New Chapter in Iran-Russia Energy Ties

Ali Forouzandeh

Director General of Public Relations

The Petroleum Ministry in the 13th administration recently signed a three-way gas swap deal with Turkmenistan and Azerbaijan, as part of its energy diplomacy aimed at restoring ties with regional nations.

Shortly after the swap contract was signed, Iranian President Ebrahim Raeesi visited Russia at the invitation of President Vladimir Putin. The important point with this visit was that Minister of Petroleum Javad Owji accompanied him.

Owji was travelling with Raeesi in his capacity as the Iranian chairman of Iranian-Russian Business Council. He met with Russian oil officials, signing important documents for the development of oil and gas fields, construction of petro-refineries and transfer of technological knowhow.

Oil and energy constituted the focal point of negotiations between the Iranian and Russian presidents. They reached the conclusion that for a stronger presence in the energy market, they had to upgrade their cooperation level because an active energy diplomacy would give rise to valuable achievements in various political and economic domains.

Rather than relying on Europe and West, the 13th administration is focusing on the revival of political, commercial and economic relations with regional and neighboring nations. This point has been regularly highlighted by President Raeesi since taking office.

Russia has in recent years run into discrepancies with Europe and the US, thereby turning its attention to the East. Islamic Republic of Iran is among key regional nations, firmly determined to enhance its status in its ties.

Specifically on the energy issue, since the two countries sit atop giant oil and gas reserves and both are influential in the Gas Exporting Countries Forum (GEFC) as well as OPEC+, convergence between Tehran and Moscow would be decisive in light of Western sanctions.

Now with President Raeesis’ remarks that Iran sees no restrictions when it comes to developing cooperation with Russia, the Russian side is expected to show firm will in following through with this cooperation.

New Chapter in Tehran-Moscow Energy Ties

Iran’s petroleum minister, Javad Owji, has said Iran and Russia had signed a number of key documents for the development of oil and gas fields in Iran, building petro-refineries and transfer of technology.

“Good decisions have been made in gas trade, which may lead to change in the region,” the minister said.

Owji was speaking after traveling to Moscow with President Ebrahim Raeesi in his capacity as minister of petroleum and the Iranian chairman of Iranian-Russian Business Council.

The minister met with Russia’s energy minister Nikolay Grigoryevich Shulginov and Deputy Prime Minister Alexander Novak in Moscow.

“In various sectors of energy, roads and transportation, agricultural jihad, energy, cases that have been ambiguous in the past, and projects that Russian companies are operating in Iran, negotiations were held and good decisions were made,” said Owji. “In the sector of energy, good decisions were made in the upstream sector, the development of oil and gas fields and the downstream sector in the development of petro-refineries and petrochemicals and the transfer of equipment and technology that is strategic in the Iranian oil and gas industry.”

He stated that in the meeting with the large Russian companies, good agreements have been reached on the transfer of technology and strategic equipment required in the oil industry.

“A comprehensive plan of cooperation with Russia has been prepared and provided to this country. We hope to reach new agreements and contracts within the framework of this plan,” he said.

Owji went on to point out that Iran and Russia, as the largest holders of world gas reserves, can cooperate in this sector (gas).

“Given its existing infrastructure, Iran has announced its readiness to trade and swap gas from Russia to Iran and other neighboring countries,” he said.

Regarding proposals for liquefied natural gas (LNG) production and exports, Owji said: “Good decisions have been made in the field of gas trade, which may lead to change in the region.”

Regarding his meeting with Novak, he said: “The two countries have good potential in the field of energy, and we hope that with the agreements reached in these meetings with the Russian Ministry of Energy, the Russian Deputy

Prime Minister and various large Russian companies will soon lead to the signing of deals.”

He also said that Iran and Russia, both sitting atop huge oil and gas reserves, held close views regarding the OPEC+ alliance.

Russia Upstream Potential

Owji said Iran and Russia were both under sanctions, adding that Russian companies that do not cooperate with European and American companies can cooperate with Iran.

“It was decided that we use the potential of Russian companies in the upstream sector and development of oil fields and manufacturing of equipment and technology transfer. Also, companies from the two countries can export equipment by establishing a joint plant in Iran,” he added.

Regarding economic cooperation, he said: “Good agreements have been reached in the agriculture sector. Various Russian companies have also identified numerous power plant projects. Fortunately, we reached good agreements in the field of financing, which is emphasized by various organs of the country.”

Owji said that Iranians would soon see the result of agreements made with the Russians.

The minister said Iranian and Russian oil and energy ministries were determined to finalize agreements soon.

“A comprehensive roadmap for joint cooperation in all oil and energy sub-sectors has been developed. We have been offering our proposals to the Russian side for the past month, and powerful Russian companies have also expressed interest in cooperating,” he said.

North-South Corridor

Owji said: “The issue of transit and Iran’s North-South Corridor, which is of economic and political importance to the two countries, is emphasized by both sides.”

“Fortunately, the Petroleum Ministry’s four subsidiaries had already prepared a comprehensive plan and a complete roadmap and prepared various projects for development of oil and gas fields, construction of petro-refineries, refining units and technology transfer, especially for enhancing recovery from oil and gas fields, which were presented to Russian sides,” he added.

Owji also said that various rounds of talks had been held with top Russian companies over the past two months, leading to important agreements.

“Some of these MOUs were signed during this trip, which may be of great help to the petroleum industry. Iran and Russia are key players in the energy sector. With our petroleum industry potential and the capabilities of Russian companies, this cooperation would definitely serve both countries,” he said.

Gas Swap

Asked about Russia’s gas swap via Iran’s territory, he said: “During the recent visit, the issue of Russian gas swap by Iran was discussed. Over recent months, gas swap from Turkmenistan to Azerbaijan by Iran became operational. The same proposal was made to Russia to swap its gas from Azerbaijan to southern Iran for export, which can be exported in the form of LNG to any part of the world.”

In the swap issue, he said the North-South Corridor was of high significance for both nations both economically and politically. “Some projects were proposed in the sector of Ministry of Energy, Ministry of Road and Ministry of Agriculture, which we hope would lead to agreement,” he said.

During Raeesi’s visit to Moscow, ways of expanding economic ties; removing banking, customs and infrastructure barriers, upgrading Tehran-Moscow oil and energy cooperation, as well as joint investment in infrastructure energy projects were discussed.

Oil/Gas Field Development

Mohsen Khojasteh-Mehr, CEO of National Iranian Oil Company (NIOC), said based on agreements reached between Iranian and Russian sides, big Russian companies would help NIOC develop oil and gas fields in Iran.

“Russia has big potential in terms of developing oil and gas fields and providing the necessary equipment, and in this regard, it can cooperate with Iran in joint ventures, development of Iranian oil and gas fields and enhanced oil recovery,” he said.

Khojasteh-Mehr said a main feature of Raeesi’s Russia visit was to expand ties particularly in the energy sector.

“Specifically in the oil and gas sector, there is good ground for cooperation between the two countries. Under the present circumstances where Iranian and Russian interests are intertwined, the Iranian president’s visit would help strategically deepen the ties,” he said.

He said Iran and Russia were powerful countries with geopolitical significance and great economic potential.

“Iran and Russia are among the most influential nations in the world,” he said.

Iran-Russia Energy Cooperation

Speculation is rife about a possible extension of a 20-year cooperation pact Iran and Russia had signed in 2001 as Iranian President Ebrahim Raeesi is set to visit Russia. Some analysts have highlighted advantages of the agreement while some others magnify on disadvantages, citing the background of relations between the two nations. However, it is crystal clear that Iran and Russia enjoy high potential for cooperation in various sectors of the energy industry, as both are rich in hydrocarbon deposits.

The Institute for International Energy Studies (IIES) has analyzed aspects of cooperation between Iran and Russia in the energy sector.

Necessity of Strategic Cooperation

Given the role and position of Russia as one of the most important oil and gas suppliers in the world, development and strengthening of joint cooperation in the field of energy between Iran and Russia constitutes a serious necessity. Energy as a political tool may lead to economic development and upgrading of national interests, so that through active and international energy diplomacy, valuable and significant achievements in various political and economic dimensions could be achieved and significant success may be also recorded.

In 2001, a cooperation agreement between Iran and Russia was signed in Moscow, which has been extended several times. Due to its general nature, as well as underdeveloped relations between the two countries in other areas, the agreement has not been as effective as expected. Due to the passage of time and change of administrations, as well as the increase in the level of relations between the two countries, it is necessary to change the text and conditions of this agreement, so the two countries are determined to renew the pact.

Although upgrading strategic ties with China is on the agenda, improving long-term relations with Russia may have big advantages for Iran. Given that in 2024 most of the world economy will be concentrated in the East Asian region, strengthening relations with these countries will be very useful for the national interests of Iran. Strengthening relations with Russia can also be considered in line with it, although development and strengthening of strategic relations with Russia depends on strengthening relations in the economic, scientific and energy sectors.

Strengthening and developing bilateral relations and cooperation with Russia will provide significant capacity for the country to pursue national interests, as well as to reduce the severity of sanctions and the US maximum pressure campaign. Due to its geopolitical position and its opposition to US unilateralism, Iran has always had a special place in Russia’s foreign policy, laying the foundation for a strategic dialogue between the two countries.

Shift from Strategic Dialogue to Strategic Partnership

Over recent years, developments in the international environment, such as the crisis in Syria, the Ukraine issue, and US sanctions on Iran and Russia have elevated the level of cooperation between the two countries from strategic dialogue to strategic partnership, requiring policymakers to draw a more serious and objective roadshow. An important point over recent years, in the macro-relations between Iran and Russia, is the issue of imbalance in cooperation in the political, security and economic domains.

From the point of view of policymakers and experts, cooperation between the two countries in the political, security and military fields is at a satisfactory level, while in the field of economic

cooperation, which could help political interactions, it has not been very effective and satisfactory. This shows that in an age of economic and political intertwinement, these considerations cannot be separated.

Russia’s economy rather than being industry-oriented is energy-oriented, as the countries importing energy from this country are on the list of Russia’s largest trading partners (Turkey and Europe). Therefore, such an economic model does not allow for extensive trade with Iran. Due to structural complexities, Iran's economy blocks engagement of the private sector, and government measures are limited to mere statements and determination of the level of future cooperation in the form of instructions, which would hinder any elevation of trade.

In general, it should be said that extensive economic exchanges could guarantee the macro-policies of Iran and Russia at the regional and international levels. It seems that the policy of looking to the East, especially after the Crimean crisis, has been able to improve the position of Eastern countries in the structure of Moscow’s economy. Therefore, Iran is expected to consider improving its position in these ties by various methods.

Moscow has consistently stated its intention to expand economic cooperation with Tehran despite Washington sanctions. In reality, however, bilateral trade turnover remains moderate. Iran's share of Russia's foreign trade in 2018 was only 2%, which has caused Iran to be ranked the 50th in the list of Russia's foreign trade partners. In 2017, Iran was Russia’s 48th largest trading partner.

Energy Cooperation

Despite an increase in cooperation between Iran and Russia in most areas after the collapse of the Soviet Union, the paradigm of relations between the two countries in the field of global energy supply is described as rivalry. Despite the policy of Eurasianism and the preservation of traditional Russian dominance in the regions and the emergence of Iran as a rival for this country, there is the possibility of cooperation between Russia and Iran in various fields, including cooperation in energy transmission routes. Russia's policy of gaining access to more markets in Asia, such as India and Pakistan, and benefiting from Iran's proximity to these countries, makes such cooperation possible.

Furthermore, considering the important and positive role of Russia in the Gas Exporting Countries Forum (GECF) and OPEC+ under the present circumstances, against the backdrop of imposition of harsh US sanctions on Iran and Russia, strengthening the convergence and cooperation of the two countries is very important and effective.

Russia has moved its oil-based economy to gas development in recent years and has pursued strategic policies in this area, ignoring some sanctions. Given the concerns of Iran and Russia in the field of sanctions and the oil-based economy of these two countries, it seems that in the field of energy, especially oil, the effectiveness of Russia's strategic policies in this field should be examined.

Europe has allocated a significant share of its gas imports to Russia, but with the crisis in Ukraine, diversification of gas exporters has also been on its agenda. However, Europe's heavy dependence on Russia in this sector has led to a view of minimal cooperation between them, which could provide the ground for Iran’s engagement. In fact, Tehran may benefit from the policy of European diversification on the one hand, and Russian technology and knowledge on the other.

Areas of Cooperation

The grounds for cooperation between Iran and Russia in the energy sector may be divided into five categories as follows:

Exchange of Goods

Due to the experience of both countries in the field of energy and the existence of rich energy resources in both countries, the use of energy equipment and commodities and related services has a high comparative advantage and creates a favorable environment for cooperation.

Energy commodities cover a variety of heating and cooling equipment, a variety of turbines, a variety of refining and petrochemical products (commensurate with the advantage that each of these countries has in the production of these products) and the development of swap exchanges in these areas.

In the field of energy services, there is a wide range of areas of cooperation, including energy auditing, design of energy systems, financial management and investment, implementation and commissioning, management and maintenance, training and monitoring and certification. Energy service companies, in addition to ensuring energy savings and offering rewards commensurate with energy efficiency, provide the required financial resources and a variety of services regarding feasibility study of projects and design.

Exchange of Energy Resources

Utilization of the existing capacities in both countries is highly effective due to the availability of materials and resources, as well as the geographical and political position of both parties with regard to export or production of goods and joint ventures within the two countries or in the third country.

Exchange of raw materials and energy sources may include exchange of raw materials and primary energy sources for both parties, including oil, gas, coal, and renewable energy sources like wind, hydropower, solar and geothermal. Meantime, secondary fuels may include exchange of electricity in excess of demand, especially in neighboring cities, and facilitating export of electricity and preparation of ground for export to a third country.

Exchange of Knowhow

One of the main axes and at the same time the simplest methods for development of exchanges is the use of knowledge, research and technological capacities of the two sides, but it has not received sufficient attention. This particularity may facilitate trade exchanges and help normalize them.

There is great potential for research, which may include market study, development of model, presenting common perspectives for global energy and development of technical and engineering studies in various sectors. Improving scientific and technological cooperation with leading Russian firms may prepare the ground for technological exchanges and transfer of energy-related technologies. Russia’s technologies in the oil and gas sector that can help Tehran-Moscow cooperation are as follows:

EOR

Most of Russia’s oil fields in West Siberia are in the second half of their lifecycle now. Russia is applying a variety of techniques to preserve its production levels. Many reservoirs in Iran are in similar conditions, and benefiting from Russia’s experience in this regard would be instrumental in increasing the rate of recovery.

Renewables

Given Iran’s remarkable potential to produce renewable energy on one side and Russia’s technological skills in this sector, there is proper group for cooperation in renewables.

Flare Gas Gathering

Over recent years, Russia has made significant progress in flare gas gathering. It is the world’s third largest producer of associated petroleum gas, after the United States and Venezuela. The Russian government has recently passed a number of laws requiring all oil companies to refrain from wasting resources and to use at least 95% of associated gas. In the first phase of the Kyoto Protocol (2008-2012), Russia carried out several projects to reduce greenhouse gas emissions.

In this regard, it deserves mentioning that Russia is technologically able to manufacture various types of rotary equipment, including turbopumps, turbochargers, and turbogenerators among others. This equipment and capabilities may be used to gather associated gas. A small power plant or several rows of turbogenerators may be built alongside each oil production unit in order to gather flare gas for conversion to electricity. Given Iran’s growing demand for electricity, the Ministry of Energy is willing to buy electricity. Since this equipment is high-tech and Iran cannot buy them due to US sanctions, Russia may be a good option.

CCS

Carbon capture and storage (CCS) or carbon capture and sequestration is the process of capturing carbon dioxide (CO2) before it enters the atmosphere, transporting it, and storing it (carbon sequestration) for centuries or millennia. Russia has good experience in this technology.

Technology

Other technological cooperation in the field of energy with good potential to strengthen and develop joint cooperation pertain to production, injection, transmission, distribution and conversion of natural gas, digitalization and field intelligence, facilities, operations and processes, offshore drilling, horizontal drilling, drilling low-diameter and three-string wells, heavy oil storage, shale oil and gas extraction, construction of mini-LNG units, and recovery from unconventional sources.

Strategic Energy Cooperation

The most important fields of strategic cooperation between Iran and Russia in the energy sector are as follows:

Participation of the two countries in the implementation of petrochemical projects and utilization of existing technical experiences in the field of business models in the petrochemical field, cooperation in establishing joint ventures for joint activities, cooperation in regional and international energy forums, review of crude oil sales in exchanges, establishment of Joint Energy Bank and Joint Energy Fund, development of cooperation in relation to energy transmission routes, participation in development projects of South and North Pars gas fields, Kish gas field and cooperation to implement gas storage projects in Iran, cooperation between the two countries to build transmission pipelines Oil and gas and joint oil and gas cooperation between the two countries in the Caspian Sea, cooperation in the construction of an oil refinery in the Commonwealth of Independent States (CIS), strengthening GECF cooperation, upgrading cooperation in the energy sector within the framework of the Shanghai Organization, consultation on signing export / import and transit agreements in line with improving the country's gas balance and increasing national interests and security, strengthening cooperation to achieve more markets in Asia such as India and Pakistan, attracting Russian participation in the development of Persian Gulf gas fields and transmission of gas through the proposed Chabahar pipeline to India, participation in the production of strategic equipment in the upstream sector.

There is also potential for cooperation between Iran and Russia in joint manufacturing of strategic equipment, the most important of which is as follows: cooperation in the manufacturing of strategic downhole equipment like ESS and ESP, cooperation in the manufacturing of oil and gas control equipment, cooperation in pipe equipment manufacturing, cooperation in alloy casing manufacturing, cooperation in hydraulic energy installations, supply of oil and petroleum products, oil exploration and production, cooperation in coal-fired power plant building, cooperation in distributed energy installations, cooperation in hydraulic and thermal power plant equipment manufacturing.

Iran Activating Energy Diplomacy

Ahmad Assadzadeh has been officially named deputy minister of petroleum for international affairs and trading.

In an interview, he has outlined his plans as long as he remains in this post. He has also answered a wide range of questions about Turkmenistan-Iran-Azerbaijan gas swap contract for swapping Turkmen gas to Azerbaijan via Iran’s territory, Iran’s gas export contracts and planned gas exports to Europe.

Referring to imposition of US sanctions on Iran’s oil sector, he said: “Sanctions have their own complexities and we are trying to take effective measures with regard to sanctions lift throughout talks with P5+1 nations. The important issue in this regard is to verify the lifting of sanctions, for which we have conducted a comprehensive study and reported results to relevant authorities.”

Unlocking Gas Deal

The swap contract signed for the delivery of gas from Azerbaijan to Turkmenistan via Iran’s territory would thaw the ice in ties with neighboring countries. The contract was signed within 100 days after the administration of President Ebrahim Raeesi took office. Examining its various political and economic aspects shows that this agreement would be beneficial to Iran.

“The significance of the gas swap contract is that it has been signed by three state bodies: Turkmengaz (Turkmenistan), SOCAR (Azerbaijan) and NIGC (Iran). The contract takes up added significance after ties turned sour and it is an effective step in unlocking ties with Turkmenistan. Prior      to this, swap was done by the private sector, which was positive, but unfortunately it was halted under the previous administration for some reasons,” he said.

Assadzadeh said throughout the signature of the new gas swap contract, Iran-Azerbaijan-Turkmenistan relations were reviewed and the ground was prepared for following up on the development of the Alborz oil field in the Caspian Sea. “This is a win-win agreement for the country,” he said.

He added that the gas agreement would serve as a springboard for Iran to upgrade its ties with Turkmenistan and Azerbaijan.

“As far as winter fuel supply is concerned for northeastern Iran, the Petroleum Ministry had already undertaken some good measures without having to wait for this agreement. However, feeding this gas into northeastern areas would help sustain the network,” he said.

Noting that Iran, Turkmenistan and Azerbaijan are three important players in the region's gas industry and that these three countries together hold a quarter of the world's gas reserves in 2020, Assadzadeh said: "However, the trio constitutes 8.7% of total world gas reserves, which does not fit their capacity.”

He added: “Turkmenistan, Iran and Azerbaijan exported 31.6, 16 and 13.6 bcm of gas through the pipeline in 2020, respectively, totaling 61.1 bcm of gas by pipeline, accounting for 8% of the world’s 755 bcm of world gas exports by pipeline. The three countries’ share of global gas trading – pipeline and LNG – is 5% of a total 1,243 bcm.”

“As Azerbaijan and Turkmenistan are land-locked while Iran has access to high seas and some gas-thirsty neighbors, using Iran's geography for transit or swap of Turkmenistan and Azerbaijan gas to other countries may enhance export capacity and subsequently, gas production from the three states and sustainable interaction between them would be guaranteed.  As a result, this tripartite contract could be the first step in long-term trilateral gas trade cooperation to increase the three nations’ share of regional and global gas markets,” he said.

He said that in addition to development of gas trade through tripartite cooperation, there is a wide capacity for exchange of knowledge and technical-engineering services from the upstream to downstream sector of the gas chain, which may increase the efficiency and reduce waste, help improve production levels as well as the refining capacity and exports. “I believe that these three countries can fare better in the medium and long term with a collaborative approach and become more influential players in the region and the world in terms of gas production and exports in the future," he said.

“The crude oil swap can be followed through with these countries. To do so, we really need to perform a swap operation, and we also have to use crude oil in the Caspian region, which produces less fuel oil in the refineries in the north of the Iran, which, if that happens, will have additional benefits for us,” he added.

Promising Events

Assadzadeh said: “After the signing of the gas swap contract, other attractive proposals have been made by some countries in the region, which we are pursuing. If these proposals lead to the signing of a contract, a good thing will happen in the field of energy diplomacy.”

He added: “Over recent months, we have also succeeded in starting trade with Armenia, reviving the previously swapped contract, further improvement of the level of ties with Turkmenistan, and the issue of the Caspian Sea and the Alborz oil field, which were previously agreed upon

by senior officials of the two countries. Iran and Republic of Azerbaijan signed an agreement to mobilize and receive new proposals following this initiative to strengthen exchanges and interactions with countries in the region.”

“The issue of swap was the result of a scenario that was designed and shaped. Although the dimensions of this action are economically small and some of its angles cannot be expressed, but strategically it has deep dimensions which experts know,” he said.

Realistic Pricing

Asked to comment on rumors of weakness of Iran’s position in the gas market after agreeing to swap Turkmenistan’s gas to Azerbaijan, Assadzadeh said: “These issues do not contradict each other. We may both export gas directly to this country and swap. Adopting these policies will not only weaken our position, but also make Iran an energy hub in the region.”

“It is noteworthy that any role in the gas market depends on optimization and doing things that can release gas for export. Unfortunately, the uncontrolled consumption of gas in Iran has affected export targets. If we miss the opportunity to export and swap gas now, it is not clear whether or not we will have such opportunities anymore, and other routes will be revived that we are not interested in and that threaten our interests in the region,” he said.

Assadzadeh stressed: “Regarding gas exports, another important point is that a realistic and strategic view should be formed about gas pricing for exports in the country, and of course, any corruption in contracts should be dealt with seriously at the same time.”

No Alternative to Iran Condensate

The issue of Iranian gas exports to Europe has been gradually raised in Iran since the early 1990s, and has always been one of the topics discussed with European countries under various administrations in Iran. Switzerland, France, Italy and Germany have always looked to buy Iranian gas, but these negotiations never led to a contract, and Iranian gas did not reach Europe.

Asked about any plan for gas exports to Europe, Assadzadeh said: “We concentrate on working with our neighbors, we have so many opportunities among our neighbors and Europe is our next priority, but if the Europeans are interested, we can negotiate to meet their needs. It requires that Europeans exercise independence and not follow the United States.”

“The United States introduced an innovation by imposing sanctions on trade companies, and unfortunately the Europeans followed the suit, and that backfired on them. It seems that some of the US followers have so far failed to find any alternative to Iranian condensate and they are perplexed,” he said.

“We have had good cooperation with European countries, which can continue, but it could be said that we will definitely give priority to our economic partners, who continued their cooperation with us during the sanctions period,” he recalled.

Constructive Cooperation in the Persian Gulf

Assadzadeh touched on ties with neighboring countries, saying: “At the Petroleum Ministry, we are fully prepared to cooperate with regional nations as well as Arab littoral states of the “Persian Gulf”. Some of these countries have recently shown a positive and constructive approach, which we welcome at the Petroleum Ministry.”

“Many of these countries need gas and we have good gas resources and reserves in the Persian Gulf. We may have constructive and progressive cooperation through a win-win formula. At the Office of Deputy Minister of Petroleum for International Affairs and Trading, we are reviewing various scenarios for cooperation with these countries and we welcome serious and sincere work,” he said.

Iraq Indebted to Iran

Iran has two gas contracts with Iraq. The first one, which was signed in 2013, is for gas export to Baghdad while the second one, which was struck two years later, carries Iran’s gas to Basra. Both contracts are effective, but the term of the contract is coming to an end. 

Regarding cooperation with Iraq, Assadzadeh said: “As far as Iraq is concerned, good plans have been devised within the Petroleum Ministry, which God willing, will become operational soon. It is so important that a special envoy has been designated to follow up on cooperation with Iraq. One topic of cooperation is gas.”

Asked about any renewal of gas agreement with Iraq, he said that Iraq heavily depended on gas and that negotiations were under way for renewing the agreement. “Of course, our friendly and brotherly country Iraq should pay for its gas imports on time. Here, NIGC tries to do its best to export to Iraq as much gas it has agreed.”

Assadzadeh said: “We share border fields with Iraq, which is an opportunity for economic ties between the two countries. At our Office, good studies have been carried out in the field of integration of joint fields with Iraq, which unfortunately was not implemented under the previous two administrations. I will not intend to go into details now, but in short, doing so requires the serious will of both Iran and Iraq. We can cooperate with Iraq in the field of export of technical and engineering services, repair of oil equipment and goods, and many other things.”

Gas Exports to Pakistan 

The contract to export Iranian gas to Pakistan was signed in June 2009, less than 20 days before the 10th presidential election (June 22, 2009), in the presence of then-Iranian President Mahmoud Ahmadinejad and his Pakistani counterpart Asif Ali Zardari. The day the contract was signed, more than two decades had passed since Iran began negotiations to export gas to India and Pakistan known as the Peace Pipeline. Four years after the signing of the contract and four months prior to the 11th Iranian presidential election on March 12, 2013, Ahmadinejad and Zardari broke the ground for the pipeline. That was while Iran had built more than 1,100 kilometers of the pipeline on its own territory.

Assadzadeh said: “Although Iran, with the construction of the 1,100-kilometer pipeline, has shown its determination to export gas to Pakistan, the Pakistani side, under pressure from the United States and some of Iran's regional rivals, withdrew from the deal on the pretext of financial strains. This pretext played well into the hands of the following administrations, as no attempt was made to implement the contract, and the Pakistani gas market was dominated by LNG. In fact, Pakistan had enough money to pay for LNG and LPG imports, but in Iran it was said that it cannot pay for the take-or-pay clause of the agreement.”

Asked if the 13th administration had held any talks with Pakistan for gas exports to Iran’s eastern neighbor, he said: “We are trying to reach a formula

 with Pakistan to revive this contract. We can conclude a contract for the export of Iranian gas to Pakistan by signing a multilateral agreement between Iran, Pakistan and third and fourth countries, and break the lock on this route to be a good platform to mobilize a number of other projects with Pakistan

Our eastern neighbor needs a lot of fuel and Iran is the most reliable partner.”

“We may exchange views with Pakistan. Large quantities of fuel are now smuggled into that country and the profits go to smugglers. It seems that it is possible that by designing some projects along the border, the profit of production will reach border residents and smuggling will be controlled. The same is true for Afghanistan, although the current situation in that country is totally different,” he added.

Defeating Sanctions

Regarding the role of sanctions in the renewal of Iran’s gas contracts, Assadzadeh said: “Sanctions as a disturbing variable are not ineffective in our cooperation, but we have had many disturbances in the years after the [Islamic] Revolution, and by relying on our rich internal capacities, these threats can be turned into opportunities and the enemy may regret what he has done.”

“In the petroleum industry and in the country as a whole, as the Supreme Leader mentioned, we must pursue a strategy of neutralizing sanctions, and we have seen over recent years that wherever the country reaches a capability, these enemies themselves have come forward to cooperate with the aim of stopping,” he said.

New Oil Markets

In response to a question about oil exports to South America, Assadzadeh said: “Fortunately, with the efforts made by our friends in the sales sector, oil exports have gained serious momentum, and the markets which were not even thought of before are opening up, and the result is that the Petroleum Ministry, during the first eight months of the current calendar year to 20 March 2022, fed currency into state coffers more than committed. God willing, this process will be strengthened.”

“Unfortunately, the previous administration missed out on key opportunities for cooperation with South America. God willing, that will be compensated in this administration, and good agreements have been reached with some countries in that region, the effects of which will be revealed soon,” he said.

Regarding cooperation with Syria, he said: “We have plans for cooperation with Syria and Axis of Resistance in general. A Petroleum Ministry delegation was recently dispatched to Syria to study aspects of cooperation.”

Ad Hoc Groups

Assadzadeh said that ad hoc groups would be set up at the Office under his management. He enumerated them as follows: Strategic Monitoring Working Group, whose main purpose is to study the environment and analyze market developments and political and geopolitical events, and to develop an energy diplomacy program; Investment Working Group, which aims to identify new frameworks for foreign investment and trade in the oil industry’s Multilateral Cooperation Working Group, which aims to activate the presence of the Petroleum Ministry in multilateral agreements such as ECO and SCO among others  as well as comparison with some other economic agreements in the world such as Eurasia, BRICS, Mercosur (common market of South American countries).

“The fact is that we did not make significant use of the capacity of these treaties. An example is the ECO, or, presumably, these unions and treaties that are formed with the participation of several countries. Can we not use multilateral purity with the member states of a treaty? These are just some of the goal setting shareware that you can use,” he said.

Assadzadeh also said that many Iranian specialists based abroad were willing to cooperate with Iran. He added that conditions should be facilitated for their cooperation.

“Sometimes we have seen people or capacities brought in from abroad, but they have not been used as they should be. Dealing with this issue at our Office also depends on the innovation ecosystem in the Petroleum Ministry to reach a proper order and program so that we can support it,” he said.

No Surrender to Gas Rivals

Negar sadeqi-A three-nation gas swap contract signed by Iran, Turkmenistan and Azerbaijan recently took effect in late December. The contract signed on 28 November 2021 on the sidelines of the 15th ECO Summit calls for the supply of 1.5-2 bcm a year of Turkmen gas to Azerbaijan via Iran’s soil. Mehran Amir-Moeini, marketing director at the Office of Deputy CEO of National Iranian Oil Company (NIOC) for International Affairs, has said the contract would set a record in Iran’s contractual negotiations. Although some believe that the contract volume is small, Amir Moeini says: "The important thing is that we are in the gas trade; although small in size; "We should not worry that by signing this contract, we have handed over the market to our competitors," he said. Because we did not do that; it is important that in gas export contracts we need to move forward benefitting from strategy and policy.

The following is the full text of the “Iran Petroleum” interview with Mehran Amir-Moeini:

The tripartite gas transit agreement between Iran, Turkmenistan and Azerbaijan has recently entered the implementation phase. Some believe that the agreement is not significant because it involves a low volume of gas, while some others evaluate it from the standpoint of Iran entering gas trade. What do you think of that?

First of all, I would like to point out that it is not our first gas export of swap project, and from gas trade point of view, any activity that leads to generating income, even though small, is a positive step for the country. The interesting point is that the negotiations on this contract have been completed in less than three months, and as far as I can remember, this is a record in the contract negotiations, which is a positive point. But in signing this contract, what is much more important and less considered is “trade”. The volume of this contract may not be very important in the first place, but we should keep in mind that especially in the case of gas exports through the pipeline, the relationship between the countries becomes more intertwined and stronger, because the pipeline creates some sort of cooperation and an interdependence. In this way, better relationship with neighboring countries is established, as if during the sanctions period, Iranian gas was almost exempted, because the Iranian gas buyers requested that sanctions not be applied to gas, and this happened. Iran's gas exports to Turkey and Iraq is still continuing and are excluded from sanctions. So the spirit of the contract is positive, but in case in future we intend to expand that business, it is another issue.

Azerbaijan Republic and Turkmenistan are our gas competitors in the region. By signing this contract, have we created a rival for ourselves and facilitated their gas exports?

As far as this contract is concerned, we have to look at the volume of swap, which is not worrying to insinuate that we have given up the market to our rivals. The key point is that we are involved in the gas trade. Although this competition creates a connection between us (Iran), Azerbaijan Republic and Turkmenistan, but because of its small volume, we should not feel threatened. Relationships like this enhance the entanglement of countries, in my view everything is not limited to economics; rather it is a give and take system. These are complex games that must be approached with more precision and applying precise strategies when geopolitical issues are involved. On the other hand, one has to note that it is true that we like to have our own market, but importers do not like to depend on just one single exporter either. They also want to diversify their gas import mix. If we want to prevent the diversity of gas sellers, buyers will find their markets in another way. I am confident even if gas buyers want to leave their markets to you, they do not leave their whole market to you. So I’m not so worried, as we have not created rivals for ourselves. Another point is that given the volume of our reserves, we need a strategy in this area to see where our optimized gas export point is or whether we should also pay attention to geopolitical issues and take into account their costs and benefits. It is hard, but it is possible.

You mean they will not become our rivals in the European market?

As I mentioned, these are strategic discussions, we need to have a strategy to enter any market. Of course, studies have indicated that the European

market is not very profitable for us, because it has to go a long way and there are so many countries that the pipeline has to go through, so this is a problem by itself. However, the European market could be a strategic market for us. These are the issues that decision-makers need to decide upon, and we provide them with the costs and benefits of that decision with the calculations we make. It's up to them to decide upon it.

                            How much does the swap deal affect the revival of our relations with Turkmenistan?

It will be definitely effective. Sometimes the two sides may be stubborn and not talk to each other. But this contract paves the ground for the parties to talk, and many issues will be definitely resolved. Overall, I think it’s a good movement.

Can this trade be extended to neighboring countries?

Why not! We may also be able to establish such ties with other neighbors. For instance, we may deliver Qatari gas to Pakistan through swap, or we may swap Turkmen or Azerbaijani Republic gas to Kuwait. I mean, there are many ways to activate the gas trade through swap, and all of them could be assessed.

Is it possible at all?

Whether it is possible or not; in my view, it definitely is. Manner of doing it depends on the interests of both parties. In case the interests of both parties are secured, it will normally lead to signing contracts.

As far as swap is concerned, you may have an economic bridge with any country that has reserves and any country that consumes. I remember about three years ago, the Kuwaitis proposed gas swap through Iran. They said that in light of sanctions, they proposed Iran to receive Turkmenistan gas and to deliver our own gas from the south to Kuwait, the gas specifications and quality can be calculated. Whereas we have extensive gas pipelines in Iran there was no need to build a pipeline for that purpose. At that time, we did not reject the Kuwaitis’ offer. But we were so passive that we could not make it happen. Of course, sanctions, had significant impact.

Under the present circumstances which option do you see as more appropriate?

As I mentioned, strategy is of great importance, and we need to look at the issue both in terms of security of demand and security of supply. We cannot merely supply all our resources and trade through swap or pipelines. In my view we should have a combination of all the methods of gas export and gas trade. It could be ok to have LNG exports along with pipeline? LNG exports may not be lucrative enough now, but we can export partly through this option. We’d better be present in all markets, and not to limit ourselves to a single market. Of course, all these discussions are raised regardless of sanctions.

Taking into account all these developments, how do you see the future of gas exports?

Two issues are involved in this case. Do we have the necessary resources? Yes we have. Our first task is to get these reserves out of the reservoirs with high investment. The next issue is that we need to see what our strategy is in exporting gas. For instance, if we want to deal with Europe, undoubtedly we must resolve our political problems. We also have Iraq and Turkey in the gas export market with neighboring countries, and at least we should not lose our market in these countries. These two countries are our first and second priority, we also have a contract with Pakistan that is coming to an end, and today we must start our negotiations with the Pakistanis in earnest. Now, apart from these neighbors, there are more distant markets like China or India to be taken into account.

Given the high consumption of gas in Iran, is it a cause of concern for exports?

The first question that arises in any gas export negotiation is to know where our gas lies. It lies underground. We do not have any problems with gas reserves, there is potential for that, but we need investment, as well as absorbing financial and human resources. All these are possible, we may train human resources and receive financial resources from international markets. Even assuming there are no sanctions, our domestic financial resources do not cover the investment costs of developing gas fields, so we need to attract foreign investment. We may attract investors through signing any contracts that does not contradict with our national laws and regulations.

Iran Oil Exports Up 40%

 President Ebrahim Raeesi has said that Iran would be seeking to have sanctions lifted, adding that Iranian oil exports have increased to the extent to allay any concerns about exports.

“Under the 13th administration, oil exports have increased 40% and the money from oil exports is being returned to the country,” he said.

Noting that Iran had been exporting oil and condensate despite sanctions, he added: “In the past, it was said that it was not possible to increase oil exports with sanctions, but today we both export oil and receive oil.”

“Despite all the sanctions, today we have seen an increase in exports of oil and gas condensate, while some have repeatedly said that it is not possible to achieve such exports,” Raeesi said.

He also wrote on his Twitter account: “Although following up on lifting of sanctions is a serious plan of the administration, in the thirteenth administration, the effort to neutralize the sanctions has not been tied to negotiations, so that today, under the same conditions of sanctions, our oil sales have increased so much that we no longer worry as its revenue is returning to the country.”

Minister of Petroleum Javad Owji also wrote in Twitter: “Receiving oil revenue under the 13th administration has been significantly higher than before and its money is being paid on a regular basis.”

New Era Starts in Petchem Sector

Iran’s annual petrochemicals production capacity is predicted to reach 100 million tons by the end of the next Iranian calendar year (March 20, 2023), the CEO of National petrochemical Company (NPC) has said.

Morteza Shahmirzaei said that 68 production complexes with the annual nominal capacity of about 90 million tons are currently active in the country, and regarding the planning the figure is forecast to reach 100 million tons by the end of the next year.

Iran's petrochemical industry has a clear vision and promising outlook for its development, the NPC managing director further stressed.

Petrochemicals’ production have risen eight percent in Iran during the first six months of the current Iranian calendar year (March 21-September 22, 2021), compared to the same period of time in the past year, according to an official with the NPC.

Jalal Mir-Hashemi, the NPC’s director for the production control, put the six-month petrochemical output at 32.8 million tons, and highlighted that the petrochemical plants operated with a good capacity during this period, Shana reported.

Shourijeh Storage Capacity to Hit 40 mcm/d

The head of Iranian Gas Engineering and Development Company (IGEDC) has said that the capacity of the Shourijeh storage site would reach 40 mcm/d.

“Gas production in Iran has increased from 7 mcm/d at the beginning of the [1979 Islamic] Revolution to 870 mcm/d,” Reza Noshadi said.

“Today, National Iranian Gas Company (NIGC) is managing storage facilities in a bid to integrate the value chain. It outsources storage site management,” he said.

Noshadi added: “The Shourijeh site is planned to see its storage capacity increase from the current 20 mcm/d to 40 mcm/d, but IGEDC’s work is not limited to this and goes beyond.”

The official added that NIGC would be developing gas fields like Mokhtar, Bankoul and Qezel Tappeh.

“Their study is under way and their appraisal wells and even development plans have been drawn up,” he said.

NIOC to Nationalize 146 Standards

National Iranian Oil Company (NIOC) plans to nationalize 146 Iranian Petroleum Standards (IPS), the deputy head of NIOC Directorate of Research and Technology for commercialization affairs said.

“Of a total of 146 finalized IPS, 106 would be nationalized under a research deal with the Standards Research Institute and 40 others would be on the agenda based on the research and operational needs of the Office of Deputy CEO of NIOC for Production Affairs,” Abolfazl Moradi said.

“Review and nationalization of IPS was put on the NIOC Directorate of Research and Technology’s agenda in 2019 under a contract with the Standard Research Institute and in cooperation with” relevant bodies, he added.

“In the work processes of reviewing, compiling and nationalizing these standards, first creating a database of experts inside and outside the oil industry, including the main and subsidiary companies of the Petroleum Ministry , private companies, consulting engineers, scientific associations, producers and consumers and other stakeholders.

Banks Invited to Invest in Upstream Oil Sector

The CEO of National Iranian Oil Company (NIOC) stated that several investment plans have been foreseen for the development of oil projects, and announced negotiations with banks and petrochemical holdings to finance upstream oil projects.

Mohsen Khojasteh-Mehr said: "In the field of human resources, our approach is to attract elite manpower from the University of Petroleum Industry and other universities."

He said: “In the technology sector, a very serious movement has started and we have removed and revived this sector from its mere presence on paper and laws. A contract and memorandum of understanding have been signed with Academic Center for Education, Culture and Research for about $275 million and IRR 160 billion, of which about $75 million and IRR 160 billion are final contracts and the rest are in the form of memorandums.”

He continued: “About 750 low-efficiency wells will soon be pitched for with technology companies.”

The South Pars and North Dome gas fields are the largest fields in the world that have helium , and we are now importers of the item, while this gas has many uses in various industries,” he said.

Tehran Ready to Upgrade Turkmen Gas Swap Deal

Iran’s Petroleum Minister Javad Owji says natural gas swap from Turkmenistan can increase by up to 10 times in volume terms if Ashgabat agrees to further transfer deals with Tehran.

Owji said following a meeting with Turkmenistan’s visiting Vice President Rashit Meredov that Iran has the infrastructure required for transferring up to 40 million cubic meters (mcm) per day of the equivalent of gas received from Turkmenistan to customers in Iran’s neighborhood.

“Today we declared to the friendly and brotherly country (Turkmenistan) that we are ready for imports and swap of gas with neighboring countries to up to 40 mcm per day or 10-15 bcm per year,” said Owji.

Referring to the results of his meeting with the Turkmen officials, he said, “Today, we had good talks with Sardar Berdymukhamedov, Deputy Chairman of government and Rashit Meredov, Foreign Minister of Turkmenistan, over various fields related to energy.”

Owji added: “Iran has the required infrastructure for importing up to 40 mcm/d of gas from Turkmenistan and swapping it with neighboring countries.”

Owji said that Iran and Turkmenistan will sign a series of new documents to further expand energy ties during the two-day trip of Turkmen delegation to Tehran.

He added: “The two sides had held fruitful talks today about future gas and fuel swap deals, as well as on cooperation in technical and engineering projects in their petroleum industries.”

The announcement came days after Iran started transferring the equivalent of around 4 mcm of natural gas received from Turkmenistan, located to the east of the Caspian Sea, to Azerbaijan, on the western side of the Sea, based on a trilateral agreement reached in late November. 

The swap operation has been hailed as a major success in the field of energy diplomacy for an Iranian administration that came to office in August.

It has also triggered a restart in political and economic relations between Iran and Turkmenistan as the two countries have had disputes over price issues in a previous gas swap agreement.

Meanwhile, Meredov said: "Today, clear and good negotiations were held on the gas contract signed during the years of Turkmenistan's independence.

$4bn Consortium to Fund Petro-Refining Projects

Iran’s petroleum minister, Javad Owji, has said that a $4 billion consortium was envisaged to fund petro-refining projects.

He made the remarks after overseeing the ceremony of signing of a memorandum of understanding for a pipeline to carry petroleum products on the Rafsanjan-Birjand-Torbat Heydarieh-Mashhad route. The MOU was signed between National Iranian Oil Refining and Distribution Company (NIORDC) and Bank Mellat.

“This new pipeline is an economical project, which would carry 150,000 b/d of oil. It would also transfer petroleum products from the Persian Gulf condensate splitter to northeast after running through three provinces,” he said.

Owji offered his gratitude to the CEO of Bank Mellat for providing the 370-million-euro budget and supporting new oil projects. He added that the Ministry of Economy and Bank Mellat would help provide necessary budget to oil projects, particularly in the petro-refining sector.

The minister also said: “Good agreements have been signed with Turkmenistan on the export of technical services, petroleum products and oil, which we hope will be implemented soon.”

KEPCO Expands Offshore/Onshore Cooperation

Khazar Exploration and Production Company (KEPCO) has signed two memorandums of understanding with National Iranian Drilling Company (NIDC) and National Iranian South Oil Company (NISOC) to upgrade cooperation in both onshore and offshore sectors.

Morad Kamali, CEO of KEPCO, said based on National Iranian Oil Company (NIOC)’s instructions, KEPCO would develop hydrocarbon fields and drill exploration and development wells. “Given NIDC’s capabilities in this regard, we welcome cooperation and synergy with this company,” he said.

“Over the past few years, despite restrictions on the Caspian Sea, including the land-locked status of the Caspian Sea and the imposition of unjust sanctions on Iran's petroleum industry, excellent measures have been taken to develop the basic infrastructure for exploration activities in the north of the country,” he added.

Iran Leading Gas Hydrate Projects

The head of research and technology at the National Iranian Oil Company (NIOC) Directorate of Exploration has touched on cooperation between this Directorate and the Research Institute of Petroleum Industry (RIPI) on gas hydrates.

“Fortunately, we have gone up to half of the second phase and we hope that we would soon start operational phases,” said Ali-Reza Miqaninejad.

He said that gas hydrate projects were 10 years old, adding: “The work on this issue was formed with the cooperation of RIPI and Directorate of Exploration and it can be said that our country, along with leading companies and research institutes in the world, has well understood the importance of this project and is currently being implemented.”

Noting that hydrate projects involved technological intelligence, he said: “Since the beginning of discussions on the issue of hydrates in the world, this discussion has been followed in our country and in the form of long-term plans, the first phase of this project has been completed and we are now halfway to the second phase.

RIPI Awarded INSO-16000-1 Certificate

The Research Institute of Petroleum Industry (RIPI) has been awarded the INSO-16000-1 certificate in application of Article 17 of Clean Air Law.

The certificate, which has been developed by National Standards Organization, is aimed at energy efficiency and reducing pollution emissions. It includes instructions on periodic inspection and safety regulations, as well as setting caps for pollutant emissions.

Mohammad Shamkhani, head of mechanical engineering division, said: “Since the technical inspection of central heating system is a very useful way to reduce energy consumption and the production of polluting and toxic gases, obtaining the certification of national standards in order to audit, optimize and reduce the problems of central heating systems is a necessary step.”

“Complete inspection of the central heating systems of buildings and their components and tuning up the central heating system, analyzing the combustion products of the chimney with a gas analyzer and comparing it with the standard,

NIOC Outlines Development Strategies

CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr has outlined the operational and development strategies of the state-run firm.

“Sitting atop huge hydrocarbon reserves is a big advantage for us, which would facilitate our access to low-cost fuel for 100 years,” he said.

Khojasteh-Mehr stressed the necessity of application of the steering regime theory of corporates, adding that in the implementation of major petroleum industry projects, there should be a focus on determining a steering pattern.

“So far, good effort has been made in planning and reforming procedures at the NIOC level. The managers must know that the approach adopted for NIOC steering should be based on knowledge-based approach and carrying out activities based on a plan-oriented pattern,” he said.

“Finally, in order to examine the output, a system has to be created to measure the results quantitatively too,” said the NIOC chief.

Khojasteh-Mehr reiterated the need for running corporates in line with the latest technological patterns across the globe, adding: “Technological approaches should be taken into consideration not only at the level of projects, but also at the managerial levels. We have given freedom of action to the subsidiaries and we will provide them with necessary license.”

Noting that Iran’s economy and authority were tied to the development of science and technology, he said that corporate governance requirements had to be taken into consideration.

“This is an important issue within the framework of effective communications between managers and Board members with shareholders and other stakeholders in line with the objectives set for corporates,” he said.

“In simple terms, any manager is required to learn the art of working properly and to that end they should focus on program-oriented approach,” Khojasteh-Mehr said.

He also emphasized transparency in performance and accountability within the framework of managerial responsibilities, adding: “These two issues are pillars of corporate governance, which would be measured throughout auditing.”

Khojasteh-Mehr said that auditing had to be done at least twice a year in order to allow for discovering any flaws.

Iran Woos Investors with Oil-for-Goods Barter

Oil-for-goods bartering is a policy the administration of President Ebrahim Raeesi is seriously following up on, and negotiations have been held to that effect. Ali-Reza Daneshi, CEO of National Iranian South Oil Company (NISOC), tells “Iran Petroleum” that talks are under way for the development of Pazanan, Maroun Bangestan and Shadegan under oil-for-goods barter. He has expressed hope for a 300,000 b/d output hike from the current 3 mb/d by NISOC by attracting investment.

The following is the full text of the interview Daneshi gave to “Iran Petroleum”:

How much is the current production capacity of NISOC?

Our current production capacity stands at about 3 mb/d, whose materialization requires time.

When do you think you can reach maximum output?

NISOC is ready for 3mb/d oil supply by the end of the current [calendar] year to 21 March 2022.

What are your plans to attract domestic and foreign investment?

Given financing problems at the level of National Iranian Oil Company (NIOC), NISOC is following up on several principled policies, including systematic interaction and relationship with petrochemical plants as one of the major customers of rich gas, liquids, condensate and naphtha at NISOC-run areas. Based on our negotiations that have already begun, they will finance development of joint fields that would supply feedstock to petrochemical plants. A $5.5 billion project is now ready for developing 15 independent gas fields. Furthermore, flare gas gathering is an optimal source for petrochemical plants. Two projects with a total credit allocation of $1.2 billion by Bidboland Petrochemical Plant and Maroun Petrochemical Plant are under way, which will come to fruition in the near future. Another case is implementation of projects and providing necessities for oil-for-goods barter. This policy is being followed up now. In Pazanan, we are in talks with local contractors for developing fields for $200 million. We are waiting for its approval prior to assigning it to the contractor. In Maroun Bangestan, we have reached basic agreement for field development for oil-for-goods barter at the same amount. The agreement is being followed up on. In Shadegan, development of a field with $1 billion is being finalized. We have also held talks for the reconstruction of rigs and procurement of equipment, which will soon reach the phase of contract. In other high-risk underdeveloped fields, development projects are being drawn up for attracting investment. NISOC welcomes all investments with the priority given to oil-for-goods barter.

Three months have passed since you took over as the CEO of NISOC. What have been the most important measures undertaken over this period?

The first thing to do was to monitor the organization. Although we have been involved with internal affairs, there was a need for re-monitoring to clear the way for further action. Preserving and enhancing production rate is an integral part of NISOC obligations. To that end, we had first to look for independent and reliable financial resources in order to organize numerous projects. Focusing on the value chain throughout the upstream sector activities has been a key issue. Now that I am talking to you, a five-year plan has been submitted to NIOC for preserving and increasing output. There are also problems with payments, which hope for changes as we are currently in talks.   

How are you going to provide financing?

It is partly related to oil-for-goods bartering, which we have not yet taken any action for. However, financing resources for some of our services are now ready. For instance, in return for services that we have rendered to petrochemical plants, they have helped us. Foreign investors have also come ahead and good talks have taken place.

Is NISOC fully authorized in this regard?

NISOC coordinates everything with NIOC.  In the planned oil-for-goods bartering too, it was decided that we arrange for financing resources with the NIOC Directorate of International Affairs in a bid to avoid any duplication so that activities would be done from the same source. That is key issue for NIOC and for us.

What does the five-year plan you submitted to NIOC include?

NISOC’s five-year plan has been drawn up for the country to reach the country’s crude oil production capacity despite unjust sanctions, numerous financial problems and lack of young manpower absorption over recent years. We hope to increase our production by 300,000 b/d while stabilizing the annual production decline at about 500,000 barrels by adopting such methods as oil-for-goods barter and attracting investment. We may fail to reach the target fully, but we will be partly successful. To that end, we plan workover on more than 500 wells and drill more than 200 others, while the desalination capacity would increase up to 3.4 mb/d, which is a tough job. We have drawn up this plan on the assumption of sanctions remaining in effect and we have made calculations on that basis. On the other hand, given the high percentage of output fall, one key objective in this plan would be to consider independent gas resources for NISOC’s oil reservoirs. Currently, 12 NISOC fields are being injected with gas for sustainable production, but currently we are injecting very little gas.

How do you plan to hire local and foreign contractors to reach the five-year objectives?

We mainly focus on local contractors and manufacturers and we will fully support them. The governing laws in the country are also in this direction. In addition, given the large capacity of the petroleum industry, we will support foreign investment, too; for which we have talks under way. As far as domestic manufacturing is concerned, several activities are under way simultaneously. Soon, we will be signing an agreement with local firms for a 15,000-pam completion string which is vital in high-pressure drilling. Meantime, in light of the petroleum industry’s need for seamless pipes, NISOC plans to manufacture such pipes.

We will be also benefiting from the potential of scientific, research and knowledge-based centers in the country without facing any restrictions in this regard.

What are the details of your five-year plan for the renovation of installations?

Fortunately, we recently obtained license for $200 million renovation of installations next calendar year.

Is it costly to reopen the wells capped during sanctions?

There is no serious problem. Some of these wells will be easily back to production. The number of wells that may face problem is not high. We mainly blocked wells whose return to production would be easier. NISOC experts have been in charge for this purpose.

The plan mainly targets 28 reservoirs. Isn’t there any conflict with the new five-year plan?

Our natural production fall in reservoirs stands at about 500,000 barrels a year, which is not a small figure. We have to preserve the current output levels while trying to make up for losses. We are now planning to reach 3 mb/d output ceiling.

The drop in production was previously announced at 400,000 barrels. Has it increased?

The drop has increased because proper injections have not been done in our reservoirs for three years.

In terms of schedule, which projects would be first among the 28 reservoirs?

NISOC respects its commitments to contractors. So far, 25 projects have been assigned to contractors. The three projects of Nargesi, Kaboud and Lali Asmari would become fully operational in the first half of next calendar year. The remaining projects are planned for the following years, which have had 34% progress up to now. Due to the slow pace of progress in some of these projects, it has been decided to accelerate the projects by changing the internal structure of NISOC and redistributing manpower. Furthermore, some task forces have been established to deal with financing and commodities and find solutions to the problems. Meantime, talks are being finalized with foreign investors. Following implementation of these projects, in addition to preserving NISOC’s production capacity at 300,000 b/d, we will be witnessing the same amount of output hike. Other goals of this plan include activating domestic manufacturers of goods and oil and gas contracting companies because in the concluded contracts, the maximum use of Iranian goods and services has been emphasized as one of the requirements for the implementation of maintenance and production enhancement projects. Also, with the permission of the Economic Council, 4% of the project implementation cost will be allocated to social responsibilities.

What is the current recovery rate of reservoirs in NISOC fields?

The recovery factor of reservoirs is variable. In some reservoirs such as Asmari and Ahvaz, it is excellent and more than the world standard and in others it is not suitable. We need to face the reality of reservoirs and try to improve it. For instance, in the Ahvaz Bangestan reservoir, where the recovery factor is extremely low, due to the limited gas supply, we are trying to inject water into it, and the pilot project has had a good result.

Which EOR projects have been envisaged by NISOC?

Let me briefly explain the four projects we have under way in this regard:

Pilot project of water injection in the Bangestan reservoir of the Ahvaz field: This project, as the first water injection project in NISOC fields, may open a new horizon along with gas injection. The goal of this project is to achieve the injection of 50,000 barrels of water per day. Once completed, it may bring about 15-20% recovery rate, which is a good figure. In case of successful water injection, a wide spectrum of Bangestan reservoirs would be potential candidates for water injection.

CO2 injection into the Asmari reservoir of the Ramin field: In addition to hydrocarbon gas injection projects that have been running in the region for more than four decades, the injection of non-hydrocarbon gases such as carbon dioxide is also in the study and feasibility study plan. The comprehensive study of the Ramin field emphasizes the usefulness of carbon dioxide injection, and the laboratory phase of this project has just been completed. The next step is the feasibility and design of the project ground level facilities and the economic review of the project. If successful and economical, new capacity will be added to the production and reserves of NISOC fields.

Hydrocarbon gas injection for pressure compression: Gas injection has been done into 12 NISOC fields for more than four decades now. About half of NISOC oil reserves in place depends on these projects and about half of NISOC’s production comes from gas injection wells. Due to the negative gas balance this year and the shortage of gas for injection in previous years, gas injection projects in the regions, have always been active with part of their capacity and if the gas required for injection is not provided, a significant part of the company's reserves will be wasted away.

Smart water injection into Asmari reservoir in Binak field: Due to the proximity of Binak field to the Persian Gulf and the suitability of smart water injection in this field in the screening phase, a study phase is underway. A comprehensive study of this field has identified the option of smart water injection as appropriate and the laboratory phase has just been completed, while suitable water for injection with the greatest potential for oil production has also been identified.

Has NISOC envisaged the scenario of sanctions lift in its plans?

Definitely this issue has been taken into account.

Given the mission assigned by the CEO of NIOC to subsidiaries including NISOC to enhance oil output, what has been done?

During the past years and due to the conditions of sanctions, oil production in NISOC fields has not been as desired. But fortunately, we have no problem in carrying out the mission and reaching the oil production ceiling desired by NIOC, and we will act in the shortest possible time. To achieve this goal, the main problem of NISOC pertains to the facilities and processes, for all of which the project is defined and requires financial support, and whenever it is demanded, we are able to reach the desired ceiling.

How will you deal with domestic manufacturing?

NISOC does not face any obstacles in supporting domestic construction, and our efforts are focused on eliminating the weaknesses and gaps in this sector by strengthening and developing their activities. I would like to state that at present more than 70% of the goods required by NISOC have been manufactured domestically, and for the remaining part, which mostly consists of installation of equipment such as rotary machinery, studies are under way.

What are your plans specifically for attracting technology?

According to our studies, NIOC has potential to absorb new technologies up to IRR 10,000 billion. These technologies mainly concern equipment and commodity. About 75% of commodities pertaining to wells, or 12,000 items, have so far been manufactured domestically. A need analysis and assessment has been done, which will be dealt with by the Office of Vice-President for Science and Technology and also knowledge-based companies. In addition to that, about IRR 10,000 billion worth of technology-oriented research projects is under way with universities and research centers, which could help develop local technology. Meantime, necessary planning has been done to use local capacities including central labs to help attract technology. A specialized research center for oil and gas would be soon established within NISOC.

Petchem Value Chain Requires Completion

In an event held on 29 December 2021, to mark establishment of National Petrochemical Company (NPC), Minister of Petroleum Javad Owji laid emphasis on government support for investment in the petrochemical industry.

“The policy adopted by the administration and the Petroleum Ministry is focused on all-out support for the petrochemical industry, as well as scientific and research centers. I would like to inform all those interested in investment in this industry that following becoming active in the upstream sector of the industry, they would be present in the downstream sector too,” he said.

Stressing the need for the completion of the value chain in the petrochemical industry, the minister said: “By the end of the term in office of the 13th administration, all petrochemical industry catalysts would have been manufactured by the Petrochemical Research and Development Company (PRTC) or Iranian research and knowledge-based companies.”

On the sidelines of this ceremony, the third agreement for development of PET products was signed with the Shahid Tondguyan Petrochemical Company, agreement for ethylene oxide catalyst commercialization and technical knowhow with Puya Pajouhesh Bakhtar and an MOU was signed with Tabriz Petrochemical Company for development of products.

Owji said the petrochemical industry was highly significant not only in Iran, but also across the globe. He said that Iran’s petrochemical industry had an annual production capacity of more than 90 million tonnes, which would largely meet national needs.

Noting that 67 petrochemical plants were active in the country, the minister said: “Preventing crude materials sales would have no solution but to develop the petrochemical industry. Therefore, the main objective in developing the petrochemical industry in the country would be to prevent crude materials sales.”

He said the petrochemical industry was the best sector for investment. He told investors that value chain completion projects were highly valuable.

“Demand for petrochemical products at global markets is growing spectacularly and this trend is forecast to increase to 160% by 2040,” he added.

According to the minister, demand for other hydrocarbon products (crude oil and gas condensate) is forecast at 1-2%. He said the petrochemical industry was the best choice for investment.

Owji also said that despite sanctions, petrochemical companies earned the country nearly $9 billion, which is expected to reach $12 billion by March.

He said that the annual budget law for next calendar year to 21 March 2023 contained guarantees for investors to keep feedstock prices unchanged.

Noting that investors always looked for a reliable, low-risk and profitable place for investment and sought to supply feedstock

sustainably, he said: “Studies show that nowhere is better than the petrochemical industry for investment because of its high value-added.”

Owji laid emphasis on the necessity of completing the value chain in the petrochemical industry. He said that in addition to petrochemical exports, middle products should be also converted to final products. H said nearly 15,000 industrial units were using petrochemical feedstock.

He said Iran had 34,000 bcm of recoverable gas, adding: “More than 50% of petrochemical plants are fed with gas. Today petrochemical plants consume 70-80 mcm/d of gas.”

Call for Investment

Morteza Shah-Mirzaei, CEO of NPC, called for investment in the petrochemical sector. He said: “Investors who are looking to obtain permit or have already received basic agreement are invited to come and transform their licenses to plan. NPC is ready to support investors wherever needed.”

He also said that the new Articles of Association for NPC had been drafted, adding that they should now be endorsed by the Petroleum Ministry before being adopted by the parliament.

Technical Knowhow

Majid Daftari, CEO of PRTC, said: “So far, 32 petrochemical industry technologies have been developed locally by the company. Eight technologies pertain to the main process of the petrochemical industry.”

He said that 20 petrochemical industry catalysts had been developed domestically in Ian, adding that PRTC planned to make 8 catalysts next calendar year and 12 catalysts within three years.

Touching on PRTC’s agreements, he said it had signed 30 agreements worth five million euros. He added that such agreement would allow Iranian license to run the petrochemical industry.

He also outlined the macro-objectives of PRTC, adding: “Developing technical knowhow for petrochemical products, strategic chemicals as well as materials needed for research and upgrading manufacturing units are among the major objectives of this company.”

Daftari said that PRTC had registered 270 patents in Iran and abroad up to last calendar year. “With the development of local technology and licenses, we transform technology and knowhow to knowledge-based economy alongside engineering companies.”

“We conduct our research in an integrated manner and in all fields at the same time, and with the cooperation of universities, research institutes and knowledge-based companies, we create technical knowhow. Manufacturers of equipment and engineering companies, together with PRTC, prepare the process design package and the initial design package, and the knowledge produced as technology is transferred to research companies,” he said.

Daftari also referred to the catalyst market, saying: “The petrochemical and refining catalyst market in the world is valued at about $21.5 billion with Iran holding a $400 million share. The figure does not include precious metals. In Iran’s catalyst market, the petrochemical industry has a $270 million share, covering 40 catalysts, 20 of which have been manufactured domestically.”

Noting that the commercial manufacturing of eight catalysts was in its final stages, he said that 12 catalysts were to be developed domestically by 2024 so that the petrochemical industry would become independent.

Daftari said PRTC could provide services to companies in relation with technical license, development of products, development of technology, determining specifications of catalysts and analyzing results.

West Monopoly on Catalyst Production Ends

Mahnaz Mohammad-Qoli

Over recent years, Iran’s petrochemical industry has been able to largely meet its needs in this field by relying on the knowledge and capabilities of Iranian engineers and specialists and domestic manufacturing technology, thereby overcoming existing sanctions. The items which Iranian engineers and specialists have managed to supply, range from the manufacturing of catalysts to the manufacturing of key devices in this industry. In this regard, some time ago, with the presence of Javad Owji, Minister of Petroleum, some of the achievements of the petrochemical industry in this field were unveiled, which we will give a picture of.

For the first time in the Middle East, a device has been developed to measure the lifespan of polyethylene pipes in contact with chlorinated water. Developed by the Petrochemical Research and Technology Company (PRTC), this device is widely used, including simulation of drinking water transfer pipes and estimating the lifespan of pipes.

Farzaneh Ardakani, a researcher at PRTC, said: “This device, which measures the lifespan of polyethylene pipes against chlorinated water, is the first to be built in the Middle East.”

“We designed this device to measure the degree of degradation in pipes in very difficult conditions, including high chlorinated water, PH, high pressure and temperature, and to be able to produce the various compounds we produce based on these scales. Finally, we offer the best compound to the market to be resistant to harsh conditions,” she said.

Global Markets

Ardakani said the benefits of the project were to solve the crisis of not using polyethylene pipes in the urban water supply system in the country and also to provide the conditions for petrochemical companies producing pipe grade to enter global competitive markets and added: “This device is being manufactured for the first time in the country based on articles and patents.”

Pointing out that this device was not modeled on any foreign device, she emphasized: “There was no very specific patent for making this device, there was an existing standard that we designed and built based on the standard conditions with the engineering team.”

Noting that the Netherlands, Switzerland and the United States are currently conducting tests on polyethylene pipes with this device, she said: “Due to sanctions these countries refused to conduct necessary tests for us and we had to make it on our own. By building this device, we were able to break the monopoly of these countries in making this device.”

“At present, due to the existing capability, we may provide services to all applicant petrochemical companies, as well as universities willing to carry out research work,” she said. “All petrochemical companies producing polyethylene pipes may use the services of this machine, while we have signed a memorandum of understanding with Jam Petrochemical Co. to do this on their grades. Then we have Arya Sasol petrochemical grades on the agenda.”

She said manufacturing the device lasted one year, adding: “We provide these services to any petrochemical company and pipeline company intending to conduct this test.”

Exclusive Formulation

Sanctions and obstacles lying ahead never caused Iranian engineers and specialists to give up their efforts. The latest breakthrough is PRTC specialists’ success in breaking a German company’s monopoly on a chemical formulation, which resulted in remarkable results. An example is the construction of lab-scale setup for activator production, which is used in ethylene oxide units.

Elham Feyz, a PRTC researcher, said of the setup: “Due to sanctions, some petrochemical units had problems in supplying the activating substance, which had led to a drop in production in some units. Therefore, PRTC worked on the formulation of these units in the country and provided production information to the consumer units so that they could produce this substance domestically if necessary.”  

She said that for the first time, PRTC supplied about 150 tonnes of activate to the Morvarid petrochemical plant.

Feyz said: “That led to the conclusion of a 25-year contract with Bakhtar Petrochemical Co. on a production scale of 300 tonnes per year, which could supply this material to the entire country”.

Feyz enumerated the benefits of the project as being a significant improvement in CO2 uptake in adsorption towers, ethylene oxide (EO) units and meeting the needs of the petrochemical industry. She added that the Morvarid, Maroun, Farsa Chimi and Pars Glycol Bakhtar were among beneficiaries.

“The most important issue in this regard was the achievement of the formulation of this substance, because a German company, as the largest producer of chemicals in the world, had this formulation exclusively,” she said.

Ammonia Synthesis Catalyst

Ali Jafari, senior PRTC researcher, said Iran had mastered technical knowhow for manufacturing the ammonia synthesis catalyst on an industrial scale. He added that this catalyst was largely used at the Razi, Shiraz, Pardis, Khorasan and Kermanshah petrochemical plants, as well as 10 active units in Iran.

He said: “The catalyst is produced for the first time in the country by melting method in laboratory scale and in industrial scale by electric arc method. Its raw material is completely domestic and made of minerals and it is a cheap material. The catalyst is produced by Denmark and Chinese companies, and Iran is manufacturing it for the first time.” 

He said the technical knowhow for this catalyst had been developed by PRTC, adding: “The catalyst has already started commercialization and pilot production

in the country, and we are currently looking to market the catalyst at home and abroad.”

Jafari said the catalyst was producing big hard currency revenue, adding: “The average lifespan of this catalyst is 10 years and because the number of ammonia units in the country is high and its consumption is high, the production of this catalyst in the country significantly prevents the outflow of currency.”

He said that the catalyst would be supplied to ammonia units as of next calendar year.

He noted that the catalyst would be used at ammonia production plants at Razi, Shiraz, Pardis, Khorasan, Kermanshah, Masjed Soleyman, Lordegan and Hengam plants.

Hydrogenation Catalyst Base

Mehrdad Rajabi, a PRTC researcher, said the project would save the country more than IRR 1,000 billion annually, adding that acetylene would be eliminated from the feedstock of olefin units (Shazand, Bandar Imam, Amir Kabir, Ilam, Arya Sasol, Jam and Maroun petrochemical plants). He said that the catalyst base was being commercialized.

“It is necessary to remove acetylene from the input feed in all olefin units. One way is to use this catalyst, which is spherical and 2 to 4 mm in size, and it is called aluminum-based silver palladium catalyst,” he said of the technical knowhow of the project.

“Until recently, due to sanctions, countries with this basic technology did not sell it to us and did not give us its technology. Based on this, we focused on this project and during the last 2 years we were able to get a formulation that will form the basis of this catalyst,” said Jafari. “We did not use the old methods to achieve this because it involved environmental problems, so we used new technology to build it.”

He said that the technology of making catalyst base is fully domestic and the designer of this process and system is also Iranian, while all its materials are from local raw materials and are prepared much cheaper.

“This method is used for the first time in the catalyst manufacturing industry and we were able to indigenize the spherical catalyst base manufacturing industry in the country for the first time,” said Jafari. “No country provided Iran with this technology and we did not need technology in this field.”

He said currently, 30 kg of this catalyst has been produced in the country and it is planned to develop this catalyst on an industrial scale in order to eliminate the need for this catalyst in the country and to export it abroad if necessary.

“Having manufactured this catalyst in the country, we saved on more than $100 million because it is a costly catalyst whose manufacturing requires scientific and technical technology,” said Jafari.

Polymerization Setup Design

Sadeq Abedi, a researcher with PRTC Polymer Group, touched on the design of the polymerization setup in the country, saying: “All equipment in this setup is domestic and it is of high efficiency.”

He added: “With this device, in addition to evaluating the catalysts that we produce ourselves, we can develop these catalysts and bring them to an industrial scale in commercial units. On the other hand, we identify the problems of industrial processes and solve their problems in such a way that we modify the process problems to some extent and improve the operating conditions or the conditions of use of catalysts and catalyst structures.”

“That leads to catalyst efficiency and ultimately unit efficiency, and results in better products,” he said.

Abedi said the setup belonged to PRTC, adding: “This setup has been designed after studying articles. The articles provide us with a general view, but we lack methods of application. Here, we can extract data which would be generalized to larger scales.”

“The data available here is available in raw form, and we convert academic raw data into engineering and executive data in commercial and industrial units,” he added.

Noting that this system had already been used at Amir Kabir Petrochemical Plant, he said: “Currently, preliminary talks have been held with the Mahabad petrochemical plant. Once these talks are finalized it would be used in the Mahabad plant, too.”

“Using this set up would prevent shutdown and overhaul of units. Furthermore, the chemical consumption would decline at these units. Totally, chemical consumption would drop 20%, not to mention repair costs. Furthermore, the lifespan of these units would become longer,” he said.

No Need for Basel Technology

Mohammad Vakili, a PRTC researcher, said: “Olefin products need a series of chemicals, such as catalysts, to turn them into polymers, which we are currently working on. That is, we convert olefins into polymer products.”

“This catalyst is being made for the first time in the country, and will not be repeated for the next 10 years,” he said. “The main license for the catalyst is in the possession of Basel, but following the acquisition of Basel by Americans, they stopped cooperating with us and refused to cooperate with us, so our new complexes were abandoned.”

“There are 15 types of polyethylene catalysts, we now need 3 of them. Meanwhile, our colleagues in the research and technology company have prepared two other types and they are gradually being replaced,” said Vakili. “Most of the technology we needed came from Basel and later other companies. Fortunately, we no longer needed the technology we were getting through Basel.”

SAZ201 Catalyst

PRTC has developed SAZ201, making the country independent of importing this catalyst.

This catalyst, which is one of the main needs of polyethylene production units in the country, has been able to remove some obstacles to the production of this product in the country, so that other countries were not needed to manufacture this product in petrochemical units.

The benefits of the plan are to meet the catalytic needs of polyethylene production complexes and to prevent the outflow of foreign currency from the country and its application in heavy polyethylene production units. The catalyst is currently in the commercial production stage.

World Oil and Gas Market in 2022

As 2021 is coming to a close and 2022 arrives just fresh from the calendar, international oil markets seem to be quietly warning up for the beginning of a new era. The future for the oil and gas industry has changed for the better or worse.

For over 100 years the main story was one of growth in production to supply the largely Western- driven and emerging markets and the competition between private companies known as IOCs and government- owned companies known as NOCs. Right after crash of 2008, markets realized that the era of low oil prices had ended. Asian economies posed to be permanently the main destinations for more than three fourths of the Middle Eastern and North African producers.

On the other hand, technologies to improve efficiencies and cut consumption showed up strongly and proved to be eminent in the early years of the current decade. Renewable sources of energy are slowing but surely finding a rightful place in the global energy consumption. The industry’s response to these developments has implications for the global economy in general, and oil and gas producing countries in particular. In 2021, oil and gas supplied 67 percent of the commercial energy consumed in the world. However, gas share increased. Coal did not lag behind either. Oil and gas production and exports contributed to 25 percent of Russia’s GDP. Members of the Organization of the Petroleum Exporting Countries (OPEC) are more and less on the same page.

The present piece of writing aims to highlight some of the major challenges facing oil and gas markets in 2022.

The oil industry can no longer rely on its monopoly of the transportation market.

Use of oil products in transportation sector accounts for about half of the world oil market and most of its expected growth. This is showing signs of decline. Pandemic and emergence of distance working as a new and permanent new work reality, has led to consumption of less fuel and gas. Regular imposition of public or limited lockdowns means that there are still less physical movements in 2022 and perhaps beyond.

People have less mobility but more consumption. Consumption paradigms have changed from service economy to goods and less durable commodities.

Prices of consumer goods such coffee and beans and foodstuff have risen more than the prices for gas or other sources of energy. In the meantime, companies invest more for consumer goods rather than oil and gas.

Less gas consumption and less jet fuel used by airlines and aviation industry also means some idle capacity for refineries. Refining sector is a major part and sector of oil industry. Oil producing and consuming countries have heavily invested on downstream sector. In fact, major oil companies both NOCs and IOCs have been taking pride in their value chain system often referred to as A to Z. According to October 2021 report of IEA, global downstream investment has been sluggish by as much as 18 percent compared to the same month report.

I’m not going to engage on the subject of COP26 and Net- Zero emissions fantasy but a reference to distancing of car manufacturers from combustion engines to electrical cars needs to be carefully under surveillance by the oil industry. Electric vehicles are advancing more rapidly and faster than it was believed in 2019- 2021. According to recent studies roads and highways will see more electricity generated engines by as much as 12 percent. This includes vehicles charged by solar power, too.

The role of OPEC and non-OPEC is likely to change. I mean, OPEC + has come to stay. The next OPEC Secretary General may opt to rename the organization as OPEC + or something that would demonstrate a more permanent feature to the organization that was once OPEC.

In fact, current market monitoring committee is the reminiscent of OPEC back in 1980’s and 1990’s when OPEC ministers met more frequently than by annually. There weren’t summer and winter conferences.

Market dynamics have changed drastically. Fundamentals are not just about supply and demand. Several other factors are already showing up. In 2021, the world oil market was just discussing inflation and Federal Reserve’s decision on interest rates. By 2022, inflation will most likely be the dominant factor in the OPEC + policies agenda. As such, OPEC + will not only be the central bank of global oil market, but should as well act as a party to the world economy and international monetary decision making process.

OPEC + should also address the issue of capacity management. Capacity build up within and outside. Shale oil has to keep in touch and let the Organization to make better supply/ demand estimations.

Iran chose to form the gas exporting forum, GECF for a reason. Now over 20 years on, the global energy scene has witnessed that the current oil price hikes is gas- related. This is particularly evident in the 2021 electricity shortages in Europe. A total of 87 percent of EU electricity is generated by gas turbines. In fact, several oil producing nations including Iran are the victims of gas supply disruption.

Although Gas Exporting Countries Forum has had an acceptable performance since its set up, the GECF member countries expect the Forum to move toward elevation and while improving its image, in the transition period further foster the use of natural gas in the world. [U1] 

It could possibly revise its statute[U2]  to address such issues. This was the case for OPEC when it decided to review its statute [U3] to address prices, too.

In the meantime, gas diplomacy is at full swing and perhaps has never experienced something like this before. North Stream 2 gas pipeline is now being used as a weapon by the United States and Russian federation. Central Asia is busy building gas corridors but with no or little additional gas supply to Europe which needs it most for the first quarter of 2022.

Most oil producing countries face decaying oil fields. Most oil fields in OPEC + countries are in the last decades of their lifecycles. While countries are facing declining volume of oil production, the quality of their oil is in bad shape, too.

OPEC + needs to put the house in order. Members add to their contributions 400 tb/m. However, members do not deliver. OPEC + average quota compliance stood at 112 percent during the second and third quarters of 2021. This indicates that 23 members of OPEC + alliance have no spare capacity.

This did not lead to more investment and capacity built up in 2021. Uncertainties prevails. Major oil reserves holders like Venezuela and Iran are under sanctions. Other producers do not see encouraging signs from the market due to using oil as a weapon. Investment is encouraged by security of supply. Once the market is treated politically, investors keep distance. Quantity and quality of oil is declining and possibly 2022 won’t be any better.

In conclusion, 2022 will be an interesting year for the international oil market. As documented by the OPEC Secretariat, demand will continue to recover, but additional supplies will be forthcoming from Shale and countries like Norway, Canada and US. Small addition to supply may come from some African producers such as Guyana. As mentioned above, Shale oil will still remain a mistrial side of the international oil market. Shale does not proportionally respond to stable oil prices. It is realized that unlike conventional oil fields, shale oil cannot hold reservoirs as spare capacity. Once it starts producing it will have to carry on. Once production stops, it will have to undergo the entire process all over again. 

Environmental hazards from shale oil and gas is a major issue as well. White House environmental team is considered a radical one. As such shale producers and banks are skeptical to risk that easy.

However, gas will remain an important factor depending on 2022 winter weather. Severe winter may also mean less sun in summer and less solar capacity in Europe. In fact the golden era of gas is already with us. We may refer to gas as White Gold, as we once referred to oil as Black Gold.

ExxonMobil Finds More Oil Offshore Guyana

ExxonMobil and its partners have made two oil discoveries at Fangtooth-1 and Lau Lau-1 in the Stabroek block offshore Guyana.

The Fangtooth-1 well encountered about 164 ft (50 m) of high-quality oil-bearing sandstone reservoirs. The drillship Stena DrillMAX drilled the well in 6,030 ft (1,838 m) of water. Fangtooth is about 11 mi (18 km) northwest of the Liza field.

The Lau Lau-1 well encountered about 315 ft (96 m) of high-quality hydrocarbon-bearing sandstone reservoirs. The drillship Noble Don Taylor drilled the well in 4,793 ft (1,461 m) of water. Lau Lau is approximately 42 mi (68 km) southeast of the Liza field.

Abo FPSO Secures Extension Offshore Nigeria

Eni subsidiary Nigerian Agip Exploration Ltd. has awarded BW Offshore a contract extension for the Abo FPSO until the end of 4Q 2022.

The spread-moored FPSO has operated at the Abo field offshore Nigeria since 2003.

The vessel has a production capacity of 44,000 b/d of oil, water injection capacity of 33,000 b/d, gas compression capacity of 48.4 MMscf/d, and storage capacity of 930,000 bbl.

Equinor Drilling Two Prospects Offshore Mid-Norway

Equinor has started its 2022 exploration campaign offshore Norway, with a well targeting two prospects.

The semisubmersible West Hercules is drilling well 6407/9-13 in production license PL1060 in the Norwegian Sea, targeting the Upper Jurassic Ginny and Mid-Jurassic Hermine prospects.

The potential stacked reservoirs are close to Equinor’s Njord field infrastructure and northwest of the OKEA-operated Draugen field, in between the Galtvort discovery and the planned Hasselmus tieback to the Draugen platform.

Petronas Finds Gas at Hadrah

Petronas Carigali Sdn Bhd (PCSB) has made a gas discovery with the Hadrah-1 exploration well on block SK411 offshore northwest Sarawak, Malaysia.

Located in the shallow waters of the Balingian Province about 170 km (106 mi) offshore, the Hadrah-1 well was drilled to a total depth of 1,850 m (6,070 ft) in November 2021. It encountered gas within an approximately 200-m (656-ft) thick sequence of high-quality sandstone and carbonate reservoirs.

3D-Printed Plugs for Australia Intervention

Vallourec has employed additive manufacturing to supply a fast-track order for VAM TTR HW riser lifting plugs with a 100-metric ton lift capacity.

The client needed these for a workover program in the Timor Sea offshore Australia.

Vallourec re-designed the lifting plugs to include special non-standard diameters (15% higher) that were compatible with Weatherford’s existing equipment. They were then 3D-printed using the Vallourec Wire Arc Additive Manufacturing (WAAM) robot in Singapore, and were delivered in just under two months compared with the more usual three to four months.

Energy Share in Kazakhstan Unrest

Shuaib Bahman

The recent wave of unrest in Kazakhstan was triggered after people protested against gas price hikes in the cities of Almaty and Aktau, which spread to other areas across the country. The widespread protests drew international attention to Central Asia’s largest republic and the second largest breakaway republic of the former Soviet Union.

Kazakhstan enjoys the best position among Central Asian nations mainly due to its vast territory, sharing long borders with Russia and China, both big powers in the region, having more than 2,320km of coasts off the Caspian Sea, huge oil and gas reserves, several atomic power plants, operating several space stations and big uranium reserves. The unrest in the country has highlighted the issue of energy production and its impact on Kazakhstan’s economic growth, as well as the issue of influencing world oil and gas prices.

Development and Contradiction

Kazakhstan was one of the most economically developed countries in Central Asia during the Soviet Union era. This trend, which is largely related to the country's geographical location and rich natural resources, continued in the post-independence years. In a way, Kazakhstan continued to achieve the highest economic growth among its peripheral countries, thanks to revenues from energy sales. Of course, Kazakhstan's economic growth could be divided into two periods, 1991-2001 and 2002 to present. In the first period, due to the identification of economic capacities and insufficient capacity to extract energy resources, the country did not have much growth, but with the entry of energy companies and investment in energy extraction and transfer technology, the country's economic growth in the second period significantly improved compared to the first period.

However, during its years of independence, Kazakhstan has also faced various political, economic and socio-cultural challenges. As Kazakhstan's economic development progresses, the social gap between the rich and the poor has widened, and despite years of efforts made by the Kazakh government to reform its social and economic structure through oil revenues, it has only succeeded in building some infrastructure in big cities. In fact, economic development has taken place only in large cities such as Almaty and Astana, and in many cities and regions of the country, there is social and economic inequality that has made it difficult to even serve these areas. For example, in some areas, there is not enough water and electricity.

This indicates an uneven development in Kazakhstan and has played an important role in increasing the social and political dissatisfaction of the people and encouraging them to confront the government. Because a segment of people in Kazakhstan believe that distribution of wealth has not been done properly and that oligarchs and influential and powerful families have benefited more than masses from windfalls. Accordingly, ongoing widespread protests following the energy prices hike in a country that is itself an energy producer may be due to the fact that the distribution of wealth is not fair and that the middle class has not taken shape in the true sense.

Energy and Protests

Kazakhstan, with 172 oil fields, sits atop 3% of the world's proven oil reserves. By the end of 2020, it was ranked the 12th on the list of countries with the highest proven oil reserves in the world. While volume of Kazakhstan's proven oil reserves stood at about 9 billion barrels in 2006, they have risen to 30 billion barrels since 2007. Kazakhstan also has 7.2% of the world's known gas reserves, amounting to 3 tcm. The estimated reserves, including gas resources in the northern part of the Caspian Sea, reach 5.8 tcm.

The existence of such huge oil and gas resources in Kazakhstan has made it an optimal place for the super powers to compete. In recent years, the three powers, Russia, the United States and China, have made significant efforts to expand their influence in Kazakhstan, especially in the energy sector. The rivalry somehow spurred behind the scenes the role of foreign actors and their logistical support in the unrest in Kazakhstan. Although this influence did not come to the fore following the failure of the initial attempts made to overthrow the government, the actions of foreign actors in these events cannot be ignored. In particular, in addition to oil and gas resources, Kazakhstan, with its industrial facilities and nuclear weapons testing, largely determines the prevailing atmosphere in the Central Asian region, and any serious change in the country could lead to similar developments in other countries in the region.

On the other hand, the continued unrest in Kazakhstan could also lead to higher oil prices in the world markets. In the week leading up to the unrest, oil prices rose about 5 percent. The main reason for the price increase was the suspension of trains and the reduction of production at the Tengiz oil field during the protests. However, due to the government's success in calming the situation, Kazakhstan's oil production and export process was not severely disrupted. As Tengiz Chevroil announced, it is gradually increasing oil production to normal rates.

Energy and Future

Kazakhstan is very important in the global energy equations, and unrest in the country could have a direct impact on oil and gas prices. The country, which is also known along with Russia as two influential members of OPEC +, has played an important role in the formation of OPEC+ and the stabilization of energy prices in recent years.

Given that Kazakhstan's energy sector is heavily invested in by Russian and Chinese companies, followed by the United States and Europe, there has always been competition between these countries for greater control of Nursultan's energy resources. Although the Kazakh government has tried to manage the conflict by balancing its relations with Russia and China on the one hand and the West on the other, its cooperation with Moscow and Beijing in the Eurasian Economic Union and the Shanghai Cooperation Organization, as well as cooperation, it has not been very pleasant for the West with OPEC in its plan to stabilize oil prices.

However, despite the failure of the protests in Kazakhstan, foreign elements are still likely to be involved in planning the unrest. Meanwhile, in order to prevent the influence of external factors on its domestic environment, the Kazakh government must take serious steps to carry out economic reforms and better distribute revenues from the sale of energy among different sections of society, and organize a balanced development in the country.

Energy, Focal Point of Iran-Russia Cooperation

Shuaib Bahman

Iran-Russia relations have not been developed sufficiently from an economic standpoint; however, there are numerous and diverse grounds for cooperation between Tehran and Moscow. Iran and Russia are important states in global equations, each playing a key role in the global energy sector. Russia is the second largest producer and exporter of oil in the world, behind Saudi Arabia. Russia is also the first largest producer and exporter of natural gas on the global scale.

Oil and gas from Central Asian countries are also exported to Europe via Russia. On the other hand, Iran ranks the second behind Russia in terms of natural gas reserves in the world, and over decades, it has tried to benefit from these resources more widely by entering the global gas export market. Accordingly, studying Iran-Russia relations in the years after the collapse of the Soviet Union cannot be studied without considering the role of energy.

The scope of influence of energy on both Iranian and Russian behaviors has been expanding negatively or positively. What is especially important in the current situation is to pay attention to energy as the axis of expansion of cooperation between Iran and Russia. Particularly as the United States seeks to tighten sanctions against Russia and Iran, expanding relations between the two countries could help reduce unilateral US sanctions. In this regard, cooperation in two important areas of oil sales and management of global energy markets can be pursued by both parties.

Oil Sales Cooperation

Cooperation between Iran and Russia to sell oil is not a new issue, but it has not materialized for various reasons. The first negotiations for the export of Iranian oil to Russia began in 2014, and according to the initial plan, Russia was to buy up to 500,000 b/d of Iranian oil in exchange for Russian equipment and goods.

The large oil-for-goods contract, valued at $1.5 billion a month, was adjusted after lengthy negotiations, and the two countries agreed on 100,000 b/d. Although the plan was implemented to a limited extent with a nuclear deal between Iran and P5+1, it was once again considered by Moscow and Tehran when the Trump administration raised the issue of US withdrawal from the JCPOA.

Given US pressure to cut Iran's oil exports and sales to other countries to zero, Russia's offer of oil deal with Iran has been a good opportunity to circumvent sanctions on Iran and could open doors to Iranian oil sales.

First and foremost, the Iran-Russia oil deal, which has been described as oil-for-food, is by no means barter trade, because Iran may pay for any commodity or services which it may need. Meantime, Russia can sell its commodities and equipment to Iran, which would be a lucrative trade.

Second, Iran-Russia oil agreement is a proper method for Iran to diversify its oil buyers because under the deal Russia would sell Iranian oil to any country it wants. Since Iran’s oil quality is similar to that of the Ural area in Russia, the Russians would not have any major problems in selling Iran’s oil. Furthermore, Russia can win a larger share of Europe’s markets by selling Iran’s oil, which is one of Moscow’s long-term energy strategies.

Third, Iran-Russia oil agreement would increase Iran’s oil exports, which would in turn help Iran’s economy against sanctions. The deal is lucrative for Russia too because it would receive fees for marketing Iran’s oil.

Fourth, the oil deal between Iran and Russia is a golden opportunity for two countries that want to have a broad and long-term trade relationship with each other. This can be a basis for the development of trade relations between the two countries, both energy-related sectors and other economic sectors.

Fifth, one of the important benefits of the Iran-Russia oil contract is the facilitation of Iran-Russia trade relations. Because at present, the volume of economic exchanges between Iran and Russia is more than half of the proceeds from the sale of 100,000 b/d of oil. Thus, such a plan would facilitate trade between Iran and Russia, and the two countries would eliminate the exchange of money with each other.

Influence on Energy Markets

Iran and Russia are countries with rich oil and gas resources, each of which has the potential to become the hub of energy and influence international markets. Although some energy strategies, such as the desire of both countries to export gas to Europe, can make them rivals, but regional and international conditions have shown that countries with oil and gas resources have suffered more than they have benefited from competing with each other.

Accordingly, Iran and Russia need to define themselves as partners in the field of energy in order to have an impact on global markets. What drives both countries to pursue an energy cooperation strategy are the common threats and benefits of lowering or increasing energy prices. In fact, influencing international markets to increase oil and gas prices can be a good ground for strategic cooperation between Tehran and Moscow. An excellent example of this cooperation can be seen in the formation of GECF, which was formed with the joint proposals and follow-ups of Tehran and Moscow.

Moreover, the two countries' cooperation in the field of energy has, on two occasions, helped reorganize global markets. The first was in the aftermath of 9/11, when global oil prices fell, and the second was related to a 2016 OPEC agreement with non-OPEC oil-producing countries, in which Iran and Russia played a significant role.

Meantime, Tehran and Moscow may work together to influence trends in global markets. Especially since the increase in Iran's oil production in the post-sanctions environment has led to the return of Iran to its important position in the field of energy. The willingness of Russian companies to invest in Iran's energy sector could also be an important step in bringing the two countries' oil and gas policies closer together. Therefore, Iran and Russia, due to their rich energy resources, willingness to influence global markets and the existence of common ground for cooperation in the field of oil and gas, may be seen as aligned nations in many sectors.

Future Cooperation

In recent years, the energy issue has posed international and regional challenges to Iran and Russia. For example, energy contracts, particularly in the area of energy transfers with US intervention in recent years, have been designed to impede the development of Russian-Iranian energy relations. However, there are at least five areas for energy cooperation between Iran and Russia:

Cooperation in the field of nuclear energy and construction of new nuclear power plants in Iran;
Buying and selling oil and gas equipment and technology and energy production;
Russia's direct investment in Iran's oil and gas fields;
Bilateral and multilateral cooperation for the construction of energy transmission pipelines; and
Investment and cooperation for the construction of power plants.

Given the above areas, it is possible that extensive cooperation in the field of energy will be shaped between the two countries. In fact, energy can become the driving force of economic relations between Iran and Russia, especially that cooperation in the field of energy will be lucrative for both countries.

Roadmap for Iran Gas Swap with Regional States

The Iranian Gas Engineering and Development Co. (IGEDC) is the powerful executive arm of gas industry projects in Iran. Besides its regular tasks, IGEDC is providing infrastructure to secure energy supply domestically and contribute to gas exports.

Reza Noshadi, CEO of IGEDC, tells “Iran Petroleum” IGEDC is ready to operate international projects with a view to improving Iran’s gas swap with neighboring countries.

The following is the full text of the interview Noshadi gave to ” Iran Petroleum”:

Does IGEDC compare itself with top regional and global companies in project implementation?

Yes. We strongly hope to be engaged in international cooperation. Implementation of gas pressure boosting stations and stations in our country is saturated. We have to turn to foreign markets, and we have announced this to all pipe production companies and other manufacturers in the country, and we support these companies. We have plans in this field and we are looking to create an international work environment. We need to be able to use the enormous potential of 211 engineering and contracting consulting firms. Of course, this is a very difficult action and it also triggers many challenges. According to the company's Articles of Association, we can operate in all areas of oil and gas. The articles of association of the company go far beyond the Articles of Association of National Iranian Gas Company. Upgrading the company's activities to an international level is a process that we seek to achieve.

What is your perspective in becoming an international company?

We have already started training and educating international groups in the company. In this company, as the strongest company in the field of work in the development of all processes, it has been written. Plans have been made for project management training and access to international encyclopedias and certifications. We have designed training courses to manage international projects and improve the level of negotiations. There are plans to create international working groups in the company to go to the international sphere with such support. It is a long, energy-intensive and time-consuming process, and our presence in the international arena is a highly competitive and challenging arena that we are seriously pursuing. We have put the initial plans to become a reputable international company on our agenda. There are many capacities in the company's Articles of Association. The Board of Directors and the General Assembly of this company want to realize the potential capacities of the Articles of Association in the field of cross-border activities.

Do you also engage international consultants?

Our consulting engineers go through the same process to work and internationalize because they are all private. The instructions and procedures of our consulting engineers are in the international drawer and follow international standards. Definitely, the presence in each region will depend on international financial and legal advisors.

Where does IGEDC stand in the region and in the world? In the engineering and development of gas network in the region we are behind Russia. And on the global scale we come behind the United States and Canada in terms of network size and activity.

Given decades of experience, does IGEDC plan to get engaged in the projects for gas supply to neighboring countries?

At present, the emphasis is on the implementation of gas swap projects, such as the gas swap from Turkmenistan, which has received much international attention. There are good capacities in the country to perform gas swap deals. Azerbaijan Republic, Armenia, Turkey and Iraq through two routes (Baghdad and Basra), Kuwait through Iraq and Pakistan through the peace pipeline are the capacities intended for gas swap. The Pakistan option in international trade is very serious, and a plan is being considered to send gas from the Oman Sea to India without Pakistan being engaged. Gas exploration in Afghanistan is also an option. I hope we can one day have a share of these markets.

How much capacity has been built through gas swap with Turkmenistan?

The network capacity for gas swap with Turkmenistan is 35 to 40 mcm/d. Gas should be delivered to Iran before being passed on along the border. Our other neighbors do not have gas potential, but in Iran this potential is high in the transmission network.

How many projects does IGEDC plan to operate this calendar year? What about next calendar year?

IGEDC currently has 211 active consulting and contracting agreements. By the end of the year, it will start up about 817 km of pipelines in different diameters from 16 to 56 inches, the most important of which is the Qom-Parchin pipeline, whose operation depends on NIGC’s dispatching department. We had another gas transmission pipeline called Bidboland-Ahvaz, which was also implemented for the flexibility of the gas network and was put into operation this year. We are very active in Sistan and Baluchestan Province, so our focus is in this province. We are constructing the Zahedan-Dashtak pipeline from Dashtak to Zabol, which is planned to be operational by the end of the year, and the people of the region can enjoy the blessings of gas.

Iranshahr and Khash are other cities that will complete their gas engineering and development company there by the end of next calendar year. This year, we have a pipeline in Laft, located in Hormozgan Province, which gas will be injected in it. In total, it can be noted that we have 1800 km of pipelines in operation in the whole country, the implementation of which is underway, and most of them will be operational by the end of next calendar year. Thus, the company's activities will be completed next year in Sistan and Baluchestan and Hormozgan provinces.

What about gas compressor stations? What are your projects?

IGEDC has widespread operations under way in launching gas compressor stations. It is simultaneously operating 12 stations, which is a record. The Arsanjan and Kheyrgoo stations have been launched and the rest including Dourahan, Ab Pakhsh, Nour Abad, Khour Mowj and Pol Kaleh would come online by the end of next calendar year.

Creating infrastructure and increasing gas storage capacity is one of the major programs of the Petroleum Ministry. It seems that with the finalization of the first contract for the transfer of the Khangiran field gas storage development plan, you have drawn a clear vision in this regard. Please describe the plans for the gas storage plan.

According to the efforts made during the last 42 years, the country's gas production capacity has increased from 7 mcm/d to 1,100 mcm/d and the distribution of 870 mcm/d. Tens of thousands of kilometers of pipelines with different diameters have been put into operation in the country. The mission of IGEDC in the development of the pipeline network and gas compressor stations is coming to an end and it should be considered as the end point. We have a place in the world in the construction and development of gas transmission network and its maintenance. Accordingly, due to the saturation of activities for the construction of the transmission network in the country, we have defined new strategies for the company, one of which is to create capacity and infrastructure for gas storage.

According to the plans, by 2024, the gas storage capacity in the country should reach 10% of production capacity, i.e. about 80 to 90 mcm/d, which should be used at peak consumption, which unfortunately is very low, about 2-3%. We cannot fill this gap until 2024 because we started late. But at IGEDC, we began with the Shourijeh D storage site and we plan to put out to tender Sarajeh in the form of BOT, EPC or EPCF. We are currently waiting for a license from the Petroleum Ministry, and if the administrative steps are completed, we will complete the tender for the transfer by the end of the current calendar year.

We also have plans for two other fields called Nasrabad in Kashan and Bankoul in Ilam province. It is worth mentioning that in the last decade, good studies have been conducted on the Nasrabad field in Kashan. The Bankol storage project in Ilam province will take several years. We will soon hold a tender for an appraisal well in Bankol. Immediately after appraisal, the development plan will begin, and after emptying the storage, we will put the injection program on the agenda. In general, according to the plans made for the next 6 to 7 years, we may reach the target set for 2024.

Would you please explain about other activities of IGEDC?

Based on the studies, we plan to turn the turbines of 86 gas compressor stations in the country into a combined cycle. This action will be taken in a bid to reduce electricity consumption. We have also put the energy recovery stations (CGS) energy recovery project on the agenda. If we do these two big projects, the equivalent of hundreds of megawatts of electricity will be saved in the country. Currently, several technical and economic meetings are being held to carry out these projects with different sets.

Have sanctions affected IGEDC projects?

Sanctions have no impact on our work. The petroleum industry has a brilliant background. We use internal capacities. In storage, field development and gas transmission, we have no technological limitations that will be affected by sanctions. All commodities and related technologies are sourced from within. Some of the raw materials for the production of needed commodities are supplied from abroad, which is done by the private sector, and there is no problem, and we support the manufacturing of commodities wherever they are economically viable for us.

What about turbocompressors?

In the storage project of Shourijeh D gas field, we will make a revolution in turbocompressor manufacturing with the support of IGEDC. The compressor with an output pressure of 330 Bar will be used for the first time with an Iranian design. This compressor is made by MAPNA. It is different from the new generation of MAPNA compressors because its new generation provides 1,300 PSI pressure for us, but it will provide us with 330 Bar, i.e. 5,000 PSI.

Will you use Iranian compressors in gas compressor stations, too?

Yes, all Iranian equipment is used. One of the actions taken by the company in the past was the internalization of one of the most complex rotary machines, turbocompressor, in the country. With the investment made, the technology transfer of Siemens turbocompressors was carried out by OTC, and MAPNA has upgraded two other turbocompressors, ZORYA and SOMI. The relevant purchase contract was made by IGEDC, and according to the implementation of new projects in this company, we were supposed to purchase 100 units from MAPNA and 100 units from OTC. We have so far purchased 60-70, which have been installed. Iran is operating ZORYA and SOMI without any dependence on Siemens. In the Shourijeh D field three trains of new compressors are used.

IGEDC managed to manufacture API5L X80 for the first time in partnership with Oxin Steel. What are the specifications of these sheets? Can we expect reduced costs now?

To make this sheet, a technical cooperation was made with Oxin Steel and we supported its manufacturing. All the measures are aimed at supporting domestic manufacturing. In the implementation of our pipeline projects, most of our expenses are spent on the purchase of steel and pipes, and with the use of these new sheets, our major expenses are reduced. We have succeeded in making API5L X80 sheets and this sheet will surely turn into pipes. If we use these pipes, part of the costs will be reduced.

    Do you have a joint project on the agenda with academic centers and knowledge-based companies?

Yes, we have many research projects on the agenda, for example, we are cooperating with the Research Institute of Petroleum Industry (RIPI), Amir Kabir University of Technology and the University of Tehran to store gas in the Qezel Tappeh field. The same goes for CGS projects. On the other hand, we are launching a system that shows the weather and geographical conditions of each point by numerical modeling, and we are no longer limited to station data, which itself increases the accuracy of project design. The design progress of this system is 68% and it will be used until the middle of next year.

Domestic Manufacturing Largely Supported

Mahnaz Mohammad-Qoli

Iran’s petroleum industry, while having an important and strategic position among the country’s industries, has high ability to take advantage of innovative opportunities to create value in its chain of activities. In this regard, strengthening the flow of knowledge-based economy and meeting the technological needs of industry through innovation capacity and relying on domestic potential are among top policies of the Petroleum Ministry in the current administration.

Accordingly, on the sidelines of an exhibition of Iranian domestic manufacturing in Tehran, we interviewed a number of managers and officials at science and technology parks and universities about the potential of this sector in the technological development of Iran’s petroleum industry.

Vahid-Reza Zeidifar, deputy minister of petroleum for engineering, research and technology, touched on the extensive presence of knowledge-based companies at the exhibition, saying: “Following the [1979 Islamic] Revolution in Iran, industrial and research companies in the country have grown and flourished, which is a matter of pride.”

He referred to support offered by the Office of Vice President for Science and Technology, as well as the Office of Deputy Minister of Petroleum for Engineering, Research and Technology for industrial and research companies involved in the petroleum industry, expressing hope that more would be seen in the future.

He said: “The policy of the 13th administration is to support production and remove barriers to production. These policies have also been communicated by the President to all its ministers and deputies, and the Minister of Petroleum has been asked to support these policies in any way so that we can reduce dependencies and minimize foreign purchases in order to domestically manufacture necessary goods for the oil industry.”

Less Dependence

Zeidifar said: “At present, due to the activities carried out and the support provided to the Petroleum Ministry, the dependence of the oil industry on foreign companies has reached less than 50%.” 

Noting that the Office of Deputy Minister of Petroleum for Engineering, Research and Technology had been instructed by the Minister of Petroleum to work in favor of minimizing foreign purchase by supporting domestic manufacturing, he said this Office would do its best to put an end to dependence on foreign companies and make maximum use of domestic manufacturing.

He referred to establishment of science and technology parks in the petroleum industry, saying: “Currently, a favorable environment has been created for the use of the technological potential of domestic companies related to the oil industry in the country, and the Petroleum Ministry will use that platform. In this regard, even proper budgets have been considered by the parliament for this year and next year, and the Petroleum Ministry is making its utmost efforts to absorb these budgets in line with the existing needs.”

Technology-Based Deals

Zeidifar went on to discuss the Petroleum Ministry’s agreements signed with universities, adding: “In the past, the Petroleum Ministry had concluded field-based contracts with some domestic universities, but now, according to the new approach of the Petroleum Ministry and the agreement of the President, these contracts will be turned into technology-based ones in order to achieve better results.”

He added: “We are currently holding meetings with stakeholders in this sector to convert the contracts into technology-oriented ones, while the Office of Deputy Minister of Petroleum for Engineering, Research and Technology is also trying to amend these contracts.”

Zeidifar also referred to the potential of science park of the Petroleum Ministry, saying: “There is favorable ground provided by this park for local companies linked with the petroleum industry. Furthermore, the Petroleum Ministry is also seeking to strengthen the internal construction and strengthen the internal strength of manufacturers and technology and knowledge-based companies, considering the approach.”

He said a memorandum of understanding had been recently signed by the Petroleum Ministry and the Office of Vice President for Science and Technology, adding: “This memorandum has been focused on using the science and technology park and strengthening it so that companies could make the most of this park.” 

Foreign Monopoly Broken

Davoud Tafazoli, deputy head of the Khorasan Science and Technology Park, said that the science parks were affiliated with the Ministry of Science, Research and Technology.

“Khorasan Science and Technology Park is the first specialized oil and gas development center in the country that has received its final license from the Ministry of Science. At present, there are 350 companies operating in this park, of which 70 companies are active in the field of oil, gas and petrochemical equipment,” he said. “Science and technology parks are government complexes aimed at supporting knowledge-based and technology companies. Of the 350 companies in Khorasan Science and Technology Park, 110 are knowledge-based companies.”

Tafazoli said over 6,000 people are employed in Khorasan Science and Technology Park companies, more than 50% of whom are related to the oil industry.  

Tafazoli highlighted the capability of companies related to the oil industry in this science and technology park in the downstream sector of the oil industry, as well as refinery control systems and added: “In the fixed equipment manufacturing section of industrial valves and in the rotary equipment section, high-speed and high-pressure pumps have been manufactured by a number of knowledge-based companies in this park. In addition, all petrochemicals and refineries in the country have used the products of technology and knowledge-based companies in this park, and this equipment has been installed there.”

Regarding the capabilities of companies in the Khorasan science park, he said: “In the field of high-speed pumps and compressors, these companies have achieved considerable capability, so that in the past, the production of these goods was the monopoly of an American company, but now it has been produced in Khorasan Science and Technology Park for several years. On the other hand, the control systems of the refineries, which were monopolized by Siemens, were taken out of monopoly due to the activities carried out by a company in the Science and Technology Park.”

He stated that in the section related to oil and gas in the specialized councils of Khorasan Science and Technology Park, employers in the field of oil and gas are members of this working group, adding: “With this approach, companies affiliated with the Khorasan Science and Technology Park are face to face with their customers and the employer is responsible for all confirmations.”

Tafazoli also stated that more than 80% of companies in this park are on the Petroleum Ministry’s vendor list. He pointed out: “Last calendar year, Khorasan Science and Technology Park companies’ sales were IRR 16,000 billion, of which IRR 5,000 billion were in the field of oil and gas.”

He also referred to an agreement signed with National Iranian Gas Company (NIGC), saying: “Currently we have two manufacturing projects related to control systems and one gas detector agreement with NIGC.”

“Khorasan Science & Technology Park was established almost 19 years ago. It has been working in a specialized manner in the oil and gas sector for the last 11 years,” he said.

Tafazoli said: “Khorasan Science and Technology Park has formed a network with other science and technology parks in the country that are located in this area and is in constant contact with them.”

Technology Development

Mehran Aqakhani, head of Khuzestan Science and Technology Park Institutes, said: “The park was established in Khuzestan in 2009 due to the need of new technologies in the industries based in Khuzestan. The main part of Khuzestan province's industries is oil and gas and petrochemicals, and we have done a lot of activities in this field, such as establishing an oil and gas technology growth center in cooperation with the Petroleum University of Technology. On the other hand, we established a consortium of oil and gas companies, bringing together specialized companies in the field of oil and gas.”

He added: “287 companies operate in Khuzestan Science and Technology Park, 18% of which are active in the field of oil, gas and petrochemical industry in Khuzestan Science and Technology Park.”

Aqakhani said companies related to the oil industry in Khuzestan Science and Technology Park enjoy high capacity, adding: “During these years, we have done significant activities in the petroleum industry, including National Iranian Drilling Company (NIDC) for drilling additives, logging system and setting up management systems in laboratories. We have signed a contract with the Directorate of Exploration to use a new geological method, and we are cooperating with Chamran University in this regard.”

Regarding the new method, he explained: “This is a geochemical method being implemented for oil exploration in Khuzestan. It removes up to 90% of error rate in estimating reservoir identification.”

He went on to explain about cooperation with the Maroun Petrochemical Plant, saying: “We have worked a lot in well completion fluids, drilling and directional drilling fluids, oil and

gas well monitoring, rotary equipment, downhole oil and gas equipment and data transmission equipment, and we have a technological product or we are developing, which we need support.”

He said that the Khuzestan park companies were tasked with developing technology, adding: “The companies affiliated with the Khuzestan park are domestically manufacturing technology. They have also commercialized some technologies to be used in the oil and gas industry.”

Gas Leakage Detection Drone

Amir-Hossein Azimi of Sharif University of Technology said that more than 400 persons were working with the Technology Center of the university, mainly in projects related to the petroleum industry. He said these companies were involved with metallurgy, mechanical, electrical and petroleum engineering.

“At this center, there is potential for any kind of activity by engineers. We are one of these groups. We are active in the aerospace and fluids sector,” he said.

Touching on the manufacturing of a gas leakage detection drone, he said: “Given our potential, we have been able to make this device for the first time in the country. This device has many advantages compared with manpower, including high speed of action compared with operator.”

“The device is used to detect methane, and is highly sensitive. It can detect methane up to 50 meters high,” he said.

He pointed to other advantages of using the drone and added: “The drone does not give GPS points for routes, but it contains the information on the map and provides the information to the person by mapping it.”

He stated that the drone is currently operating in Qazvin Province Gas Company, adding: "This drone has the ability to go above flares and receive information and provide it to us."

According to Azimi, one of the South Pars gas refineries has asked to use the drone.

Cooperation with Canada University

Mohammad Karimi, head of industrial communications and entrepreneurship at Khajeh-Nasir University of Technology, said that the university had signed IRR 20 billion worth of agreements with the petroleum industry.

“It is the first university of technology to have cooperated with the Petroleum Ministry. It has agreements under way with NIGC, National Iranian Oil Company (NIOC), Iran Gas Transmission Company (IGTC), Iran Offshore Oil Company (IOOC), South Pars Gas Complex (SPGC) and Shazand Petrochemical Co.,” he said.

Referring to the university’s activities, he said: “GIS at Iranian gas transmission lines, descaling of gas pipelines, intelligent pigging of gas transmission lines and determination of pipe thickness and pipe deposition thickness for NIGC has been done by the university. Meanwhile, some time ago, we signed a contract with SPGC under the title of Process Optimization.”

He added: "In order to concentrate on activities related to the oil industry in this university, with the consent of the dean of the university, we have established the first oil industry productivity research institute."

He described the activities of the research institute and added: "The research institute is currently operating and we have concentrated on all the activities that take place at university in the form of mechanical, electrical, civil, surveying and materials engineering."

Regarding cooperation with IOOC, he said: “In this regard, with the cooperation of the Offshore Oil Company, for the first time in the country, we have entered the production of products that need to be re-engineered and redefined. This is a very important step towards further cooperation between Khajeh Nasir University and the oil industry.”

He continued: "Most of the needs raised by the oil industry are provided in the form of products, so our new cooperation is to produce products that the Petroleum Ministry is pursuing."

He said: “Khajeh Nasir University used to traditionally cooperate with the Petroleum Ministry, but now these methods are not responsive, so it is necessary to expand this cooperation in order to promote product-oriented needs and what the oil industry needs.”

Pigging Robot

Karimi also touched on the sanctions targeting the petroleum industry, saying: “According to the activities carried out at Khajeh Nasir University, we seek to maintain and strengthen the university's position in the oil industry, while our goal is to shift graduate theses and projects related to the oil industry to technological production and product manufacturing.”

He further referred to the achievement of Khajeh Nasir University on the issue of commercialization of some technologies in the oil industry and added: "Although we are at the beginning of the way in the field of technology commercialization, in this regard, an intelligent robot has been designed in Khajeh Nasir University for smart pigging."

He expressed hope that the products manufactured for the Petroleum Ministry would reach the phase of implementation and technology transfer.

He stated that the university has strong relations with the world's major universities and major oil companies and interacts with them whenever necessary: "We have very good interactions with world-class universities in the field of oil industry and in the field of technology transfer." We have no problem with world-class universities.

He added: "Currently, we are fully cooperating with one of the Canadian universities in the field of oil industry, so that in the field of oil exploration, our colleagues at the Department of Electronics are working on this issue in the control department."

Iran Contractors Engaged in Oil Industry

Over recent years, due to the support programs of the Petroleum Ministry for Iranian manufacturers and contractors, the presence of these companies for the development of Iran's oil industry has been highly significant. Accordingly, considering the development plan of the Petroleum Ministry in the new government and also enhancing the quality of activity of Iranian companies, the expansion of bilateral cooperation with these companies is on the agenda of the Petroleum Ministry.

Therefore, this ministry is trying to reduce the dependence of this industry on foreign companies in light of the country's need to develop the oil industry, which according to Vahid Reza Zeidifar, deputy minister of petroleum for engineering, research and technology, has fallen below 50%.  

Here we review a report about the activities of Khatam al-Anbia Construction HQ (KAC) as a leading contractor for petroleum industry projects.

KAC is involved in the petroleum industry as contractor, temporary and permanent investor. Its main field of activity is oil and gas production enhancement.

General Seyed Hossein Housh ul-Sadat, commander of KAC, has said that KAC was working to help enhance Iran’s oil production by 150,000 to 200,000 b/d.

NGL 3200 Plant

Given KAC’s activities in the Iranian petroleum industry, of a total of 26 infrastructure projects handled by KAC last calendar year, the petroleum industry had a significant share. One key project was construction of 235 km of the 1,000-km Goreh-Jask oil pipeline, which has been instrumental in the development of Makran coasts.

It is worth noting that the Goreh-Jask pipeline is the longest oil transfer pipeline in the Middle East with an approximate length of 1,000 km, which, if completed, will be able to export gas condensate from near Goreh in Bushehr Province to near Jask Port for export. According to officials, in the first phase of the project, the pipeline could transfer up to 350,000 b/d of crude oil from Goreh to Jask. In the next phases of the project, the pipeline is planned to transport 1 mb/d.

Meantime, KAC is behind production of over 40% of gasoline, 21% of gas production and 42% of oil and gas storage tanks.

KAC plans to implement 50 projects over 50 weeks next calendar year, one of which would be completion of a gas transmission pipeline and launching the NGL 3200 plant.

General Housh ul-Sadat said that NGL 3200 would gather flare gas to produce 97,000 b/d of NGL, 41 tonnes of solid sulfur and 340 mcf/d of natural gas. Natural gas would be used as feedstock for a power generation plant under construction nearby.

It is also noted that by operating NGL 3200, in addition to ending flaring at six oil fields in West Karoun, 250 mcf/d of feedstock would be supplied to petrochemical plants in Mahshahr. The NGL 3200 project would come online within the framework of the second jump projects in the petrochemical sector to allow for development of various sectors of the petrochemical industry.

The general expressed hope that gas injection into the plant would begin by next March.

2 Petro-Refineries

Considering the global approach in the construction of petro-refinery units, as well as the government program in the construction of petro-refinery complexes and on the other hand the construction of the Persian Gulf Star refinery in the country, the development plan of the petro-refinery complex next to this refinery is very important, not to mention its economic benefits. Accordingly, considering the importance of this issue, KAC plays a significant role in the construction of the Mehr Persian Gulf Petro-Refinery Complex in southern Iran. The complex project has had 38% progress.

Furthermore, the Anahita petro-refinery project is also being pursued by KAC in western Iran, whose development requires budget allocation from National Development Fund of Iran (NDFI).

Offshore Platforms

KAC is also involved in offshore platform construction, which is being currently pursued by Sadra as an affiliate of KAC.

Housh ul-Sadat said: “Sadra is currently constructing offshore platforms related to the Reshadat field renovation and development project, as well as four Aframax tankers, two of which have been completed, one is nearing completion and one is under construction.”

“Good events will happen for the company in the next two months, on the other hand, the experts from this company have traveled to South Korea, which could lead to good events,” he said.

Palayesh Naft Eyes Taekwondo Title

The Palayesh Naft Abadan club was the only representative of Iran’s petroleum industry in the final stage of the taekwondo premier league in recent years. It has sought to put on a new face by recruiting many local athletes and to minimize its dependence on non-local ones.

In addition, the existence of sports talents and elites in Abadan and more generally in Khuzestan Province, has led the club to set up an academy and use local players, to maintain itself in the back of the country's taekwondo premier league in coming years and be able to face competitors using its resources and with the maximum power of local players, to think of gaining a platform in this arena.

Rouhollah Goudarzi, chief trainer of the Palayesh Naft Abadan taekwondo team, said: “Due to the peak of the coronavirus pandemic, we have started training with a long break in recent months, which coincided with the club waiting for the Taekwondo Federation to get permission to participate in the new season. For this reason, we prepared the team shortly before the start of the competition.”

Referring to the team composition, he said: “Last calendar year, we participated in a very young team that had a good experience, and now this year we are seeing the results. Hopefully, with the long-term plan we have seen, we will have more long-term investment in our players. We do not intend to take these players out of the activity cycle in any way.”

Asked about the number of local team members, he said: “Last calendar year, 50 to 60 percent of the team was local and consisted of promising young players. If we invest in these players, after 5-6 years, they can play for Abadan Taekwondo, provided that they are maintained and invested in.”

Asked why trainings and competitions were held in Tehran and not in Abadan, Goudarzi said: “This presence in the Premier League is not ineffective. It will definitely affect the training clubs in the city and the province and will motivate the coaches. If the players succeed at the level of the Premier League, the infrastructure must be created for them, which will benefit other generations and the basic players.”

Asked why Abadan has not hosted rivals in the premier league, he said: “We have corresponded with the federation many times to host Abadan so that we can receive feedback. Unfortunately, most of the teams in the country's premier league are from Tehran, and this is why the federation is persuaded to hold the games centrally in the capital.”

As for recruitments, he said: “Our team with local players has always had the first title in the province and has always been a champion in the competitions between the country's refineries. We had very good players who were invited to the national team camp from this city and from the heart of league games.”

Touching on the objectives of this team for the new season, he said: “Since in the coming season, the law will be modified and, in the end, two teams at the bottom of the ranking will leave premier league, we try to be in the middle of the table. The sensitivity of the work has increased a bit in the upcoming season, so we try to keep the balance in our final rank with the talents we have. But for the coming seasons, we will definitely think of being on the podium.”

Boosting Local Athletes

The Palayesh Naft Abadan club has hired Yousef Karami as its technical manager, as the team seeks a stronger presence in the league. Karami has already won championship titles at international events.

Regarding the Palayesh Naft Abadan team and its plans, he said: “Fortunately, the CEO of the Palayesh Naft Abadan Club is an athlete himself and he is well aware of the problems. In sports, it is not possible to draw conclusions quickly from the thoughts of organizers, and in Abadan, one has to work from an early age and at the same time train a coach, even if this is done in this area, it is not done in other cities. And unfortunately, we are facing these problems.”

He added: “The main goal is to find good talent and give good training to these talents and motivate them to be able to work in the Premier League team of their city in the future. Our other goal is to strengthen our local athletes and in the coming seasons, first rely on them to stay in the league, then in the coming years to think about gaining a place and going on the podium.”

Expressing hope that the envisaged goals would be achieved, Karami said: “We try to centralize the potential of the province to use for the progress of taekwondo in Abadan, specifically for the Palayesh Naft”.

Palayesh Naft Taekwondokas in Premier League 

The Palayesh Naft Abadan’s taekwondo team has claimed the top spot in the second group of the Persian Gulf Cup. As the second week ended, the first stage of competitions of the second group of the taekwondo premier league, the Palayesh Naft Abadan team came on the top after powerfully defeating its rivals. It was followed by teams from” Can Home Appliances” and “Pas”. It also deserves mention that by the end of the first week, Goudarzi was named among the best chief trainers. In the second week, Mehdi Yousefi was recognized as the most technical taekwondoka, and Behrouz Bakhtiari was recognized as the best team head. All were from Palayesh Naft Abadan.