A Better World for All

Kasra nouri
Director General of Public Relations

Javad Owji, Iran’s newly-appointed Minister of Petroleum who assumed his duties on 25 August, is a graduate of petroleum engineering from the Petroleum University of Technology. He already served as deputy petroleum minister from 2009 to 2013. Owing to more than three decades of involvement with the oil, gas and petrochemical industry, he is one of the most experienced persons to take the helm at the key ministry.

Given such experience and background and in light of plans announced by Owji for overcoming impediments to petroleum industry development, everything heralds a bright future.  

The minister’s plans may be classified under two groups. First, he envisages policies aimed at removing domestic challenges and implementing development plans with a view to enhancing the maximum efficient recovery, revising energy consumption and sustainable supply patterns, preventing crude oil sales and paying special attention to the downstream chain completion through absorbing specialized manpower, supporting local manufacturers and contractors, and boosting level of ties with universities and knowledge-based companies. The second group covers the Petroleum Ministry’s international diplomacy for promoting Iran’s status in international markets and forums, regaining Iran’s oil market share and identifying new markets, and regulating international relations via benefiting from the potential of international bodies like OPEC, GECF and IEF. To that effect, increased cooperation with neighboring states particularly those in the Persian Gulf and the Caspian Sea, active presence at regional and international organizations along with adopting a realistic diplomacy would pave the way for realizing objectives.

For Iran’s Petroleum Ministry and the new minister, securing national interests and ensuring Iran’s economic strength would top all objectives. No country is able to guarantee its economic interests through unilateralism, political bullying and coercive measures.

Experience has shown that the world would become a better place to live in light of mutual respect for rights and interests. The Islamic Republic merely favors a better world for every one – a principle prioritized by the Petroleum Ministry.

Javad Owji, Newly-appointed Minister of Petroleum:

I’ll Do My Best to Counter Sanctions and Maximize Oil Sales

 Javad Owji won vote of confidence in the Iranian parliament to assume his duties as the minister of petroleum in the administration of President Ebrahim Raeesi. During deliberations prior to the vote of confidence, he had touched on the main challenges of the petroleum industry, saying: “Due to sanctions, the petroleum industry is on the economic frontline. I’ll try my best to counter sanctions and maximize crude oil and gas condensate sales.”

Born in 1966 in the southern city of Shiraz, Owji studied petroleum engineering at the Petroleum University of Technology (PUT). He joined Iran’s petroleum industry in 1990. He has already served as CEO of National Iranian Gas Company (NIGC), member of Board of Trustees of PUT and vice-chairman of South Zagros Oil and Gas Production Company.

The newly-appointed minister of petroleum told MPs: “I’ve been involved in the petroleum industry for more than 30 years and I have a clean record and I am against corruption.”

Priorities and Challenges

Owji said the petroleum industry was one of the main economic advantages of the country. He touched on the 95% share of this industry in the national energy supply and its key share of Gross National Product (GNP), saying: “Oil and petroleum products and petrochemicals’ sales, commodity supply and attracting foreign investors into this industry constitute the domains of our constant fight against global hegemony.”

“In its all-out economic war, the petroleum industry has faced challenges and traumas in various sectors due to chronic structural problems, lack of foresight and inefficiency as well as pressure from unjust sanctions. Bringing the petroleum industry locomotive back on the right track would require surgical operation at various levels. Without transformation, there would be no other way out of the current crisis,” he said.

Elaborating on the petroleum industry’s challenges and priorities, he said: “Crude oil and gas condensate sales have sharply declined due to unjust sanctions. Joint fields need development for maximum recovery. Investment in the petroleum industry has sharply declined in recent years. These are some examples.”

Owji touched upon other challenges of the petroleum industry, citing the need to enhance oil and gas production capacity, dealing with the high energy intensity, preventing crude oil and petrochemicals sales and the necessity of developing the value chain particularly in the downstream petrochemical industry, the necessity of renovating petroleum industry equipment which is more than 50 years, old as well as energy commodity subsidies.

Challenges Not Negating Achievements

Owji said the achievements of petroleum industry staff in energy supply, expansion of gas supply across the country and enhanced petrochemical production in recent years should not be ignored.

“Speaking about challenges, I do not intend to negate efforts already made,” he added.

Owji said that efforts had to be made for countering sanctions and maximizing crude oil and condensate sales.

“After the imposition of unjust sanctions against Iran by the US, crude oil and gas condensate exports have significantly declined and our rivals have taken part of our export market. Revival of the market share and defeating sanctions would require action which would be possible under the aegis of the government, the parliament and Supreme National Security Council,” he said.

OPEC Quota

Owji referred to strong diplomacy and international relations in the oil and gas sector, saying: “We will severely follow up on maintaining and recovering Iran’s quota and standing within OPEC and oil markets by using the capacity of international and regional organizations including OPEC and Gas Exporting Countries Forum.”

“We will focus on expanding cooperation level with neighboring countries, as well as Persian Gulf and Caspian Sea littoral states for exploration of and production from joint oil and gas fields,” he said.

Active Approach on Sanctions

 Owji asked: “Should the minister of petroleum adopt an active approach to counter sanctions or should he adopt a passive stance and wait for political and international circles? Should he count on the enemy of the nation for the lifting of sanctions or should he rely on Iranian youth to defeat sanctions?”

He added: “I assure you that we will use all forces in the country and adopt an active approach to circumvent sanctions. We will use methods and experience which I cannot reveal here to take necessary measures for selling oil. We will also use the capacity of the private sector and all executive bodies in selling oil.”

Owji said oil-for-good was a method of skirting around sanctions. He added: “When I was CEO of NIGC, the gas industry was sanctioned and therefore gas imports were restricted. But we got around the sanctions by bartering gas for commodity. That is while we had the best ties with the Turkmenistan government.”

Joint Fields

Owji said he had promised President Raeesi to finalize the case of oil and gas fields shared with neighboring states for maximum recovery from them.

“I’ve been involved in the development of more than 10 oil fields and I know the terms of contracts quite well. Oil and gas deposits belong to all people and all generations. Therefore, I’ll do any action that would help enhance oil production capacity in the country. Clearly, such fundamental measures would help Iran become strong in the economic, political and security sectors,” he said.

“Another plan would be to gather associated gas, stop flaring and make optimal use of flare gas. Sustainable fuel supply to power plants would be done in collaboration with the Petroleum Ministry. Meantime, we have also plan for fuel supply and increasing gas storage at strategic points,” he added.

Gas Imports from Turkmenistan

Owji said completing gas refining projects, building transmission lines and gas compressor stations and supplying gas to new industries in addition to signing agreement for importing natural gas from Turkmenistan would top his agenda.

“Reducing energy intensity and reforming the consumption model are among my serious plans. We have no option but to revise our consumption pattern and we have to consider exponential tariff system for highly consuming customers. To implement this policy, we have to adopt a standard regime and adopt incentive policies for energy intensity reduction through the Iran Fuel Conservation Company (IFCO),” he said.

Lowering Crude Sales

Owji said reducing crude oil sales and generating value-added for the downstream industry, particularly in the petrochemical sector, would be a top priority. “One way of circumventing and neutralizing sanctions would be to convert crude oil to products because we didn’t have too many problems in selling products.”

He said that implementing projects for quantitative and qualitative upgrade of the refineries to increase production particularly petrochemical feedstock was another plan in the 13th administration.

Touching on the parliamentary piece of legislation supporting development of downstream industries, he said: “We can benefit from the capacity of this law. We can also benefit from the assistance of the private sector and investors to draw up plans in support of the value chain development and extending discounts on feedstock to downstream industries and supporting petrochemical parks.”

“We undoubtedly support development of petro-refineries by the private sector in supplying domestic needs and export of petrochemical products,” he said.

Attracting Investors

Owji said a main chapter in petroleum industry development was attraction of investment, adding: “To develop the petroleum industry we would need the government, parliament and private companies’ help. Through long-term investment, we will guarantee their security, complete the attraction structure and apply incentive policies to domestic and foreign investors, including the capital market.”

He also said that another financing option would be to engage people in petroleum industry projects.

He said that bartering crude oil and condensate with contractors and manufacturers was also on the agenda.

“We will use the capacity of National Development Fund of Iran. Given the nature of petroleum industry projects it would be possible to guarantee financing through NDFI via agent banks,” he added.

Strategic Agreements

Owji said another option would be to use the potential of financial institutions, banks and economic organs to attract investment through strategic agreements with friendly and aligned nations.

The minister said organizing human resources in the petroleum industry and training specialized forces would be a strategic issue, noting they were on the frontline of Iran’s economy.

“Upgrading technology and supporting knowledge-based companies with a view to increasing domestic manufacturing level would be instrumental in the materialization of resilient economy,” he said. “Today, the techno-engineering services market and the products of knowledge-based companies in the oil and gas industry amounts to $5 billion. We will try our best to supply most techno-engineering services and commodities from domestic manufacturers and companies.”

Gas Exports, Iran Bargaining Chip

One of the priorities of Iran’s Sixth Development Plan is to enhance gas export capacity, which has been achieved more than before with the development of the South Pars gas field and increased recovery. Meantime, pipeline exports are more important because exports through the pipeline hold a share of two thirds of the gas export market. The important point in this regard is that in this method, there is no need to transport by vessels and subsequently shipping insurance, and practically shipping and insurance sanctions, will not affect it.

Iran is one of the largest holders of gas resources in the world. It has had big plans to develop the South Pars gas field. 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. Thanks to these efforts, the completion of the projects related to the 28 phases of this joint field has reached the final stage, and practical steps have been taken to create a daily production capacity of 1bcm/d of gas in the country in the near future.

Recently, the CEO of South Pars Gas Complex (SPGC), referring to the significant growth of gas production in this complex, stated: “With the launch of new refineries, the number of refineries in operation in South Pars has now reached 12 refineries, and thanks to this important development, the share of SPGC in gas production is more than 74% in the country. The treated sweet gas supplied from SPGC increased by about 155 percent in 2019 compared to 2013, the figure will increase in the current calendar year as well”. And according to officials from the Petroleum Ministry and National Iranian Gas Company (NIGC), the gas extraction capacity from the South Pars field would reach 750 mcm/d.

On the other hand, in addition to supplying 75% of national gas needs, South Pars would help accelerate development of the petrochemical industry, which would in turn diversify the mix of petrochemical products.

As the holder of the largest gas reserves in the world, Iran cannot be indifferent to gas export markets; development of export infrastructure, including construction of the Iran Gas Trunkline 6 (IGAT6) installing gas compressors in this trunkline represents one of Iran’s serious plans to increase its share in the world gas trade markets, especially neighboring countries.

Hassan Montazer Torbati, CEO of NIGC, has said that Iran’s gas exports has increased 100% over eight years, rising from 9 bcm in 2013 to 18 bcm now. Iran’s gas export agreements with Turkey and Iraq are effective and exports to Azerbaijan and Armenia go on.

Gas Exports to Iraq

During the last two decades, the political, economic and social relations between Iran and Iraq have increased sharply. Iraq is the second largest export market for Iranian non-oil goods, earning Iran good revenue annually. Relations between the two countries in the oil and gas sector are also significant. Iran has two gas contracts with Iraq. The first one is about exporting gas to Baghdad, which was signed in 2013, and the second one is about gas exports to Basra, which was signed in July 2015.

Iran’s Petroleum Ministry signed an agreement with Iraq, based on which gas delivery began in 2017. Iran raised the amount of its gas exports to Iraq in 2018. Despite political and economic pressure from the US in the new round of sanctions, Iraq’s gas imports from Iran have not declined; rather they have increased. Iran is currently exporting on average 50 mcm/d of gas to Iraq via two pipelines, one carrying 35 mcm/d to Baghdad and one carrying 15 mcm/d to Basra.

It has also to be noted that commissioning of Iran Gas Trunkline-6 (IGAT-6) and IGAT-9 in southwestern and western Iran has helped increase gas exports to Iraq.

As US sanctions intensify on Iran, Iraq is the only country to have won waiver in order to meet its growing electricity needs. Therefore, Iran’s gas exports to Iraq continue. Iran’s Petroleum Ministry hopes to increase gas exports to Iraq.

Two border terminals in Naftshahr and Shalamcheh are reserved for natural gas exports to Iraq. To that effect, the 231-km-long Kouhdasht-Naftshahr and 141-km-long Ahvaz-Shalamcheh pipelines have been branched from IGAT-6 for this purpose.

Currently, 14 mcm/d of gas is being supplied to Baghdad for power plants there, whose increase depends on domestic gas consumption.

Apart from gas exports to Iraq, Iran is supplying 1,200 -1,300 megawatts/hour of electricity to Iraq. In light of Iraq’s daily increasing demand for electricity, Iran is instrumental.

The US State

Department has granted another sanctions waiver allowing Iraq to import Iranian electricity until December as it grapples with frequent power outages and lack of domestic capacity.

Washington has granted Baghdad waivers since it withdrew from the 2015 nuclear deal with Tehran and imposed sanctions in 2018, including blacklisting Iran’s energy industry. Iraq relies heavily on Iranian natural gas for power and the waivers are an acknowledgement of that dependency, though the US ultimately expects Iraq to cut the imports.

Planned Gas Exports to India/Pakistan

The plan to transfer Iranian gas to South Asia has been on the agenda since the early 1990s with the aim of supplying some of the gas needed by Pakistan, India and even China, but despite India and Pakistan's initial interest in receiving gas from Iran, political factors and intervention of great powers prevented materialization of this project, which was known as the Peace Pipeline.

Iran, considering the many benefits it could have from the implementation of this plan, has always emphasized its implementation and has seriously pursued the implementation of the plan within the framework of bilateral consultations with India and Pakistan. Iran signed a bilateral agreement with Pakistan in 2009, to that effect. According to the agreement that was signed, gas was to be exported to Pakistan by 2014, but this issue was delayed due to various reasons, including Pakistani excuses over the issue of sanctions against Iran. This was while Iran, according to its commitments, started the construction of IGAT-7 extending from Assaluyeh to Sistan and Baluchestan Province along the border with Pakistan. Then presidents of Iran and Pakistan broke the ground for that purpose in March 2013.

During the ceremony, Iran pledged to invest $500 million in Pakistani territory with the aim of speeding up the construction of the pipeline in Pakistan, but despite all efforts and commitments by Iran and bringing the gas pipeline closer to the border, the Pakistani side, for various reasons and excuses, including foreign political pressures and the impossibility of fulfilling financial obligations during the embargo period,  has not shown the slightest incentive to implement the plan, rather than that continues to take advantage of Iran's political and economic conditions for more concessions.

In this regard, the financial problems raised by the Pakistani side seem to be more of an excuse, as the country has recently signed a contract to receive LNG from Qatar.

Currently, gas has reached Iranshahr city in Sistan and Baluchestan Province and the 200km-long gas transmission pipeline to Chabahar is also in the final stages. In addition to transporting gas to Chabahar and other southern cities in Sistan and Baluchestan province, the pipeline will also cover gas exports to Pakistan.

Turkey, Sustainable Market

Following the victory of the Islamic Revolution, as Iran quitted exporting gas to the former Soviet Union, Turkey was considered the first target market for gas exports, so the country is the oldest gas export area for Iran.

Iran started supplying gas to Turkey in 2001 under a 25-year deal. Under the terms of the agreement, Turkey receives at least 8.5 bcm of gas a year from Iran. In early April, the flow of gas from Iran to Turkey stopped following a blast at the pipeline.

Turkey needs to import 130 mcm/d of gas, supplying its needs mainly from Russia and then Iran and Azerbaijan. 

Iran-Turkey gas deal would expire in 2026. Iranian officials have already embarked on talks to negotiate extension of the deal with Turkish officials. The talks are currently held online due to the coronavirus pandemic.

1mcm/d Gas Delivery to Nakhichevan

A swap agreement is in effect between the Republic of Azerbaijan and Nakhichevan, according to which Iran would supply less than 1mcm/d of gas to Astara for distribution in cities near Astara. In return for this amount of gas received, the same volume of gas was delivered to Nakhichevan through Jolfa. In these cases, for each gas transfer, a fee or gas transfer fee is received from the contracting countries. Therefore, this project was on the one hand economically viable for Iran and on the other hand it links the two nations with gas.

By carrying out the mentioned process, if there was a problem in the Astara basin and the first national line and the line needed to be repaired, a source from the Azerbaijani side would supply gas to that region and there would be no disruption in the gas supply process.

Currently, 1 mcm/d of gas is exported daily to Nakhichevan, which totaled 250 mcm during the first eight months of last calendar year.

Gas Delivery to Armenia

Iran and Armenia signed a 20-year gas-for-power agreement in 2004, according to which Iran's gas will be used by power plants in Armenia and Iran will import electricity from Armenia, in return. Armenia has been importing gas from Iran since 2009.

Iran received three kw/h of electricity from Armenia at the border in return for 1 cubic meter of gas, which has now risen to 3.2 kw/h. According to officials from the Ministry of Energy, Iran has imported 300MW of electricity from Armenia and 150 MW from the Republic of Azerbaijan this summer.

Regarding the volume of gas exported to this country, the CEO of Iran Gas Transmission Company (IGTC), said: "In 2016, according to the contract, 365 mcm and by the end of the first half of the current calendar year, 250 mcm of gas will be exported to Armenia through this pipeline. But the export pipeline has an annual capacity of 2.3 bcm.”

One of the ways to deal with sanctions and reduce the resulting pressure on the country's economy is to use domestic capacities to fundamentally remove the shadow of these sanctions from the country. As the world's largest holder of gas reserves, Iran has great potential to supply the world's gas needs and earn money through it, but currently Iran has a share of less than 2% of the world gas export market. Of course, exporting gas through pipeline is still one of the priorities of gas exporters or importers.

For instance, China has sought in recent years to import gas from Turkmenistan to spare any sanctions. It has built three 500-km-long pipelines cutting through Uzbekistan and Kyrgyzstan to receive gas. Although it may look uneconomical, it has been done for safety reasons in China.

Iran Tops World Oil/Gas Discovery

The era of discovering large oil and gas anticlines in the world and even in Iran is over, and companies must now look for oil and gas in oil traps. Exploration operations have become more complex and difficult over recent decades, but despite these conditions the Iranian plateau still is home to many oil and gas fields to explore. The latest evidence came in Wood Mackenzie’s report in 2019, which ranked National Iranian Oil Company (NIOC) the first in terms of oil and gas exploration. According to the report, NIOC was known to have discovered in 2019 alone 4.973 billion barrels equivalent of recoverable hydrocarbons, which ranks it the first among national oil companies and international oil companies across the world. This figure accounts for 31% of the total volume of hydrocarbons discovered in the world in 2019.

The discovery of Eram field with 2.7 billion barrels of recoverable reserves (equivalent to 20% of the total gas discovered in the world) and the Namavaran field with 2.3 billion barrels of recoverable reserves (equivalent to 10.5% of the total oil discovered in the world) put the two discovery projects respectively in the 1st and 3rd place in 2019. In another part of the report, it is stated: “The amount of global exploration in 2019 was 21.2 billion barrels, which was about twice as much as in 2018 and the highest amount after 2015.”

Moreover, 9 major explorations in 2019 took place in Iran, Russia, Mauritania, Cyprus, Suriname, South Africa and Malaysia, and 20 major discoveries are equivalent to 75% of the volume of hydrocarbons discovered in the world. 13 of the 20 largest discoveries in the world in 2019 had less than 500 million barrels of recoverable reserves.

NIOC with a total of 4.97 billion barrels of liquid hydrocarbons equivalent is by far ahead of Russia's Gazprom (in second place with 3.18 billion barrels of liquid hydrocarbons), British oil company BP (in third place with 1.4 billion barrels) and US company ExxonMobil (in fourth place with 0.9 billion barrels of hydrocarbons). In this ranking among the top 15 companies, the French company Total is ranked the sixth, the Italian company Eni is ranked the eighth and the Royal Dutch Shell is ranked the thirteenth.

Sophisticated Oil Discovery

Exploration is one of the main and at the same time the most complex specialties and activities of the upstream sector in the oil and gas industry. At present, due to the conditions of oil and gas exploration in the sedimentary basins of the country, especially the Zagros sedimentary basin, the main exploration operations take place in deep and complex horizons in terms of geology such as special deep horizons and in stressful conditions such as wetlands, such as Abadan, Fars, as well as forest areas such as Azadegan and border areas, and Iran's petroleum industry, due to the importance of new hydrocarbon resources and in order to replace part of the oil and gas produced, has envisaged new exploratory projects by defining new exploration projects in vast parts of the country's sedimentary basins.

Iran is home to about 5 sedimentary basins, which constitute about 2% of the offshore and onshore section of  ​​the country. There are different capacities in sedimentary basins; some places such as Zagros and Persian Gulf have high potential, but some places such as central Iran and Kopeh Dagh have less potential, while in some places such as Semnan and Tabas, no potential has been observed yet. Therefore, Iran's Petroleum Ministry plans to remunerate foreign companies operating its exploration blocks based on the risk-taking of these companies in case sanctions have been lifted and new exploration agreements are signed. So far, there are 250 oil and gas fields in Iran's sedimentary basins, and according to experts familiar with the matter, there is still a chance to discover oil and gas resources in Iran. The global norm for oil and gas exploration likelihood is between 30 and 50 percent, while this figure reached 70 percent in Iran's five-year plan.

Sedimentary basins that are likely to hold hydrocarbons have been identified across Iran. Zagros, Persian Gulf, Kopeh Dagh and Gorgan, central Iran, Moghan, Caspian Sea and its coasts, Makran and the Sea of Oman are among Iran’s hydrocarbon exploration priorities.

Iran Block Discovery History

In 1997, NIOC, developed the framework of the exploration block tender program and notified the Directorate of Exploration with a view to attracting investment and accelerating onshore and offshore exploration operations of foreign companies to participate in exploration projects. NIOC exploration experts, despite not having the experience in outsourcing work to foreign companies, were able to prepare exploration blocks. Iran's first round of exploration tender was held in March 1998 in London, during which 17 exploration blocks including Moghan I, Moghan II , Gorgan, Aras, Zavareh Kashan, Mehr, Fars, Semirom, Farsi, Tabas, Anaran, Dara, Western Kish, Eastern Kish, Bandar Abbas, Hormoz and Makran were put out to tender for assignment to foreign companies. Twenty foreign companies such as Eni, Petronas, Edison Gass, Arco, OMV, Premiere, Statoil, Karin and Helpreis participated in the tender and announced their readiness to participate in the Mehr, Anaran, Munir, Farsi and Qeshm exploration blocks. In the first round of bidding for Iran's exploration blocks, a contract was signed with OMV for the Mehr block, with Edison Gas Company for the Munir block and with Statoil for the Anaran Block. At that time, the contracts merely led to exploration operations. Among the exploration blocks of the first round, Band Karkheh oil field in Mehr block and Azar oil field in Anaran block were declared commercial and economical. Iran is currently producing from Azar, while making plans to develop Band Karkheh.

In 2000, the number of remaining exploration blocks from the first round was put out to tender for the second time in Tehran for transfer to foreign companies. A total of seven foreign companies participated in this tender, and finally three of them offered proposals for six blocks. India’s ONGC started work in the Farsi block, which resulted in the Farzad B field.

In 2002, the second round of tender for Iran's exploration blocks was held in Tehran. In this round, Iran's territorial waters from the north of the Persian Gulf to the Strait of Hormuz were divided into eight exploration blocks including Bushehr, Iran Mehr, Dayyer, Hamoon, Alvand, Forouz, Towsan and Larak, which went to the tender with the same provisions of the first stage. 22 foreign companies participated in the second stage of the tender for Iranian exploration blocks. In this stage, Petrobras won the Towsan block and Repsol won Iran Mehr and Forouz.

The contract model in the third round of the Iranian exploration blocks tender, which was held in Hague, the Netherlands, in 2003, was slightly different from the previous two rounds, as development was added to exploration activities.

Iran's approach to exploration and development contracts has been welcomed by foreign companies. In this round, 16 exploration blocks such as Moghan 1, Moghan 2, Kouhdasht, Kermanshah, Bijar, Khorramabad, Saveh, Garmsar, Maraveh Tappeh, Tabas, Zabol, Raz, Makran Gharbi, Saravan and all high-risk sedimentary areas of Iran were put out to tender.

In the third round of bidding for Iran's exploration blocks, about 30 foreign companies were present, and NIOC held more than 247 sessions introducing exploration projects, and finally proposals for the 6 exploration blocks were submitted by foreign companies. For the Khorramabad block, 8 companies, Saveh block, one company, Garmsar block, one company, Kouhdasht block, two companies, Raz block, one company, and Makran Gharbi block, one company offered proposals.

Foreign companies are interested in investing in oil and gas projects on the long-term (15 to 25 years). Under exploration and development contracts, a foreign company that successfully completes an exploration operation is given the chance to participate in the development phase without launching a new tender.

The fourth round of Iran's oil and gas exploration tenders took place in 2006. In this round, the bids offered to foreign companies were significantly different from the third round as the duration of exploration and development operations was increased to 30 years, while the discounts on contracts fell from 30 percent to 20 percent.

Incorporating production revenues from oil and gas fields in the annual financial reports of foreign companies was another obvious difference between the fourth and the previous rounds of contracts for Iran's oil and gas blocks.

The presence of oil and gas field development companies as a consultant alongside clients was another feature of this round of tenders, while according to the third round of tenders, companies had no right to a long-term presence after production.

In general, in the fourth round, 16 oil and gas exploration blocks from different parts of Iran were put out to tender. The number of companies that participated in this course and those which came to Iran to visit the proposed blocks was about 37. NIOC Exploration Directorate held 268 briefings for the visiting companies; among these applicants, 11 companies offered cooperation proposals. A total of three blocks were assigned in this round; The Dayyer Block has been handed over to Edison Gas, the Danan Block to Petrovietnam and the Moghan II Block to a Croatian firm. Due to the imposition of sanctions, the projects are on hold now.

According to NIOC rules of procedure, except for the four provinces of Khuzestan, Bushehr, Kohguiluyeh and Boyer Ahmad, tenders may be held everywhere across the country.

Iran is currently divided into 96 oil and gas exploration blocks, although this number may increase in the future due to the revision of these blocks, which is aimed at increasing their attractiveness. In Iran, there are high-risk exploration areas along with low-risk areas, some blocks are cut off by border lines and environmentally protected areas and need to be repaired. For example, the foreign contractors in Garmsar exploration block in the past faced problems and obstacles related to the environment; and consequently the contract was abandoned.

Now, by restructuring its oil contracts, Iran has taken the first step to streamline administrative bureaucracy and increase the attractiveness of its petroleum industry. Oil experts believe that with the lifting of sanctions against Iran's petroleum industry, many foreign companies will rush to work in Iran. Therefore, we are strongly looking to arrangements for the presence of these foreign companies inside Iran.

So far, 14 oil and gas exploration blocks have been handed over to foreign companies; of course, it goes without saying that NIOC experts have been working with foreign companies in the exploration blocks and oil-rich areas of Iran since the Islamic Revolution of Iran in 1979. With the departure of foreign companies and experts from Iran, exploration activities have been carried out by the NIOC Directorate of Exploration, and fortunately since then the Directorate has explored large geological structures with huge oil and gas reserves, such as the Azadegan oil field.

One of the important goals of Iran in reviewing its oil contracts is to absorb the latest technology in the world. Therefore, one of the conditions of these contracts is the involvement of Iranian private companies along with foreign companies so that in the future Iranian companies may become international companies.

Lucrative Exploration

Statistics show that despite extractions, the volume of recoverable hydrocarbon reserves in Iran has increased over the past 43 years, and stands at 160.12 billion barrels. According to the US Geological Survey (USGS), Iran ranks the third in the world in terms of exploration capacity, behind Iraq and Russia.

A total of 390 oil and gas reservoirs have been identified in the country, of which 258 are oil and 132 are gas. Among 258 reservoirs, 141 have been developed and 117 are untapped (45%). Also, out of 132 gas reservoirs, 30 reservoirs have been developed and 102 reservoirs have not been developed (77%). These numbers show that exploration in the whole country is ahead of production and development.

Iran has recorded one exploration per season since 2019. More exploration is expected in southwestern Iran this summer, which would add to Iran’s recoverable oil reserves.

Activity in the field of exploration in the Iranian petroleum industry carries two main messages: first, Iran’s oil industry is alive and active because exploration is a long-term business with high-risk and big investment that yields after a long time. Therefore, when the Iranian petroleum industry invests in exploration, its message is that it pins hope on the future. Second, despite imposition of all the sanctions on the petroleum industry, such success shows that Iran has not backed down.

Replaceable H/C Reserves

According to data provided by NIOC Directorate of Exploration last year, the rate of exploration replacement for oil and gas produced in Iran in the last two decades has been favorable such that in the gas sector, for every 100 units produced, 180 units have been replaced, and 70% of the oil produced over these 20 years has been replaced by new exploration.

So far, about 60% of the country has undergone exploration studies and the success rate of exploration wells is about 60%.

Another noteworthy point is that along with the expansion of exploration activities and increasing the country's hydrocarbon reserves, significant steps have been taken in the development of oil and gas fields, especially in joint fields.

At the forefront of exploration after the Islamic Revolution is the discovery of the South Pars gas field (jointly owned by Qatar) as the largest joint gas field in the world.

The discovery of Yadavaran, Changuleh, Azar, Band Karkheh, Arvand, Towsan, Paranj, Assaluyeh, Jofair, Aban, Binalood, Susangard, Sohrab, Sepehr, Dehloran and Yademan oil fields are among discoveries after the Islamic Revolution. Other post-revolution discoveries are Tabnak, Kish, Khairabad, Gardan, Zireh, Mansourabad, Homa, Dey, Sefidzakhor, Farsi, Ahvaz, Sefid Baghoon, Halgan, Farzad B, Soumar, Toos, Sefid, Delavaran, Arya and Paznan.

Gas discovery in the Khami horizon of Bibi Hakimieh field, oil discovery in the South Pars oil layer, discovery of the Arash oil and gas field, gas and gas condensate discovery in the Karanj field in Khami formation, gas discovery in Darian, Gadvan and Fahlian formations of the Marun field, discovery of oil and gas in the Khami horizon of the Binak field, discovery of the Lavan gas field in Dehrom anticline, discovery of the Sarvak reservoir of the Ramin field, discovery of the Dehrom reservoir of Belal field, discovery of Khami reservoir of the Mansouri field, discovery of Khami reservoir of the Ab Teimour field, discovery of the Fahlian gas reservoir in the Ahvaz field, discovery of the Kupal field (Asmari reservoir), discovery of the Khayyam field, discovery of the Mehr field, discovery of the Saman field, discovery of the Dehloran field (Asmari reservoir), discovery of Bistoun field (Asmari reservoir), the Khartang field, Khosrow field, Dostku field, Sefiddang field, Charak-1 field, Sarab-A field, Arya and Sardar Jangal fields should also be added to the list of explorations.

Jask Terminal Offshore Pipe laying Ends

The construction of the offshore oil pipeline of the Jask crude oil export terminal has been completed, the operator of Jask oil terminal project in southern Iran announced.

According to Vahid Maleki, with the completion of the shore pooling operation of the sixth line of the terminal’s offshore pipeline which connects the terminal to its third single point mooring (SPM), the project’s pipeline was fully implemented and completed with a total length of 45 kilometers, the portal of Pars Oil and Gas Company (POGC) reported.

The official noted that if the development plans for the terminal are pursued by the new government as scheduled, the second phase of the terminal’s development project could be implemented as soon as late September.

The construction of the Jask oil terminal’s second pipeline was started immediately after the completion of the first pipeline in late January.

As the country’s second major oil terminal, Jask terminal is under development by POGC on 60 hectares of land and with nearly €260 million of investment.

In line with the development of the above-mentioned oil terminal, a pipeline project, dubbed the Goreh-Jask oil transfer project, was also constructed. This project has provided Iran with an alternative route for the country’s crude oil exports that are currently carried out through the Strait of Hormuz.

Innotech Park Signs Cooperation Pacts

The Petroleum Industry Innotech Park has signed eight cooperation agreements with universities and technology parts across Iran.

The agreements were signed with the Departments of Technology of University of Tehran, University of Ahvaz, Sahand University of Technology, Geophysics Institute of University of Tehran, Khorasan Park of Science and Technology, North Khorasan Park of Science and Technology, Semnan Park of Science and Technology and Yazd Park of Science and Technology.

The agreements with the Departments of Technology of University of Tehran, University of Ahvaz are aimed at establishing joint innovation centers, Sahand University of Technology, Geophysics Institute of University of Tehran and Seman Park of Science and Technology is aimed at setting up joint incubator while the idea sought in the agreements with Khorasan Park of Science and Technology, North Khorasan Park of Science and Technology and Yazd Park of Science and Technology is to support technological units involved in the petroleum industry.

NIOC Monitoring Center Officially Launched

The monitoring center of National Iranian Oil Company (NIOC) has been officially inaugurated.

The center is established with the aim of collecting, assessing, and displaying online information on the production, distribution, and foreign trade of oil, gas, gas condensate, petroleum products, and naphtha.

Speaking at the event, NIOC deputy CEO Farrokh Alikhani who was the executive director of the monitoring center project, noted that all the processes related to the production and distribution of major oil and gas products are displayed online in this monitoring center.

According to Alikhani having access to up-to-date information and data in the oil industry will pave the ground for making optimal decisions in various areas.

“In the monitoring center of NIOC, all information related to oil and gas production and its quantity and quality as well as the processes related to supply and distribution are fully collected and displayed online at any time,” he explained.

Shourijeh Gas Storage at 1 bcm

Natural gas storage has reached 1 bcm at the Shourijeh facility, the production manager of Iranian Central Oil Fields Company (ICOFC) said.

Ahmad Rajabi said: “Through arrangements made between ICOFC Directorate of Production, East Oil and Gas Production Company as well as Directorates of Supervision on Production at National Iranian Oil Company (NIOC) and National Iranian Gas Company (NIGC), gas storage at the Shourijeh facility has exceeded 1 bcm.”

“Given the storage record of 1.856 bcm of gas last calendar year and the strategic role of this storage facility in supplying gas during winter and serving energy needs of northern and northeastern provinces, planning was made for the current calendar year,” he added.

“In case of sufficient supply and delivery of gas by NIGC and continued injection of maximum gas until November, about 2 bcm would be injected into the site with the ability to supply 15 mcm/d during the final four months of the year,” he added.

Referring to gas storage at the Sarajeh facility in Qom, he said: “Storage at Qom Sarajeh facility has been met more than 100% and this trend continues as planned.”

NISOC Met 84% of Annual Overhaul Plan

National Iranian South Oil Company (NISOC) fulfilled 84% of its overhaul plan last calendar year, a NISOC official said.

Gholam-Reza Nourani, NISOC production manager, said the company embarked on the largest overhaul plan in the country.

“Overhaul for last calendar year was planned in the three sectors of processing installations, processing equipment and rotary equipment above 4,000 horsepower,” he said.

He said during last calendar year, more important overhaul-related activities were carried out from the year before.

“Owing to the significant capital budget allocated for the current calendar year, overhaul activities will increase significantly year-on-year,” he said.

Nourani noted that overhaul operations last calendar year were carried out against the backdrop of various restrictions including the covid-19 pandemic, hot weather and decrepit installations.

NISOC embarks on a widespread overhaul plan on an annual basis with a view to guaranteeing sustainable output, ensuring safety of installations and protecting capitals.

Ministry of Petroleum Welcomes any Kind of Investment

TEHRAN (Shana) – Iranian Minister of Petroleum Javad Owji said: "We welcome investments of any kind for development of gas fields with the priority of maintaining the production of the South Pars gas field; as the current trend continues, we will become gas importers in the coming years.”

Javad Owji on Thursday evening (September 3) said in a meeting with oil industry managers in the Pars Energy Special Economic Zone: “Supply of fuel for the winter is one of the current priorities of the oil industry and it has been predicted that we will face a 10% increase in gas consumption this year.”

He expressed hope that by reviewing and following up on affairs, the country will be able to overcome the winter fuel challenge without any problems.

The Minister of Petroleum stated that favorable measures have been taken in the petrochemical industry so far and this industry has met a large part of the country's hard exchange needs in recent years.

"Vaccination of all oil industry workers has been seriously considered, and I recently told the president that oil industry workers have been greatly overlooked in this regard," he said.

The Minister of Petroleum arrived in Assaluyeh this evening on his first operational visit, and after attending the tomb of the anonymous martyrs of Assaluyeh, examined the gas and petrochemical projects based in the area in a meeting with the relevant managers in the Pars Energy Special Economic Zone.

Later in Assaluyeh, the Iranian Minister of Petroleum said the first train of the phase 14 refinery of the South Pars gas field would come on stream in the winter this year.

Speaking to reporters during a visit to Assaluyeh on Friday, Mr. Owji said, "I thank God that I succeeded in making my first business trip to Assaluyeh region as the Iranian Minister of Petroleum; over the course of this trip I visited gas refineries, petrochemical complexes and platforms of South Pars.”

He considered the supply of winter fuel as one of the most important concerns of the Ministry of Petroleum at present, and added: “More than 700 million cubic meters or in other words 70% of the country's gas consumption is supplied from Bushehr Province and the South Pars refineries.”

The Minister of Petroleum noted last night's meeting with the managers of the oil industry in the Pars Special Economic Energy Zone and positively evaluated the meeting, saying the latest state of the refineries and ongoing projects in the region were the focus of the meeting.

Owji expressed hope that with the decisions taken this year, the maximum production and recovery of gas from the South Pars joint field will be achieved.

No Fuel Oil at Tehran Power Plants

Ali Asghar Abdoli, director for power plants improvement at Thermal Power Plant Holding (TPPH), has announced that fuel oil consumption at power plants around Tehran has been brought down to zero.

“Around the city of Tehran, there are two power plants that have consumed no fuel oil since six years ago,” he said.

“Fuel oil consumption at power plants would push air pollutants higher than normal levels. To remove such pollution, there are two methods,” he added.

He said that based on a study conducted at the Ministry of Energy in cooperation with other organs, removal of sulfur in the fuel oil would be possible at the refineries.

In a fossil fuel power plant the chemical energy stored in fossil fuels such as coal, fuel oil, natural gas or oil shale and oxygen of the air is converted successively into thermal energy, mechanical energy and, finally, electrical energy.

Each fossil fuel power plant is a complex, custom-designed system. Multiple generating units may be built at a single site for more efficient use of land, natural resources and labor.

Energy Consumption Drops at Tehran Refinery

The CEO of Tehran oil refinery has said that energy consumption fell 1.1% at the facility last calendar year.

Hamed Armanfar said the decline in energy consumption saved the refinery IRR 3,714 billion.

“Last calendar year, emission of about 2,500 tonnes of SO2 and about 50,000 tonnes of CO2 into the air at the Tehran oil refinery was prevented,” he said, adding that the development had reduced social costs incurred by pollution emission.

Regarding measures that helped reduce energy consumption, he said: “Transforming the electricity of control units from STG to GTG, holding energy management meetings to regularly monitor the refinery energy performance, following up on energy efficiency projects, studying energy costs and gross profits of the refinery, regular monitoring of liquid fuel consumed at the refinery with a view to maximum use of natural gas and eliminating liquid fuel among other measures helped cut energy consumption at Tehran refinery.”

NPC to Fetch $50bn in 2027

Iran’s National Petrochemical Company (NPC) is planning the fourth leap of the petrochemical industry, based on which the country’s petrochemical revenues are expected to reach $50 billion by the Iranian calendar year 1406 (starts in March 2027), according to NPC Managing Director Behzad Mohammadi.

“By completing the projects defined in the second and third leaps, and the implementation of strategic projects defined in the fourth step of the smart development of the petrochemical industry, achieving a goal of generating $50 billion of revenue can be realized in the horizon of 1406,” Shana quoted Mohammadi as saying on Monday.

Speaking at the unveiling ceremony of the NPC’s new portal, Mohammadi noted that 47 major projects have been defined to be implemented in the fourth leap of the petrochemical industry.

“For the fourth leap, a total of 47 new projects have been defined and classified into three sections: combined feed projects, new propylene production projects, and pioneering projects. With the implementation of the fourth leap projects by 1406, the cumulative investment in the country’s petrochemical industry will reach $ 125 billion,” he said.

Bid Boland Launched Under Tough Conditions

The Managing Director of Iran’s Persian Gulf Bid Boland Gas Refinery has said the refinery is playing a significant role in providing feed to the country’s petrochemical plants and completing their output basket.

“The position of this refinery is very important in supplying feed to petrochemical units and completing the country's energy basket.” Mahmoud Aminnejad said in a ceremony for celebrating the achievements of the country’s petrochemical industry in the previous Iranian calendar year (ended on March 20).

Underlining that the refinery was constructed in a condition when the country was under significant pressure due to the U.S. sanctions, the official said: “the project is important because it has enabled us to process and refine the associated gases collected from the country’s oil fields.”

“With the construction of Bidboland Persian Gulf gas refinery, the oil industry's 110-year-old dream of collecting and processing associated gas has been fulfilled,” he said.

He called Bidboland Persian Gulf Gas Refinery one of the most important projects among all South Pars projects and said: "After sour gas entered this refinery, we reached product in less than seven days."

PGFK, INSIG Sign Seamless Pipe Production Agreement

Iran National Steel Industrial Group (INSIG) and Petro Gohar Farasahel Kish (PGFK) have reached agreement on the manufacturing of seamless 4-inch line pipes.

Reza Dehqan, deputy CEO of National Iranian Oil Company (NIOC), said at the ceremony that manufacturing seamless 4 and 6-inch pipes had accelerated over the past two years.

“Equipping and standardizing the manufacturing of this category of pipeline has been done by INSIG in cooperation with National Iranian South Oil Company (NISOC),” he said.

He said the IRR 500 billion deal involved development of the Lali field in its Asmari reservoir.

“The Office of Deputy CEO of NIOC for Development and Engineering has been to encourage contractors to choose Iranian manufacturers, and I hope that this agreement would pave the way for the manufacturing of 6-inch in diameter and higher pipes,” he added.

Dehqan said NIOC and INSIG would soon sign an agreement for the supply of 4 and 6-inch line pipes for 500 km.

“It is currently faced with commercial, legal, contractual and even technical obstacles. Once they are removed we will soon see an agreement signed to that effect,” he added.

Jafar Yousefi, CEO of INSIG, said: “The company had focused on manufacturing of below-6-inch line pipes. That goal has now materialized.”

“The process of manufacturing line pipes at INSIG was launched with technical knowhow offered by NISOC experts. We have now managed to win petroleum industry certificate for our products,” he said.

Yousefi said domestic manufacturing of pipes would prevent the outflow of hard currency. “We are now ready to manufacture downhole pipes. We will take necessary measures to that effect.”

Least-Polluting Clean Fuel in Iran

Mahnaz Mohammad-Qoli

Various industries have established "Health, Safety, Environment" (HSE) departments in order to protect their service workers against life threats, and protect the environment. In the oil and gas industry, due to high sensitivity as well as high-risk oil and gas fields, HSE is of high significance. When it comes to the gas sector, it takes up added significance as natural gas may become more hazardous if security precautions are not taken.

"Iran Petroleum" has interviewed Gholam-Reza Bahman-Nia, HSE chief at National Iranian Gas Company (NIGC), to learn more about HSE activities in the gas industry.

What measures have been taken at NIGC to mitigate environmental pollution, particularly at refineries and specifically at the South Pars gas field?

Projects and ongoing measures related to mitigating pollutants emissions in subsidiaries are a very detailed list of various measures in the areas of management, monitoring and control of air pollutants, wastewater treatment and the establishment of green management. In particular, considering the sensitivities related to pollution in the Assaluyeh region, and following a Cabinet decision during the presidential tour of the region in early 2019, a comprehensive plan to reduce pollution in the Pars Special Economic Zone was developed, which is underway. The plan includes various axes, including establishment of a wastewater treatment system at Site 2, improvement of wastewater treatment systems at Site 1, projects and measures to control and mitigate the sulfur oxides emissions, and plans to reduce and recover flare gas among others. They are being operated with the cooperation of various relevant pillars, such as South Pars Gas Complex (SPGC), Pars Oil and Gas Company (POGC), Special Zone Company and petrochemical companies located in the region.

What measures have been taken for zero-flaring?

Normal flaring is considered a process related to refinery safety, but it is also important in terms of resource loss, as well as environmental pollution. However, this process, in addition to causing air pollution, evokes visual sensitivities and creates the perception of pollution for the viewer. In general, control and reduction of flares at refineries with regard to benefits such as preventing waste of resources, preventing the emission of greenhouse gases due to climate change and reducing air pollution have always been taken into account and in this regard, projects and plans have been under way at refineries. In the first step and initial goal setting, flaring was envisaged to be cut to the designed level. This step was achieved for the first five refineries of South Pars, and even in some refineries the amount of flaring was reduced to less than the planned amount. The next step involves zero flaring with the aim of recovering gas dispatched to flares.

Is there a standard certificate in the field of the environment? What is the status of the gas industry in this regard?

Almost all companies have obtained the ISO 14000 certificate and are maintaining and improving the status of environmental indicators through definition of numerous projects. Regarding establishment of energy management system, according to Article 38 of the Sixth National Development Plan, companies are required to install energy management systems in buildings. To that effect, they have to obtain waste management certificate, energy tag and other technical certificates for buildings. Operational units and industries are legally obliged to implement a periodic monitoring program and measure the amount of emissions of air and waste pollutants. These monitoring programs are often carried out by designated laboratories of the "Department of Environment". In some cases, the provincial DOE branches, while reviewing monitoring reports as well as other measures of industrial units, issue non-pollution certificates to eligible companies.

What is the significance of environmental protection in the gas industry?

Environment protection is one of the fundamental principles and values ​​governing the activities of this organization. This issue is explicitly mentioned by the CEO in the integrated system policy statement and is seriously considered by managers and, of course, employees. The environmental performance of subsidiaries has always been considered as one of the criteria of evaluating the performance of those organizations and the general meetings of subsidiaries, and senior managers of the organization and the Board of Directors of NIGC seriously deals with the quality of related operations and reports. Environmental achievements and significant measures in this area are always rewarded. On the other hand, the main task of the company is to provide clean fuel for various industrial, service, commercial, residential and transportation sectors in the country, and natural gas fuel emits the least amount of pollutants among fossil fuels. Thanks to gas supply, emission of thousands of tonnes of pollutants caused by other fossil fuels would be prevented annually.

How are environmental impacts measured in NIGC development projects?

Generally speaking, according to the company's mission, there is no conflict between the two categories of energy supply and environmental protection, and energy supply does not necessarily lead to the destruction of the environment. However, some processes can naturally be destructive to the environment or involve the exploitation and consumption of natural resources. But the predicted and current patterns in the organization are designed to identify these destructive aspects and eliminate or minimize their risks. Environmental impact assessment done in the phase of feasibility and location of the company's development projects would allow for predicting the environmental impact of the project in the construction, installation and operation phases. Furthermore, the process of identifying and evaluating the environmental aspects of the organization's activities, which is a general and current process in this company and its subsidiaries, covers all the activities of the organization in terms of impact on the environment, and outstanding aspects are considered through control measures. Therefore, clean fuel supply and clean fuel production are not in conflict with each other, and we can supply clean fuel with the least pollution rate  provided that, as mentioned, we can anticipate the

environmental consequences of the business and that our facilities are designed in accordance with the standards, our equipment will be properly maintained. Our operator should operate more carefully and compassionately, and pollution mitigation and control systems should be put into service. The main problem of our industries, especially in refineries, is related to design and implementation.

What governing documents exist in the environment sector? Apart from that, has any roadmap been designed for the gas industry?

Fortunately, in the field of environment, governing documents are numerous and diverse. The most important governing document in the environmental domain is the general policies of environmental protection, which were signed on in 2015. The second important document that has been recently published and unveiled is related to the general land management policies that have been recently issued by the country's Management and Planning Organization, which we hope will also go through its legal process. According to these policies, establishment of industries, transportation and agriculture, refineries and petrochemicals, etc. will be regulated, and it will no longer be possible to establish refineries, petrochemicals, steel industries, etc. in any part of the country. In this document, the country is divided into 9 areas, and each area covers three or four provinces, which can compensate for each other's shortcomings. In each area, restrictions, facilities and business environment are specified. There are also environmental goals and programs of the Petroleum Ministry, which are communicated every year. National laws, which include pieces of legislation, are considered one of the most important governing documents in the field of environment. These documents include the Law on Waste Management, the Law on Clean Air, the Law on Soil Protection, and materials related to the environment in the Fifty-Year Law on Socio-Economic and Economic Development. Moreover, some international conventions are considered as governing documents due to the country's membership, which is recognized through the Acts passed by the Islamic Consultative Assembly. Resolutions of the High Council for Environmental Protection are also among the regulations and upstream documents applicable to NIGC. Fortunately, NIGC has a good roadmap to ensure the implementation of these governing documents.

How does the gas sector interact with DOE?

Generally speaking, DOE, as a supervisory organization affiliated with the presidential office, carries out its supervisory duties through its administrations which interact with national gas subsidiaries located in different provinces in addition to pursuing the required legal considerations through mentioned companies. At the staff level, communications and interactions between NIGC and DOE get under way through the HSE General Directorate of the Ministry of Petroleum. We are currently evaluating all the pipeline projects and obtaining permits from DEO, and in this regard we have good interactions with the organization.

How has development of gas infrastructure and replacing petroleum products with gas contributed to environmental pollution mitigation? Has this issue been separately studied?

Yes. Fortunately, the gas industry is known as an environmentally friendly industry. This is because natural gas, as the cleanest fossil fuel, produces less pollution per unit of energy production compared to other fossil energy sources. Furthermore, growing gas consumption and replacing heavier fossil fuels such as diesel, fuel oil, coal, etc. with gas will practically help mitigate air pollution and greenhouse gas emissions. Today, due to the huge and valuable infrastructure created in the gas supply chain, most of the country's energy demand is met through natural gas, thereby mitigating air pollution in cities.

Do you engage environment-related knowledge-based companies, academic centers and the private sector in the gas industry?

The growing problems and intensification of environmental crises in recent decades in the world have caused the demand for further development of environmental knowledge and technology and the environment is one of the fastest growing areas in terms of technology. In our country, academic centers and knowledge-based companies have significant capacities to meet industrial needs in this field. Therefore, our policy has always been to encourage such centers to follow two-way interaction, identify needs and provide solutions, and develop up-to-date technologies. So far, in the field of waste management, creation of information technology infrastructure and environmental software, cooperation with the said centers has been fruitful and good success has been achieved in this field. In fact, many private companies serve as environmental advisors. For example, the EIA studies of projects are now carried out by these companies at the level of subsidiaries.

South Pars, Symbol of Iran Capacity

Iran’s petroleum industry’s efforts in developing hydrocarbon fields shared with neighbors have been mainly focused upon gas and condensate production from the South Pars gas field. Iran has in recent years managed to outdo Qatar in recovering from their jointly-owned reservoir although international sanctions have barred foreign firms from cooperating with Iran. Had the US not imposed tough sanctions on Iran’s petroleum industry in 2018, oil and gas production from all fields Iran shares with neighbors would have been much higher. However, petroleum industry contractors and manufacturers have managed to keep activity running in the development of joint oil and gas fields despite all international restrictions.

The fact is that the Iranian petroleum industry is still unable to sell as much of its crude oil as its market share, despite the new US administration having taken office, due to the most severe financial and banking sanctions. Moreover, the outbreak of the coronavirus has also had a negative impact on the market. These issues have inevitably had a negative impact on the development of this industry in recent years. In the meantime, the projects in the joint oil and gas fields, among other projects, have been and are of great importance for the oil industry. In recent years, Iran has succeeded in taking decisive steps towards the development and production of the fields.

The petroleum industry is currently witnessing more cooperation between companies and domestic manufacturers and therefore the issue of domestic manufacturing is being focused upon further. Local firms have now such strong points as specialized manpower, productivity-oriented view, high flexibility and movement, high bargaining power and win-win talk, national and international experience and history, ability to export knowhow and techno-engineering services, and access to software and hardware equipment.

SP11, Only Remaining Phase in South Pars

Over four decades, development of South Pars has faced many ups and downs. Qatar was outperforming Iran up to 2013 when Iran’s gas recovery from South Pars stood at 240 mcm/d. That was when Iran decided to prioritize South Pars phase development due to financial restrictions. Therefore, it gave priority to the projects with a high degree of progress. Therefore, SP12, SP15&16 and SP17&18 were prioritized and necessary finance was provided. Finally, all these phases became operational to help enhance South Pars gas recovery. In 2017, SP19, SP20 and SP21 were prioritized. Finally, recovery from South Pars reached 575 mcm/d, i.e. 2.4 times higher than the 2013 output levels, one key factor here was the implementation of the 2015 nuclear deal, known as the JCPOA, and the ensuing removal of sanctions. In 2019, National Iranian Oil Company (NIOC) focused on the development of SP13, SP14 and SP22-24. Following 20 years of efforts  made and spending $70 billion, the South Pars development was finalized. Today, except for SP11, all offshore and onshore phases of South Pars have been developed. No foreign engineer is currently on the site and all activities there are being handled by local manpower. In some cases, records have been set in terms of engineering, design, implementation and production.

Offshore Chain Completed

Recently, the 27-phase South Pars offshore chain was officially put into operation. With the completion of construction, installation and operation of 37 gas platforms, the South Pars offshore chains, including production from the offshore section of the 27 South Pars phases, were officially put into operation. Seventy-three platforms have been designed, installed and commissioned for development and production from South Pars gas field, and 3,200 km of 32-inch subsea pipeline has been installed to connect these platforms to onshore refineries.

Over the past eight years, Pars Oil and Gas Company (POGC), operating South Pars on behalf of NIOC, has managed to complete 17 standard phases.

With the development of SP12, SP15&16, SP17&18, SP19 and SP20&21 from 2013 to 2017 and the startup of SP13 as well as SP22, SP23 and SP24 in 2018 and

installation and operation of SP14 platforms, Iran outdid Qatar.

The offshore chain of South Pars has been formally launched, while the last production platform of this field belonging to SP14 came online in March 2019. Gas production from the offshore section of SP27 materialized following the completion of the offshore chains of the development projects of this shared field.

Over the past eight years, about $25 billion has been spent on the remaining South Pars development phases. The figure stands at more than $10 billion for offshore installations. Iran owns 3,700 square kilometers of the 9,700-square-kilometer gas field. Iran owns about 14 tcm of gas plus 18 billion barrels of condensate.

Ever since development of this field started, Iran has recovered more than 1.8 tcm of gas and 2.2 billion barrels of condensate.  

223bcm Recovered in 1 Year

Last calendar year, Iran recovered 223 bcm of gas from South Pars, which is equal 70% of total gas output. Over the past eight years, recovery from South Pars has totaled 1,300 bcm.

The offshore section of South Pars involves drilling wells, installing wellhead platforms, and laying subsea pipelines connecting platforms with onshore refineries. There are currently 336 wells active in South Pars, nearly 70% of which has been completed in the past eight years. A total of 37 wellhead platforms have been installed at South Pars, nearly 70% of which belongs to the past eight years. Seventeen platforms have production capacity of 28 mcm/d, while 20 others have production capacity of 14 mcm/d.

Currently, a total of 3,200 km of subsea pipes have been laid to carry gas from platforms to onshore refineries. Some 2,160 km has been installed and launched over the past eight years.

Nearly $25 billion has been invested in South Pars in the past eight years, more than $10 billion of which in the offshore installations.

In the first years of South Pars development, most offshore activities were being handled by foreign firms. But now local firms and Iranian engineers are handling the bulk of job.

$2.5bn in SP14

           The offshore section of SP14 has been designed, engineered and implemented with a total investment of $2.5 billion. The offshore section of SP14 has four platforms that became operational from 2018 to 2020.

SP14 is being developed to supply 56.6 mcm/d of rich gas, 75,000 b/d of condensate and 400 tonnes a day of sulfur, as well as 1 mt/y of liquefied petroleum gas and 1 mt/y of ethane to feed petrochemical plants.

The offshore section of SP14 contains four platforms (two main and two satellite platforms), each with a capacity to recover 14.2 mcm/d from the South Pars reservoir. Platform A came online in April 2018, Platform C in November 2018, Platform B in January 2020 and Platform D in March 2020.

The SP14 development was assigned under a 35-month agreement in 2010 to a consortium comprising Industrial Development and Renovation Organization (IDRO), Industrial Projects Management of Iran (IPMI), Iranian Offshore Engineering and Construction Company (IOOC), National Iranian Drilling Company (NIDC), Iran Shipbuilding and Offshore Industries Complex (ISOICO), MAPNA, Paybandan and Mashin Sazi Arak.           

Sustained Gas Production

In the current calendar year, South Pars would see its output increase more than 40 mcm/d. What should follow is to submit a general plan to the new administration with a view to preventing pressure fall-off in South Pars and maintaining production levels. That would require $25-30 billion in investment. An agreement has been signed with OTC to supply compressors to increase offshore and onshore pressure.

Thanks to South Pars, Iran increased its gas exports 90% and gas delivery to refineries 80%. Gas distribution across the country hit a record 95% in urban and rural areas. The number of villages connected to the gas distribution network has increased from 14,000 to 33,000.

According to National Iranian Gas Company (NIGC) data, power plants across the country consumed 932 mcm of gas during a cold ten-day period last winter, which was up 25% year-on-year.

Last but not least, the petroleum industry did not remain idle even after the US pulled out of the JCPOA and proceeded with its development despite all restrictions.

Petchem Sector and Triangle of Strains

Masoumeh Asghari

Iran’s petrochemical industry has not backed down over the past three years specifically after the US imposed all-out sanctions on the country, particularly the petrochemical sector. On the contrary, it recorded last calendar year as one of the best and most successful periods.

Since 2018, when foreign companies were fully banned from cooperating with Iranian companies and petrochemical imports and exports were slapped with tough bans, the petrochemical industry has hit records as new petrochemical plants have become operational. More importantly, the petrochemical industry has been the top hard currency earner and managed to remove part of financial restrictions under conditions of sanctions.

A Unique Golden Year

Last calendar year was a unique year for the petrochemical industry. Seventeen projects became operational under the third jump, leading to a 25-million-tonne increase in the petrochemical production capacity in one year. The 17 petrochemical projects required $11.4 billion in investment, which helped raise the petrochemical production capacity from 65 million tonnes a year before to 90 million tonnes last calendar year. That was while the coronavirus pandemic was added as a second restriction factor to all economic and sanctions restrictions.

The Miandoab, Kaveh, Lorestan catalyst production, Kimia Pars Middle East, Bushehr, Lordegan, Urmia potassium sulfate, Hegmataneh, phase 2 of Ilam, Persian Gulf Bid Boland II gas refinery and Kangan petrorefinery were among projects inaugurated last calendar year. In the current calendar year, Sabalan petrochemical plant, Phase 1 of Masjed Soleiman and Parsian Sepehr became operational.

That along with the completion of 17 petrochemical projects brings the total number of petrochemical plants to 64. Furthermore, three logistics plants are operating in the petrochemical sector which is expected to yield $21.5 billion in revenue – a new record in this sector.

Iran’s petrochemical industry earned $9.4 billion in export revenue in the calendar year to March 2020, $8.1 billion of which it supplied to the Central Bank, i.e. 120% higher than committed.

Last calendar year the petrochemical industry’s revenue fell to $9 billion due to the COVID-19 pandemic. However, it supplied $6.4 billion in revenue, i.e. 170% higher than committed. In the current calendar year, petrochemical exports are expected to yield $14.2 billion in revenue, $8.2 billion of which would go to the Central Bank.

According to National Petrochemical Company (NPC) data, Iran’s petrochemical industry would be gaining $20 billion in revenue in the current calendar year, $14 billion of which would be from exports.

Petchem Megaprojects

The Persian Gulf Bid Boland project had remained hamstrung for years, but it was revived thanks to efforts made by Iranian engineers. Megaprojects placed the petrochemical industry and the Persian Gulf Petrochemical Industries Company (PGPIC) on a new direction in the upstream petroleum industry. The Bid Boland project is earning Iran $1.5 billion in annual revenue. Still more significantly, there would be no gas flaring by March 2023 and associated gas would be largely used as feedstock for petrochemical production.

The petrochemical industry has throughout its decades of activity supplied products whose number and diversity have been on the rise. Generally speaking, only in the feedstock supply sector, these projects have been in contact with the upstream sector. Efforts have been constantly under way to complete the cycle of products, supply a wider number of products and finally help realize the longtime dream of ending raw materials sales. That is why many petrochemical plants were banned from entering feedstock supply and other upstream domains. Specifically, after petrochemical plants were privatized under Article 44 of the Constitution, the gas with the upstream sector was widened as all oil resources are national wealth and exercising public sovereignty right over them lies with the Petroleum Ministry. However, the decision adopted by the Persian Gulf Bid Boland refinery in line with zero flaring and instead supply feedstock from this source opened a new way for petrochemical plants to be fed with flare gas.

Jafar Rabiei, CEO of PGPIC which operates the BB project, said: “The petrochemical industry has proven its capacity to join the upstream sector for its value chain supply.”

Of course, two new megaprojects, each worth $3 billion, are envisaged to come online by 2027.

He also said the ground had been paved for the two petrochemical megaprojects of Almas and Hormuz, totally worth $7 billion.

“The petrochemical industry is financially and technically able to operate upstream oil and gas projects. Two reasons may explain why. First, petrochemical plants, in addition to financial and technical capacity, are more motivated in feedstock supply and they can operate these projects based on a regular timeframe,” he said.

Rabiei said that the $4.5 billion Hormuz project would be fed with a combination of ethane and butane, which the giant South Pars gas field would supply.

Furthermore, construction of three megaprojects with combined feedstock would begin soon, which would help diversify petrochemical products. The propylene, methanol, ethylene, benzene and urea chains would be developed.

The Hormuz petrochemical megaproject, with an annual capacity of 5.8 million tonnes and $4.5 billion investment, would be fed with ethane and butane to produce varieties of polyethylene and polypropylene. A second project is operated by Visa Energy Arghavan in Assaluyeh with an investment volume of $1.6 billion with an output capacity of 1.8 million tonnes. The third project is the Arya Oil and Gas Company’s olefin project with an investment of $4.8 billion with an annual output capacity of 4.8 million tonnes.

Bright Future for Projects

A welcoming event in recent years has been that National Petrochemical Company (NPC) defined a second and third jump in a bid to complete remaining projects from previous years. This planning has continued regularly and what has remained from the second jump is ending, and parts of the third jump projects have started out. Eleven projects from the mix of second petrochemical jump have been left. Five projects would come online in the second half of the current calendar year and six others in the first half of next calendar year. There are currently 50 active projects in the petrochemical industry, 39 of which have come online in the third jump. The third jump projects would begin in the second half of next calendar year. With the completion of the third jump in the petrochemical industry, the capacity of this industry would reach 136 million tonnes annually. By 2027, the production capacity of the petrochemical industry would reach 167 million tonnes.

Last calendar year, most petrochemical projects became operational within the framework of the 6th Development Plan. Despite the coronavirus pandemic, 17 petrochemical projects came online in that year, adding 25 million tonnes to the country’s petrochemical production capacity. That is unprecedented as it has created job opportunities directly for 27,300 persons.

The significance of materialization of this objective is emanated from the fact that based on Article 44 of the 6th National Development Plan, the government is required to make planning to enhance the new petrochemical production capacity so that the petrochemical production capacity would reach 100 million tonnes. The important point is that the petrochemical industry capacity was below 62 million tonnes in 2016, but it increased to 83.5 million tonnes by last March. The figure is expected to reach 100 million tonnes in the current calendar year, which is the 5th year in the 6th National Development Plan.

The petrochemical industry has been able to supply domestic industry as well as downstream sector needs. Of the 35-million-tonne petrochemical mix, 10 million tonnes had been sold on domestic markets, which would generate jobs in 15,000 small and large-sized enterprises operating in the downstream petrochemical industry.

Petrochemical products have also witnessed diversity as more than 40 chemicals and about 340 grades of polymer products were supplied on the market last calendar year. More than 20 products would be added to the petrochemical mix by 2025. Meantime, these measures have directly resulted in the materialization of a big objective in the petrochemical industry. Once the third jump projects become operational, the petrochemical industry would receive 2 million barrels of oil equivalent a day (mboe/d) from the upstream sector, which shows the significant role of this industry in preventing raw materials sales. This issue takes up added significance when the figure would reach 2.3 mboe/d by 2027.

Meantime, with the continued development of the petrochemical industry in new hubs, three projects in the Parsian hub, three projects in Makran, four projects in Qeshm Island and two petro-refining projects in Jask would be instrumental in ending raw materials sales.

Flexibility

The petrochemical industry has a bright and long-term horizon before it. It would need precise planning up to at least 2027 and some commitments may be envisaged about the details of this performance. This planning has been envisaged regardless of the presence of a specific administration or person and is in full compliance with the general requirements of the petrochemical industry. Therefore, no change will occur even if the administrations or officials change.

Amir Vakilzadeh, director of NPC projects, said recently that even after a new administration has taken office no change would be envisaged in the third jump.

“All petrochemical industry projects have received basic agreement after the investor’s announcement of readiness and expert exam. Therefore, even with administration changes, projects are unlikely to be set aside,” he said.

North Pars, Changloueh Fields Up for Investment

 Some 120 kilometers southeast of the southern Bushehr Province, Iran owns a gas field holding more than 57 tcf of gas in place. North Pars is among fields with high potential for investment. The field is estimated to require $16 billion in investment, including $5 billion in the upstream sector and $11 billion in the downstream sector (mainly LNG plants).
North Pars was discovered in 1963 following implementation of 3D seismic testing. Then, 6 exploration, appraisal and development wells were drilled for the field development. Two foreign companies including Exxon were in charge of North Pars development. That was halted in 1979.

At the time of its discovery, North Pars was the largest gas reservoir in Iran. Investment in North Pars was accelerated until the jointly-owned South Pars was discovered to become Iran’s top priority.

Today, South Pars is in its final stages of development and it is time for North Pars to undergo development.

A brief review of North Pars shows that 17 wells have so far been drilled, while 26 offshore platforms have been installed at North Pars. However, development and production are yet to start there.

North Pars whose production capacity equals four South Pars phases, has capacity to produce 3,600 mcf/d of gas. Such recovery would require drilling 46 wells. The rate of recovery envisaged for North Pars stands at 61%.

North Pars’s gas is planned to be used at LNG plants in order for Iran to produce 20 million tonnes a year of liquefied natural gas.

National Iranian Oil Company (NIOC) officials eye financing and attracting manpower for new projects, including North Pars. The North Pars development is envisaged in four phases, each phase with about 1.2 bcf/d of gas.

The LNG produced from one phase of this field would belong to Iran, while the revenue from the sales of LNG from the other two phases would belong to foreign investor. The foreign party will have authority to sell its LNG to its own buyers. The gas produced from one phase of this field would be used for domestic purposes and injection.

About IRR 12,000 billion is estimated to be required for infrastructure : electricity, water, jetty, access routes, helicopter center, emergency centers and telecommunications.

Geographical integration has been done in North Pars and South Pars, covering a total area of 46,000 ha. North Pars and South Pars cover 16,000 ha and 30,000 ha, respectively.

The Exploration Directorate of NIOC and Pars Oil and Gas Company are jointly conducting studies to have a precise estimate of gas reserves in North Pars.

In case North Pars becomes a special economic energy zone, it would be possible to offer facilities to investors. This issue is currently under review.  

North Pars has also oil layers with an API gravity of 12.

NIOC and Sinopec signed a $16 billion agreement in 2007 for the development of North Pars in four phases, but the Chinese firm pulled out of the project.

Changouleh Attractive Enough

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

Changouleh is one of the important oil fields in West Karoun region in southwestern Iran. Foreign companies have time and again shown interest in getting involved in development of this untapped field which Iran shares with neighboring Iraq. Three top Russian companies and one Croatian company have already submitted their requests for the development of Changouleh oil field which was among the projects introduced during a conference in Tehran hosted in the last calendar year to unveil Iran Petroleum Contract (IPC), the new model of oil contracts.

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

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

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

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

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

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

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

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

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

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

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

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

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

But the problem with these joint fields is that development operations in neighboring countries are over, while development projects in Iran are still going on. Our rivals will not wait for Iran to finish its work for their operation of the shared fields. The volume of these shared reservoirs declines every day without Iran having extracted oil.

In this regard, the administration of President Hassan Rouhani has focused its plans on the development of joint fields whose life cycle is limited in a bid to raise the country’s 7% share of production from these fields. Furthermore, the economic plans of Iran’s administration have created another requirement for the oil sector, which is bringing the country’s crude oil production capacity to more than 5.7 million barrels in four years.

Therefore, it could be argued that the development plans worked out for Iran’s petroleum industry with focus on joint fields have sketched out a very difficult mission for the petroleum industry. With regard to the acceleration of development of joint fields, Iran’s petroleum minister recently ordered the transfer of drilling equipment from independent to joint fields. That promises the realization of the petroleum industry’s objectives.

Opportunities for Investment in Ferdowsi, Aghar Fields

More than 110 years of search have led to the exploration of supergiant South Pars gas field and Azadegan oil field. Iran has more than 100 oil and gas reservoirs, i.e. one new oil/gas field per year over the past century.

The Ferdowsi oil field in the Persian Gulf is among the Middle East reservoirs with about 37 billion barrels of heavy crude oil.

National Iranian Oil Company (NIOC) hopes to develop this field under the IPC mode. Developing Ferdowsi would require five to seven years.

Fifty years ago, a Swiss company made a big discovery in the Persian Gulf. No other company has since smashed this record. It was the discovery of the Ferdowsi oil field containing heavy crude oil.

The Ferdowsi oil field is located west of the South Pars gas field and near the Golshan gas field. Ferdowsi is 190 kilometers far from Bushehr Port and 88 kilometers far from the coastline.

Ferdowsi is a giant heavy crude oil field with some gas in the Dalan and Kangan layers. It is known to be the largest field with heavy crude oil in Iran and the Middle East.

The first exploration well was drilled in 1966 in order to identify heavy crude oil layers. The second well was drilled one year later to examine gas layers potential. Based on the findings of wells 1 and 2, the Swiss company Adax conducted the master development plan (MDP) studies. The findings of studies indicate existence of heavy crude oil in this field.

Ferdowsi is estimated to contain 31 billion barrels of oil in place. It is expected to produce 70,000 b/d of oil. The field is 20 kilometers long and 13 kilometers wide.

After Adax concluded its studies, due to the significance of heavy crude oil reserves and for the purpose of gaining more precise information for the development of Ferdowsi, NIOC instructed the Petroleum Engineering and Development Company (PEDEC) with conducting 3D seismic testing, drilling two appraisal wells for more precise assessment and taking cores from the crude oil layers to carry out necessary tests. The drilling of the third well in Ferdowsi started in April 2010 in order to assess the oil and gas layers. Initial findings showed that there was abundant heavy crude oil with various API gravities in the Kajdomi, Dariyan, Gadovan, Fahlyan and Sourmeh layers.

NIOC drilled a second well in Ferdowsi to study gas potential in the Dalan, Kangan and Faraqoun layers. Gas was proven to exist in these layers in 1967. Based on an appraisal of the Ferdowsi field through the first and second wells, Adax estimated the field’s reservoir at 35 billion barrels with a recovery rate of 6%. But during an announcement about the field in 2015, the field was said to contain 37.1 billion barrels of oil in place.

Development of the Ferdowsi field is among projects aimed at acquiring technology to recover heavy and ultra-heavy crude oil in the fractured carbonated reservoirs with a focus on practical research to choose the most appropriate method for heavy crude oil refinery.

NIOC studies indicate that full development of the Ferdowsi field would need five to seven years. The significant oil and gas reserves, as well as the commerciality of developing this field make investment in these fields attractive.

Given the special nature of technology used in developing heavy crude oil fields and the use of specialized tools, PEDEC has agreed to provide foreign companies with more data in case any MOU is signed for cooperation.

The Ferdowsi field is projected to produce 10,000 b/d of oil in the first phase and more than 300,000 b/d in next phases.

Aghar Gas Field

The Aghar gas field is among large onshore gas fields in Iran. It is currently producing 20 mcm/d of gas. The Iran Central Oil Fields Company (ICOFC), which supplies more than 40% of Iran’s total gas, is in charge of development of the Aghar field.

Aghar was introduced along with other fields to foreign investors to undergo development under the newly-coined Iran Petroleum Contract (IOC) model. The second phase of the Aghar field, with a recovery rate of 71.5%, is an attractive investment project.

The annual growth in domestic consumption, as well as international obligations for gas exports to Turkey, Iraq and other neighboring countries has always led the Iran's Petroleum Ministry to envisage gas production hike as a priority.

The Aghar gas field is located 110 kilometers southeast of Shiraz and 35 kilometers southeast of Firouzabad in Fars Province.

Discovered in 1972, the Aghar field has now 16 wells, 13 of which are producing gas.

Gas production from Aghar began in 1999. Natural gas and condensate are separated after production to be delivered to the Farashband gas refinery for processing through two pipelines. Each pipeline is 90 kilometers long.

The second phase of the Aghar gas field is to undergo development to double production to 40 mcm/d. Planning has been done for the second phase development of the Aghar gas field.

In parallel with the plan to double the Aghar gas output, installations would be built near the Farashband gas refinery for processing.

The gas produced at the Aghar field is planned to be injected into southern oil fields, including Maroun. This gas field has wellhead facilities, four gas gathering centers, pipeline to carry gas from wells to central facilities and finally the Farashband refinery, a gathering and separating center, controlling room, pumping station, and pigging systems.

The Aghar gas production capacity stands at 95.22 mcm/d of natural gas. It also supplied 4,300 b/d of gas condensate.

Studying the Aghar gas field implemented with a view to updating previously conducted studies, incorporating new findings and completing previous studies through interpreting and assessing petrophysical diagram, and modelling of fractures. The studies, which lasted four years, were led by the Department of Reservoirs Studies.  The main finding of these studies is that the field’s in-place gas deposits are up 40%.

The final recovery of over 71% of in-place reserves of this field has been done. In the natural depletion scenario, in light of wellhead pressure restrictions, the final recovery rate is set at 34.7% with a production ceiling of 22 mcm/d by 2023, when the installation of a compressor would bring the recovery rate to 71.5%.

Chief among studies conducted are: drilling operations to enhance recovery and preserve the production ceiling, carrying out periodical static tests, appraisal wells drilling, PGF output phase increase to 30 mcm/d and the optimal scenario after installing compressor and spudding six new wells for reaching the production ceiling of 30 mcm/d.

 Time & Size

Main Measures Leading to construction of Goreh-Jask Pipeline

In the run-up to the national pipeline carrying oil from Goreh to Jask, significant and valuable measures were taken, details of which would be interesting to know.

Size

Removal of 30 mcm of soil (1,000 km)

Manufacturing of 83,000 pipes

Welding of 1,000 km of pipeline within 15 months

Key Starting Dates

Official Date of Pipe-Laying

May 2020

Pipeline Welding End Date

April 2021

Electrification of Pump Stations

March 2021

First Pump Arrival

February 2021

Crude Oil Pumping Starting Date

May 2021

Launch of Two Iranian Pumps in Pump Station No. 2

June 2021

Completion of Offshore Pipeline Coating Operations

July 2021

New Energy Finds, Turkey’s Economic Boon

 Shuaib Bahman

Turkey's energy strategy has undergone a severe transformation with the discovery of new energy reserves across the country. Ankara, which over recent decades has sought to become an energy hub, now intends to gain a significant foothold in global markets in the future. Therefore, Turkey's new strategy has been designed and developed with the concept of a “blue homeland” that seeks both to dominate the country's energy resources and to provoke nationalist sentiments at home. Given the importance of Turkey's new energy discoveries, the present article seeks to look at Ankara's policies and programs with a focus on these resources. The effects and consequences of using the newly-discovered reserves, along with the challenges faced by Turkey, have also been considered.

Energy Discovery

Since 2013, Turkey has pursued a new approach to offshore exploration activities by passing the 6491 Oil Law in order to enhance domestic oil and gas production and encourage investment in this field. Turkish oil companies then explored and extracted hydrocarbon resources using exploration and drilling vessels in the Eastern Mediterranean. Accordingly, Turkey has so far completed the drilling of eight wells in the eastern Mediterranean that showed some signs of natural gas but their reserves were not large enough to be commercially viable. Ankara is therefore expected to drill more wells to help develop its exploration activities in the eastern Mediterranean.

Meanwhile, one of the most important discoveries in Turkey is the Amasra-1 well located in the Sakarya gas field in the Black Sea, which is estimated to hold 135 bcm of gas. Earlier in 2020, Turkey announced the exploration of its 405 bcm of gas reserves in the Tuna-1 offshore well in Sakarya. According to the information published in the first phase, 3 to 5 bcm of gas in these fields will be recovered annually by 2023, and in the next stages, they will increase to about 15 to 20 bcm per year.

In addition, Turkey will be able to increase its oil production from 61,000 b/d to 6,800 b/d by announcing the discovery of oil in three new offshore wells in May 2021. This trend shows that Turkey is seriously pursuing the exploration and operation of its own oil and gas reserves.

The discovery of new offshore gas reserves in the Mediterranean and the Black Sea has strengthened Turkey's dream of becoming an energy hub more than ever. In this regard, Turkey intends to offer its offshore gas in the Black Sea in the futures gas market in Istanbul for trading. The purpose of launching this future market is to de-risk transactions by providing more stable trading than the normal gas market. According to information released by the Turkish government, 540 bcm of gas worth more than $100 billion is to be traded under the “Black Sea Gas Contract” in the futures gas market.

New Energy Hub

If Turkey's statistics on newly discovered fields are true and the discovered reserves are of good quality, then it can be expected that Turkey's period of dependence on imported energy will end while it will become an important energy hub in the region which enjoys necessary geographical potential for exporting gas to Europe.

In addition, production from these resources may offer a significant opportunity to the Turkish economy. Turkey gets about 70 percent of its fuel needs from fossil fuels and overseas. In 2019, the country spent nearly $50 billion on energy. Under such circumstances, not having to buy energy saves a huge amount of capital by the Turkish government, which can spend a significant part of it on infrastructure. In fact, a large amount of the Turkish government's foreign exchange expenditures will be saved annually. Of course, this amount should also increase the potential revenue from energy sales in the future. At the same time, people and industries in this country will probably pay less for the use of energy, which in turn will have significant economic impacts on the production process and economic prosperity in this country.

On the other hand, large offshore gas reserves could be a turning point and a new trump card in Turkey's relations with European countries. Because if Turkey pursues a strategy of exporting gas to Europe, then it will have more capacity to bargain with the European Union. Furthermore, when Turkey would no longer have to import gas from countries such as Iran and Russia, its future relations and interactions with Tehran and Moscow would change.

Challenges Ahead

Although the discovery of new oil and gas resources is a boon for the Turkish economy, using these resources faces challenges. Because the extraction of Turkish offshore gas resources in the Black Sea requires significant investment and, of course, technical and technological facilities and capacities, Turkey cannot go ahead alone without seeking foreign help.

Meantime, Turkey’s claimed reserves in the Eastern Mediterranean could provoke political and security crises in the region. Turkey, Greece, Southern Cyprus, Egypt, Zionist Regime, Lebanon and Syria in the Mediterranean region have serious discussions with regard to determining their water boundaries in recovering from fossil energies in the seabed. Meanwhile, the disputed waters of Turkey with Greece, Cyprus and other countries of the Eastern Mediterranean do not make it easy to operate the resources in this region. It is noteworthy that in the past year, the issue of sovereignty over some of the energy fields in the East Mediterranean has gone to the brink of military confrontation between Turkey and Greece. Meanwhile, European countries are aware of the political implications of Turkish sovereignty over these resources, but they have biasedly supported Greece. This will be a serious challenge for Ankara in operating East Mediterranean resources it lays claim to.

UAE Ambitions, New Oil Challenge

 Shuaib Bahman

 The United Arab Emirates’ oil reserves, over recent years, have increased significantly. This has led UAE political officials to be more confident in OPEC and international energy markets, and even to compete with Saudi Arabia in this regard. Given the importance of this issue in the future of global energy markets, which could lead to various developments, the question here is to know if the UAE intends to become OPEC’s largest oil exporter. If the UAE pursues such a goal, how will global markets as well as OPEC fellow members be affected?

New Discoveries

Over recent years, the UAE Supreme Petroleum Council has announced the discovery of billions of barrels of oil reserves in different parts of the country. The council has confirmed the discovery of about 2 billion barrels of conventional oil in the Abu Dhabi emirate, as well as about 22 billion barrels of unconventional oil in the mainland. Earlier, the UAE Supreme Petroleum Council announced the discovery of new reserves containing 7 billion barrels of oil and 58,000 bcf of natural gas.

Prior to the announcement, the UAE was the eighth largest oil holder with 97.8 billion barrels, followed by Venezuela (298.4 billion), Saudi Arabia (263.3 billion), Canada (171 billion); Iran (with 157.8 billion), Iraq (with 144.2 billion), Kuwait (with 104 billion) and Russia (with 103.2 billion) were ahead of the UAE. However, new discoveries have added more than 31 billion barrels of oil to UAE reserves. Thus, the UAE can now be ranked sixth among petro-states with about 128 billion barrels of oil.

With the discovery of new oil reserves in the UAE, Abu Dhabi Oil Company is to increase its investment over the next five years to 448 billion dirhams (about $122 billion). Under the plan, the UAE plans to direct 160 billion dirhams ($43.6 billion) to the UAE’s local economy between 2021 and 2025. This shows that the UAE has designed an ambitious new plan for oil production and exports.

Change

The UAE’s rise among oil holders has come at a time when the country has been cited in recent decades as a resource that will run out of oil in the near future. For this reason, the UAE was not considered an influential player, mainly in the long-term horizon for oil markets. However, the change in the country’s standing in the past year, on the one hand, has changed the views on the future of Abu Dhabi’s role in the field of energy, and on the other hand, has changed the country’s behavior in the international arena.

One of the most important changes in this regard has emerged in the UAE’s relations with Saudi Arabia. The dispute between the two countries over the UAE’s share of exports and a change in the OPEC+ agreement, which eventually led to a Saudi retreat, could be a prelude to Abu Dhabi’s future ambitions. In fact, in the first step in its oil ambitions, the UAE succeeded in forcing a powerful actor like Saudi Arabia to accept its demands. Therefore, there is no guarantee that this country will not make similar or even more ambitious demands again in the future, particularly because the UAE and Saudi Arabia’s different tastes over regional issues such as the war in Yemen, relations with Qatar and the presidency of the Gulf Cooperation Council (GCC) are growing day by day.

Future Outlook

There are at least two scenarios as to why the UAE has oil ambitions:

The first scenario is that the UAE is well aware of the hidden war that is under way for dominance on export markets. The US becoming an oil exporter in recent years has intensified competition in this area. At the same time, Saudi Arabia’s cooperation with the US in this regard could affect the UAE’s position both in global markets and in the political arena. Therefore, the UAE intends to expand its oil capacity as much as possible in order to continue to be a decisive player in international markets in the future.

The second scenario is that the UAE aims to increase production and exports in preparation for post-oil era. If the forecasts of companies like BP, which believes that the world is currently at the peak of demand for oil, or the Norwegian company Equinor, which believes that the demand will reach its peak in 2027 or 2028, are accepted, then countries like the UAE merely relying on petrodollars will have little time to sell their oil at a reasonable price.

Accordingly, the UAE intends to make best use of oil before demand for it decreases. Many energy estimates suggest that the world will eventually switch from oil as a major energy source in the next one to two decades, and that the era of renewable energy will begin. Therefore, the UAE intends to use this remaining opportunity to sell its oil resources and invest its large oil revenues in renewable energies.

The fact is that the consequence of either scenario the UAE chooses would be the same for oil producers across the globe. The only result for world markets would be tight competition and the UAE’s confrontation fellow producers, particularly within OPEC. Adoption of such approach by the UAE would mean that although it would not officially quit OPEC or OPEC+ deal, it would stick to its national interests and would struggle for a bigger share of the market.

Brazil Ultra-Deepwater Market Growing

 The economic recovery of Brazil’s ultra-deepwater oil and gas market is underway, according to a recent report by Evercore ISI.

In its latest Offshore Rig Market Snapshot (July 2021), the consulting firm noted that three term floater contracts were signed for Brazil over the week ending July 15, with Petrobras renewing two ultra-deepwater drillships and PetroRio taking over an UDW semisubmersible rig later this year.

Overall, Evercore says that 10 floaters have been contracted for Brazil year to date, for almost 17 rig years. Notably four of these floaters were contracted by Petrobras, with the other six contracts going to Karoon Energy (two), Equinor, PetroRio, Shell, and TotalEnergies.

Beluga to Farm Into Offshore Cameroon License

Tower Resources has executed a binding heads of agreement for a farm-out to Beluga Energy of a 49% participating interest in the shallow-water Thali production-sharing contract (PSC) offshore Cameroon.

The farm-out covers $15 million toward the cost of the planned NJOM-3 well, estimated to cost around $16.8 million. Both companies will fund pro-rata any costs above $15 million, plus future expenditure.

Both parties have prepared a draft joint operating agreement and plan to submit this and the draft farm-out agreement shortly to Cameroon’s government for approval.

OGA Assessing UK Offshore License Incident

Britain’s Oil and Gas Authority (OGA) is investigating a possible breach of field production consents in UK offshore waters.

The OGA will seek to compile and assess further information, offering the company concerned the opportunity to provide written representations before determining how the case should be resolved.

Last October, the Authority published its Thematic Review into Industry Compliance with Regulatory Obligations. This examined compliance in six areas of interaction between the OGA and UK offshore licensees, identifying instances of good and improving, practice, but also noted a need for further improvement.

Acteon to Build Philippines LNG Terminal Jetty

Atlantic, Gulf & Pacific Co. has contracted Acteon Integrated Solutions (AIS) to support the development of the Philippines LNG import and regasification terminal in Batangas Bay.

The company will transport and install the jacket structures to form the LNG berth. These structures will vary across the construction site and will include approach trestles, mooring and berthing dolphins, and associated furniture such as walkways, fenders, and mooring hooks.

AIS will be responsible for the full construction of the jetty and all the marine works, except anything to do with the transportation of LNG.

Santos, Oil Search Move Closer to Merger

Santos and Oil Search have agreed on conditional terms for a full merger.

If approved by the respective shareholders, this would create – according to Santos – a regional champion possessing a diversified portfolio of long-life, low-cost assets across Australia, Timor-Leste, Papua New Guinea, and North America with significant growth opportunities.

Saudi Aramco to Boost Capacity 550,000 b/d by 2025

Saudi Aramco is pressing on with plans to ramp up its crude production capacity, looking to fill what it says will be a looming supply hole left by other global oil companies, which are cutting back on their upstream plans.

The Saudi state-run oil giant said Aug. 9 that it's on pace to raise how much crude oil it can produce from its current 12 million b/d to about 12.55 million b/d by 2025, on its way to achieving a maximum sustainable capacity of 13 million b/d in the coming decade.

Engineering work to expand output at the Marjan and Berri fields is in the final stages, Aramco said in its second quarter earnings report. The Marjan and Berri projects are expected to add production capacity of 300,000 b/d and 250,000 b/d, respectively, by 2025, the company said.

Aramco also in the second quarter completed the Ain Dar and Farzan crude oil increment targeting secondary reservoirs that will add a total production capacity of 175,000 b/d.

"We see a lot of drop in investments when it comes to crude oil supply in the mid- and long-term. We are capitalizing on the opportunity by first increasing our maximum sustainable capacity from 12 million b/d to 13 million b/d," CEO Amin Nasser said on a web call with analysts on Aug. 9.

"Of course we are trying to benefit out of the lack of investments by major players in the market by putting investments in this sector."

Aramco is boosting its oil production capacity at a time when most oil majors are curbing their investments and future development in new increments as part of their energy transition policies.

US June Oil Exports Rise

US crude exports rose by about 28pc in June led by a sharp increase in shipments to India and South Korea.

Total domestic crude exports averaged 3.49mn b/d in June, up from 2.71mn b/d in May, according to trade data released by the US Census Bureau. US crude exports in June were up from 2.75mn b/d a year earlier.

India was the top destination for US crude loaded in June 2021, taking about 521,000 b/d, up by 160,000 b/d from the previous month as demand in that country continued to recover from a devastating Covid-19 outbreak.

State-controlled Indian refiners in December expanded their import portfolio to include more US grades. Refiner IOC is now including West Texas Light (WTL) as an eligible grade in its weekly import tenders and Hindustan Petroleum (HPCL) issued a unique tender that sought Mars for its Vizag refinery earlier this year.

US crude headed to South Korea averaged about 462,000 b/d in June, nearly doubling from the previous month.

Meanwhile, US crude headed to China continued to lag year-earlier levels, averaging 244,000 b/d in June, down from 350,000 b/d in May.

China's intake of US crude was volatile last year, but exports to that country rose sharply in May-December 2020, averaging 690,000 b/d during that time, buoyed by an interim trade agreement signed last year with the administration of former president Donald Trump. The deal required China to buy $27bn of US crude and other energy commodities in 2020 and $42bn in 2021.

BKV Corp to Buy Texas Power Plant for $430mn

US shale maker BKV Corp is acquiring a Texas power generator for $430 million in a move that leverages its gas production to generate electricity, the company told Businesshala.

The deal comes as Texas tries to encourage new gas-fired power generation to meet record demand. Competition from cheap wind and solar has caused Texas coal-fired plants to shut down, leaving the state facing shortages during extreme heat and cold events.

Denver-based BKV is purchasing the 758-MW Temple, Texas facility from the closely held Temple Generation I LLC through a 50-50 joint venture with Banpu Power US Corp., a related company. The deal is expected to close in the fourth quarter of 2021.

China Slashes Fuel Export Quotas by 73%

China has cut export quotas for refined fuels by 73% year-on-year in the second issue for 2021, as new taxes on imports of key blending fuels are set to boost sales of domestically refined fuels.

The latest batch of quotas, totaling 7.5 million tonnes, were issued to seven firms, including a private refiner, according to two people familiar with the matter.

That was sharply down from 28 million tonnes in the second batch a year earlier and 27.99 million tonnes in the first batch for 2021.

The quota issues did not give the breakdowns by products, which normally cover diesel, gasoline and aviation fuel.

Beijing also separately issued 3 million tonnes of low-sulphur marine fuel export quotas in the second batch, down from 5 million tonnes in first release for 2021.

BP Sees Potential for Green Hydrogen in Australia

The production of green hydrogen and green ammonia is technically feasible at scale in Australia, but will require a major investment in port, electricity and water services, BP said, based on the findings of a study.

The study, supported by the Australian Renewable Energy Agency (ARENA), looked at building a demonstration plant and a 1 million tonnes a year facility, with an electrolyser powered by renewable energy to split water to produce hydrogen, which would be used to make green ammonia.

Australia, the world’s top coal exporter and the second largest exporter of liquefied natural gas, wants to develop green hydrogen to replace fossil fuels in a global push to cut carbon emissions.

India May Join China to Lower Oil Prices

The world’s third-largest crude oil importer, India, could join China in tapping into its strategic petroleum reserve in a bid to sell lower-priced crude to its refiners amid rallying international oil prices.

India is reportedly considering selling half of its SPR to attract private participation in expanding its strategic storage capacity, government sources told Reuters.

The sale of crude from reserves could also be a move from one of the importers most sensitive to price hikes to reduce the price of crude for its refiners, Reuters columnist Clyde Russell says. India’s SPR currently holds around 36.5 million barrels of crude oil.

India has been the most vocal critic of the OPEC+ production reduction pact this year, saying that it does not support “artificial cuts to keep the price going up.”

OPEC+ Keeps Oil Market in Deficit

Most oil market experts believe that the OPEC deal last month will help cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.

The raising of the production limits by OPEC plus oil producers is positive for oil in both short and medium-term as the 400,000 barrel per day monthly supply additions should still leave the oil market in deficit at the end of 2021, research analysts at Merrill Lynch said.

They argue that a change in baseline production levels does not mean an immediate 1.6 million b/d hike from April 2022 and will mostly redistribute quotas within OPEC+. “Production quotas may be adjusted on the way, while baseline production changes signal a general commitment from the key member,” analysts Karen Kostanian and Ekaterina Smyk said.

“Production quotas may be adjusted on the way, while baseline production changes signal a general commitment from the key members,” they said.

In July, OPEC+ nations raised the output limit imposed on five countries, including the UAE, by phasing out 5.8 million barrels per day of oil production cuts by September 2022.

The analysts allayed concerns that oil prices would run into some turbulence post the latest OPEC+ agreement as the market feared upcoming supply hikes and importantly the select members potentially flooding the market in 2022 with cumulative 1.6 million b/d additions to baseline production levels.

Most oil market experts also believe that the OPEC deal last month, marking the end of a gridlock, will help cool prices which have climbed to 2-1/2 year highs as the global economy recovers from the coronavirus pandemic.

 Exxon Launches US Shale Gas Sale

 Exxon Mobil has begun marketing US shale gas properties as it ramps up a long-stalled program that aims to raise billions of dollars to shed unwanted assets and reduce debt taken on last year.

The top US oil producer three years ago set a goal of raising $15 billion from sales by December. More recently, it promised to accelerate lagging sales to whittle a record $70 billion debt pile.

The company’s XTO Energy shale unit is seeking buyers for almost 5,000 natural gas wells in the Fayetteville Shale in Arkansas, spokeswoman Julie King confirmed. Exxon is marketing the properties itself and aims to receive bids this month, people familiar with the matter said.

“We are providing information to third parties that may have an interest in the assets,” King said. No buyers have been identified, she said, declining to confirm the August call for bids or the company’s anticipated value on the wells.

Exxon has achieved about a third of its three-year, $15 billion target with activity and asset values down during the pandemic. It has received sales proceeds of $557 million through June and has deals pending valued at more than $2.15 billion.

Exxon acquired the Fayetteville assets in 2010 for $650 million amid a shale boom that would change the US energy landscape. The boom led to an oversupply of gas that pushed prices to record lows and last year led Exxon to reduce the value of its US oil and gas holdings by $17.1 billion.

The Arkansas properties cover some 416,000 net acres (1,680 square kilometers) and are some of the North American natural gas resources cut last year from Exxon’s development plan.

 US Crude Output to Fall Less than Forecast

 US crude oil production is expected to fall by 160,000 barrels per day (bpd) in 2021 to 11.12 million bpd, the US Energy Information Administration (EIA) said in a monthly report, a smaller decline than its previous forecast for a drop of 210,000 bpd.

Oil prices CLc1 have rebounded from the historic lows seen last year, prompting some US producers to boost drilling activity. The total US rig count has more than doubled since falling to a record low in August last year.

The EIA said it expects production to be relatively flat through October before beginning to rise in November and December and throughout 2022.

For 2022, US crude production is expected to average about 11.8 million bpd, a rise of 650,000 bpd, smaller than the previous forecast for a rise of 750,000 bpd.

Output hit an all-time annual high of 12.3 million bpd in 2019, before the coronavirus pandemic crushed demand and prices.

The agency said it expects US petroleum and other liquid fuel consumption to rise 1.58 million bpd to 19.70 million bpd in 2021, compared with a previous forecast for a rise of 1.52 million bpd.

US gasoline consumption averaged 8.6 million bpd in the first half of 2021, up from 8.3 million bpd in the second half of 2020 but below the 9.3 million bpd in the second half of 2019, EIA said.

"Our latest estimates show that gasoline consumption in May through July was higher than we had previously expected. Growth in employment and increasing mobility have led to rising gasoline consumption so far in 2021," the agency said.

Shell Considering Resumption of Libya Operations

Global energy multinational Royal-Dutch Shell is considering the resumption of its operations in Libya. The revelation was made after Shell had held a meeting with National Oil Corporation (NOC) chairman Mustafa Sanalla during their visit to Tripoli.

As reported by Libya Herald at the time, Shell had stopped its operations in Libya in 2012, ceasing exploration activities and abandoning drilled wells.

At the time, it had cited harsh (EPSA IV) contracts and insecurity as major factors in the decision. Shell had had disappointing results from exploration of their Libyan concessions and considered further exploration to be economically unsound.

The NOC reported that the meeting discussed the possibility of Shell contributing to the development of fields in Libya, as well as increasing its activity in marketing and developing refineries.

NOC chairman Sanalla welcomed the company’s delegation to Tripoli, stressing the depth of the relationship between the NOC and Shell as one of the largest international companies in the field of exploration and production.

He also welcomed the possibility of cooperation in the development of some exploratory plots, exploration of some other pieces, contribution to investment and development of the oil and gas industry in Libya, transfer of expertise, development of human resources, refinery development and renewable energy projects, and assistance in projects to increase the storage capacity of oil reservoirs and other investment projects, in addition to implementing spatial development programmes.

Ilam Gas Refinery Set to See 50% Output Hike

 In light of national gas industry development, refineries are proceeding with their plans. Accordingly, in line with the objectives in this sector, Ilam gas refinery as the only facility in western Iran to supply gas would see its production rise 50% by 2023, making it a leading facility in the gas industry development.

Ilam gas refinery was established to supply gas to Ilam and other western provinces, feed Ilam petrochemical plant and process sour gas from Tang Bijar field. Ilam gas refinery is fed by a pipeline with capacity of 6.8 mcm/d, which could rise to 10.2 mcm/d in the second stage.

Ilam Gas Refining Company, in accordance with the implementation of continuous overhaul operation programs and activities in order to maintain sustainable production, moves in line with sustainable development policies and has taken extensive and diverse measures in the water, soil and air sectors with a view to mitigating environmental pollution and standardizing outputs. As a result, the company has been removed from the list of companies polluting the environment. At the moment, one of the most important programs of this refinery is to obtain a green management certificate.  

Looking at the activities carried out in Ilam refinery, we see records in the supply of products and also diversity in the mix of products, which has made this refinery one of the most unique refineries in Iran. According to Rouhollah Nourian, CEO of Ilam gas refinery, the mix has been diversified and bentonite sulfur has been produced in this refinery. With this action, in addition to producing the highest quality sulfur among Iran's gas refineries, ‘we are witnessing that the quality and production of high quality agricultural products are enhancing and earning more income.”

Liquefied petroleum gas (LPG) production at this refinery grew 211% year-on-year and sulfur saw its output increase 7%. Furthermore, condensate production increased 2% and for the first time since the refinery was launched more than 30,000 tonnes of ethane was delivered to the Ilam petrochemical plant. That is while in previous years and prior to the commissioning of the olefin unit of Ilam petrochemical plant, the ethane produced at this refinery was used as fuel for the refinery with the rest being fed into national trunkline along with natural gas.

Having launched the olefin unit in the downstream sector and receiving three products – ethane, condensate and LPG –Ilam refinery has completed its gas value chain and has become a revenue generator for National Iranian Gas Company (NIGC) and the nation. This refinery is instrumental in the sustainable development of Ilam Province.

Nourian said the refinery would receive in the first phase 330,000 cubic meters a day of gas, which would increase to 550,000 cubic meters in the second phase.

Prior to commissioning the olefin unit at the Ilam petrochemical plant, the ethane was used to power the refinery.

Phase 2 of Refinery

Construction of the refinery began in 2001 and ended in 2007. It came online in 2008. Extensive plans are currently under way to develop Phase 2 of the refinery. Meantime, the technical and engineering documents have been completed to help finalize the necessary technical properties in the process of purchase of equipment, pipes and joints, valves, pressured vessels and storage tanks. That is being followed up on by Iran Gas Engineering and Development Company.

Upstream feedstock supply is the most important issue in implementing Phase 2 of this refinery. Based on plans, and in case necessary finance is provided by March 2024, commissioning this project would lead to a 50% increase in the refinery output.

Domestic Manufacturing

Domestic manufacturing of equipment, self-sufficiency and reduced dependence on foreign companies are under way at the refinery. Since it started operation, the refinery identified and used the potential of domestic companies with a view to the domestic manufacturing of necessary equipment. Various companies established self-sufficiency committees, and the issue of domestic manufacturing was put systematically on the agenda. Various technical groups were established at domestic companies for the supply of commodities and equipment.

Last calendar year, over 70% of commodities needed by Ilam gas refinery was purchased from domestic manufacturers, and 15% of which from knowledge-based companies. In the same year, the refinery used domestically manufactured seal rings, rotary equipment, components of industrial actuators as well as KVs of valves.

The refinery plans to enhance output, reduce energy consumption indices, carry out a purposeful assessment of energy, use flash drum gas for incinerating wastes, and launch compressors at the condensate unit.

Iran Drilling Sets Records

 Oil drilling operations are among the most important stages of oil and gas production, thereby playing a decisive role in extraction from oil and gas wells. National Iranian Drilling Company (NIDC) is one of the companies active in the Iranian oil industry that has been able to meet the drilling needs of the Iranian oil industry, leaving behind a long and brilliant history. Over recent years, due to the growth of technical knowhow in the country, many services related to the drilling industry have been nationalized by this company, so that the implementation of drilling operations to explore, develop, and operate oil and gas reservoirs, repair and workover, injection wells and all related technical / engineering services are performed by NIDC in the country and other parts of the world, both onshore and offshore.

Drilling Operations Directorate is a major division of NIDC, which started work in 1979 with six drilling rigs. Now, relying on more than four decades of experience and having 72 drilling rigs and utilizing specialized and technical manpower, it directly conducts any complex drilling operations onshore and offshore, using the best drilling rigs equipped with top drive systems, advanced fluid purification.

The Directorate’s fleet uses 65 onshore drilling rigs and 7 offshore drilling rigs in line with the economic development plan and the policy to increase oil production and also expand overseas activities as one of the main centers in the production process.

116 Wells in One Year

Last calendar year, 116 oil and gas wells were drilled by the company's drilling fleet, of which 1113 were in onshore fields and three at sea. Of these wells, 26 are development wells, 2 appraisal wells, 4 exploration wells and 83 workover wells.

Since the start of the current calendar year, a total of 30 wells measuring totally 23,280 meters have been drilled and completed, of which 28 wells have been drilled onshore and two wells have been drilled in offshore fields.

Most Wells in NISOC Area

Most wells have been drilled in the areas run by National Iranian South Oil Company (NISOC). Of 30 wells drilled since the beginning of the current calendar year, 23 wells belong to NISOC. Other customers of NIDC are Iranian Offshore Oil Company (IOOC) with 3 wells, Petroleum Engineering and Development Company (PEDEC) and Directorate of Exploration with one well.

The important point is that NIDC has conducted all drilling using its 56 rigs without renting any rig from other companies.

Projects Under Way

In light of the diversity in NIDC contracts, there are currently 17 projects under way within three different frameworks (EPD, EPC & EPD and Dry Rate). Drilling of 23 wells in the South Azadegan oil field, 13+1 wells in the Kish gas field, the Naftshahr, Gachsaran, Balaroud, Lali and Bangestan projects, the Ramin field, implementing four drilling projects for OEID: the Zilaei field in partnership with Global Petro Tech Kish, the Mansourabad field project in partnership with Petroiran Development Company (PEDCO) and the Sepehr and Jofair fields are among them.

Project Completion

NIDC has completed the EPD project for Phase 14 of South Pars and delivered it to the client. Furthermore, the drilling of five wells in the Naftshahr oil field, being run by the Iranian Central Oil Fields Company (ICOFC), is almost getting completed. They included four workover wells and one development well. In the drilling project in the South Azadegan field, assigned by PEDEC to NIDC for enhanced recovery from West Karoun, 20 development wells and three workover wells would be drilled. To meet its objectives in this project, NIDC used 9 drilling rigs and has far managed to drill and complete 22 wells.

Accessory Services

Last calendar year, 43 wells measuring 10,182 meters were drilled while 654 meters of horizontal and oriented coring was carried out by NIDC to obtain information about oil and gas reservoirs.

The Directorate of Technical Services and the Directorate of Special Operations conducted 4,431 counts of services for customers. They included 1,080 cases of logging, sampling from drilling fluid and geological services, 3,351 instances of coiled tubing, acidizing, cementing, injectability, well test, air drilling, underbalanced drilling, well pipe-laying, hanger installation and well productivity test.

In the current calendar year, 2,585 meters of drilling, 268 cases of coring and 307 cases of logging have been conducted.

60 Drilling Items to Be Manufactured

Manufacturing of 60 important items in the drilling industry in the current calendar year is on the NIDC agenda. These items have been designated based on the needs of drilling directorates of operations, technical services, special services, maintenance and repair, rotating tools and logistics and commodities. In interaction with scientific and research centers and local manufacturers and industrialists, they are being manufactured domestically for the first time.

So far, as a result of constructive and effective interaction between the petroleum industry and university and partnership and technical synergy with entities involved in manufacturing, more than 7,000 high-consumption and practical items in the drilling industry has been manufactured. Building the main shaft of Varco top drive and MH, which are highly significant and sensitive upper rotary equipment, was assigned by the Office of Vice President for Scientific and Technology Affairs to domestic manufacturers and universities. Two Varco top drive shafts and MH are expected to be manufactured in the current calendar year. Meanwhile, construction of Bonnet Seal has been finished. 

Manufacturing UBD rotary equipment is also undergoing the administrative procedure.

Renovation of Drilling Equipment

NIDC’s operational fleet consists of 72 light, heavy and super heavy drilling rigs. In order to keep drilling rigs ready for use and with the aim of overhauling (overhaul) of drilling rigs and equipment, the company plans setting up a Reconstruction and Renovation Directorate.

Bu Ali Sina Petchem Plant to Upgrade Quantity and Quality

The light fraction desulfurization project at the Bu Ali Sina petrochemical plant came online in July with a view to bringing down the sulfur content to below 1 ppm.

Jafar Rabiei, CEO of Persian Gulf Petrochemical Industries Company (PGPIC), said the petrochemical project had been implemented in the midst of tough sanctions and the coronavirus pandemic with a view to increasing output to 110% of the rated capacity for supplying products of higher quality and value.

The desulfurization project at Bu Ali Sina had been long drawn out. But the Bu Ali Sina Petrochemical Company decided in August 2018 to finish the job over a 21-month period.

The project had its own hardships, including the fact that it was in the heart of a large-scale complex. Furthermore, the new equipment had to be adapted to the data of the previous systems. Add to this the toughening of sanctions and the start of the covid-19 pandemic. However, construction of the project started and it became finally operational in July. The engineering and design of the Bu Ali Sina petrochemical plant’s desulfurization had been handled entirely by local firms with more than 85% of the installed equipment having been supplied by domestic manufacturers.

The desulfurization plant transforms 350,000 tonnes of products to higher-value products. This project has so far cost IRR 7 trillion, which has created many direct and indirect job opportunities. The idea behind this project has been to sweeten the sour light fraction and transform it into products of higher value.

With this project, the value of the feedstock supplied to this petrochemical plant would increase, while sustainable production at this plant would be guaranteed. That would enable Bu Ali Sina to convert 350,000 tonnes a year of light fraction to such products as liquefied gas and raffinate.

The Amir Kabir and Bandar Imam Khomeini petrochemical plants would benefit from the feedstock supplied by this project.

Feedstock for Olefin Plants

Mohammad Ahmadzadeh, CEO of Bu Ali Sina Petrochemical Plant, said: “Between 25% and 30% of Bu Ali Sina petrochemical products are sulfur-containing light fractions which would serve local companies. In case of suspended or reduced activity, Bu Ali Sina would have to reduce its output.”

He said that the raffinate produced there would first supply local needs before being exported, adding: “That would generate revenue for the company. In the most conservative state, Bu Ali Sina would make the annual gains of IRR 4 to 5 trillion.”

He put at 350,000 tonnes a year the raffinate and LPG production capacity at the light fraction unit. He said it would make up for a 20% loss experienced in the plant output in recent years, noting that it would supply products 10% higher than installed capacity.

Proper Management

Safar Ali Babaee, CEO of Petrochemical Industries Development Management Company (PIDMCO), said domestic manufacturing of 130 items of equipment used in the light fraction project of Bu Ali Sina was another big achievement. “Throughout this project, we managed to domestically manufacture some equipment while with the help of experts, technical knowhow and production license were obtained.”

One outstanding characteristic of this project was to adapt the old and new equipment using the potential of local contractors. That was done without using the services of prominent foreign companies.

Timeframe Respected

Except for several equipment including compressors that had been purchased from foreign companies at the beginning of the project, the rest has been domestically manufactured. Financially speaking, 85% of this project is domestically manufactured.

The project was implemented on schedule. Despite sanctions and the COVID-19 pandemic, the initially approved budget of IRR 7,000 billion was not changed.

For this project, permits had been given to buy foreign-made products. However, NPC insisted on supporting domestic manufacturing, but in cases where foreign purchase was inevitable arrangements had been made for the transfer of technological knowhow and the partnership of an Iranian company in any foreign purchase. 

Bu Ali Sina Petrochemical Plant lies on 36 ha of land in Khuzestan Province, specifically in the Special Economic Petrochemical Zone. It is the third aromatic project of Iran’s petrochemical sector.

Football in Past Season

From Survival to Downfall

 Football, over recent years, has seen many ups and downs in the petroleum industry. It experienced both good and bad days. The best days might have been when Naft Tehran soccer club was present in the pro league and reserved itself a berth in the Asian championship league. Naft Abadan and Naft Masjed Soleyman football teams failed to experience such good days. However, based on such background we review the performance of soccer teams of the petroleum industry in the past year.

Six oil soccer teams were present in the pro league, first league and second league of Iranian club footballs in 2020-21. That is not a good record for these teams. The oil teams went through ups and downs in the previous season and failed to respond to their fans’ expectations. Sanat Naft Abadan, Naft Masjed Soleyman in the pro league, Pars Jonoubi Jam in the first league and Naft and Gaz Gachsaran teams, Melli Hafari Ahvaz and Naft Omidiyeh in the second league competed with rivals in this season.

From Asian League Ascension to League Survival

The Sanat Naft Abadan football team began the season with many changes, starting from a new head coach to new players that had freshly joined this team. Sirous Pour Mousavi’s trainees started a good league and several good events helped this team vie for championship title. The petroleum industry teams did a great job up to the final days of half season to the point that their presence among the top four teams gave them hope for an Asian berth. The petroleum industry teams topped the pro league in a period which was short. Therefore, hopes became stronger among fans for this team to win a berth in Asia. However, with the start of the second half season, everything changed color suddenly and there was no news of the first half season. The team, which claimed an Asian title, did not see any win over 100 days until it felt the danger of being kicked out into the first league.

Sanat Naft Abadan suffered a serious loss and Pour Mousavi’s trainees failed in every attempt. Anyway, a 10-day training event changed the situation and this team finally scored 37 points to finish in 10th place. Of course, it was nothing strange as the petroleum industry team had already experienced such conditions in previous seasons and now experts have to analyze this problem to see why this team is falling in the second half season.

Staying in the League

Naft Masjed Soleyman, another team present in the Iranian soccer clubs’ pro league started the season with its new head coach and achieved good results with the facilities at its disposal. It was in the middle of the table by the end of the first half-season. But after the team’s head coach departed to Zob Ahan, Naft Masjed Soleyman experienced a serious loss in the second half season. Dariush Yazdi, the new head coach of this team in the second half season, failed to meet the expectations and was removed very soon. Finally, it was Mahmoud Fekri who took over the team. With its third head coach, Naft Masjed Soleyman managed to obtain several good results, thereby finding hope for survival. Of course, Fekri’s results were fluctuating but the coach managed to lead his team to the pro league. Having scored 31 points, Naft Masjed Soleyman has remained in 13th place.

Good Start / Bad End

Pars Jonoubi Jam, having dropped to the first league, was seeking a return to the pro league. Therefore, it chose Mohammad Nosrati as its head coach. Pars Jonoubi Jam had a good start and it topped the table in some cases and maintained its invulnerability record until the final weeks of the first half season until everything changed. The team that had pinned hope on the championship title was struggling for survival only. Changes in the team management and the presence of ambitious young players in the team prevented Pars Jonoubi Jam from shining in the second half-season and it was finally ranked the 10th with 48 scores. Pars Jonoubi Jam might have been back to the pro league had it continued its good start. But this team had a very normal and unexpected end.

Survival on Final Day

The Melli Hafari Ahvaz started its performance in the second league with several draws. After that the team went on a win spree. The team’s young head coach Amin Jafari showed he was looking to make surprises. But like similar teams, this team also suffered serious loss until it could not achieve acceptable results and dropped in ranking. However, Melli Hafari Ahvaz was ranked the 12th after scoring 29 points.

Third League

Unlike previous years when Naft o Gaz Gachsaran was fighting for the first league, it did not have a good start this time. It was in the same situation up to the end until it dropped to the third league after a failed season. The team changed its head coach three times throughout the season in the hope of remaining in the league, but the shocks inflicted on the team failed to resolve the problem. In the end, the Naft o Gaz Gachsaran team fell to the third league table with only 20 scores.

Iran Petroleum Industry Book Review

(Part II)

In this piece of writing we will be reviewing major books written in the history of Iran’s petroleum industry. 

Blut für Öl. Der Kampf um die Ressourcen (Blood for Oil: the battle for natural resources)

The 20th century was rightly named the century of wars and oil. A concurrence of oil and war would yield nothing but blood. Ever since oil was discovered and extracted to be converted to petroleum products the more human beings have moved towards development and progress the more wars and bloodletting have accompanied oil. It is noteworthy that colonialist powers across the globe resorted to any action only for oil. The contemporary world’s history is filled with stories of overt and covert wars against oil-rich nations. The history of oil production has been marred by wars in oil-producing countries. Hans Kronberger describes this in detail in his book Blood for Oil. The author has sought to show to what extent oil, a strategic product, has given rise to historical developments over the past 120 years.

Dr. Mohammad Mossadeq’s Memoirs & Reflections

Three events have marked Iran’s petroleum industry: discovery of oil in Iran by William Knox D’Arcy, nationalization of petroleum industry and the Islamic Revolution. Historians and petroleum industry experts have mainly focused on the second event. The most comprehensive book is Dr. Mohammad Mossadeq’s Memoirs & Reflections by Iraj Afshar. That would be interesting for anyone interested in the history of Iran’s petroleum industry. This book provides a detailed review of the historical developments of the petroleum industry, particularly what had happened during the nationalization movement. An advantage with this book is that it puts together two other books published earlier: A Brief Introduction Into My Life and Memoirs, A Brief Review of History of Nationalization of Petroleum Industry in Iran.

The Story of Oil and Iran Economy

An important point is that oil mainly affects the economy. Although we speak about the impacts of oil on politics, international relations, culture and social and even artistic issues, everything would become meaningful in terms of economy. The emergence of the petroleum industry and its development is first and foremost economic. Of course, studying the economic history of oil in Iran would be also of high value. Paying attention to this aspect of history of oil may develop our vision as an oil-rich nation and prove effective in future economic planning. Researchers like Saeed Ali Abadi, Majid Qalandar Mahalleh and Nouroddin Parsapour have provided a remarkable collection: The Story of Oil and Economy in Iran; A Brief Review of Oil Functionality in Iran’s Economy in Recent Century. This book has sought to simply review major economic issues and adopt a fully historical approach in a bid to prove to its readers that over the past century how the petroleum industry affected Iran’s economic procedures. This book has analyzed a very important issue. In addition to those interested in the history of the petroleum industry, students of economics would also learn a lot from it.

Oil Income, Development and Third World

It would be no exaggeration if we say that after the formation of the Organization of the Petroleum Exporting Countries (OPEC) and the oil-rich Third World nations’ daily increasing attention, nothing has been more important than using oil revenue for development. All oil-rich nations have tried their best to use oil for national development since the 1970s. This objective might have materialized or gone astray. In either case, the main objective still holds.

The petroleum industry history in the world shows that the oil income may spare many nations crises. Saeed Ahadi has outlined this issue in Oil Income, Development and Third World. The author has sought to explain and describe theoretical fundamentals, historical experience and objective instances of oil revenue with development in the Third World. By reading this book, one would see how some nations have committed harmful errors or some others have become extremely beneficial.