Year of Oil Diplomacy

Ali Forouzandeh

Director General of Public Relations

During last calendar year ( ended on March 20), Petroleum Ministry of the 13th administration made valuable achievements particularly in the energy diplomacy sector although it was only six months into office. The most important achievement was the trilateral gas swap agreement signed by Iran, Azerbaijan and Turkmenistan. Furthermore, on the sidelines of President Ebrahim Raeesi’s official visit to Russia, Minister of Petroleum Javad Owji met with Russia’s deputy prime minister, as well as senior managers of Russia’s private oil and gas companies to discuss how to develop cooperation. Important documents were signed between the two parties.

The sixth summit of the Gas Exporting Countries Forum (GECF) was also held last calendar year. In addition to meeting with fellow members, Iran carried its message through to the world: Despite the unilateral US sanctions, Iran’s petroleum industry has relied on its specialist manpower and benefited from local companies and expertise to enhance its natural gas production and implement key projects in both upstream and downstream oil and gas sectors. Addressing the meeting, Iran’s petroleum minister expressed Tehran’s readiness for cooperation with GECF member states in natural gas and LNG trading.

Another hope-inspiring piece of news for the petroleum industry was Iran’s ability to reach pre-sanctions output levels thanks to Iranian technicians. It is hoped that after the removal of unjust sanctions, Iran would be able to maximize its oil export capacity.

The Petroleum Ministry plans to develop the country’s petrochemical industry and complete the value chain in this sector. A top petrochemical power in the Middle East, Iran is expanding related infrastructure. By benefiting from existing capacities, Iran can apply an effective energy diplomacy.

It is noted that on account of development projects, which would come online the current calendar year or later in the future, the petrochemical industry would see its share increase in both domestic and foreign markets. A comprehensive strategy would help Iran boost its share in international markets. In parallel, thanks to the current atmosphere in the energy diplomacy, diversifying products and destinations would be a new strategy in the petrochemical industry.

Iran’s petrochemical production capacity has exceeded 90 million tonnes a year now, which would reach 104 million tonnes by next March. Iran hopes to invest $16 billion in the petrochemical industry for implementing 30 strategic products over five years.

NIGC CEO

Iran, an Influential Gas Exporter

Mahnaz Mohammad-Qoli

Gas production in Iran and supplying consumer and stakeholder needs inside and outside Iran has opened new horizons in the Iranian gas industry. To that effect, Iran has extensive plans in coming years to export gas to regional nations. A case in point is Iran’s gas swap deal with Turkmenistan and Azerbaijan, which is considered important by National Iranian Gas Company (NIGC). Majid Chegeni, CEO of NIGC, tells “Iran Petroleum” that a variety of scenarios are being planned for Iran to enhance its share of global gas trading with a view to getting a significant share in the world energy mix. 

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

What policies is NIGC pursuing within the 13th administration in the sectors of swap, exports and imports? What plans do you have for enhancing Iran’s share of global gas trade?

The 13th administration’s priority is to broaden trade with neighboring nations. In the first place, NIGC is trying to prepare the necessary ground for developing the trading natural gas and its products within the framework of diverse trade mechanism for its neighbors in light of their potential and needs. Therefore, when there is surplus gas outside Iran, we try to import it for consumption and then in exchange we can supply gas through various mechanisms including swap. In the meantime, other trade methods such as transit are also on the agenda, and since they have not been implemented yet, I will not talk about them.

To enhance Iran’s share in the world gas trade, plans have been designed in several sections. First, in the short term, the company seeks to remove barriers to trade in natural gas, both at home and abroad. For instance, the company has gone through the administrative process of accepting natural gas to be listed on the stock exchange, and natural gas will soon be offered on the stock exchange. At the same time, efforts have been made in the foreign sector to minimize existing problems with neighbors, including Turkmenistan, and to address non-trade barriers. Efforts have also been made to review current contracts with the maximum possible capacity and to review the requests of business partners with maximum understanding. In the medium term, the company is working to remove some commercial barriers, including infrastructure and hardware, by expanding existing pipelines and increasing its natural gas transmission capacity.

In the long run, the main plan is to supply as much gas as possible for export based on the development of production resources or to reduce gas consumption and optimize this valuable commodity.

The Iran-Azerbaijan-Turkmenistan gas swap deal settled five years of tension between Iran and Turkmenistan in the gas sector. Will this cooperation continue? Are you ready to increase the volume of gas swap and extend the term of the contract?

This 5-year contract, although it does not seem very large in terms of volume, is very important for NIGC, considering that it was able to create a new trade corridor south of the Caspian Sea. NIGC is ready to immediately upgrade this capacity to the maximum mechanical capacity of the existing pipelines, and in this regard, constructive negotiations have been held with Azerbaijan. However, NIGC is ready to cooperate with other neighbors in addition to Azerbaijan if the Turkmen side is willing and upgrades its infrastructure capacity. NIGC is also ready to accept foreign investment in the construction of a pipeline to carry gas from east to west or north to the south of the country within the framework of the transit mechanism.

Do you have any plans, in addition to gas exports, to export engineering services? Are you trying to provide necessary infrastructure for that purpose?

Since NIGC is a proprietor of technology in the design, operation and maintenance of gas facilities, in interaction with its partners, it introduces these capacities. For instance, the Iran Gas Transmission Company (IGTC) undertook to pig the pipeline carrying gas to Iraq. NIGC recently signed an MOU with a European country on technology diplomacy and exporting engineering services. But as far as commodities and related services are concerned, NIGC, through its negotiations with foreign partners, introduces local firms’ potential while making every effort to clear the way for their presence in foreign markets. But the fact is that what would transfer NIGC’s capabilities beyond Iran’s borders lies in their own capabilities. 

Khuzestan Province Gas Company has expressed its readiness to operate and launch gas supply infrastructure in Iraq’s border areas and some meetings

have been held to that effect. But such activities require some modifications in the company’s Articles of Association. Have any plans been envisioned in the gas industry perspectives?

NIGC has a plan known as “gas export development based on provincial infrastructure”. Under this plan, eastern and western provinces including West Azarbaijan, East Azarbaijan, Kurdestan, Sistan and Baluchestan, and Khorasan Razavi have been active under the authority of NIGC’s International Affairs Division. Some meetings have been held and we are trying to come to conclusion. In Khuzestan, it is new and we are studying the issue. Regarding modifications to the Articles of Association, due to the complexities of natural gas trading contracts, all activities are concentrated at NIGC. Therefore, for the moment, there is no such plan on the agenda.

During the first days of your presence at NIGC, you held meetings with Iraqi energy official and Russian companies. Can we expect good news in international cooperation in the future?

Currently, meetings are regularly held at the level of experts and managers between NIGC and Iraqi and Russian partners on a variety of issues related to the natural gas industry trading, whose results will definitely be positive in the future.

At what stage is the renewal of contract for exporting gas to Turkey and Iraq?

Renewal of contract requires negotiations based on a precise assessment of market conditions on the part of the buyer and the seller both. The volatile conditions of the energy market put new challenges to assessments. However, NIGC experts have monitored energy market conditions in Iraq and Turkey prior to starting preliminary talks for contact renewal. We hope to reach conclusion in one year, particularly with regard to Iraq. Furthermore, negotiations with Turkey for contract renewal are much likely to be finalized by 2023.

Given the infrastructure and high potential of the gas industry, do you have any plans to enter other countries’ markets such as exporting LPG to Afghanistan?

Breaking into the natural gas and gas product market of neighboring countries requires upgrading infrastructure for energy transmission to these countries. Each country has its own unique case. Regarding Afghanistan, we are already exporting LPG to that country and we are ready to increase exports upon demand. 

Iran’s gas industry has taken steps towards local manufacturing, self-sufficiency and self-reliance in supplying parts and equipment. What percentage of this industry’s needs is supplied domestically? Has any roadmap been drawn for these activities?

NIGC has drawn up a comprehensive self-sufficiency plan for the domestic manufacturing of strategically needed items and equipment required by the gas industry. As the first step in this regard, NIGC held the first event on the development of technology in the gas industry for largely-used items in December 2019 with a view to completing the link of technological development and local manufacturing of strategic equipment for the purpose of supporting domestic manufacturing and startups and knowledge-based companies. A package of prioritized demand (comprising 29 basic commodities and technology items) was presented to startups, knowledge-based and technological companies so that during a three-year period, necessary items would be manufactured domestically and more than € 250 million would be saved. For this purpose, NIGC has signed agreements with 24 knowledge-based companies for the local manufacturing of commodities and equipment, which are being produced for the first time in the country. Knowledge-based companies are being supported through technology development and local manufacturing through signing contracts, developing technology through cooperation with parks of science and technology. Although there are many achievements in this field, development of technical knowledge and construction of testing and applied research devices, upgrading national turbines, upgrading national compressors, upgrading and installation of monitoring systems of pressure boosting facilities are just some of the achievements of these institutes.

Underground Storage facilities are a strategic infrastructure in all countries. In the gas sector, 2 storage sites have been put into operation so far. What’s the perspective in this sector?

Existing underground gas storages are Sarajeh with a storage capacity of 1 bcm and Shourijeh D with a storage capacity of 2.25 bcm. Underground storage facilities are under development in the second phase of Shourijeh with a storage capacity of 2.25 bcm and Shourijeh D with a storage capacity of 0.5 bcm. The second phase of Sarajeh with a total volume of 2.75 bcm is under development. Meanwhile, converting Ghezel Tappeh, Nasrabad, Bankol, Baba Qir and Mokhtar into storage sites are under study. The Sarajeh and Shourijeh storage capacity will increase from 3.25 bcm to 6 bcm by 2026. On the other hand, the volume of recoverable gas from these storage sites in the cold months of 2026 would increase to 55 mcm/d.

Ramifications of Active Energy Diplomacy

The 6th summit of the Gas Exporting Countries Forum (GECF) was held in Doha, Qatar in February 2022. Islamic Republic of Iran, as a founding member of GECF participated in the summit at the highest level. Due to the adoption of active energy diplomacy after 10 years, Iran has seen its position grow in gas trading. Iran’s high position shows the country’s strength. Being located in the center of the strategic energy ellipse of the world and sitting atop the world’s first hydrocarbon reserves, Iran has an important position in the field of global energy developments and as one of the energy players with active participation, it is playing a strategic role within GECF.

Having served as the GECF Secretary General for two terms, Iran currently owns a 2% share of the global gas trading. Due to holding 18% of the world’s gas reserves and enjoying a strategic position, Iran intends to develop its gas trade.

We have interviewed Ali Akbar Velayati, foreign affairs advisor to Supreme Leader Ayatollah Ali Khamenei about Iran’s active energy diplomacy in the region, Mohammad Hossein Adeli, former GECF secretary-general, Fereydoun Barkeshli, President of Vienna Energy Research Group, and Mohammad Ali Khatibi, Iran’s former governor for OPEC.

Deeper Ties with Neighbors

Velayati said a new chapter had opened for new international interactions with an active energy diplomacy. He told “Iran Petroleum”: “Recent developments in the international and regional arenas and our country's efforts for sanction relief and the willingness of some countries to establish economic relations, including in energy and oil, may strengthen the active energy diplomacy while sketching out new outlooks for development and deepening bilateral and multilateral relations.”

He touched on cooperation between sanctioned nations in using their shared capacities and advantages, saying: “Islamic Republic of Iran is currently crossing one of the toughest sanctions in the history of international relations.”

He said: “Unjust sanctions against the great nation of Iran have led to some restrictions such as on oil sales, access to international financial systems, restrictions on the transfer of funds, etc., but relations, especially with countries with such restrictions, can be developed and deepened as Iran has not restricted itself.”

 Velayati added: “Islamic Republic of Iran has land and water borders with 15 countries, providing valuable opportunities and areas for the country that can be developed day by day, and therefore the policy of deepening relations with neighbors is very effective in reopening new areas.”  

He also said that Iran and Russia had deep strategic ties which could be developed largely. “The shared interests and views have been very important, especially in the regional field, which has been implemented in various sectors so far, and the top officials of the two countries have repeatedly expressed their interest in developing relations, which can particularly emerge in the field of energy.”

GECF, No Political Union

Adeli said GECF was a professional forum for gas producers and exporters, noting that it was not a political union.

“The Forum is made up of different countries that are competitors on the one hand and compete in the gas markets and on the other hand have different political tendencies. For instance while Russia, Iran and Venezuela and to some extent current Bolivia have similar tendencies, Qatar, Egypt, Libya, Trinidad and Tobago, Nigeria and even Algeria do not see themselves on that side. Thus, political alliances between those countries are not conceivable by getting together in the GECF, but on the other hand, since they have shared interests in the future of gas, they can work together as a union,” he explained.

He said that the energy security was inevitably linked with sanctions, adding: “Of course, Iran is subject to tough sanctions and no country is faced with as tough sanctions as we are slapped with.”

“The sanctions deprived Europe of Iranian gas and severely affected Europe's energy security. If Iran exported gas to Europe and Iran was allowed to develop its gas fields and also expand its LNG with foreign investment, today it could export at least 40 to 50 bcm of gas to Europe, which means better energy security for Europe. Therefore, the most important group that suffered from the sanctions on Iran's energy sector was first Iran itself and then the European Union,” said Adeli. “The next few decades will be golden decades for gas, and from then on gas may not be a desirable fuel, so countries with gas resources will do their best to extract and export gas.”

Historic Chance for Iran

Barkeshli, speaking about the GECF summit, said: “The GEFC summit was held in a context which the global gas market had never experienced. According to the International Energy Agency (IEA), global gas demand is growing three times the global oil demand. Unprecedented growth in global gas demand has fueled a steady rise in gas prices.”

“For the first time in the history of world oil and gas, where reference oil and gas prices have been recorded in Pennsylvania, USA, oil prices are now a function of gas prices. In other words, the price of gas has become the driver of oil price growth. Major energy exchange traders monitor the gas market to measure and evaluate global oil prices,” he added.

He said the unprecedented rise in gas prices does not end with gas alone, adding global prices for most minerals such as copper, zinc, lithium, or even coal have seen unprecedented uptrends.

“In fact, it is part of the process of transformation or transition that we are experiencing. The transition is energy-centric in principle, but it is also an economic transition,” said Barkeshli. He said conditions were optimal for GECF to play a constructive role in managing the global gas market.

“Global energy market management is not just about price,” he said. “Today, even at $100, we do not see more investment in gas and oil. The $150 price does not help either. It only increases inflation and puts pressure on consumers, especially in low-income countries.”

“For the Islamic Republic of Iran, at the same time, a historical role has been provided. Gas trade is different from oil. In the gas business, becoming a gas corridor or hub is important. We must not make mistakes. Turkey has no gas, but it wants to be an energy player. Austria has no gas, but is Europe's gas hub. Of course, geopolitical management is important to become a gas corridor. Gas, for development, requires a long process of peace and security for investment,” he said.

Iran Not Waiting for Others

Khatibi, Iran’s former Executive Board member of the GECF said: “Two decades after the birth of GECF, it is time for its members to evaluate their performance and position to determine to what extent they have achieved their goals that were emphasized at the beginning of the establishment of the Forum.”

“GECF members should not be against each other, and rather they should support each other. For instance, the Forum members should not seek to seize the place of a sanctioned fellow member. That would make sanction imposers more determined in sanctioning oil and gas exporters. That is while oil and gas exporters may help each other overcome sanctions,” he said.

“The Iranian delegation to the GECF summit was well placed. Given the evaluation of Iran's gas performance and the speeches made at this meeting, other countries now know that Iran will not wait for investment and participation of other countries for development and progress, and will go on with its plans, while welcoming cooperation with others. However, I trust the regional strategy of Islamic Republic of Iran, which we witnessed during our visit to Qatar, may bring good results for us and other countries, and result in a win-win outcome. I hope our neighbors will welcome Iran's proposals,” he added.

“GECF members are expected to cooperate with each other and refrain from negative competition against one another. Another important role which GECF may play, is to keep the gas market balanced so that consumers, exporters and investors would make reasonable gains,” said Khatibi. “GEFC should not wait for the consumer to decide for it, but should play a balancing and effective role. I believe that GECF may play a more effective role in the gas market.”

Swap Gas Deal, New Chapter in Regional Cooperation

Mahta Sadeqian

As soon as the 13th administration took office in Iran, energy diplomacy was activated. Early 2022, Iran entered into swap agreement with Turkmenistan and Azerbaijan, indicating a thaw in Tehran-Ashgabat ties.

As Minister of Petroleum Javad Owji said Iran intends to play a more active role in the global gas market through gas diplomacy, because in addition to being the second largest gas producer in the world, due to its geopolitical position, Iran can not only export gas to countries in the region, but also it can benefit from gas swaps due to the infrastructure available in the country.

December 2021 can be considered the beginning of a new chapter of regional cooperation for Iran’s Petroleum Ministry, as we witnessed a turning point and the market of regional gas equations took on a different color with the tripartite gas swap agreement between Iran, Turkmenistan and Azerbaijan. Regardless of the economic and political benefits of the gas swap agreement, its greatest achievement is the resumption of relations between Turkmenistan and Iran after a five-year hiatus. This issue, in the shadow of active diplomacy and the expansion of regional interactions, showed that even with the imposition of US sanctions, development of trade with other countries was not far off and that there have been many ways to get out of the impasse to move towards sustainable development.

Many experts agree that even with 100% domestic gas supply, gas imports from Turkmenistan should not be cut off, because we receive gas from this country at proper price and has an economic justification for us that this gas can be consumed in the north of the country and we can export equivalent volume of gas to neighboring countries at a higher price. Therefore, each of Iran's neighbors has characteristics and advantages that we should consider in the portfolio of international relations, especially Turkmenistan, which is our strategic neighbor. Hence, continuation of gas interaction with this country will have numerous advantages for us.

Under the tripartite gas swap agreement between Iran, Turkmenistan and Azerbaijan, which was signed on the sidelines of the 15th meeting of the Economic Cooperation Organization (ECO), after the bilateral meeting between Iranian and Azeri presidents, Turkmenistan transports up to 2 bcm of gas via the territory of the Islamic Republic of Iran to the Republic of Azerbaijan, with Iran entitled to take necessary gas for its five northern provinces.

Moreover, due to the problems of sanctions, Iran cannot receive the relevant fund from Turkmenistan for its swap, that is why it has preferred to receive gas instead of this amount, that is, Iran takes part of the gas that is swapped from our country as a swap fee. It is estimated that between 20 and 25 percent of the swap gas reaches Iran; that is, we swap 5 mcm/d of gas and remove 20% of it, which is something equal to 1mcm/d.

For this gas swap agreement, Iran will deduct 15% of Azerbaijan's gas export in transmission fee.

This contract is valid for another five years. In the meantime, what is certain is that in recent years, Turkey has planned to diversify its gas import sources and become a gas hub in the region, replacing Iran in the gas swap to Nakhichevan. Therefore, the action taken by the 13th administration to activate the gas swap is some sort of active presence of Iran in the region, as a reliable partner in this sector.

Upgrading Iran Status

Less than 1.5 percent of the global gas export market belongs to Iran, while governing documents such as Vision 2025 provide an 8 to 10 percent share of the gas trade market as a necessity. Now the fundamental question is how Iran can regain its share of this volatile market against the backdrop of political tensions?

One of the opportunities for Iran to increase its share of the global gas market and become a gas hub in the region is Azerbaijan. It seems that Iran has taken the first step by signing a tripartite swap agreement, and constructive and active diplomacy can achieve this. On the other hand, Iran's strategic position near large holders of gas reserves makes it possible to think of other neighboring countries to take a 10 percent share of global gas trade, so that the resources of these countries could be used to form gas trade in the region centered on Iran.

Despite all this, many domestic and foreign economic observers say that Iran's bargaining chip is the use of transit opportunities, as if the US strategy to isolate Iran from this route has reached a dead end. The swap makes the countries of the northern border region dependent on our country, which will also strengthen political relations and political stability in the region.

Swap Win-Win Deal

Turkmenistan is a country with rich oil and gas reserves and has been looking for different ways to deliver its gas to other countries for many years, so swap contracts have numerous advantages for Turkmenistan in this regard, and for us as an intermediary country to be able to do so. It is important to play the role properly.

On the other hand, among the countries in the region, Turkmenistan is ranked the sixth in the world in terms of gas reserves, and Iran is the most suitable geographical route for transporting its gas to major gas consumption centers in the world, namely European countries, China and India, but in recent years, the country has refused to revive this gas swap due to its demand for gas from Iran.

Of course, it is noteworthy that we should have taken advantage of the swap opportunities, especially in the gas sector, in addition to providing part of the gas shortage in the northeastern regions in the cold seasons, albeit to a small extent, regional exchange advantages and strengthening political relations with neighboring countries. Turkmenistan has access to high seas to enter export markets, and Iran is an important option, as it can easily access southern waters and export its gas, and if so, in the future, Iran will be also beneficiary.

Undoubtedly, the gas swap agreement will not be the end of the story. If this contract is managed intelligently over time, it will bring valuable achievements to the country in the future. Establishing our channel of communication with Turkmenistan, at a time when Iran is facing hostile sanctions, could be a turning point in ending many tensions in the region and opening up communication channels.

It should be emphasized that Iranian gas delivered to Azerbaijan is located in the small and strategic region of Nakhichevan. The gas relationship between Iran and Nakhichevan began with the signing of a 20-year swap agreement in 2004. A contract in which Iran was required to supply gas to Nakhichevan, and Azerbaijan was required to supply gas to Iran's Astara region. However, in recent years, Turkey has considered replacing its gas with Iranian gas by accelerating the 80-kilometer Agadir-Nakhichevan pipeline. Although it is not yet clear exactly how the pipeline relates to Iran's new deal, there is no doubt that the swap deal could strengthen Iran's foothold in the region.

The last advantage of this contract is solving the problem of gas deficit and pressure fall-off in the northern provinces of Iran through the right of transfer, which in recent years has caused early gas outages in industries and problems in domestic consumption. In this regard, the CEO of National Iranian Gas Company stated: “In addition to economic importance, this contract will help the stability of the gas network in the north and northeast of Iran.”

Iran Strong Role

Nersi Qorban, an energy expert, speaking on the gas swap agreement, said: “By increasing domestic potential, implementation of this agreement can strengthen Iran's role in energy relations in the Caspian Sea region. For the past 25 years, consultations have begun to turn Iran into the region's center of gravity and gas hub, and the first step in this direction has been taken by Iran through the implementation of the Turkmen gas swap to the Republic of Azerbaijan.”

Due to its geographical location, Iran can receive gas from producing countries and deliver it to countries with gas shortages on the other side of the border, thus making Iran the main gas pipeline route in the region. Iranian gas exports to Turkey and Iraq are currently underway; however, other opportunities such as exports to Pakistan and India have not yet been implemented. For the Turkmen gas swap, we will use the pipeline route that was previously used to import gas to the country. If we want to increase the volume of the contract, we will have to build more pipelines in the country.

Russia, on the other hand, is now the world's largest holder of gas reserves and Iran is the second largest holder of gas. If Iran wants to achieve a high position in global gas interactions, it must strengthen its infrastructure in terms of gas production and transmission, and put consumption optimization on its agenda.

In general, with the signing of the swap agreement, a step forward was taken in the energy relations between the two countries, and this agreement helped to provide sustainable winter fuel for the provinces of Khorasan Razavi, North Khorasan and South Khorasan, Golestan and Semnan.

75 Wells Spudded and Completed in One Year

National Iranian Drilling Company (NIDC) drilled and completed 75 onshore and offshore wells last calendar year (to 20 March 2022) , the CEO of NIDC said.

Hamid Reza Golpayegani said while at the beginning of last calendar year only 55 out of its total 73 drilling rigs were in operation at NIDC, as a result of increased activity the number of rigs in operation reached 60.

He said that last calendar year NIDC used over 82% of its operational capacity to conduct petroleum industry projects in preserving and enhancing the oil production capacity.

Noting that 13 onshore and offshore drilling rigs were under renovation and qualitative upgrade, Golpayegani said: “In the light of National Iranian Oil Company (NIOC) development plans, the number of operating drilling rigs will be increasing in the current calendar year (to March 2023).”

Touching on the turnkey projects handled by NIDC, he said: “With the recent supply of commodity and equipment, drilling and completion of 10 wells in the South Azadegan oil field is being handled by the Petroleum Engineering and Development Company (PEDEC). That has started once Fath 28 and Fath 92 drilling rigs were engaged.”

Golpayegani said that 13 gas wells were to be drilled in the onshore section of Kish Island by Fath 69 drilling rig. The client in this project is Pars Oil and Gas Company (POGC).

Iran to Start Drilling in Arash Field Soon

Iran’s petroleum minister has said the country will soon initiate drilling operations at the Arash gas field despite a recent deal of Saudi Arabia and Kuwait to jointly develop the giant offshore field, which they refer to as Durra.

Javad Owji wrote in his Twitter account that Tehran had completed comprehensive studies of Arash, “by drilling exploration wells and conducting seismic surveys”.

“With the installation of a jacket, the drilling operation in the field will begin soon,” he noted.

“Although we are open to talks and cooperation for developing joint fields, unilateral measures will not pose any obstacle,” he added.

Arash/Durra is a giant shared offshore gas field that extends across Iran, Saudi Arabia and Kuwait.

Saudi Arabia and Kuwait recently said they agreed to develop Durra, which lies in the shared neutral zone between the two nations.

The agreement was signed by Kuwait Oil Minister Mohammad al Fares and Saudi counterpart Abdulaziz bin Salman al Saud.

Tehran, Yerevan Eye Broad Energy Ties

Iranian Petroleum Minister Javad Owji met with the advisor to the Armenian prime minister on bilateral cooperation in the energy field.

Owji received the Advisor to the Prime Minister of Armenia for a meeting in Tehran to discuss cooperation in the field of energy.

Armenia has low hydrocarbon reserves and relies on importing fuel and a nuclear power plant that was built during the former Soviet Union to provide the energy it needs.

Due to political disputes with Republic of Azerbaijan, the oil-rich neighbor of the east, and Turkey, the western neighbor of Armenia, Yerevan supplies its energy needs from Iran and Georgia.

Earlier, Armenian sources reported that Iran and Armenia agreed to enhance Iranian gas exports to Armenia. Russia now supplies about 80 percent of Armenia's gas.

In 2004, Tehran and Yerevan signed a 20-year gas for electricity barter agreement, according to which Iran's exported gas will be consumed by power plants in Armenia, and in return, Iran imports electricity from Armenia.

Gas Storage Capacity to Double

The Iranian Petroleum Ministry plans to expand its underground gas storage (UGS) facilities in center and northeast of the country to allow better management of gas resources during cold winter months.

Iran's UGS capacity will reach 6 billion cubic meters (bcm) by 2025, nearly double the current figure of 3.25 bcm.

Gas storage is typically filled during the summer to be used in the winter. Iran has two UGS facilities, a relatively large one located near the northeastern city of Sarakhs under the name of Shourijeh and a smaller one located in Sarajeh near the central city of Qom.

However, the current storage capacity only accounts for 1.7% of the total annual gas production in Iran.

Iranian President Ebrahim Raeesi was in Shourijeh to instruct the start of construction works on a second phase of the storage system.

The project will take three years to finish and will need an investment worth $700 million. It will allow the transfer of another 20 mcm/d of natural gas from the storage.

Restoration to Pre-Sanctions Oil Output Levels

CEO of National Iranian South Oil Company (NISOC) Ali-Reza Daneshi has said that under the current administration, plans were formulated during a six-month period for much expected restoration to pre-sanctions oil production levels.

“After the 13th administration took office, extensive plans were prepared over six months for Iran to return to pre-sanctions output levels, including short-term, mid-term and long-term plans,” he said.

“We worked out 18 key plans to bring us back quickly to suitable capacity, some of which were downhole plans,” he added.

“We also paid attention to pipelines and carried out 51 measures including overhaul of 2,200 km of pipelines,” said Daneshi. “We carried out the overhaul of big production units and we have now favorable conditions to return to the pre-sanctions conditions.”

Regarding the contribution of knowledge-based companies to increased oil output, he said: “I may firmly argue that we will quickly return to the pre-sanctions levels, whose major sign is output hike.”

$8bn Projects Envisaged in West Karoun

 The CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr has said that $8 billion worth of projects has been envisaged for the development of joint fields located in West Karoun.

“One of these projects is the second phase development of the South Azadegan field by setting up a consortium of Iranian companies,” he said.

Khojasteh-Mehr said that due to its realistic view of the upstream oil sector, the 13th administration made decisions to accelerate incomplete projects related to shared oil and gas fields’ development.

“The second priority for the 13th administration was to strike new agreements with joint fields accounting for a big share of output,” he said.

Khojasteh-Mehr said the third measure was to increase output from the fields that had already been developed.

He said production from the South Azadegan oil field had increased over the past seven months.

The official added that the second phase development of South Azadegan was open to foreign investment.

He said that the Iranian Central Oil Fields Company (ICOFC) would be handling onshore fields in West Karoun, while the Iranian Offshore Oil Company (IOOC) and the Pars Oil and Gas Company (POGC) were in charge of offshore projects.

“Contractors are also going ahead with the development of the Sepehr and Jofair oil fields in West Karoun,” added Khojasteh-Mehr. He noted that the two fields would see their output increase in the current calendar year.

“For preserving oil output and bringing production capacity back to pre-sanctions levels we did not need any foreign nations and we entirely used our domestic capacity in terms of manpower, commodity and equipment,” said the CEO of NIOC.

Khojasteh-Mehr said that Iran’s position as the top holder of oil and gas reserves combined was an element of strength for the country.

“Based on recovery factor, Iran’s recoverable crude oil reserves stand at around 157 billion barrels, while our recoverable gas is about 33 tcm, but our combined oil and gas volume is 330 trillion barrels of oil equivalent.

The CEO of the National Iranian Oil Company continued: "In terms of the volume of in-place oil and gas reserves, we have a total of more than 1,200 billion barrels of oil equivalent of in-place gas liquids and gas condensate."

Sarakhs to Become Mideast Sulfur Hub

The head of Shahid Hasheminejad Gas Refining Company announced that 100% of domestic power had been used in the construction of Shahid Soleimani's sulfur complex.

Yahya Feizi, referring to the opening of two plants in the Shahid Soleimani sulfur complex in the presence of President Ebrahim Raeesi and Iranian Minister of Petroleum Javad Owji, said: “Shahid Hasheminejad Gas Refining Company produces a maximum of 2,000 tonnes of sulfur per day. The company had previously faced the problem of storing 2.5 million tonnes of sulfur, which caused safety and environmental problems. At that time, the company had to transport its sulfur in raw form to Bandar Abbas and from there to India and China.”

President Raeesi inaugurated two of the four plants of Gonbadli's Shahid Soleimani Sulphur Complex.

Feizi said: “Now, using the power of knowledge-based companies and private sector investment, this sulfur has been delivered to four private sector factories in molten form and is converted to granulated sulfur with a value added of $15, bentonite fertilizer with three times value added and micronized sulfur with eight times value added.”

Iran Exported Gasoline, Gasoil in March 2022

Iran’s deputy petroleum minister for refining said the country exported a gasoline shipment, as well as three cargoes of gasoil in March, 2022.

Jalil Salari added Iran has increased the amount of fuel in its storage depots and even lived up to the commitments on fuel exports made during the previous administration.

The CEO of National Iranian Oil Refining and Distribution Company (NIORDC) further said Iran is now capable of both meeting local demands for fuel and exporting surplus reserves.

Elsewhere in his remarks, the top official underlined that the rate of fuel consumption in the country is extremely high, adding a movement should be launched to optimize energy consumption.

He said plans are underway to enhance storage capacity at the country’s refineries, adding several refinery projects are currently underway and will be completed in 2022.

Energy Mix to Diversify

CEO of National Iranian Gas Company (NIGC) Majid Chegeni has underscored the need to diversify the country’s energy mix.

“In the light of the position of natural gas in the country and the world and the variables currently existing around us, we decided to establish the Gas House as a think tank in order to catch up with technological progress,” he said.

Chegeni said that the idea of Gas House within the Institute for International Energy Studies (IIES) was raised to respond to NIGC research needs. He added that the main task assigned to the Gas House was to regularly monitor challenges and issues related to the gas sector for informed decision-making. 

“NIGC-related issues including gas supply and demand, production, storage, energy intensity are among issues to be focused upon,” he said.

He called for the diversification of the energy mix and implementation of energy efficiency plans. “Last winter, we were producing 850 mcm/d of gas in the winter peak, which is a record. But unfortunately the bulk of this amount was consumed by the household and business sectors.

Petchem Output Target Reached

The CEO of National Petrochemical Company (NPC) announced the realization of the production plan of the petrochemical industry for the previous calendar year, which ended on March 20.

Morteza Shahmirzaei said: “The NPC status has become much stronger following privatization, and today could be more dynamic than before, provided more precise planning, monitoring and control.”

“The development policies of the petrochemical industry are not and should not be subject to administrations’ political tastes; any industrial development program that is based on science and expertise and away from tendencies and prejudices must be continued.”

He considered the revision of petrochemical industry development plans that have not been developed or have not been done based on expert studies as one of the priorities of NPC, and stressed that the red carpet should be spread for investors and industrialists of the petrochemical industry.

Shahmirzaei also touched on the readiness of NPC to bolster its international ties: “Whether the Vienna talks succeed or not, the general environment for foreign investors to join Iran's petrochemical industry has been prepared and preparations have been made to improve international interactions in the petrochemical industry.”

Iran Lifts Oil Output to Pre-Sanctions Levels

Iran’s Minister of Petroleum Javad Owji has said the current capacity of oil production in the country has exceeded 3.8 mb/d, thereby reaching the pre-sanctions levels.

“We hope to reach higher figures in crude oil, gas condensate and other petroleum products and petrochemicals exports during the calendar year,” he said.

“By taking effective measures in the onshore and offshore oil fields, drilling new wells and workovers, reconstruction and modernization of facilities, oil collection centers, the country’s crude oil production capacity has reached the pre-sanctions level which is 3.8 mb/d,” he said.

He added: “In the gas sector, thanks to National Iranian Oil Company (NIOC) and National Iranian Gas Company (NIGC) efforts in the winter, the highest figure of gas production from the South Pars joint field was 705 mcm/d.”

“With strong will, identifying customers and new markets, strong marketing, using different methods in oil contracts and using committed and specialized forces in this field, this happened and the sale of crude oil and gas condensate has reached high figures.”

Asked if the Petroleum Ministry had any plans to sell more oil, Owji said: “Yes, oil export capacity, especially gas condensate, was low last year, and we hope that with the efforts of our colleagues in this sector during [the calendar year of] 1401 [which started on March 21] we will obtain higher figures in the field of exporting crude oil, gas condensate and other petroleum products and petrochemicals.”

He noted: “Today, in the 27th ministerial meeting of OPEC+, the members agreed to roll over their last month's decision and increase production by 432,000 b/d for May.”

“The daily increase of 32,000 barrels compared to the figure set for last month was considered, and all members agreed with the decision and it was decided that the members of OPEC+ should closely monitor the conditions of the global oil market,” he said.

“Political and security tensions in the world's oil-rich regions have raised concerns, but rising oil prices are being monitored by OPEC+ experts," Owji said.

Greenhouse Gas Emissions Falling in NISOC-Run Areas

Oil companies in Iran are required to curb their greenhouse gas emissions. National Iranian South Oil Company (NISOC), which supplies 80% of Iran’s oil, has adopted a series of measures including gas flaring control, energy loss management and processing supervision to cut greenhouse gas emissions by many affiliated production companies. Mohammad Reza Naderi, head of HSE at NISOC, tells “Iran Petroleum” that production of 33 million tonnes of carbon dioxide could be prevented.

The following is the full text of the interview Naderi gave to“Iran Petroleum”  .

How does NISOC deal with environmental issues, specifically air quality which has turned into a national issue in recent years?

First of all, let me offer a scope of the extent of operation by NISOC. NISOC covers the provinces of Khuzestan, Kohguiluyeh and Boyer-Ahmad, Bushehr, Fars, Ilam and Lorestan. The company supplies 80 percent of the country's oil and about 20 percent of its gas. Obviously, due to its activities on such a large scale and with a high volume of oil production, the company deals with thousands of oil and gas wells, numerous and scattered operational units and hundreds of thousands of kilometers of the main pipeline. In this vast area, there are various ecosystems, different topographies, drinking and irrigation and water dams as well as numerous protected areas, which shows the great importance of the area in terms of environmental issues. As you know, some of NISOC installations are ageing, therefore, any process or operational changes in the complex and facilities will also affect its surroundings. It is noteworthy that development of residential areas has also overshadowed the safety zones of the company's installations, therefore, their proximity to industrial zones without observing pre-determined boundaries, will double their impact on industrial activities. However, in addition to its commitment for environmental protection, the company has also defined and implemented several environmental projects to control and reduce environmental pollutants. All our efforts are focused on using the installations and equipment and executing processes in line with the environment and in this way we have never shirked from our main mission. On the other hand, we have to admit that we, as an oil company, have our own pollution and we may cause pollution unintentionally or in the event of an emergency. In this regard, the environmental problems of NISOC have been identified and necessary operational plans have been defined and developed for all of them. We also have good interactions with provincial departments of environment, emphasizing the observance of legal requirements in the scope of the company's activities, so that a combination of experience and technical know-how of oil industry staff with the environmental knowledge of provincial departments of environment has resolved many problems. With this introduction, I should say that numerous environmental projects or programs have been defined in various sectors, especially in the field of air quality. Among the company's programs are gas flaring prevention, self-declaration reports on sources of pollution, cooperation with the Khuzestan provincial department of the environment in monitoring and controlling air pollution, using mobile oil treaters (MOT) and mobile oil separators (MOS) and green burners, injecting waste to disposal wells and building a standard evaporation poll, conducting environmental impact assessment (EIA) reports, management of waste, management of drilling cuttings, combating hazes as a public interest measure and green space projects.

Why is there gas flaring?

Flares are essentially designed as a safety measure for a factory and based on engineering standards for emergency conditions. The main reasons for excess gas flaring are gas burning with the aim of creating safe operating conditions, gas burning due to operational and repair problems, gas burning due to power outages in oil and gas factories, gas burning due to non-receipt of gas by downstream industries. These cases lead to flaring until the problem is resolved. In fact, flares are not used as permanent equipment and are used due to the need in emergency situations. Therefore, it is not possible to remove the flare completely, but it is ensured that continuous flaring will be prevented by implementing plans to prevent the flaring of associated gas.

What have been NISOC’s major measures in gas gathering?

Numerous projects have been defined by NISOC’s Corporate Planning Division to prevent gas flaring, some of which have become operational and some are in the implementation stage. On the other hand, by attracting investors, projects such as collecting 593 mcf/d of Aghajari and Gachsaran associated gas, gathering 249 mcf/d of flare

gas at Karoun and Maroun are being implemented. Furthermore, the private sector has been engaged in two flare gas gathering projects, including 3.5 mcf/d in Parsi Cluster and 22 mcf/d in Maroun. In compliance with HSE requirements in all of NISOC projects, effective measures have been included in the agenda of the relevant managements and units. For example, in all output preservation and enhancement projects (28 reservoir projects), which are currently being implemented as a megaproject, environmental requirements, especially treatment of contaminated soils, reuse of effluents, basic management of drilling rigs and no flaring are considered. And this issue has been emphasized as an obligation in the contracts between us. I emphasize NISOC’s support for private companies. Other measures undertaken to help improve air quality include using MOT and MOS. This equipment was first used by Karoun Oil and Gas Production Company, an offshoot of NISOC. All affiliates are now using these facilities and NISOC currently owns 15 such devices. There are also devices that have been rented from other companies. This equipment prevents the burning of oil in the fuel pit during workover or reclamation of wells, and thus contributes significantly to reducing the emission of pollutants into the air. For example, from April 2020 to March 2021, the amount of oil collected due to the use of MOT and MOS equipment is 17,220 barrels of oil in Karun Company and 154,702 barrels in Maroun Company, which was previously burned, is now collected and returned to the operational units. At NIOC, the amount of greenhouse gas emissions is calculated annually according to the instructions and guidelines of the Petroleum Ministry. In the method of calculating the emission inventory of greenhouse gases, various sources including emissions from fixed combustion sources, flare, volatile emissions and indirect emissions such as emissions due to electricity consumption are considered. It is worth mentioning that due to the lack of liquid combustion, the source does not emit greenhouse gases. Comparative statistics from 2016 to 2020 show that the amount of greenhouse gas emissions in many companies operating in NISOC-run areas has decreased. This has been achieved through gas flaring control, process monitoring, energy waste management and implementation of gas flaring prevention projects. The company is also committed to implementing appropriate control measures to reduce emissions to the minimum possible in the event of air inversion. According to international standards, many of the world's leading oil companies have announced to reduce per capita greenhouse gas emissions by less than 20 kg per barrel. According to the available statistics, NISOC has now been able to be in the range of international standards in two of its subsidiary companies in the area of impact in Ahvaz (Karun and Maroun oil and gas production companies), where it has limited gas emissions to below 20kg. If the above-mentioned gas gathering projects are implemented, our company will have the ability to fulfill the commitment of the Paris agreement to reduce greenhouse gas emissions for the whole country. With the full operation of the projects and during the production ceiling, the emission of about 33 million tonnes of CO2 can be prevented. Of course, let us not forget that the Paris agreement also applies to all industries in the country, which fortunately, the petroleum industry is also a leader in this field. On the other hand, due to the need of petrochemical companies for the gas produced by NIOC, these companies have also entered the field of associated gas projects. Considering plans to reduce greenhouse gas emissions in the downstream sectors of the petroleum industry, greenhouse gas emissions will also be significantly reduced. Obviously, the share of the petroleum industry in the emission of greenhouse gases in the whole country is much lower than other industries and resources (especially mobile sources), but the company has taken all possible steps to significantly reduce the amount

of greenhouse gases. I should also announce that the NISOC’s Environmental Protection Division, following National Iranian Oil Company (NIOC)’s guide, has developed software that has facilitated the calculation of pollutant emissions. This software has won the NIOC approval and now other oil companies also use this software. It is crystal clear that performing accurate calculations and collecting pollutant emission data is the first step to formulate principled and correct operational plans in order to reduce pollutant emissions.

When will Khuzestan residents see no flaring?

Associated gas gathering projects started for the first time in the 1960s and now up to 80% of the associated gas production is collected. These data show that NISOC has made a serious determination to reduce flaring, as facts on the ground attest to. This has been achieved through implementation of projects to prevent flaring of associated gas, control of gas burning and continuous monitoring of the process conditions by specialized and experienced groups in the petroleum industry. According to available statistics, it is clear that a significant amount of air pollutants has been prevented. As mentioned above, flares are not used as permanent equipment, but are just used due to emergency needs. Therefore, it is not possible to completely remove the flare due to the operational need in special circumstances, but it is ensured that continuous flaring is prevented and reduced to a minimum by implementing plans to prevent combustion of associated gases. According to the studies performed (according to the forecast of production and distribution of gas 2021-2025), if the conditions are provided and problems are solved, with the implementation of environmental programs and projects, all the flare gas will be zero by 2025. Financial problems, operational cases and unforeseen events are other reasons for the difference in forecast and performance.

Can the goals be reached as long as sanctions are in effect?

The zero-flaring scenario in 2025 has been developed on the assumption of persistence of the present circumstances. In such a way that thanks to the opportunities obtained due to sanctions and through the use of services and internal empowerment, we seek to realize projects. To this end, in many sectors of the industry, using the ability of domestic experts and specialists, basic and effective measures have been taken and the experience gained will help the industry even if the current unjust sanctions remain effective or are lifted.

Is there enough budget for environmental activities?

Project applicants follow up on the announced routes through specified channels. In this process, the HSE  Directorate has a supervisory aspect, which can help prioritize environmental projects. Fortunately, due to the importance of the environment, the managers of this company are also committed to protecting the environment. This has played an important role in seeking approval, providing liquidity and promoting environmental projects. Obviously, improving financial conditions plays an important role in accelerating the implementation of environmental projects.

Do you have any short-term plans to blunt the impact of existing flares?

NISOC, using the knowledge of petroleum industry experts and potential of oil service workers, has managed to implement smoke-free flares as a short-term solution. Smoke-free flares are aimed at more efficient flaring of associated gas in a bid to increase the output of combustion. The environmental advantages of these projects are full combustion of hydrocarbons and preventing hazardous airborne particles, preventing emission of unburned hydrocarbons particularly aromatics and reducing their associated environmental and health risks and preventing emission of the poisonous carbon monoxide. This project was implemented as a pilot in operational units No. 2 and 3 of Karun Oil and Gas Production Company in Ahvaz. Due to the success of the project, the necessary planning is underway to improve the flares of other oil and gas companies, especially at Maroun Company. Furthermore, using the capabilities of domestic private companies, the type of flares is being improved. Currently, a local company in Khuzestan province is active in this field and by  making changes in some flares and after installing them, we are witnessing a significant reduction in the emission of pollutants. Considering the previously announced cases, using the capabilities of domestic companies in this field can be considered as a clear example of turning a threat into an opportunity at NISOC.

Do you also involve academic expertise in pollutant reduction?

NISOC has an R&T division, one of whose tasks is to link the petroleum industry and university. Numerous research projects have been planned in this division, the output of which is used as designated solutions to solve the company's problems. A meeting with university professors in the field of air quality is also planned to benefit from their views and experiences as scientific experts in improving the methods of work. Our concern, not only as employees of this company but also as citizens, is to solve the problems of pollution and this issue has caused us to follow the executive plans of this sector more seriously.

Flare Gas Capture Set to Culminate

Recently, Minister of Petroleum Javad Owji oversaw the signing of eight contracts for gas gathering east of the Karoun River. The minister said then that flare gas gathering projects would be completed before the 13th administration bows out.

Noting that the Ministry of Petroleum was ready to assign development of oil and gas fields entirely to petrochemical companies, he said: “The deal by Petroleum Ministry and petrochemical plants is a win-win deal for both sides, as petrochemical companies may secure gas and liquid feedstock for their plants for at least 30 years by developing oil fields in less than three years.”

Engaging Iranian Banks

The 13th administration has sought to finance associated petroleum gas gathering projects in various ways since taking office, and has never tied development of the extensive oil industry to nuclear talks. National Iranian Oil Company (NIOC)’s senior managers recently gathered to exchange views about ways to make more optimal use of financing by money market actors.

Directing banking resources to the industry that drives national economy, undoubtedly leads banks to play a positive role in the economic system. The Petroleum Ministry recently announced that a consortium had been established comprising local banks for investment in the petroleum industry. This banking consortium is expected to invest $4 billion in the first step in the petroleum industry, which would gradually increase, as more banks are engaged. That is a positive step for the petroleum industry, the banking system and the entire national economy.

The cooperation of the banking system with the oil industry is an issue that has been neglected for many decades and this issue is considered as one of the factors of the country's economic underdevelopment. Establishing and strengthening the mechanisms for the presence of the banking system in the oil industry, in addition to filling the gap of lack of financial resources for the implementation of oil industry development plans, will lead to sustainable and economic efficiency and profitability of the country's banking system. Over recent years, the banking system has been severely criticized for its engagement in the country's economy and the tendency of banks to serve as dealers as intermediaries in the housing, car and foreign exchange markets because its presence has resulted in nothing but intensification of market chaos.

For years, the petroleum industry, under the unjust and unilateral sanctions imposed by the West, has not been able to seriously benefit from foreign direct investment in the upstream and downstream sectors. Petroleum Ministry and industry managers are trying their best to keep the oil industry development running with a view to development objectives by relying on Iranian companies and banks.

Petchem Money

In the meantime, one of the important projects of the petroleum industry, has been to gather associated petroleum gas. Prior to the 1979 Islamic Revolution, due to the non-operation of independent gas fields, a small portion of associated gas was collected and processed to be fed into Iran Gas Trunkline 1 (IGAT-1) for urban gas and power plant supply. Iran was also exporting gas to the Soviet Union.

The Petroleum Ministry of the 13th administration has decided to use new methods such as utilizing the power of industrial holdings to invest in the upstream sector, such as gathering and processing associated gas, in order to prevent flaring. The decision, which has been welcomed by petrochemical plants due to its sustainability in feed supply, led to the recent signing of a $500 million East Karun gas gathering contract and the signing of a West Karun flare gas capturing contract with the Persian Gulf Holding Company.

According to international documents, Iran’s oil industry has pledged to reduce its greenhouse gas emissions un-provisionally by 4% and provisionally by 8% by 2030. The Petroleum Ministry is now considering steps to prevent environmental pollution and fulfill its commitments in associated gas gathering.

During the past years, steps have been taken to determine the task of this category, including the simultaneous implementation of 9 national projects with a total gathering capacity of 5.1 bcf/d of flare gas, including Bidboland Persian Gulf gas refinery (four LNG projects). Persian Gulf Yadavaran gas refinery (NGL 3200), Hengam gas refinery (Qeshm Island gas flare), (Dehloran) and NGL 3200, Maroun field, and NGL in Kharg Island.

Gas Gathering

Statistics provided by the Department of Corporate Planning of National Iranian Oil Company (NIOC) in 2016 shows that the flare gas to be potentially gathered amounted to nearly 43 mcm/d (more than 100 million barrels of oil equivalent a year). 

Petroleum industry managers and experts have always been concerned with gas flaring. Now, the 13th administration’s Petroleum Ministry has taken steps to finalize gas gathering projects.

Skid-mounted facilities are an option for ending associated gas flaring. Skid-mounted flare gas recovery systems are easy to install. For instance, a 100mcf/d processing unit may be built within 15 months and installed in three months, far less than the 10 years required for building an NGL unit in Iran. Skid-mounted processing equipment may separate gas condensate. Therefore, it is the most optimal method for increased production in Iran.

Amak Project

Capture and conversion of flare gas may have many economic and environmental benefits. In this regard, in a bid to prevent the flaring of associated gas and environmental pollution, fill feed shortages at petrochemical plants, produce light gas for industrial and domestic use and finally make optimal use of these gases, NIOC has prioritized the plan to collect associated gas in the Bangestan oil layer (AMAK), Ahwaz, Ab Teimour, Mansouri, Kupal and Maroun oil reservoirs.

Prior to the time that Amak project had become operational, 241 mcf/d of sour gas, associated with the Bangestan layer’s oil, was flared, emitting about 9,000 tonnes a day of pollutants. 

During the startup phase, the first step included operation of four gas compressor stations, and a sweetening refinery.

With the completion of the first phase of the Amak project, the economic step of the project including 17 sour gas compressor and dehydration stations, a sour gas condensate refinery, 280 km of pipelines and 95km of power transmission lines and several substations was realized.

Following the operation of the last pressure compressor station in 2009 and an acid gas desalination plant in 2021, 28,000 b/d, worth $1.68mn, of gas liquids was produced. Moreover, 182 mcf/d of gas, worth $780,000, is delivered to National Iranian Gas Company (NIGC). Therefore, the gas and condensate recovered from this project is valued at $2.46mn.

The second phase of the Amak project is environmental, which includes 96km of 12-inch pipe. That helped prevent the flaring of 14 mcf/d of acid gas to allow for the delivery of up to 18 mcf/d of gas to the Razi Petrochemical Plant.

According to the CEO of National Iranian South Oil Company (NISOC), Iran’s crude oil production capacity is 3.8 mb/d, of which 3 mb/d coming from southern regions. Associated gas is key feedstock for petrochemical plants, which may be used for domestic consumption. However, the required credit was not allocated to this project by previous administrations.

With the implementation of the Amak project, about 86% of the associated petroleum gas is currently gathered in oil-rich southern regions, which is allocated to domestic consumption or injection into oil reservoirs for maximum efficient recovery (MER).

Less Pollution in Oil Hub

NISOC is recovering 18-20 mcm/d of flare gas, financed by Maroun Petrochemical Co. and Bidboland Persian Gulf refinery, to feed petrochemical plants. Other projects are under way in western and southwestern Iran for gathering about 12 mcm/d of flare gas to feed petrochemical plants.

Numerous projects have been formulated by the NIOC Directorate of Corporate Planning with a view to recovering flare gas. Some of these projects have already become operational and some others are close to coming online.

On the other hand, by attracting investors, the Aghajari and Gachsaran gas gathering projects are being operated at the rate of 593 mcf/d and Karoun and Maroun projects at the rate of 249 mcm/d.

Less Pollution in Gas Hub

License has been granted for the finalization and financing of a project to cut gas flaring by 20% at ten refineries in the South Pars gas field with a view to stopping the flaring of 2.3 bcm a year of associated gas. That would be one of the largest environmental projects in the petroleum industry.

The comprehensive sustainable development project is aimed at the integrated management of all refineries and facilities at the South Pars gas field, as well as refining South Pars pollutants, including oil, gas and petrochemicals. Under the aegis of cooperation on the part of NIGC and National Petrochemical Company (NPC) managers, this project has made progress in the three sectors of management of refining and consuming polluting gases, managing polluting liquids and managing polluting solids (specifically sulfur). 

Due to the high economic value of flare gas and the indirect benefits that come from gas gathering, different countries in the world have made large investments in this area and have been able to reduce the volume of their flare gas to a large extent. Persian Gulf countries such as the UAE, Kuwait and Saudi Arabia are among those countries that have ended flaring at oil fields.

In general, considering that flare gas gathering in addition to direct economic benefits has many indirect benefits such as reducing environmental pollution and in the Sixth National Development Plan, special emphasis has been placed on gathering flare gas, the Petroleum Ministry should take this path more seriously and quickly.

For these projects to be more successful, it is necessary to reduce the investment risks in this field and to price the products that are to be produced from the captured flare in such a way as to encourage the investor to step in.

Optimal Use of Flare Gas Envisaged

Over the past century in Iran, the flaring of associated petroleum gas (APG) has had adverse impacts on the environment and endangered the health of the local community of oil and gas industrial areas. Turning off these flares is a must both economically and is in compliance with international obligations. Therefore, Iranian petrochemical companies have moved to make long-term investment in this sector with a view to ensuring sustainable feedstock supply. A case in point is the Bidboland 2 gas refinery.

To prevent environmental pollution, Iran’s Petroleum Ministry increasingly decided to collect flare gas. Of course, over recent years, Iran has made serious moves to decide on this issue.

According to the statistics provided by the Corporate Planning Directorate of National Iranian Oil Company (NIOC) in 2016, the potential amount of associated gas for capturing was about 43 mcm/d (more than 110 million barrels of oil equivalent per year). According to the hydrocarbon balance sheet data of 2016, the average growth of losses of all gas processing systems and flared gas through 2006-2016 has had an average annual growth trend of 11.1%, which can be attributed to a significant hike in gas production and operation of new systems. Gas processing attributed to the period. Therefore, plans to end gas flaring and instead capture flare gas has always been raised as a concern by officials and experts in the petroleum industry, and Iran’s Petroleum Ministry is required to decide the issue by the end of the Sixth Development Plan.

EOR

With the drilling of the first production well in Masjed Soleiman, and through following periods, oil production in Iranian fields has been done by natural recovery and APG has been flared. Various projects were envisaged for gathering flare gas, some of which are NGL plants to separate flare gas, the Amak project, the Kharg flare gas gathering, the Siri flare gas gathering among others.

The most effective way to compensate for the current drop in reservoir pressure in Iran is the simultaneous injection of gas along with oil production. The method was successfully implemented in the development of the Darquain field, and from the first phase, with the wellhead production of oil and gas separation, the separated gas was immediately returned to the well using high-pressure compressors. Most of the country's oil fields have passed their half-life; however, efforts should be made to implement the method used in the development of the Darquain field for the rest of the production period. Iran’s petroleum industry is currently considering two main plans, including awarding oil-related gas collection projects to the private sector and petrochemical holdings.

Accordingly, in the current situation, the simultaneous implementation of 9 NGL projects with a total gathering capacity of 5.1 bcf/d of associated gases including the Bidboland 2 gas refinery projects (including four NGL projects), Persian Gulf Yadavaran gas refinery (NGL 3200), Hengam gas refinery (Qeshm Island gas flare), (Dehloran) and NGL 2300 in the Maroun field, NGL Kharg are on the agenda. With the implementation of these projects until 2022, the entire APG in Iran will have been converted to valuable products.

Largest Gas Gathering

Last calendar year, the Persian Gulf Bidboland gas refinery project was put into operation as the largest facility for the gathering and processing of flare gas with an investment of more than $3 billion. With the commissioning of gas gathering facilities, the Persian Gulf Bidboland gas refining project, which has a processing capacity of over 56 mcm/d of associated gas, will produce 3.4 million tonnes of petrochemical feed. In parallel with the construction of the Persian Gulf Bidboland gas refining project with a view to gas gathering in East Karoun, two contracts were signed with the Persian Gulf Petrochemical Industries Company (Persian Gulf Holding) and the Maroun Petrochemical Company.

Dehloran Gas Gathering

The project for gas gathering and establishment of gas compression station at Dehloran is another gas gathering project in Iran, which has been awarded to an Iranian company for €125 million. The project has started for maximum recovery from joint fields and preventing the flaring of 82 mcf/d of flare gas. Construction of the Dehloran gas compression station is the last link in the feedstock supply chain of NGL 3100 for the purpose of gas gathering in Dehloran and Danan, which would serve as feedstock.

Construction of this station and gas transmission pipeline, would enable delivery of 71 mcf/d of gas from the Azar field. The flare gas at Dehloran, Danan and Azar totally supply more than half of NGL 3100’s feedstock.

Iran Respecting International Treaties

Iran’s petroleum industry is internally obligated to reduce its greenhouse gas emissions by 4% non-provisionally and 8% provisionally by 2030. To this end, Iran can take advantage of the opportunities offered by the Paris climate deal in order to reduce its gas flaring. Iran has a specific plan to fully eliminate flare gas and one specific case is the 5th Six-Year Development Plan.

In a bid to bring the flare gas gathering project into operation, skid-mounted facilities may be used, which is an international solution. The advantage with such facilities is that they are built fast and they can be carried very easily. For instance, a processing unit with the capacity of 100 mcf/d may be built within 15 months and installed in less than 3 months, while building NGL plants in Iran may last more than 10 years. Skid-mounted equipment is able to separate gas condensate, and is as effective as an NGL unit. Currently it is the best method for enhanced production in Iran.

Why $100 a Barrel Could Be Bad for Energy Transition

With oil costing over $100 a barrel, and Russia’s war in Ukraine underscoring the risk of relying on fossil fuel, it would seem like a great time to speed up shifting from the polluting fuel, Akshat Pathi and Will Mathis write for Bloomberg, noting that the reality isn’t so simple.

Public support for climate action is higher than ever in most countries, but that doesn’t ease the economic pain when everything from food to transport costs get more costly. “This is an unfortunate downside of the economy we’ve got that runs on fossil fuels,’ said Charlie Donovan, a visiting professor of finance at University of Washington.

That reliance makes any imbalance between supply and demand a source of price volatility, including the current spike. In 2020, oil giants drastically pulled back on investments to enhance production volume on the assumption that covid-19 lockdowns would depress demand for their product. But the quick rollout of vaccines in developed nations led to a further-than-expected recovery and a shortfall in supply.

Now Russia’s invasion of Ukraine has added risk to oil supply, with economic sanctions growing. Analysts say the longer the war goes on, the greater the chance for the oil price to remain above the $100 mark.

There is another theory that oil companies may have been investing less in production over the last decade, pushing the price higher, because their investors are pressuring them to pivot to green energy. Though not everyone agrees with that. Even after discounting the upward pressure the war adds, the high oil price is “all due to things that happened during the pandemic,” said Ed Morse, global head of commodity research at Citigroup Inc. But what do elevated crude costs mean for the transition to clean energy going forward?

One argument is that high fossil fuel prices are a good thing – consumers might be incentivized to switch to more fuel-efficient or electric cars, take fewer flights and consider replacing oil-fired boilers.

The same applies to policymakers. “When the oil price gets very high, governments put in policies to move away from oil,” said Amy Myers Jaffe, head of the Climate Policy Lab at Tufts University. And that’s easier today than during previous price spikes. The last time oil stood at more than $100 a barrel was a decade ago when clean energy was still quite expensive, affordable electric cars weren’t in sight and the Paris Agreement hadn’t been signed.

Yet, clean energy has merely slowed down the growth of fossil fuel demand, and hasn’t yet led to substantial decrease in oil consumption in most countries. That’s because replacing fossil fuel-consuming infrastructure takes time. Consider what’s happening in Norway, where 65% of all vehicles sold in 2021 were electric, and yet oil demand has fallen less than 10 since 2013. Plus, there’s rising demand from developing countries that need more energy to fuel growing economies.

There are many ways in which high oil prices can actually hurt the move to clean energy, says Bob McNally, president of Rapidan Energy Group.

Consider what happened in 2021. As the price of natural gas hit record highs in Europe, governments spent billions of dollars in subsidies to ensure that energy remained affordable. Much of that money ended up in the pockets of fossil-fuel companies, which reported bumper earnings. Green power generators, who are typically locked into long-term price contracts, didn’t gain as much from sky-high electricity prices. Now that the war in Ukraine has led to prices soaring again, the biggest European importers of Russian gas, Germany and Italy are considering ramping up coal plants even as they build more renewables for the long term.

In the US, even ardent climate supporters have called for the country to increase fracking to counter the rise in gasoline prices. President Joe Biden, who ran on a platform of aggressive green action, called on the Organization of the Petroleum Exporting Countries (OPEC) to pump more oil even, he advocated taking more actions at the COP26 climate summit.

Extensive oil also drives up inflation, potentially prompting central banks to raise interest rates. That raises the cost of capital for everyone – including renewable companies, which have to pay more to borrow to cover the high upfront costs of building wind and solar plants. It should hurt oil companies too, but high returns mean they have less need to raise money through debt markets.

For now, the big question for oil markets is what happens in Ukraine. If the situation calms down then Jaffe, McNally and Morse predict that prices are likely to fall below the $100 mark later this year. What happens following that?

Jaffe expects prices to drop and stay low. She says oil production will increase and match demand. That should be good for the transition because it gives investors certainty. But it would be bad for the transition if people buy into the narrative that increasing renewable investments will lead to a decline in fossil-fuel investments and thus cause energy prices to spike again. “Even though in my opinion it’s not correct, it creates a perception of reality,” she said.

Morse expects price volatility to become the norm, and he says that governments will have to step in, to keep prices under control. “The energy transition, as some people say, is going to be a bumpy road,” he said. “That’s a euphemism for disruptive change. And when you get something that’s disruptive, it creates fragmentation within countries and fragmentation among countries.”

McNally, meanwhile sees a boom coming, with oil prices cratering initially but then rising to as much as $150 a barrel perhaps by 2024 or 2025. He says government policies will have to actually cut demand for oil, something McNally sees Europe accomplishing but not the U.S. or China.

That’s a pretty wide range of possibilities and that’s never good for investors. “In long term, the only solution to get out of volatile situation is getting off fossil fuels,” said Donovan from the University of Washington. But the current elevated oil prices are “damaging and rationally leads policymakers to put off making the kinds of expenditures that would be required to make the transition.”

Energy Transition: Fact from Fiction

Fereydoun Barkeshli,

President, Vienna Energy Research Group

Modern history is totally acquainted with energy shocks, shortages, price hikes and panics on the buyers’ side and on the sellers’ side as well. But the current worldwide rising energy prices and large scale volatility for all key fuels and sources, is something entirely new and never experienced before. It is in fact puzzling in a way that no game theorists and econometricians could cope with and accommodate it. From Colorado minus $40 a barrel to plus $ 95 per barrel early February 2022 is something never seen before. This is a challenge to the consumers, suppliers, governments, bankers and societies everywhere.

Coming as it does, at a time of advancing energy transition, an upheaval in the world’s economic systems as big as the Industrial Revolution of the past centuries - perhaps still bigger. It confronts policy makers with issues of unparalleled complexities. If and in case it is not yet clear to some energy planners, and to some of those most concerned with the link between energy supplies and climate change advocates, it should soon begin to become so for the right and realistic reasons.

At root, the problem is about matching, and trying to keep a balance between changing patterns of supply and changing patterns of demand. The broad medium term is to describe and envisage, which is to wean the world off carbon- loaded power generation and on to a decarbonizing energy production and consumption system and culture. I would rather call this process as a socio- energy- cultural revolution.

But if this was well- intentioned since the beginning and of course favored by most governments, semi-governmental institutions and Non- governmental organizations, what happened in reality is that it led to a decline of investment in oil, gas and coal production, and if demand for these conventional fuels does not drop as fast as supply, it does not need a gigantic intelligence to figure out how a panic buying would lead to skyrocketed prices, without necessarily leading to much more supply of renewable sources of energy.

Investment squeeze and its impact on capacity built up

In fact, the process of disinvestment started in early 2000 when United Nations entered the environmental campaign scene and began Zero Carbon movements globally. I believe that the pandemic that appeased demand for conventional fuels came to the rescue of drastic supply shortages. Add a few special circumstances and a price explosion never seen and thought before follows, along with intense volatility. That’s what happens when the individual demand for power surges- whether from burning oil, gas or coal as the world recovers from the pan; when China and India, Africa and Latin America turn back to burning more oil and gas and coal and price quadruple when extreme weather patterns distort both supply and demand.

Most important renewable sources of energy such as solar and wind are weather-related. A severe cold in Texas or a wind-less summer in Europe means no electricity. Conventional fuels cannot compensate or complement each other. Renewables are sourced entirely different from conventional. We; therefore, need to find out a middle path for the energy transition. I believe that the issue of energy transition has to be depoliticized and dealt with scientifically. Of course, in the long term the situation should in theory sort itself out and a new and more stable energy and power supply pattern could emerge. The investment which is deserting fossil fuels sector will stream into renewables and into new storage technologies in the next several decades.

Fuel vectors like hydrogen will eventually emerge but carbon capture technologies and de-carbonized natural gas and petroleum products will also emerge and provide not just for a smooth transition from fossil fuels to renewables but as a destination for a better and more efficient usage of natural resources in the universe and available to humanity. I don’t intend to philosophize the subject but would like to quote famous economist Myrdal Keynes who famously wrote that in the long term we are all dead. Certainly whole generations of politicians will be gone. Eventually, if climate extremes are to be curbed and carbon emissions brought to net zero or near net zero, everyone will be happier. However, in the meantime there are lives to be lived by billions who depend utterly on reliable, affordable and uninterrupted energy supplies.

For families in colder climate, home heat is life. For older people the absence of winter warmth is death. Ever higher energy prices, so logically but coldly advocated by economists as means of chocking off demand and improving insulation, become instead the recipe for protest and popular resistance to all climate controlling measures. Injunctions to wear thicker clothes offer no comfort. Even if carbon- free energy becomes generally the cheapest, as it may, there will always have to be other forms of back-up energy to act as swing and stand-by suppliers in reserves. Gas turbines and domestic gas, may be mixed with hydrogen, will continue to play a vital part in blackouts that would follow and the social breakdowns that would follow. All this will require continued investment from elsewhere.

Two salient lessons can be understood from the present global energy turmoil. They are the first that each country or economy, if it is to prosper and to be secure will need multiple energy sources to ensure resistance when some unprecedented and unpredictable events strike. This is even relevant to oil or gas producing countries. Second, the global energy transformation, from the old energy order of the past to the emissions free order of the future, will require pacing and programming with a great deal of patience and care. According to 2020 World Bank report, some 70 percent of African population has no access to any form of modern energy sources. They rely on traditional and often harmful sources of energy derived from animal wastes to wood and vegetation sources that terribly harm the environment. COP approvals now require them to jump into solar, wind, hydrogen or fusion to overcome carbon emitting sources of energy.

Human civilization has benefited from more than 6 thousand products made from oil products and oil derivatives out of crude oil and gas. None of these products were available to humans before 19th century. With no known replacement for crude oil and natural gas in the foreseeable future, environmental organizations and activists demand unrealistic targets to put an end to oil and gas consumption. Virtually, all the components of wind turbines, solar panels, and all forms of transportation are assembled with products made from oil and oil products. Exclusion of oil and gas would mean the elimination of all that we are boldly asking to be discontinued within the next couple of decades.

Global community has demonstrated that they are not going to be mandated and regulated away from using products so essential to their well-being. International climate change advocates are simply disconnected from the reality. In the meantime oil producers seem to have taken sides with the comfort zone. That is to say they don’t speak louder than required. In fact, the United States, Britain and the Western countries, gained global dominance by monopolizing oil production, refining, technology and distribution networks. In later years, most parts of those potentials were taken over by oil producers and OPEC member states. Taking out oil from the world geopolitical map would mean a world without basic pillars of strength.

Iran is the most non-oil dependent country within OPEC and as such least concerned with oil demand for the next couple of decades. Most Middle East is struggling to diversify economies away from oil, but the focus of attention to the Middle East is oil-related and not necessarily for what they might or might not achieve in the coming years.

NOCs and Environmental issues

Iran is the pioneer of renewable energy in the Middle East. Iranian organization for New Energies was established some 27 years ago when climate change advocates were not in the scene. Iran currently produces the highest percentage of its energy from renewables, though still quite meager. Nevertheless, sanctions and twisted conceptions from sanctions have diverted the country’s energy strategy from playing the leading role it deserves in energy transition path.

National Iranian Oil Company as a leading NOC that has pioneered large scale R&E in several fields of downstream and upstream is set to play an active and decisive role in helping NOCs to establish a thorough and comprehensive plan of action towards a balanced and unbiased energy transition. The United States of America has tried to weaponize environmental issues as it has done so with oil industries in various countries during the last several years. National oil companies need to be aware of the risk of politicization and militarization of climate change.

Value-Added, Top Petchem Priority

By 2040, the annual market demand for petrochemicals and polymer products will be growing by 4.5 percent, while annual demand for petroleum products will be growing by less than 1 percent, indicating the importance of investing in and focusing on this value-added industry.

Currently, Iran holds 25 percent of the Middle East and 2.5 percent of the world petrochemical production capacity, making it the second largest producer of petrochemicals in the Middle East after Saudi Arabia. This is while big profits lie in the downstream petrochemical industry.

The pattern of development of the petrochemical industry is totally different from the past, the development of this industry in a period of high tonnage was the focus of feedstock and capacity building, but now in addition to maintaining these conditions, we must move towards chain development by looking at the world and paying attention to more details.

Therefore, petroleum industry managers are required to switch their focus from project implementation to project analysis based on market conditions and other factors. Development of this industry should be based on global development, supply and demand. For instance, last calendar year, $1.3 billion of petrochemical products were imported and therefore necessary feedstock should be provided for petrochemical plants.

Recently, a movement towards development of the petrochemical industry has begun with the aim of completing the value chain in Iran, and based on this, implementation of 33 projects has been defined as “driver projects” for the purpose of using diverse petrochemical feedstock throughout the value chain in order to activate small-sized industries, as well as industrial and chemical parks. According to the plan, with the implementation of driver projects in 6 different chains, about 3.5 million tonnes of feedstock will be allocated to downstream industries. Three groups of combined feedstock projects, propylene production and drivers are considered as strategic projects of this industry. Three combined feedstock projects, 11 propylene production projects and 33 driver projects are defined in 6 chains based on the market needs, whose investment is low.

Value-Added Creation

Minister of Petroleum Javad Owji has concentrated his plans on lowering raw material sales and creating value-added, particularly in the petrochemical industry. He has said that one way of overcoming sanctions would be to convert crude oil to products because during the past years of sanctions, supply of petroleum products has not been problematic. Meantime, the Iranian parliament has adopted a law on supporting development of downstream industries. Therefore, Minister Owji may benefit from this law and outline plans in support of development of the value chain with the help of the private sector and investors, which would also supply feedstock to downstream industries and support establishment of petrochemical parks. Planning for the value chain completion alongside petrochemical projects are among Iranian policies based on resilient economy.

Petrochemical exports have earned the country $9 billion in revenue since the beginning of the current calendar year. However, the reality is that Iran’s share of the global petrochemical trading is not as much as it deserves.

A key and unrivalled attractive point regarding investment in the petrochemical industry is long-term feedstock supply with high diversity. One interesting point is that there are eight feedstock categories in Iran’s petrochemical industry: natural gas (27%), ethane (14%), rich gas (17%), gas condensate (23%), kerosene (1%), NGL (10%), naphtha (7%) and platformate (1%). Iran cannot increase its natural gas exports now, but it may develop its petrochemical industry to convert natural gas to products and create value-added.

Petchem Jump

The total investment in 56 petrochemical plants in Iran totaled $53 billion in 2019, but the figure has now jumped to $70 billion in 83 plants, which would reach $93 billion by 2025. During last calendar year, 17 petrochemical plants came online to add 25 million tonnes to the petrochemical production capacity. Currently, the petrochemical production capacity has reached 90 million tonnes, supplied by 64 plants. With the completion of 65 new projects up to 2027, the figure would increase to 135 million tonnes.

According to plans, 43 million tonnes of petrochemical finished products would be manufactured in the current calendar year, 33 million tonnes of which would be exported, and the remaining 10 million tonnes would be distributed in local markets. In the current calendar year, more than $21.5 billion in revenue would be produced by the petrochemical industry, which would be a new record in this sector.

In terms of revenue, the petrochemical industry would see its income reach $37 billion by 2025, which would rise to $53 billion by 2027. That indicates the key role of the petrochemical industry in Iran’s macro-economy. The petrochemical industry would be receiving 2 million barrels of oil equivalent per day (mboe/d) as feedstock in 2025, which would increase to 2.3 mboe/d by 2027. 

PP and Value Chain

In recent decades, the petrochemical industry in Iran has witnessed significant production jumps in its upstream sector, so that today a significant part of Iran’s non-oil exports to world markets are products that originate from petrochemical products. Meanwhile, the lack of propylene and polypropylene as the main material for the development of the petrochemical value chain has always been one of the major causes of concern for the market.

Iran has long been grappling with the shortage of PP. Iran’s PP production by 2025 would be only 4% of total petrochemical output. This share stands at 18% for the world, 21% in China, 17% in the US and 16% in Saudi Arabia.

The value chain development for petrochemical products in Iran relies on quality upgrade and smart development. The ground has been prepared for PP chain projects following adoption of bylaw for building midstream and downstream petrochemical plants.

The current administration has also adopted a decision which comprises two sections. The first section is about construction of midstream and downstream petrochemical units with private and cooperative investment for transferring propylene into the country with a view to spatial planning and sustainable job creation, which would facilitate development to the valuable propylene chain in the country. The second section considers discount in feedstock supply.

Iran’s petrochemical imports mainly concern the propylene chain. Iran spends about $600 million on propylene imports, or 40% of the total sum allocated for petrochemical imports. Currently, Iran is producing 1 million tonnes of propylene, which is planned to reach 4 million tonnes by 2026.

A major element in developing propylene production projects in Iran is to provide its technical knowhow. PDH, GTP and MTP projects would bring the propylene production capacity to 4.5 million tonnes by 2025.

National Petrochemical Company (NPC) started building and developing petrochemical parks years ago, which would spur growth in the downstream petrochemical industry. It has been recently decided that downstream industries be established in industrial parks.

Catalyst Self-Sufficiency

As far as technology is concerned, the main sections are as follows: process, catalyst, technology and market. In this industry, the country's annual need for catalysts is $450 million while 40% of the country's catalysts are used in the petrochemical industry.

There are 40 groups of catalysts in the country, of which 16 groups have been localized and industrialized, and 9 groups will be produced soon, and 15 groups are in the research and development stage.

A total of 85 types of catalysts worth $270 million are consumed annually in the Iranian petrochemical industry. The share of polymers in this mix is $50 million. To date, we have manufactured 20 types, which is equivalent to $125 million per year, which would reach 36 types worth $195 million next calendar year.

Currently, 90 categories of products are being produced in 300 polymer grades in Iran, which would reach 105 by 2025.

Brazil Set to Stimulate Offshore Seismic Work

 The rise in oil prices will stimulate offshore seismic activity in Brazil but challenges remain to unlock projects, according to a report from BNamericas.

Andreia Leão Owens, a consultant for EnerGeo Alliance, told BNamericas that: “Environmental licensing has improved a lot over the years, but there are still difficulties.” Owens said that recent bidding rounds held by regulator ANP saw exploration blocks involved in environmental controversies.

“Seismic companies are the first in the oil and gas supply chain. If the risk is high, everything is very unstable for the companies,” Owens was quoted to say.

Kosmos Receives Ghana Pre-Emption Rights Payment

Kosmos Energy has issued an update on the sale of Occidental Petroleum’s interests in the producing Jubilee and TEN fields offshore Ghana.

After negotiating a deal with Occidental, Kosmos received notice last November from operator and partner PetroSA that they intended to exercise their pre-emption rights in relation to the sale.

Kosmos and Tullow have now concluded their pre-emption transaction.

Aker BP Assessing Oil Potential in Øst Frigg

Aker BP has proven oil during appraisal drilling on the Øst Frigg field in the Norwegian North Sea.

The Odfjell semisubmersible Deepsea Nordkapp drilled well 25/2-23 A (Øst Frigg Alfa) in license PL873, 45 km (28 mi) northeast of the Alvheim field and 220 km (137 mi) northwest of Stavanger.

Øst Frigg was discovered in 1973, the well proving gas and oil in reservoir rocks from the Eocene (Frigg formation).

However, although the Plan for Development and Operation (PDO) was approved in 1984 with the field producing gas from 1988 to 1997, the oil column at that time was considered too small to recover.

Lukoil Strengthens Shah Deniz Stake

Lukoil has completed its acquisition from Petronas of a 9.99% interest in the Shah-Deniz gas-condensate project in the Azerbaijani sector of the Caspian Sea, under a $1.45-billion transaction.

Following completion, Lukoil has increased its share in the project to 19.99%. Other parties are bp (29.99%, operator), TPAO (19%), SOCAR (14.35%), NICO (10%), and SGC (6.67%).

Shah Deniz, 70 km (43.5 mi) southeast of Baku, started production in 2006. The projects’ second development phase started in 2018.

Carbon Storage Agreement Offshore Australia

PGS and deepC Store have a Letter of Intent to jointly develop a commercial- scale carbon storage project offshore Australia.

Under the agreement, PGS will provide geological and geophysical advisory services.

The two companies say they will also investigate broader collaboration opportunities in the region.

Energy and Finance in Era of Rampant US Sanctions

Fereydoun Barkeshli,

President, Vienna Energy Research Group

The Ukraine recent crisis seems to reflect the 1973 Yom Kippur war in a major respect namely; the energy consequences. The 1973-74 oil embargo by some of the oil producing Middle Eastern countries resulted in shortage of oil in the market. Panic buying was the order of the day and international oil prices skyrocketed. The OECD governments rushed to the scene and then International Energy Agency was formed to combat any eventual scenarios again.
This happened again in early 2020 when Covid-19 pandemic broke out. I mentioned this to say that set and implemented half a century ago have mostly survived and stayed in place even after the crisis faded away. Today, while short-term options and scenarios are readily available to replace and curb the harm, global oil and energy markets adhere to more and less same or similar policies. Russia’s oil and gas trade and distribution is not under any embargo, though buyers and traders act or perhaps pretend to hesitate trading Russian oil and oil products.

One reason why this time around markets seem to have different views is that, European Union and pro-Western Economies such as Japan, South Korea or Australia are united in that they have semi-officially indicated that they intend to exclude Russian oil and gas from their energy calculations. No matter what the consequences of Russo-Ukrainian conflicts, western countries do not want to engage with Russia on energy issues. This is a gigantic statement.

Possible Scenarios

Europe imports some 40 percent of its gas from Russia through pipeline. Most of Germany and Europe gas arrives from Russia through Nord Stream 1. A second bigger pipeline was built and completed all ready for operation as Nord Stream 2 when Russia- Ukraine crisis broke out. European countries need this gas under any scenario.

It took Western Europe about 15 years to halve its oil consumption per dollar of GDP, which is now 70 percent lower than that of 1973.

This is the kind of effort the world would need to make again in the next 10 to 15 years in terms of carbon emissions, if it wants to achieve the Paris Agreement’s 1.5 degree centigrade target. Back in 1970’s energy efficiency was not in relation to carbon emissions. As such it was easier and more achievable. The 1970’s Arab oil embargo of the west and consequent high oil prices caused the OECD countries to deploy savings plans unheard of, in times of peace. Some measures were short-lived such as gasoline rationing in many countries, the introduction of car-free days in some European countries. Daytime lighting limitations and reduced electricity and power consumption.

Substituting Russia’s Energy

Similarly, in the case of a potential Russian oil and gas embargo either by Russia or Europe, some quick policy measures are needed. There are couple of candidates to replace Russian flow of oil and gas. From Venezuela to Algeria and Libya. However, it is needless to say that none of the countries on the list are capable to deliver what Russia is currently able to.

In the meantime, all parties try their best to blackmail America. Saudi Arabia wants The United States to come forward and bomb Yemen for them or to discontinue JCPOA negotiations in support of the Saudi incursion in Yemen. Poland and Hungry want more sophisticated weaponry, and Germany demands US support to diminish CO2 carbon emissions on their behalf. As if people consider the United States as an ailing champion who now needs to be respected, but still giving.

Russia is under extremely powerful international propaganda machine and still enjoying it. Russia is aware that roughly 9 mboe/d is not something that could be replaced in the short to medium term. Russia is in the business of wait and see game. However, all parties know well that Iran is a powerful compensation for Russia’s oil and gas. This is exactly where Iran has to play as a game changer.

In fact, even with Russia without any complications and war in Ukraine, supply of gas was inadequate to support Europe’s hunger for energy. European economy and specifically Germany, the largest economy in Europe needs energy and a lot of it. Europe was lazy or unenthusiastic to hit back at the United States when Washington imposed sanctions on Iran, and as such they severely pay for it.

Iran is a globally respected supplier of oil. People all around the world realize that Iran knows oil and is committed to oil. Consumers have seen Iran’s commitment to the customers. This was the case at the height of Eight Year long war of Saddam against Iran. As such Iran is the best candidate to compliment Russian shortfalls. In fact Iran’s oil production complimented Russian oil production even during normal circumstances. This is specifically true for Ural crude whose spec is very similar to the Iranian light.

Fragmentation of Global Financial System

To begin with, the world agrees that the United States of America has overused sanctions. There are currently twenty countries under US sanctions under varying reasons and pretexts. Of all types of sanctions, financial sanctions is full weaponization of international monetary and financing systems.

Overuse of US sanctions on global financial system has led most of the monetary economists and central bankers to realize and believe that dollar has lost its credibility as an international reserve currency. In fact, the

issue has been taken up by many world class economists such as Mearsheimer, noble prize winning economist who has openly called for a replacement for dollar as a reserve currency. It is known and accepted that the era of dollar denomination currency is over. The problem is to figure out how and what to replace dollar. What other currency or basket of currencies would be available as replacement.

Upon imposition of sanctions on Russian Central Bank, the country asked all buyers of Russian oil and gas to pay and settle their financial accounts in Russian Ruble. This idea officially came to effect on March 28, 2022. Russian Central Bank ruled that Ruble is bound to Gold. The rate was fixed at 5,000 Rubles per TROY ounces of gold bullion (that is 32 grams in each TROY ounce).

The conversion rate of Rubles to US dollar is 100 Rubles and 90 Kopeks, to each US dollar. If and once Ruble is bound to gold at 5000 Rubles per gram, and there are 32 grams per TROY ounce, meaning one ounce of gold would cost 160,000 Rubles, then converting that to US dollar means gold is $1600 per ounce when using Rubles, instead of $1,928 per ounce using dollar.

In other words, Russian Central Bank wiped out about 30 percent of the value of the US dollar, worldwide for gold bullion if choose to trade in Ruble. This is not yet a formal and recognized globally accepted financial practice. Bankers and financial strategists are closely watching Ruble performance. Analysts and currency watchers should soon begin to contemplate if and in case Yuan, Yen, Rupee or possibly Rial opt to form a viable basket of currency for energy trades.

Financial markets are already contemplating for a replacement of US dollar. United States has clearly passed the limits of banking sanctions against countries.

However, for the short term, Russia’s Central Bank has been raising interest rates to combat inflation. In fact, this is a practice that all central bankers adopt once they face an inflation risk. The US Federal Reserve is raising rate of interest, too. Nevertheless, interest hikes is a short-term remedy and for the medium to long term, a dollar replacement might have to be contemplated thoroughly. If oil and gas sales are pegged to Ruble and gold, Ruble will be stronger in longer term and can be re- pegged to dollar, Euro or any other currency from the position of strength. However, this would possibly lead the world economy towards a non- petrodollar future.

 Ukraine Crisis

Members of the BRICS: Brazil, Russia, India, China and South Africa abstained from condemning Russia in UN General Assembly. For BRICS members this is more and less seen as a supportive gesture towards Moscow. BRICS members brought up the issue of a common currency for trading amongst themselves in their heads of states conference in Brazil back in 2014. The topic was not fully explored in consequent meetings thereafter.

In fact the issue of a non- US dollar denominated currency was addressed by OPEC in late 1970’s and early 1980’s when US dollar was volatile and OPEC members’ crude equivalent purchasing power kept eroding. A special task force was formed. A basket of ten major international currencies (prior to the Euro) was established in order to safeguard the value of a barrel of oil in the face of weakening US dollar purchasing power. This was not taken up seriously mainly due to the technicalities of application by some of the member states.

Economic Cooperation Organization (ECO) whose secretariat is in Tehran also took up a common reserve currency other than US dollar.

Fragmentation of global fascinating systems through imposition of sanctions is a threat to global stability and sovereignty of countries. Sanctions have fragmented international financial systems and destabilize the world economy. United States is micromanaging world energy investments, technology transfer and supply chain in ways that threatens lives and livelihoods of citizens around the world.

The world economy requires a new Word Economy Order that allows a fair comparative advantage of resources. In the meantime, let’s also think that the United States might not be willing or capable of holding to dollar as the world reserves currency. I mean to indicate that America as a dollar lender and the world as dollar holders are equally and mutually responsible towards each other’s economies. In other words, United States is as much a hostage of global financial institutions as much as the other way round.

For now, Russia’s attack on US dollar might prove to be more devastating than US sanctions on Russia.

Multi-Disciplinary Training Course 2022

Mohsen Haerinejad,

President, Oil Industries Commissioning and Operation Company (OICOC)

Today, it is common knowledge that the Organization of the Petroleum Exporting Countries (OPEC) is instrumental in the global oil market, which may be seen as the market manager. OPEC is currently playing a constructive role in the market management as it can help stabilize the oil market because the idea behind establishment of OPEC was nothing more than building consensus with a view to containing the power and excessive demands by oil majors that were targeting proprietors of oil.

Ever since its establishment six decades ago, OPEC has made decisions and adopted policies with a view to interacting with consumers.

By regulating its official oil production, OPEC has always been balancing global oil prices. Preventing oil shocks, breaking the monopoly of big oil companies on the market and the global petroleum industry and controlling oil resources and acceding a reasonable level of revenue by member states are just some of the positive implications of the formation of the Organization.

Although today oil prices are determined based on market mechanisms, as well as trading in paper and physical markets, OPEC policies and decisions have always proven to be instrumental in the oil price behavior. It could be argued that in managing the oil market, OPEC tries its best in pursuing the rights of producers, consumers and investors whose interests may be in peril. OPEC has sought to supply oil in line with the market demand trend. Achieving sustainable revenue, securing supply and more importantly demand securing are parameters based on which OPEC makes plans.

OPEC brings together oil producers from three continents. That requires tying their economic interests together, which would increase mutual understanding between member states and help broaden ties.

OPEC is required by its statute to coordinate the oil policy of its member states and make sure about oil market stability for the purpose of guaranteeing regular oil supply to consumers, oil revenue to producers and ensuring return on investment to investors.

OPEC has faced many ups and downs during its career, but today it is recognized in the world as one of the most successful international organizations comprising developing nations. Over recent years, OPEC has seen a decline in oil demand, followed by a drop in oil prices. The OPEC+ agreement over recent years has been one of OPEC’s solutions to guarantee oil market stability, as well as prices.

As founder and proponent of OPEC, Iran is trying to pursue its national interests in the global oil market through its active presence in the organization, although over recent years unilateral sanctions have placed restrictions on its petroleum industry.

The OPEC Secretariat holds the annual Multi-Disciplinary Training Course (MDTC) to provide a platform for member countries to learn more about OPEC, its various missions and tasks, and to learn about the oil industry. Iran is actively present in these courses.

This year’s MDTC was held from March 28 to 31.

Addressing the event, Ayed S. Al-Qahtani, Director of OPEC’s Research Division, highlighted OPEC’s role in the oil market and cooperation with non-OPEC producers, as well as oil market balance.

Then, there was a presentation about the mission assigned to OPEC and governing bodies, as well as the role of the Secretary General.

It was noted that OPEC’s objective is to coordinate member states’ oil policy with a view to securing energy supply, guaranteeing fixed income for producers, stabilizing prices in the international oil market to remove fluctuations, ensuring regular supply of oil to consumers, and guaranteeing fair return for investors in the petroleum industry.

Then, there was discussion about OPEC’s reports and the global perspectives of oil and national economies.

In the Energy and Oil Outlook section, it was noted that covid-19 had a significant impact on oil demand, but OPEC was able to curb that impact extensively. It was also stated that the world's population will increase from 1.7 billion in 2020 to about 7.8 billion in 2045. Urban growth, population aging and migration are affecting the economies of countries. On the other hand, it should be noted that there is no significant advancement in the field of the petroleum industry technology, but lower costs occur in the production of renewable energies and lithium batteries (usable in electric vehicles). Moreover, penetration of electric cars is increasing. Renewable energy, led by wind and solar, is expected to gradually replace coal. Hydrogen is expected to emerge as a new energy carrier.

The following table shows the long-term annual growth of gross domestic product (GDP) in various parts of the world.

Pars Pipeline Opens New Horizons

The 400km new and strategic Pars Pipeline is being constructed for the delivery of 12 ml/d of refined petroleum products from Mehraran to Shiraz. The pipeline construction is aimed at developing export infrastructure as well as feeding power plants in eastern Iran.

The memorandum of understanding for the project was signed between National Iranian Oil Refining and Distribution Company (NIORDC) and Bank Tejarat. The signing ceremony was overseen by the ministers of petroleum and economics. Constructing this pipeline, whose objective is optimal fuel distribution in Fars Province, is instrumental in reducing fuel consumption, reducing operational costs (including road and pipeline building), reducing environmental impacts caused by road transport and reducing the volume of petroleum products storage in Fars.

At the same time, implementation of this pipeline, in addition to achieving Iran's long-term export goals, is considered as an alternative to road transport, which will enhance the share of product transportation through pipeline and reduce road traffic. Construction of 2 pump stations, 1 terminal and construction of a new oil depot with a capacity of 80 million liters in Fasa and development of the Shiraz oil depot are included in this project. The duration of this project is 4 years, and will begin in 2022. NIORDC had previously signed an MOU with Bank Mellat for the construction of the Tabesh pipeline to carry petroleum products through the Rafsanjan-Birjand-Torbat-e Heydarieh-Mashhad route.

One Contract, Every Two Weeks

Minister of Petroleum Javad Owji told reporters on the sidelines of the Pars MOU ceremony that Petroleum Ministry would not wait for the conclusion of Iran’s nuclear talks with world powers.

“We try to complete the projects of the oil industry by using the financial capacity of domestic banks and companies, and sometimes foreign companies,” he said.

Noting that over recent months foreign financing has been used in some development projects, he said that more details would come out soon.

He said Bank Mellat would finance the 445km Pars (Mehraran-Fasa-Shiraz) pipeline. He added that Iranian banks may help finance petroleum industry projects.

The minister said that agreements had been signed for associate petroleum gas gathering, using the financial resources of the Persian Gulf Petrochemical Industries Company (PGPIC).

“According to planning, every two to three weeks, a petroleum industry contract is signed using domestic financial resources,” he said.

Owji said the Petroleum Ministry had signed $4.5 billion worth of projects to develop oil and gas fields, adding: “We will soon sign an agreement with a consortium of local banks for the development of an oil and gas field.”

The minister also dismissed speculation that Iran would have to import gasoline in the Iranian calendar year starting March 2022.

Bank Financing

Jalil Salari, CEO of NIORDC, also reiterated that Iran would not tie development of its refining industry to ongoing nuclear talks in Vienna. “Over recent months, we have tried to finance vital projects by domestic resources and banks,” he said.

Salari said that the basic and developmental design of some oil refineries was over. “We hope that tender bids would be soon held for the development of some refineries in order to reduce fuel oil production so that we would be able to benefit from the financial capacity of local banks in these projects. Furthermore, initial studies are under way for building two new crude oil and gas condensate refineries in the country.”

He said that power plants across the country received 18.5 billion liters of liquid fuel and 70 bcm of gas during the calendar year to March. He added that 65 billion liters of fuel was being used in the transportation and industrial sectors a year.

Salari said Iran had to build a power plant every ten years in a bid to offset the deficit caused by the annual 8% power consumption growth.

“Therefore, given the 38.5% output of power plants in the country, one of our major causes of concern is fuel efficiency in the country,” he said.

Salari said that the Pars pipeline would add another 80 million liters to the country’s petroleum products storage capacity.

Diesel Cargos to Asia

Salari said that three diesel cargoes had been exported to Asian nations in early 2022. “Capacities have been created for product exports, but our focus is on supplying domestic needs and reliable storage, particularly in cold seasons,” he added.

He reiterated the necessity of developing infrastructure for product exports.

Salari said that in light of forecasts for increased fuel prices, NIORDC concentrates on fuel storage under the present circumstances and postponing exports to future.

Regarding past commitments for exporting products, he said that the process was under way.

Asked about the possibility of exporting products to other nations including the US in case of sanctions relief, he said: “For this purpose, we have set up a group to study crude oil processing in other refineries in the country. Therefore, in export, our focus is on delivering crude oil to consumption points rather than delivering products.”

Costly Road Transport

Salari said: “Transportation of products through pipeline will cost one-ninth of transportation by road. Furthermore, fuel consumption will decline.”

Salari also referred to sustainable and continuous supply of fuel in the region, environmental benefits, reduction of fuel smuggling, continuous storage in times of crisis with the pipeline network and providing safe storage from the point of view of civil defense as advantages of the Pars pipeline, adding: “The most important action of the refining industry in the field of energy efficiency is to change the transportation pattern and reduce transportation costs through construction of new pipelines and renovation of old worn-out pipelines.”

“An objective in the new pipeline construction is to overcome challenges during the first six months of the year to supply necessary fuel to power plants in eastern Iran,” he said.

Salari also touched on developing export infrastructure, saying: “Carrying products from the center and the south and crossing borders was risky. It was necessary to pave the ground for developing export infrastructure.”

Referring to civil defense, he said: “The entire development of our refining sector has taken place in the south of Iran and the product goes from the south of the country to the center and north, while the consumption pole is located in Tehran and north of Iran, and if a crisis occurs in the center, we will face problems. Construction of a new pipeline will lead to diversification and facilitate access.”

Export Infrastructure

Salari said there was good potential for exporting products, adding: “Recently, the Minister of Energy and Water Resources of Tajikistan visited Tehran and announced his country’s need, and in Afghanistan and Pakistan there is a capacity to export fuel, so the transportation of products from the center and south of the country and transportation across the border had problems and accidents and it was necessary to provide such ground in order to develop export infrastructure.”

On diesel imbalance in the current calendar year, he said: “This imbalance has occurred in winter and in previous years. In previous years, we discussed swaps in this regard. This year, considering the consumption in the north of the country, our view was that we could import part of our needs from the north, which of course was limited.”

Pointing out that optimization of energy consumption and fuel supply is one of the important issues, Salari said: “The consumption of 12,000 to 14,000 household heaters is 200 mcm/d of gas, which is equivalent to gas consumption of all power plants and the number is big, so we need to put efficient use on the agenda quickly.”

“If we do not follow the methods of improving the fuel consumption pattern, we will face a challenge in the future due to the efficiency of the industrial sector and the group of consumers,” he said.

€16.5bn Investment Boosts Refining Capacity

Farhad Ahmadi, CEO of National Iranian Oil Engineering and Construction Company (NIOEC), has outlined the policies of the Petroleum Ministry with regard to developing the refining industry as an alternative to selling crude oil.

“The firm determination of oil industry managers is to accelerate development of the industry's infrastructure, especially in the downstream sector,” he said. “To realize this plan, construction of the new Shahid Soleimani petro-refinery in Bandar Abbas, the construction of the Khuzestan oil refinery, as well as the completion of the development and stabilization plan of the Abadan refinery are on the company's agenda, for a total of about €16.5 billion (equivalent to $18 billion).

Ahmadi touched on other NIOEC projects, saying: “In total, €16.5 billion, or $18 billion, worth of new projects have been defined in refining.”

He said that the investment envisaged for the refining sector would increase the refining capacity by 480,000 b/d. The Shahid Soleimani facility is estimated to cost $11.5 billion, he said. “In order to finance this project, we will use various methods such as obtaining financing, bank financing, attracting public capital, and all our efforts are to maximize the potential of domestic manufacturers and support domestic manufacturing, while reducing dependence on foreigners help the country develop domestic industries and create jobs.”

On the planned Khuzestan refinery, he said: “The construction of this refinery with an initial estimate of $4.5 billion is another important project that has been revived in this administration and its design and implementation operations will begin in 2022.”

Quality Upgrade

He also announced the operation of the distillation unit of the Abadan refinery development project with a capacity of 210,000 barrels in the first half of next calendar year and said: “We expect the whole project to be operational by March 2023.”

“The second step of this project will be among the other new projects of the refining industry, which is the complementary operation of the first phase and will be implemented in the 13th administration with the allocation of €1.7 billion.”

Ahmadi touched on the hydrotreating unit of the Isfahan refinery as a key project under way, saying: “The project has progressed by more than 10 percent over the past six months, and we hope it would be fully operational by the first half of next calendar year.”

Other projects under way by NIOEC include a 240km Tabriz-Urmia pipeline to carry petroleum products, as well as the Sabzab-Rey oil pipeline and the Naein-Kashan-Rey pipeline. The last one would become operational by June, while the rest are expected to come online by next March.

26 Projects Completed

Ahmadi said NIOEC had more than 50 years of experience in implementing downstream projects, including building storage tanks and pipelines for crude oil and petroleum products, as well as designing and building refineries.

He said that of 35 projects assigned to NIOEC, 26 had been completed. He added that the remaining 9 projects would be completed in six months.  

Ahmadi added that in more than 7 projects being implemented by NIOEC, over 8,000 people are directly employed and 15,000 people are indirectly employed.

Domestic Manufacturing

He said: “Based on the macro goals of the country in supporting domestic construction, in the implementation of projects, we believe in domestic manufacturing and maximum support of oil industry equipment manufacturers. Accordingly, over the past four months, we have activated 7 ongoing projects and are witnessing significant progress in this area.”

Ahmadi laid emphasis on maximum support for domestic manufacturers of petroleum industry equipment, saying: “During the last four months, domestic manufacturers have been active in seven projects being implemented by the company, and the equipment required for the new pipeline projects of this company is also provided through domestic manufacturers and constructors.”

“By examining the problems and analyzing them, we have solved the problems one by one, and in relation to the supply of raw materials and the production of pipelines, we have had domestic manufacturing, and in this regard, we have ordered about 63,000 tonnes of slab worth IRR 12,610 billion and 54,000 tonnes would be ordered later. Finally, we would have placed orders worth IRR 21,400 billion with domestic manufacturers,” he said.

He also said that talks had got under way with foreign manufacturers for their engagement in Iran’s refining industry.

Refining Megaprojects

Ahmadi referred to NIOEC’s new projects, saying: “With coherent planning, we were able to define and finalize 3 large pipeline projects and 3 mega refinery and petro-refinery projects, so that we will start its design and implementation operations this calendar year.”

He said the Tabesh fuel pipeline (Rafsanjan-Birjand-Mashhad) with a length of 950 km and investment of € 372 million financed by Bank Mellat, the Rafsanjan-Yazd fuel pipeline and related facilities with a length of 220 km and a capital of € 22 million plus IRR 14,00o billion, the Pars fuel transfer pipeline and ancillary facilities with a length of 400 km and investment of €106 million with the financing of Bank Tejarat, as well as development of the 5000-tonne Qeshm jetty are among these projects.

He said the Abadan-Mahshahr pumping station was another NIOEC project, saying the company would complete its projects and accelerate the pace of work in new ones.

He said that a 400km pipeline would be built from Bandar Abbas to Rafsanjan, while cutting through Sirjan to carry products from the Bandar Abbas oil refinery and the Bandar Abbas gas condensate refinery to various parts of the country.

Petro-Refining

Ahmadi said petro-refinery facilities with a capacity of 2 million barrels had been envisaged. “Shahid Soleimani petrorefinery will be held by state sector at 20% and by private sector at 80%. But private petro-refinery construction is not quick enough and therefore this one will be operated by the government,” he added.

“This is a five-year project and necessary design, engineering, land acquisition and feasibility studies should be carried out in one year,” he said.

Talks with Venezuela

He also announced that talks had begun with Venezuela for building a 300,000-barrel refinery, saying: “We are negotiating with the officials of this country and no final agreement has been reached yet, but there are discussions about using the refining capacities of this country and even buying the shares of the refinery.”

NIOEC has more than 50 years of experience in the construction of downstream projects, including the construction of tanks and pipelines for the transportation of crude oil and petroleum products, and the design and construction of refineries in the country. The company also has its own technical specifications for the implementation of downstream oil projects based on up-to-date international standards.

Iran Starts Upgrading Heavy Petroleum Products

With the submission of documents for completing the value chain of fuel oil in Bandar Abbas oil refinery, the national plan to improve the quality of heavy petroleum products such as fuel oil was started. The project has been implemented according to the existing capacities and trust in domestic knowledge and technology in order to reduce production, improve the quality of fuel oil and transform it into products of higher value in the refining process. With the implementation of the project, the value chain of fuel oil in Bandar Abbas refinery would be completed for the first time using the technical knowhow of the Research Institute of Petroleum Industry (RIPI).

Addressing the ceremony, Minister of Petroleum Javad Owji said: “Relying on the expertise of our experts and capability gained in the Petroleum Ministry, we move forward.”

“Today, we are witnessing the completion of the fuel oil value chain by RIPI experts in Bandar Abbas oil refinery, which will be followed by local development of technical knowledge,” he said.

Owji said that the project would help reduce fuel oil output while increasing the supply of products of higher value-added and fuel oil of lower sulfur content.

The minister touched on production of sponge coke as a by-product of this project in Bandar Abbas oil refinery, saying: “The product, which is needed by aluminum smelters, was being imported to the country every year until in 2018, due to the imposition of sanctions by then US president i.e., Trump, these plants got into trouble and today, thanks to RIPI experts, we have the technical knowledge to produce sponge and needle coke, which would put an end to our dependence on imports.”

Noting that the refining process has changed in the country, Owji said: “In this process, we will be looking to secure energy supply and provide feedstock to petrochemical companies and plants across the country.”

Regarding petro-refining projects, he said that under the aegis of Majlis Energy Committee, construction of the first petro-refining project in Hormuzgan Province would begin in the new calendar year near the Persian Gulf refinery.

Oil/Gas Output Capacity

Owji referred to plans undertaken to enhance oil and gas production capacity, saying: “Planning has been made to enhance production capacity in oil and gas fields. As mentioned earlier, €4.5 billion worth of contracts have been signed with local and foreign companies for development of fields.”

He said that new agreements would be signed for the development of joint oil and gas fields, particularly the cluster of fields located in the West Karoun area. Owji said the volume of oil, gas and petroleum products’ exports had increased in terms of size and weight.

Environmental Concerns

Referring to projects for upgrading the quality of refined products, he said: “Eight projects have been envisaged for various refineries including Bandar Abbas, Tabriz and Tehran oil refineries.” 

“We follow up on these projects at Petroleum Ministry meeting and they will come online within two to three years,” he said.

Touching on the advantages of these projects, Owji said: “Along with these projects for quality upgrade, increasing refining output capacity, environmentally friendliness, increasing value and creating jobs are followed up on.”

Asked about the impact of a possible nuclear deal in Vienna, he said: “We have never waited for the outcome of negotiations. Just today, we signed €16 billion worth of agreements and MOUs for 55 projects.”

Self-Sufficiency in Coke

Ali Aqa-Mohammadi, head of the Economic Group of the Supreme Leader’s Office, underscored the role of RIPI in the achievement of self-sufficiency in the production of needle and sponge coke.

“In collaboration with aluminum plants in the country, arrangements have been made for self-sufficiency in graphite electrode, sponge and needle coke production as a national project,” he said.

Aqa-Mohammadi said the Bandar Abbas oil refinery was among nascent plants in the country, close to becoming a petro-refinery.

He said that graphite electorate imports faced bans during the Trump presidency for paralyzing Iran’s steel industry. “At that time, the Supreme Leader instructed necessary measures to be undertaken for self-sufficiency. It was known at that time that a project had been implemented at Ardakan steel plant in Yazd Province. Currently, a 30,000-tonne graphite electorate plant is under construction in Ardakan, financed by Mobarakeh Steel Mill. Two other graphite electorate plants with the same capacity are to be constructed in less developed areas in the country.”

“Under the aegis of collaboration on the part of aluminum plants in the country, arrangements have been made for self-sufficiency in graphite electorate, sponge code and needle coke as a national plan,” said Aqa-Mohammadi. 

He said a scientific center in Iran had signed agreements with local companies for self-sufficiency in sponge coke production. 

He expressed hope that Iran would be able to export 6.5 mb/d of oil in coming years in order to reach its rivals like Saudi Arabia, Russia and the United States.

Refining Value Chain

Jalil Salari, CEO of National Iranian Oil Refining and Distribution Company (NIORDC), laid emphasis on the approach for creating a value chain in the refining industry. He expressed hope that revenue from the privatization of refining facilities would finance development of new treatment facilities.

He said the situation in the country is such that the type of crude oil is constantly getting heavier and the percentage of light crude oil is very limited, adding: “Therefore, it is necessary to pay special attention to the issue of quality improvement, especially fuel oil, which has environmental benefits and creates a value chain in the refining industry.”

“Our policy and approach is to use semi-raw materials in the value chain, and Shahid Soleimani petro-refinery is in the same value chain,” said Salari.

He said that the 180,000-b/d Khuzestan refinery was fed with heavy crude oil, adding: “We hope this cooperation with RIPI would also apply to transforming products of higher value-added.”

“The model planned for light products supply at Bandar Abbas refinery is a cost-effective one in sponge coke production,” said Salari.

“One of our most important problems in the field of development of refining industries has been the issue of obtaining license, which fortunately has been resolved with the cooperation of RIPI, and we can be proud that this knowhow can be provided 100% domestically,” he added.

2ml/d Gasoline Exports

Salari said Iran’s gasoline exports reached 2 ml/d last calendar year to March.

He also touched on the plan to replace gasoline with compressed natural gas (CNG) in the country, saying: “By implementing this fuel efficiency plan, we predict to not have to import gasoline and other projects like renovation of clapped-out cars and phasing out dilapidated ones are in such direction.”

Regarding the financing of Abadan refinery development project, he said the annual budget bill predicted an extra refining capacity to serve exports.

RIP Rivals Europe, US Firms

Jafar Tofiqi, director of RIPI, said: “The technical knowhow to complete the fuel oil value chain is currently only available to the few American and European companies, and fortunately today we have it.”

Noting that RIPI is the largest obstacle to Western sanctions targeting refining projects, he said: “This center has carried out all refining and petro-refining processes with proven technology, for instance, the desulfurization project of mercaptan below 50 ppm in phases two and three of South Pars by the specialists of this center.”

“In the research project for completing the value chain of fuel oil in Bandar Abbas refinery, more than 2,150 engineering documents have been produced, so 15,000 parameters have been measured in this field to achieve the final product, the Swiss company R&D Carbon, the most reputable company in this field, has confirmed the quality of the final product of RIPI,” he added.

Sponge Coke Exports

Hashem Namvar, CEO of Bandar Abbas oil refining company, said: “We initially pursued this plan with Japanese consortia, but with the escalation of sanctions, despite the fact that 6 months had passed since the contract was signed, the company left the country, and we changed the refining pattern based on domestic facilities and requirements.”

Noting that studies on the project had been conducted domestically, he said: “Finally it was decided that the coke production plant project be implemented at Bandar Abbas refinery by RIPI.”

He said aluminum manufacturing plants consumed coke, adding: “The quality of the laboratory sample of coke produced in RIPI has been approved by the representatives of the aluminum industry.”

“The memorandum of understanding for this project was signed two and a half years ago between the Petroleum Ministry and the Ministry of Industry, Mine and Trade, and its basic engineering design operation began immediately in less than 10 days,” said Namvar. “Fortunately, the basic design of this project was successfully completed, and the coke produced at RIPI, in addition to the research tests and the aluminum industry, also passed the test of reputable European companies with results beyond expectations.”

Subprojects

Touching on the details of the project at Bandar Abbas refinery, he said: “This project is divided into three projects: One is the project of construction of process units in which 14 process units have been designed and the process units have been divided into two phases for which the necessary permits have been received.”

He expressed hope that the project would come online within four years, as scheduled in the plan, to put an end to the country’s dependence on coke imports, which would also save hard currency.

Oil Sport Success Annual Review 

Last calendar year was fraught with ups and downs for the petroleum industry’s sport teams. While due to the covid-19 pandemic and related economic mishaps and the necessity of cost-saving in all sectors, the petroleum industry’s teams had to minimize their costs of participation in the matches, they proved successful in various disciplines. The following is a review of the success of oil industry teams in local matches last calendar year. 

Gold Medal for Weightlifting

Ahvaz Melli Haffari weightlifter won the gold medal in the Asian championship in the snatch category, but he failed in the clean-and-jerk category, and did not win a medal. The Asian weightlifting championship matches in the 102kg category were held in Tashkent, Uzbekistan. Reza Dehdar competed in the matches. He lifted a 166kg weight in the snatch category. He then continued to lift 172kg and 175kg weights to finally win the gold medal in the snatch category.

Palayesh Naft Abadan Futsal

The championship title in the 16th round of Iranian women clubs’ futsal championship was awarded to the futsal team of the Palayesh Naft Abadan. The final matches were held in Khuzestan Province in June 2021. The Palayesh Naft Abadan futsal players hosted a team from Khorasan Razavi. Led by Narges Alavani, the Palayesh Naft Abadan futsal players managed to show a good performance despite stressful conditions. That was the second time the Palayesh Naft Abadan Club reached the championship title in this category.

Melli Haffari Ahvaz

The powerlifting team of the Melli Haffari Ahvaz club won the championship title of Iranian clubs powerlifting league in the first round. After outperforming the Iranian Army’s team, the Melli Haffari Ahvaz club’s powerlifting team managed to get 8 gold medals and scored 96 points to be crowned champion. The first round of powerlifting matches of world clubs was held in Urmia with the Melli Haffari team wining championship title. After two days of tough competition in which seven Iranian and foreign teams ran for title, the championship title went to the Melli Haffari Ahvaz club. These matches were held under tough competition between Iranian and foreign teams. The Melli Haffari Ahvaz team managed to score 51 points to become champion. The Melli Haffari team won 2 gold, three silver and 1 bronze medals to become the champion with a 51-point score. The gold medal of the Melli Haffari team was awarded to Mehrdad Mozaffari in the 59kg category. Furthermore, Ahmad Reza Baba Ahmadi in the 66kg and Ali Barati in the 83kg categories won the silver, and Amir Assadollahzadeh in the 74kg category won the bronze medal.

NIGC Judoka

An employee of Iranian Gas Engineering and Development Company managed to finish second in the judo championship matches held in France. Ali Reza Saatian was competing in the Judo Kata category.

Five Medals in Asia Paralympics

The son of an employee of the Maroun Oil and Gas Production Company won the highest number of Paralympic matches. Danial Mohsenian, son of Mahmoud Mohsenian, won 2 old and 3 silver medals to become the man with the highest number of medals in the 2021 matches held in Bahrain. It was the fourth round of Paralympic Youth games.  

Danial Mohsenian is the captain of national swimming team of Iranian youth with disabilities, who managed to win 5 medals in the Asian matches and bring the country this title. A total of 13 medals were won by Khuzestan youths, 5 of which by Danial Mohsenian.

7th Title in Futsal

The head coach and players of the Palayesh Naft Abadan won titles in futsal. After their championship in the premier league of women’s futsal last season, they were nominated among the top 10 nominees for the best head coach and team of the year. Their names are noted on Futsal Planet. Narges Alavani, the head coach of the Palayesh Naft Abadan team, was among them. She had scored 75 points to rank in the 7th position among top coaches in 2021. The Palayesh Naft Abadan’s futsal team that won the championship title of last season of Iran’s league came seventh by scoring 71 points.

Under the item of top female futsal players, Soheila Malmouli, the veteran captain of Palayesh Naft Abadan, ranked the 7th.