Refining Capacity Upgrade a Must

Ali Forouzandeh

Director General of Public Relations

One of the objectives of the 13th administration in the oil and energy sector is to upgrade the country’s refining capacity, which would subsequently help enhance supply of high-quality petroleum products for domestic purposes and exports. To this end, under the 7th National Development Plan, it has been decided that crude oil and natural gas sales be cut with a view to expanding the value chain and bringing the oil refining capacity to 3mb/d. Meantime, the Petroleum Ministry is following up on incomplete refining projects in a bid to rebalance petroleum products consumption in the country.

It is noteworthy that Iran’s refining and distribution industry has treated 2.2 mb/d of crude oil and gas condensate, supplied 112 ml/d of gasoil and 100 ml/d of gasoline, not to mention the 23% increase in fuel distribution to135 billion liters over the past year.

In addition to completing incomplete refining projects, the Petroleum Ministry is building several integrated refining/petrochemical plants like the one named after Gen. QassemSoleimani with a processing capacity of 300,000 b/d of crude oil and the Morvarid Makran refinery with a treatment capacity of 300,000 b/d of heavy and extra-heavy crude oil, in addition to considering overseas refineries.

Completing incomplete projects and building new refineries would also have the advantage of using local potential, exporting techno-engineering services to other nations and job creation. Iranian companies are almost fullysupplying local refineries’ needs, while there is a possibility for Iranian specialists to build refineries overseas. The refining industry has also become self-sufficient in the manufacturing and overhaul of turbines and other necessary equipment.

Despite all these capabilities, Iran’s petroleum industry remains open to foreign investors and the Petroleum Ministry will definitely welcome such investment.

The private sector involved in Iran’s petroleum industry is also ready to implement refining projects and supply such equipment across the globe.

Don’t Panic About Russia Gas Rivalry

Roya Khaleqi, Negar Sadeqi

Cooperation with Russian companies, utilizing capacity of overseas refinery and purchasing their stocks and offering discount for oil,are the most important issues highlighting news in the international energy scene. But one may wonder if Iran can use capacity of overseas refineries to sell its oil. Are the Russians a reliable partner for Iran? Is Iran selling its oil at high discount? Mohsen Qamsari, former international director of National Iranian Oil Company (NIOC), answers these questions. In an interview with "Iran Petroleum", he offered conditional support for overseas refineries. He also gives an upbeat assessment of gas swap cooperation between Iran and Russia, while noting there is nothing to worry about Iran-Russia gas rivalry.

As the first question, would you please give us your own definition of an overseas refinery? When can we claim to have such refinery?

An overseasrefinery, as the phrase suggests, is a refinery owned by a country but locatedoutside its territory. It’s nothing new. Having such refineries has long been discussed by oil producing countries and maybe it is one of the requirements of oil production. Oil producershold a stake in these refineries and provide their feedstock. Having these refineries is an investment and adds to the wealth of the owner country. On the other hand, overseas refinery is in line with national policies and prevents crude oil sales, without even having any such plan. Overseas refineries can greatly reduce costs, most importantly it is a safety valve for crude oil exports. In fact, having an overseas refinery is one of the requirements that has unfortunately been neglected over the past years.

Can overseas refineries benefit sanctions-hit Iran?

It depends on the contracts signed. Overseas refineries have two aspects. The first aspect is the refinery itself and the second one is the government running the refinery, which chiefly involves customs regulations. It depends on the type of agreement the governments have. If the governments don’t want to go along or our contractual agreements don’t allow it, sanctions can prevent us from sending our crude oil and it might not be of much benefit to us, but there is a solution. Prior to the imposition of sanctions in 2013, a number of European refineries suggested that we (Iran) could take our oil to their refinery to be processed and then returned. That is one approach to benefit from overseas refineries, which should be taken into consideration in relevant agreements. In any case, it depends on governments’ cooperation.

When can a country claim to own an overseas refinery?

Acquiring a refinery overseas may have various aspects and forms. You may rent a refinery entirely or buy it or use its idle capacity. For instance, Saudi Arabia is a stakeholder in many refineries. In some refineries, it only holds stakes, but in some cases it owns the entire refinery. Even at refineries with one-third of shares, it sets condition for the purchase of its crude oil. Regarding Saudi Arabia, it has to be noted that the amount of oil it offers for treatment overseas is lower than the amount of oil Iran offered for marketing before sanctions. Oil marketing costs are much lower in Saudi Arabia than in Iran. Saudi Arabia is exporting about 7 mb/d of oil, mainly to overseas refineries. That is below the amount of crude oil we would be marketing if sanctions were lifted. 

Are you suggesting that we use overseas refineries?

We have long been seeking to diversify our oil market. One way to do so would be to have overseas refineries. Naturally, it would be of great help under normal conditions. We produce oil more than we need. Having refinery and refining capacity is recommended. It would be great if sanctions are lifted. But as long as sanctions are in effect, diversifying export markets through overseas refineries is highly difficult, albeit not impossible. 

Critics say owning overseas refineries in Latin America would be economically unjustified due to long distance. What do you think?

We have to see what the purpose of having an overseas refinery is. For instance, during the Imposed War, we did not have Abadan and Bandar Abbas refineries in operation. We had only Tehran, Tabriz and Kermanshah refineries. We needed to refine crude oil in an overseas refinery and get back products, for which we used two refineries in Aden and southern Italy. If the purpose of the overseas refinery is to refine and get back the product, such criticism is solid-based, but what’s the problem with selling crude oil? If we want to get back the product, it seems that there is no justification for exports, but if the sale of crude oil is through refining, there is no problem at all. It would be enough as much as it can cover costs. Meantime, is tight competition for selling oil in the market, and selling 100,000 barrels of oil is more of a benediction. I believe that once crude oil is produced, preserving it would be costly.

Are other major oil producers using overseas refineries?

As far as I know, Russia has just started buying overseas refineries with the purchase of India's Essar refinery from Rosneft and plans to buy one or two refineries in China. Before the tension in Ukraine, Russia did not worry much about the sale of its oil, because it had a reliable market in Europe and had no competitors in the European market, but followingRussia’s operation in Ukraine, it has thought of an overseas refinery. Saudi Arabia also has an overseas refinery. After Saudi Arabia, Venezuela has the largest overseas refinery, which is mainly based in America. The Kuwaitis also have an overseasrefinery. The Emirates have just joined this trend and have refineries in Pakistan and China. I have not heard of Iraq having an overseas refinery. I believe that having an overseas refinery is the right policy. But we have to learn how to draw up contracts and how to secure funds.

Are Iran’s neighboring countries in position to house Iran’s overseas refineries?

In our neighboring countries, Pakistan and Afghanistan, which are not producers, there is a good energy market. After them India also has a good market. Then, South East Asian countries have good potential for the future. If we focus on South East Asia, it would be in our favor.

Apart from overseas refineries, the 13th administration has begun work on swap. Given Iran-Russia energy ties, what do you think of gas swap cooperation?

Under the present conditions, we will definitely not incur losses if we cooperate with any country in swap. Gas swap

greatly reduces costs when an important part of the country's oil and gas production is in the south and most of our demand is in the center and north, so gas swap is very useful for us and we should take it seriously. On the other hand, it should be noted that Arab and Persian Gulf countries are looking for energy. For example, if we get connected to the countries of the Persian Gulf through swapping Turkmen or Russian gas, this will create security for us, because the security of those countries also depends on us and they cannot sanction us easily. So I believe that gas swap can, in addition to overseas benefit, serve our national security.

And what about swapping Russian gas?

Swapping Russia’s gas is a good move and we can consume Russian gas in the north and deliver gas from the south to Russia’s customers. In the gas sector, I am not too worried about Russian competition. Pakistan's demand for gas is around 6 bcmper year, while the country's production does not even reach 1 bcm. No matter how much gas Russia gives them, they still need Iran's gas, so I think cooperation with the Russians in the gas sector is good. However, as I emphasized, we must conclude good contracts to prevent any problems in the future.

What do you think of Iran-Russia oil cooperation?

In the oil market, considering that the Russians have shifted from the European market to Asia, I can say that they are our competitors in this market, but in terms of development, Iran's decision hasbeen to expand cooperation with the Russians in the development of oil and gas fields.One of the reasons of long drawn-out negotiations and sometimes their failure is the difference in the standards of Iranian and Russian oil, which have never come closer to each other. On the other hand, in the past years, the Russians have been more inclined to Western investment and have not entered the Iranian market very seriously. But now I think both sides are willing toexpand their ties.

Is there still any chance?

Maybe now the situation is not the same as in the last 10, 15 years, but if the loss is prevented from anywhere, it is a benefit. Every country is concerned aboutsecuringits own interests and looking for its energy supply from far away. If countries see that energy is available to them more easily, they will move in this direction. I even think that transit is easier for us now. For example, Turkey wants to become an energy hub in the region, but since this country does not have energy, it is only considered as a trader. If Iran cooperates with Turkey in this field and wants to transit gas via Turkey, it will still be in our interest because our security will be guaranteed and this country will unwittingly depend on us for energy transit.

Isn’t transit a way of losing Iran’s gas market?

Before doing anything, we should consider our interests and see what our interests are. In our contracts, we should pay attention to whether we want to meet the needs of the country or whether we want to be a prominent actor. If we are looking for our own interests, maybe Turkey being a hub is not bad for us and it somehow secures our national interests. Therefore, I believe that we should look at the energy business in a broader way and not just see it as black and white.

Russia and Iran are both under sanctions. How can they cooperate in the energy sector?

Cooperation has two aspects: production and development and market. If the Russians want to cooperate with us in the field of development, it is possible provided that we follow their standards. In the market sector, if we can coordinate with each other and not interfere in the markets, cooperation is feasible and can be useful for us.

Focus on Caspian Sea Oil/Gas Swap

Iran enjoys great potential for delivering oil, gas and petroleum products to regional and global markets, due to its geographical position and potential energy and mining reserves. Having such potential in mind, efforts have started to put the country on the path to becoming the energy hub of the region. The first step was the signing a gas swap agreement for the delivery of Turkmenistan’s gas to Azerbaijan via Iran’s territory. Now, as the 13th administration is in its second year in office, the focus is on exporting products, bartering and swapping via the Caspian Sea, in which case, cooperation is planned with foreign firms including Russian companies. 

Negotiations with international companies and Caspian Sea littoral states, such as Russia, Turkmenistan, Kazakhstan, and the Republic of Azerbaijan, is still ongoing for increasing crude oil swap. In the past, major oil companies active in the northern part of the Caspian Sea, such as Swiss Vitol and British Petroleum (BP) have expressed their interest in cooperating with Iran in swap.

Kazakhstan, First Swap Partner

Following the collapse of the Soviet Union and the independence of Central Asian countries, oil swap; with Iran took up added significance. These countries needed to export their oil for their economic development, while their means to deliver their oil to consumers in Europe, Asia, and America were very limited. Therefore, an agreement was signed between Iran and Kazakhstan in 1996, according to which 40,000 b/d of light crude oil was delivered from Kazakhstan to Tabriz and Tehran refineries, and in return, the same amount of Iranian light crude oil was delivered to Kazakhstan's business partners in the Persian Gulf.

In this way, Iran's first oil swap was formed and continued until 2009 with new contracts. In August of the same year, based on the instruction of the then minister of petroleum, due to the low swap rate and the possibility of Iran becoming a crude oil importing country, this transit trade was stopped. Until August 2009, Iran was swapping oil for 13 years, and in this way, it was able to sign contracts with a large number of oil companies and swappers. During this period, more than 254 million barrels of oil had been transported from the Caspian Sea basin to Neka and from there on to Tehran and Rey refineries.

Since 2017, after a gap of several years, Iran has resumed swapping crude oil with the countries along the Caspian Sea, such as Kazakhstan, and is now thinking of increasing this amount of swap and expanding it.

In the oil swap operation, Iran receives a certain amount of oil from the Caspian littoral countries, or their oil customers, and delivers the same amount of oil to them in the Persian Gulf, and receives a swap fee for each barrel of oil swap.

Currently, crude oil swap is carried out using pipelines and telecommunication facilities in the northern district and through 272 kilometers of 30 and 32 inch pipelines. In this way, imported crude oil, after blending and storage in Neka oil terminal tanks, is pumped by Neka, Sari, Gol Pol and Urim oil transfer centers through a 32-inch pipeline, passing through the forested and difficult mountainous areas of Mazandaran and Tehran provinces. After traveling a distance of 220 km, it will be delivered to the Tehran region at the Moghanak pressure breaker station.

By benefitingfromthis large national plan, every month on average about 81. 67 ml of products in Golestan province and also 181 ml of products in Mazandaran province will be delivered to National Oil Products Distribution Company (NIOPDC) to prevent 876 tankers from traveling across the country.

Energy Hub

Iran's long-term goal of implementing oil swap is to become the energy hub of the region. On the other hand, Iran does not merelylook at swap as an economic activity; rather, Iran's view is strategic and long-term. Experts believe that it would bring Iran closer to its goal of becoming the energy hub of the region. In addition to the fact that the transit and swap of oil and gas from Russia brings Iran closer to the goal of becoming an energy hub in the region, it would earn the country good revenue.

Morteza Behrouzifar, faculty member of the Institute for International Energy Studies (IIES), says it would be important for Iran to tie its economy to the economy of other countries.

He described as “complicated” energy sector interactions, saying: “Moving in line with expanding the energy sector interactions would serve the country both politically and economically.”

Russia Keen for Swap with Iran

Iran and Russia have both very good potential in the oil, gas and petrochemical sectors. Due to such potential, Iran’s minister of petroleum has said in the last one year the two countries have signed$4 billion of contracts for developingfields and $40 billion of memorandums on constructing gas export pipelines and LNG plants. In other words, interactions with Russia will go beyond energy exchange, swap and export of gas, oil and petroleum products.

Iranian and Russian officials recently talked about oil and gas swap. Minister of Petroleum Javad Owji said Iran and Russia could swap up to 10 million tonnes of oil and non-oil products, adding infrastructure was ready for that purpose. He said Iran’s cooperation with the Caspian littoral states in the oil and gas sector was strategic.

“The cessation of Russian gas exports to Europe and the change in international conditions have enabled Iran to be a bridge for the transfer of Russian oil and gas products to other countries and become the gas hub of the region,” he said.

These interactions are not limited to export and swap of oil, gas and petroleum products. National Iranian Oil Company (NIOC) and Russia’s Gazprom struck a $40 billion memorandum of cooperation for the future development of Kish and North Pars gas fields and six oil fields as well as maintenance of pressure in the South Pars gas field. This MOU also covers natural gas and petroleum product swapping, LNG projects and gas pipeline construction.

“We unveiled a new model of oil contracts and off-take for the Russians for the development of fields, according to which prospective investors would be insured and supported by the Petroleum Ministry and the Islamic Republic. Such contracts are very sweet and attractive to Russian investors and in the light of the significance of energy today, a golden opportunity has been created for signing further contracts with the Russians in the energy sector,” said Owji.

New Chapter with Kazakhstan

Iran and Kazakhstan have swapped crude oil in the Caspian Sea and Persian Gulf waters for years, but last month, with the signing of a memorandum of understanding between the two countries to increase oil swaps, a new chapter in oil swaps between the two countries was opened. Of course, this is not a new issue and Iran had such contracts with the Caspian Sea States in the past.

Referring to the new chapter of Iran-Kazakhstan relations in the 13thadministration, Iran’s President Ebrahim Raisi said: “In the first step, the trade between the two countries was decided to reach $3 billion.”

Mohsen Khojasteh-Mehr, CEO of NIOC, has said: “The experts of the two countries are supposed to examine the fields of cooperation in the development of heavy oil fields, LNG, oil, gas and petroleum products swap, and export of technical and engineering services, and based on the results of the negotiations between the experts of the two countries, a memorandum of cooperation between Iran and Kazakhstan will be signed.”

Cooperation with Republic of Azerbaijan

Iran’s petroleum minister traveled to Baku in June headinga high-level economic and oil delegation in order to increase the level of relations between the two countries by negotiating with his counterparts in Baku. Of course, it goes without saying that the experience of cooperation between Iran and Republic of Azerbaijan in the Shah Deniz field is a good experience that could be the basis for defining joint work in Caspian oil and gas blocks and fields.

Since Iran has repeatedly announced that it is ready to increase the gas swap between Turkmenistan and Republic of Azerbaijan, in a meeting with the Minister of Energy of the Republic of Azerbaijan, Minister Owji discussed the executive rules of increasing the gas swap, integrated development of shared blocks and fields in the Caspian Basin, electricity exchange and common grounds of cooperation between the two countries and signed memorandums of understanding.

One of the most important memorandums of understanding between Iran and the Republic of Azerbaijan during Owji’s visit to Baku was the memorandum of understanding on doubling the transportation of Turkmenistan's gas from Iran to Republic of Azerbaijan. This contract is in the form of volume and Iran charges swap fee by taking gas.

In December last year, on the sidelines of the ECO Summit, the three countries: Iran, Turkmenistan and the Republic of Azerbaijan agreed to swap 1.5 to 2 bcm of gas from Turkmenistan to the Republic of Azerbaijan every year. This contract, which was signed after the five-year suspension of gas exchanges between Iran and Turkmenistan, has led to an increase in the stability of the gas network in the northeast of Iran and would further enable Iran to become an energy hub.

Caspian Meeting

Last month, the five Caspian Sea countries, as the world's largest holders of gas resources, gathered in Moscow, and all of them emphasized strengthening interactions and cooperation in the field of energy. Even at the Caspian Economic Conference, Iran presented its fourth proposal for the expansion of cooperation in the energy sector and put the option of forming the "Cooperation Committee for Oil, Gas and Petroleum Products of Caspian Sea Littoral States" on the table. Iran's cooperation with the Caspian littoral states in the energy sector is considered strategic.

The 13thadministration seeks to broaden comprehensive cooperation with neighboring countries, especially with the Caspian Sea littoral states, and considering its geopolitical and geo-economic position as the connection point of the Caspian Sea to the southern shores and warm waters of the Persian Gulf, the Oman Sea, and the Indian Ocean, to create mobility in economic and commercial cooperation between the littoral countries of the Caspian Sea, it is seriously determined.

During the first five months of the current calendar year, exports to Republic of Azerbaijan, RussiaandTurkmenistanincreased 84%, 40% and 40%, respectively.The export mix has also changed. Traditional exports which involved mainly farming products and fruits have given way to industrial commodities like catalysts, oil and gas equipment, turbine and compressor.

Exploration Talks with 3 Countries

The head of exploration at National Iranian Oil Company (NIOC) has said talks have been held with three countries for implementation of oil and gas exploration projects. 

“That has been done for improving interactions,” Mehdi Fakour saidat a symposium with upstream oil and gas associations.

Noting that amplified cooperation in exploration was a major objective of NIOC’s energy diplomacy, he said: “Currently 11 major and 300 minor projects have been planned by the NIOC Directorate of Exploration.”

He referred to augmented budget allocation to oil and gas projects, Fakour said: “In terms of budget allocation, we are standing at a high level. For the first time, we have managed to achieve the second rank in drilling among NIOC subsidiaries and directorates.”

He said that the budget allocated by NIOC to the Directorate of Exploration’s drilling activities was more than that of other companies. He added that the NIOC Directorate of Exploration came second to National Iranian South Oil Company (NISOC) in terms of drilling budget allocation.

“Among NIOC directorates, the Directorate of Exploration has received the most credit, thereby giving impetus to further exploration activities in the country,” he said.

Fakour said significant exploration seismic projects had been defined for the first time in two decades, adding that more than 4,000 persons were engaged in the exploration sector.

He said specialized associations of upstream oil and gas sector were combining knowledge and experience, adding: “Such associations are scientifically important and therefore they can help the Directorate of Exploration materialize its objectives.”

Fakour said that monitoring modern technologies and their application along with setting up communications channels between associations, knowledge-based companies and universities were among approaches expected by the NIOC Directorate of Exploration.

Noting that absorbing elite within associations was much easier than within state-owned companies, he said: “This issue can be seen as great potential in setting up technology and innovation network within associations.”

€30mn Megaprojects

The head of research and technology at NIOC also said 10 megaprojects were envisaged in oil and gas exploration. “These projects are worth more than €30 million plus IRR 1,500 billion, which would be of great help to job creation and technology development in the country,” he said.

Mahdia Motahari said: “With the agreement of the NIOC Board of Directors, a list of 14 strategic commodities needed by the petroleum industry has been prepared by the Directorate of Commodities to be made public in the near future.”

She said the list may give rise to $1bn turnover for domestic manufacturers and knowledge-based companies and contribute to the formation of knowledge-based and technological companies.

Motahari said cooperation between the Ministry of Science, Research and Technology and NIOC was an effective step towards upgrading the level of national science, adding that about 80% of research projects assigned to the ministry pertained to the petroleum industry.

Besides, she added that effective measures had been taken by NIOC in support of students.

Low-Output Well Revival

Motahari said that a major NIOC-backed project assigned to a knowledge-based company was the planned revival of low-output wells.

“To realize this strategy, there is a need for mutual learning and increased cooperation. At the same time, it is necessary for knowledge-based companies to prioritize new technological projects in order to meet the needs of the oil industry,” he said, referring to knowledge-based demand.

She said scientific societies may accelerate the flow of knowledge among key players in technology, and to achieve this goal, it is necessary to get connected to scientific societies in other countries.

4 Exploration Projects

Mohammad Chahardoli, head of education at Petroleum Ministry, said: “With the aim of obtaining modern technologies, the contract of four exploratory research projects will be signed with the domestic universities by the end of the [current calendar] year.”

“Establishing strong interactions between the university and the industry is one of the main strategies of the oil industry, and in this regard, with the aim of consolidating these two-way communications, by the end of the year, contract for four major research projects will be signed with universities,” he said.

“Last year, 2 defined projects were converted into contracts, and this year, a contract was concluded for one project title, and it is planned to complete 3 other contractual titles by the end of the year,” he added.

Chahardoli said achieving the goals of the country's energy strategic document and the need to focus on studying modern technologies in the framework of preventing crude oil sales, requires a detailed road map in which specialized oil and gas associations may play a role in it.

“Currently, the PetroleumMinistry has set the agenda for the development of priority technology programs, which can pave the way for the development of technology in the country,” he said.

Facilitating Role

Mohammad Reza Hatami, head of National Iranian Geophysics Society (NIGS), said: “NIGS was established in the direction of giving identity to the goals and activities of scientists and researchers in this field of knowledge and technology, and it is trying to pave the way for the progress and expansion of this science, by collective thinking and synergizing the ideas of researchers, between the internal and external needs of the country.”

“Given the available domestic capabilities, it is expected that this knowledge will be exported from Iran to the applicant countries, and this association is fully prepared in this field, while the scientific associations in the country facilitate the path of obtaining science and technology,” he said.

Mansour Qorbani, head of Geological Society of Iran (GSI), said:“Afghanistan and Tajikistan were represented in GSI.”

“In this society, the women's committee of earth sciences and also the committee of communication with the industry have been formed for the first time in this society, therefore this society is trying to create space and various aids to integrate the activities related to geology,” he said.

Mohammad Ali Emadi, secretary general of Iranian Petroleum Institute (IPI), highlighted Iran’s role in the Middle East in terms of huge hydrocarbon reserves, saying: “IPI aims to achieve greater synergy with Iran's oil industry, and in the meantime, considering the importance of exploration and its related activities in Iran's oil industry, more use of scientific power in the exploration activities of NIOC is very important and effective in the formation of the cycle of the value chain in Iran's oil industry.”

Hassan Qassemzadeh, head of Iranian Petroleum Geomechanics Association (IPGA), said: “This association was formed in order to expand, advance and promote science in the field of knowledge, technical knowledge and technology in geomechanics, underground production and storage of oil and gas and the qualitative development of expert forces and improving educational and research matters in related fields.”

Iran Plans Lifting Offshore Oil Output

Iran’s comprehensive plan to increase oil output is followed up on in line with the objectives already envisaged for economic prosperity. Therefore, Petroleum Ministry has instructed National Iranian Oil Company (NIOC) with a plan to use its oil fields to increase oil output. Using offshore and onshore oil fields is among plans to that end with joint fields being prioritized. Here we review the Iranian Offshore Oil Company (IOOC)’s oil output hike. IOOC is tasked with operating oil and gas fields off the Persian Gulf.

IOOC runs oil and gas fields located in 1,800 square kilometers of Persian Gulf waters. IOOC-administered fields hold 96 billion barrels of oil in place, 16 billion barrels of which is recoverable. Official data put at 8.5 billion barrels the accumulated oil recovery from these fields.

Planning to Restore Output Capacity

In line with the 13th administration’s plans to increase oil production and exports, IOOC made necessary arrangements to restore output capacity to pre-sanctions levels. Therefore, two effective measures were urgently taken in Kharg and Lavan, where output had dropped. Plans were also envisaged to increase output from the Esfandiar and Forouzan fields.

Ali-Reza Mehdizadeh, CEO of IOOC, has said: “Due to the corrosion and frequent leaks of crude oil transmission pipeline from Abuzar Platform to Kharg Island during the last two years, the capacity of oil transmission via that line had reached the minimum level, and in the previous period, no serious and effective measures were taken to solve the problem of the pipeline and replace it. Therefore, the NIOC Board of Directors authorized credit allocation for the new pipeline.”

The pipeline then became operational to carry crude oil and the previous decrepit line was put out of service. That came after pigging and necessary tests. According to the CEO of IOOC, the operation of the alternative pipeline last March helped doubled IOOC’s output in the Kharg area.

Reshadat Platform Overhaul

Mehdizadeh said another key measure with regard to enhanced oil recovery pertained to Reshadat Platform in Lavan.

“Over recent years, due to untimely overhaul, power supply to downhole pumps in some wells experienced problems, which halved production rate there,” he said, adding that the production was doubled after the power supply problem was resolved.

He said that the measures undertaken in the Kharg and Lavan areas in the second half of last calendar year largely contributed to IOOC’s enhanced recovery.

Phase 1 of Esfandiar

Another measure undertaken for increased oil production from Iran’s offshore fields and restoration of output to pre-sanctions levels is the implementation of the first phase development of the Esfandiar field, where operations are expected to last 36 months. Iran shares Esfandiar with Saudi Arabia. The NIOC Board of Directors has given its approval to this project whose operation is starting soon.

Phase 1 includes designing, manufacturing and installation of a wellhead platform and drilling of four wells. The crude oil produced in this field, located 95 km southwest of Kharg Island, will be transferred to Kharg Island after being processed at Abuzar Platform.

Furthermore, IOOC eyes drilling an appraisal well to obtain a better knowledge of the structure of the reservoir and designing the following phases.

Forouzan Set to Raise Output

A review of Iran’s oil output plans in the Persian Gulf indicates the emphasis laid on increased production from joint fields. To that end, enhanced recovery from the Forouzan field was envisioned. Development of Forouzan is one of the main four enhanced oil recovery (EOR) projects considered by IOOC.

According to Shahram Motevassel, development manager of Forouzan, given the priority of development of joint fields, accelerating output from Forouzan was put on the agenda. Flow from the well began after 88 days of incessant work. Oil was struck after 2,738 meters of drilling. With the completion of this well, the drilling rig was moved to another well and drilling would continue in other wells.

In parallel with designing, engineering, commodity and equipment purchase, as well as provision of necessary services, two offshore drilling rigs have been installed in this joint field. The drilling of the second well in the Forouzan field is now over.

Based on the initial capacity of the well, 1,000 b/d of oil can be extracted from this well, while in the past days, the flow of the well has been started and the cleaning of the well has also been done.

After drilling the first well in Forouzan oil field in May this year, this is the second well that has reached production in this field. It is planned to drill 26 wells in Forouzan by March 2024.

Crude Oil Storage

In parallel with implementation of oil output plans, IOOC hopes to increase its crude oil storage capacity. To that effect, following the overhaul of Storage Tank No. 4 of the Bahregan area, crude oil storage capacity in the Persian Gulf has increased 500,000 b/d. The overhaul had begun in March 2020 and did not halt despite the covid-19 outbreak. That has increased the Bahregan crude oil storage capacity by 10%, which is very important because Bahregan is a crude oil and condensate terminal.

A 250,000-barrel storage tank is set to come online in Kharg in coming months. Meanwhile, tenders are being held for three other storage tanks in Bahregan with a total nominal capacity of 1.3 million barrels. That would increase Iran’s crude oil storage capacity in the Persian Gulf.

IOOC is one of the largest offshore oil and gas producers in the world. It is tasked with operating oil and gas fields in the Persian Gulf (except for South Pars and North Pars) and the Gulf of Oman. IOOC mainly operates in the Persian Gulf where Iraq, Kuwait, Saudi Arabia, Bahrain, Qatar, the UAE and Oman are also active.

SP11 Set to Start Production

CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehrhas said that the delayed development of Phase 11 of the giant offshore South Pars (SP) gas field would reach conclusion by February 2023.

“The SP11 development project is to come online by February 2023,” he said.

Noting that Iran’s petroleum industry is the main driver of national economy, he added: “What we’re witnessing in the South Pars zone is the outcome of $85 billion investment over two decades and it is a cause of honor for the Islamic Republic of Iran.”

“This phase had remained pending for years and no measure had been taken there over the past eight years. An agreement with a foreign company did not pay off due to sanctions as the relevant company pulled out.”

He added that the 13th administration took urgent measure for this development project.

Khojasteh-Mehr said more than 700 mcm/d of gas was being recovered from South Pars, adding that this field which Iran shares with Qatar accounts for supplyingmore than 70% of our domestic needs. The official said that $27 billion worth of upstream projects were under way in the South Pars. Khojasteh-Mehr also said that two trains of the SP14 gas refinery had reached the sweetening stage.

“Development has also started in the joint Belal field which lies adjacent to South Pars,” he said.

E&P Companies Increasing in Numbers

The Office of Deputy Minister of Petroleum for Engineering, Research and Technology has renewed the list of E&P companies.

Hamid Tavassoli, CEO of Sarvak Azar, said: “In early 2010s when unjust sanctions stymied international companies’ presence in Iranian oil fields, NIOC decided to assign development of the strategic joint Azar oil field to a domestic consortium. For this purpose, Oil Industry Pension Fund Investment Company (OPIC) and OIEC teamed up. Then, Sarvak Azar was established in 2012 as a totally Iranian group to develop the Azar field under a buyback agreement.”

He said that the field came online with an early output of 30,000 b/d, which increased to 65,000 b/d.

Tavassoli said that Azar started exporting oil in 2016, adding that its exports totaled 62 million barrels for $4 billion.

He said the Azar development helped Iran win for the first time the IPMA Global Award in 2021.

NIOC to Explore Oil Overseas

The head of Exploration Division at National Iranian Oil Company (NIOC), MehdiFakour, has said that the company planned to explore oil overseas.

“This issue has been approved in the Petroleum Ministry’s roadmap, and meetings have been held with foreign companies in this regard. The issue of Venezuela is no secret to anyone,” he said.

Fakour said the minister of petroleum had insisted on the overseas activities of the NIOC Exploration Directorate.

He said that the Exploration Directorate had sent a delegation to Tajikistan, adding: “Based on instruction of the minister of petroleum, the oil industry infrastructure in this country was visited for future development and production activities.”

“Tajikistan is currently an energy importer, mainly from Russia’s Gazprom, and is willing to reduce its dependence on the company,” he said. “Tajikistan is very poor in the oil sector and related equipment, thereby providing a good market for the petroleum industry equipment manufacturers.”

Fakour highlighted the good market for petroleum products in Tajikistan, saying: “The refineries in this country require steering and crude oil and they depend on importing products to meet domestic needs.”

Russia to Supply Seamless Pipe Savvy to Iran

The director of MSP Kala Naft (NIOC), BorzouQanbari, has said that talks were under way with a Russian company to transfer seamless pipe manufacturing technology to Iran.

“Following previous meetings with Russian companies for technology transfer and equipment manufacturing, a meeting was held with a reputable international company in the field of steelmaking and production of steel pipes for oil and gas industries; and good progress has beenachieved,” he said.

“This meeting was held in the presence of active domestic manufacturers and investors interested in participating in this sector, and at the beginning of it, the Russian company introduced its capabilities in this field, and later in the meeting, the problems and challenges of indigenization in this sector were discussed and analyzed,” he added.

Qanbari said: “According to the policies of the PetroleumMinistry, as well as the special efforts made by the CEO of National Iranian Oil Company (NIOC) for local manufacturing in order to improve technical knowledge, we examined the existing cases and challenges, and fortunately, there are suitable and practical solutions for these cases.”

Oil Well Restoration under New Contracts

Mohammad Saber Karambeigi, deputy head of Technology and Innovation Park of Petroleum Industry for technology affairs, has said that the agreements for the revival of oil wells were different from buyback and other types.

He said that during a recent meeting, 48 knowledge-based companies were in attendance to get to know about the nature of agreement designed for the revival of wells.

“In this event, the details of the contracts of the well rehabilitation plan and the overview of the wells portfolio were presented by Directorates and subsidiaries of National Iranian Oil Company (NIOC),” he said.

“In July 2022, the joint presentation of the plan for the restoration of wells, known as the B2B plan, was held. In this ceremony, service providers and venture capital institutions had good negotiations with each other, and in November, a confidentiality agreement and an agreement were signed with these companies,” he added.

Iran Seeks Broader Energy Ties with Iraq

President EbrahimRaeesi has said Iran would be willing to improve level of its commercialexchanges with Iraq, particularly in the energy and trade sector.

At a joint press conference with visiting Iraqi Prime Minister Mohammed Shia’ al-Sudani in Tehran, Raeesi reaffirmed Iran’s determination to upgrade  level of cooperation and ties with Iraq in the economic, political, cultural and security sectors. “Iran seeks to expand level of exchanges with Iraq in various commercial and energy fields; and holding regular meetings of the joint cooperation commission of the two countries may play an effective role in realizing this goal,” he said.

The Iraqi prime minister also appreciated the invitation of the Iranian president to visit Tehran, while appreciating the position of the Islamic Republic of Iran in supporting Iraq, especially in the field of electricity export, and demanded the continuation of this support until the completion of Iraq's projects in electricity and gas production. He said: “Iraq istrying to find avenues to pay Iran's duesviacertain mechanisms, and discussions were held in this regard and this issue will be pursued through bilateral working groups. “Iraq is trying to pay liabilities to Iran throughcertain mechanisms, and talks were held in this regard, and this issue will be followed through bilateral working groups.”

He said that Iranian and Iraqi oil ministers would continue to hold talks in the future. “In these talks, projects pertaining to crude oil transmission and refining for the recovery of products and other projects would be discussed.”

The Iranian and Iraqi oil ministries announced their agreement to establish a joint oil working group. Following several meetings between the representative of the Petroleum Minister of the Islamic Republic of Iran and Iraqi oil officials, the two sides agreed to establish a joint working group.

This working group, which was established as a parent working group with the approach of increasing discussion and exchange of views about common cases in the field of energy in two neighboring countries, benefits from the help of several specialized working groups, including thosein the field of common fields, education, etc.

So far, numerous meetings have been held in the presence of the Iranian and Iraqi members of this working group, and some common issues, including the joint oil fields of the two countries, have been discussed and exchanged in these meetings. It is noteworthy that the representative office of the Ministry of Petroleum of the Islamic Republic of Iran in Iraq was opened not long ago in Baghdad.

Knowledge-Based Firms Break German Monopoly

A top official with Iranian Offshore Oil Company (IOOC) has said that knowledge-based companies in Iran had managed to repair MAN THM 1304 turbines, which were under the monopoly of their German manufacturer.

“The overhaul of four MAN turbines were carried out in Siri by knowledge-based companies, saving € 3 million,” said MassoudMohammadiGanjaroudi.

“Due to sanctions and the refusal of MAN to overhaul these turbines in previous years and the significance of the Siri, it was necessary to overhaul THM 1304 gas turbines. IOOC decided to assign the task to local knowledge-based firms,” he said. 

“Considering the conditions before the sanctions, the manufacturer's proposal was around €3 million, which, relying on domestic resources and localization of technology in domestic companies, €1.2 million was saved,” he added.

MohammadiGanjaroudi said the overhaul of three MAN turbines had been assigned to one company and another turbine to another company. “Following that, being present in the Siri region,the experts of these companies dismantled the turbine, its package and its accessories, and after preliminary checksin the workshop of that company, they designed special tools and finally dismantled the turbine in compliance with international standards.”

SPGC Gas Processing Output Rises

The CEO of South Pars Gas Complex (SPGC) announced that with the introduction of the cold snap in the country and the decrease in temperature and the consequent increase in consumption in the domestic and commercial sectors, the 13 refineries of South Pars have put the mission of maximum gas production on their agenda.

Ahmad Bahoush said: “The employees of SPGC are on full alert with all their power and equipment to produce the gas needed by the country, and they move with accurate and regular planning for the economy to run and ensure comfort and welfare of the people.”

The offshore joint South Pars gas field accounts for 75% of Iran’s gas production.

Referring to the strategic importance of SPGC in the path of Iran's development, he added this complex, with the daily production of more than 570 mcm of gas in its refineries, may properly provide a clear horizon for the country's economy, provide maximum gas during the cold days of the year.

“Since the beginning of the current Iranian calendar year in March, more than 123 bcm of gas has been transferred to the national gas grid with the hard work and efforts made by specialists and employees of SPGC,” he said.

Bahoush stated: “By taking significant and innovative measures and relying on local knowledge, we have been able to process more than 143 bcm of gas from the platforms since the beginning of this year.

Russia Using Iran-Made Catalysts

CEO of National Petrochemical Company (NPC) Morteza Shah-Mirzaei said Russian petrochemical plants are currently using Iran-made catalysts and they have placed new orders to import more catalysts from Iran.

Shah-Mirzaei said that following the negotiations between the two countries, Russia imported one ton of catalysts from the Islamic Republic earlier this year.

“One ton of Iranian catalyst is being successfully used in the Russian petrochemical complexes, and Russian companies have placed new orders for the purchase of more catalysts,” the official said.

According to Shah-Mirzaei, Russians previously tested Chinese catalysts and were not satisfied with the results but Iranian catalysts have been very welcomed by their complexes.

Pointing to the support of the national oil, gas, refining, and distribution companies and the special support of the oil minister to the petrochemical industry, he emphasized: “If we are going to have a dynamic economy, we must develop the petrochemical industry.”

Shah-Mirzaei stated that 70 petrochemical complexes with an annual production capacity of 90 million tonnes are operating in the country and the final sale of these complexes’ products reaches about $25 billion.

Oil Terminals Infrastructure Renovated

CEO of Iranian Oil Terminals Company (IOTC) Abbas Assadrouz has said the company is taking all the necessary measures to keep the country’s oil terminal infrastructure maintained and up to date.

Speaking on the sidelines of a visit to Kharg Island Oil Terminal, Assadrouz emphasized the necessity and significance of maintaining and modernizing the country’s oil infrastructure, including storage tanks, pipelines and export docks.

“IOTC as a technical, operational and specialized company in charge of crude oil and gas condensate export operations must have the necessary capabilities to carry out the assigned missions in the best possible way,” he said.

He emphasized the importance of maintenance and renovation of infrastructure, including storage tanks, pipelines and export docks and continued as saying: “These goals should be placed on the continuous agenda of managers, directors and heads of operational areas.”

“We must try to play our role as an agile, capable and excellent company by ensuring the stable satisfaction of customers, shareholders and key stakeholders.”

Oil, Petchem Exports Hit Record

Iran’s exports of crude oil, condensates, and petrochemical products hit their highest level in November 2022 since 2018, when the U.S. reimposed sanctions on the Islamic Republic’s oil industry, Petroleum Minister Javad Owji said.

“Iran’s oil industry is currently at the forefront of the economic war and the highest sanctions have been imposed on the industry,” Owji said.

Iran has achieved “significant growth” in its domestic energy sector and presence on foreign markets despite the “cruel sanctions,” the minister said.

“Since the beginning of the 13th administration, the country has faced problems such as winter fuel supply, lack of liquid fuel in power plants, failure to carry out major repairs in some oil and gas refineries, and the intensification of international sanctions, and most importantly, the export of oil, gas condensate, and petrochemical products. Fortunately, we were able to overcome these problems,” he said.

Emphasizing that before the 13thadministration, the country's oil and gas condensate exports was not that high, he said: “Iran's oil industry is now at the forefront of the economic warfare and the toughest sanctions have been imposed on this industry.”

Pointing out that in the past years, despite the fact that there was not much investment in the oil and gas industry and gas consumption in the country exceeded production, but the hardworking colleagues of the oil industry were able to overcome the problems by managing consumption, he said: “With planning investments in the country's refining projects and the construction of oil refineries have been envisaged by the administration in the annual budget, and the implementation of these projects has been started since several months ago.”

Owji pointed to the issue of energy diplomacy and stated that Iran did not have good relations with most of the neighboring countries before the 13thadministration started working, and stated: “Today we see that in this government, trade exchanges have increased three to four times even with some neighboring countries. In this regard, using the capacities of overseas refineries was put on the agenda of the PetroleumMinistry, which, due to the efforts of the employees of this ministry, we are witnessing today that in some countries we are using the capacity of overseas refineries.”

Owji added: “Regarding the use of domestic manufacturing, this year we have witnessed that the number of knowledge-based companies active in the country's oil industry has increased from 150 companies to more than 500 companies.”

Stating that the oil industry has already signed nearly $3 billion in contracts and memorandums of understanding with domestic companies regarding the domestic production of high-value products, the minister said: “75% of the oil industry's commodities needed in various sectors are provided by domestic manufacturers and contractors. Today, all offshore structures are built in the South Pars gas field inside the country. This achievement was made only by self-sufficiency.”

35 Pacts with Academic, Scientific Centers

Realization of objectives set for a jump in knowledge-based production, revising instructions, bylaws as well as research project procedures for facilitation are among top priorities of the Office of Deputy Minister of Petroleum for Engineering, Research and Technology. This Office has adopted a comprehensive plan to follow up on 50 major subjects.

In an interview with “Iran Petroleum”, Vahid Reza Zeidifar, deputy minister of petroleum for engineering, research and technology, speaks about knowledge-based measures taken by his Office within the Iranian petroleum industry.

What measures have so far been taken to make the petroleum industry knowledge-based?

Pursuant to the “Knowledge-Based Production and Job Creation” motto chosen for the current calendar year and the government’s policy in line with development of capacities, creating synergy and materialization of knowledge-based economy, the Petroleum Ministry has developed a bylaw to that effect. Prior to that, only one evaluation manual for manufacturers with any kind of background and characteristics of companies was used by evaluators and experts for evaluation and registration in  the Petroleum Ministry’sapproved vendor list (AVL). However, given the nature of knowledge-based companies, especially with criteria such as being nascent and lack of sufficient experience and consequently not providing a certificate of good work performance and other 16 points of evaluation, they were practically unable to get the minimum score required to appear in the AVL. Our experts have reviewed their experience of evaluating manufacturers and identified obstacles to the knowledge-based companies’ entry into the AVL. Following consultation with experts from the Office of Vice President for Science and Technology, they adopted instructions for knowledge-based manufacturers. The instructions were then posted online so that the qualified companies would apply for joining the AVL. The feedback we have received, indicates that a growing number of companies have been joining.

What is the approach of the Petroleum Ministry towards supporting knowledge-based companies for engagement in the petroleum industry?

The PetroleumMinistry is tasked with paying low-interest facilities from the Iranian Oil Industry Ventures (IOIV) or banks and credit institutions to support investment by knowledge-based companies which are helping reduce the cost of manufacturing equipment and necessary materials whileimproving productivity. Such support pertains to strategic areas such as energy efficiency, digital transformation in the petroleum industry, enhance oil recovery through reclaiming idle and low-efficient wells, flaring and associated petroleum gas capturing, first-time manufacturing of strategic products from the petroleum industry, completing the value chain of the downstream oil, gas and petrochemical sector, industrial production projects, replacing fossil fuels with renewables, obtaining required standards, access to major commercial databases, purchasing software, licenses and patents and intellectual property rights in the petroleum sector.

How many companies, science parks and academic centers are you currently linked with?

Our Office is directly linked with any oil and gas innovation and technology park and with most science parks across the country. The operational and geographical extent of the Petroleum Ministry has been a good factor for accepting research work in humanities, basic sciences as well as technical and engineering fields. Therefore, all universities and research centers of the country may serve this industry and cooperate with the oil industry to provide technological and innovative solutions for various challenges with a level of complexity. Also, most of the Iranian universities have or are in the process of signing contracts with the main and subsidiary companies of the PetroleumMinistry. By defining large projects, the Ministry has planned in such a way that other universities will also cooperate with the contracted university in conducting research services.Currently, 35 contracts have been concluded with the country's universities and research centers, which include 22 upstream contracts, 8 downstream contracts, and 5 exploration contracts. Some examples are: Development of technical knowledge of methanol production process and catalysts - Methanol Institute with Shiraz University, development of technical knowledge of olefin production process - Olefin Institute with Tarbiat Modarres University, development of technical knowledge of propylene production process and its derivatives - Propylene Institute with Iran Chemical and Chemical Engineering Research Institute, development of technical knowledge of metallocene and zeiglernata catalysts production - Polyolefin Institute with Amir Kabir University of Technology, development of technical knowledge of mini-LNG process and its equipment - LNG Natural Gas Institute with University of Tehran, development of technical knowledge of sweetening processes and manufacturing of catalysts - Natural Gas Refining and Sweetening Institute with Research Institute of Petroleum Industry, development of technical knowledge for manufacturing turbine and compressor equipment - Institute of Gas Turbines, Iran University of Science and Technology, and OTC Company, and development of technical knowledge related to smart flow measurement - Institute of Smart Measurement of Iran University of Science and Technology.

How does your Office interact with science parks and universities at home or overseas?

Regarding the cooperation with science and technology parks, the PetroleumMinistry is obliged to plan in such a way that the growth of the market and the engagement of knowledge-based companies in the petroleum industry should increase every year in such a way that the use of goods and services of these companies will increase by 40% compared to the preceding year. Also, in order to speed up and facilitate the issuance of licenses for the activities of knowledge-based companies (related to the oil industry) in Petropark or other science and technology parks in the country, the issuance of aforesaid licenses is assigned to the management of Petropark. That management is obliged to compile and communicate the necessary executive mechanism with the cooperation of the Office of Vice President for Science and Technology and the Ministry of Science, Research and Technologywithin 3 months.

In this regard, memorandums of understanding have been signed with related centers or their drafts are being prepared, which include the signing of a memorandum of understanding between the Petroleum Ministry and the Office of Vice President for Science and Technology, the signing of a memorandum of understanding between the Petroleum Ministry and Union of Employers of Oil, Gas, Refining and Petrochemical Knowledge-Base Companies, signing a memorandum of understanding between the Petroleum Ministry and Tehran Municipality, signing a memorandum of understanding with Petroleum University of Technology for training and culture-building in the areas of asset management and corrosion in the industry, preparing a draft memorandum of cooperation between the Ministry of Petroleum and the Iran Scientific and Industrial Research Organization, the drafting of the joint cooperation memorandum between the Ministry of Oil and the Ministry of Agriculture and the preparation of the draft of the joint cooperation memorandum between the Petroleum Ministry and the Ministry of Roads and Urban Development.Regarding cooperation with domestic and foreign universities, it should be noted that domestic universities and research centers play a role in conducting applied research as innovation players based on the technological demands of the petroleum industry (needs and challenges) and based on the processes of the research, technology and commercialization system. The mode of interaction with academic and research centers is mainly formed in the form of signed memorandums of understanding, which includes the conclusion of large-scale research contracts in the upstream and downstream sectors and the establishment of joint oil research institutes in universities,suchas the expected output of the conclusion of the memorandum of cooperation between the Petroleum Ministry and the Ministry of Science, Research and Technology. Also, within the framework of the research, technology and commercialization system of the PetroleumMinistry and benefiting from research opportunities, university researchers may benefit from the opportunity to learn more about the oil industry and the technological challenges of this industry in the ecosystem. Foreign universities have cooperated as collaborators and consultants along with the domestic universities of the contracting parties, especially in the large projects of the PetroleumMinistry.

Enhanced Recovery from 600 Wells Planned

Baran Mohammadi

CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr recently told a conference on oil and gas wells enhance recovery that $2.5 billion had been invested in the refinery of phase 14 of the giant offshore South Pars gas field. He said the 3rd train of SP14 refinery had become operational, adding: “The gas from the 3rd train of this refinery has been fed into the national gas distribution network. The next train is expected to become operational soon.”

He also said that operations had begun for the development of the joint Sohrab field in Khuzestan Province for an investment of about $1 billion.

Khojasteh-Mehr said development of the South Pars Oil Layer (SPOL) would begin in December. “The beginning of development of the Sohrab field, SPOL, the South Yaran and North Yaran fields, the Belal field as well as two trains of the SP14 refinery is indicative of the firm determination and fast decision-making by the 13th administration.”

He also said:” NIOC Board of Directors had given the go-ahead for the operation of an EOR/IOR center in Khuzestan’s provincial capital Ahvaz. He described the decision as a step towards upgrading the upstream oil sector.

Laying emphasis on the necessity of deep and conscious relationship between the petroleum industry and university, he said: “The Petroleum Ministry has signed agreements worth IRR 12 trillion plus €65 million for 40 megaprojects with universities and scientific centers, mostly pertaining to oil fields.”

Underscoring the necessity for consortium activity, he referred to the integrated development of the Azadegan oil field with $7 billion investment provided by a consortium of 12 entities including 6 Iranian banks and 6 E&P companies.

Khojasteh-Mehr said easy oil production was no longer an option, adding: “Today, the petroleum industry shoulders a heavy burden because timing and economy are key elements. We need to be able to increase the rate of recovery from wells with minimum costs and in the shortest possible time.”

Stressing the need for engaging knowledge-based companies in the projects aimed at boosting the recovery of wells, he said:“In the first step, we should provide attractive, easy-to-access and low-risk jobs to knowledge-based companies. If we start with simple and low-risk tasks, we may overcome difficult and complex issues in the future.”

Recovery Rate

Karim Zobeidi, NIOC corporate planning chief, said EOR/IOR methods may help increase recovery 5-15%.

Emphasizing the necessity of enhanced oil and gas recovery, he said: “Before the [1979 Islamic] Revolution, in some fields like the Ahvaz Amsari field, oil production even reached 1 mb/d. But now wells are in their second half of theirlifecycle, thereby requiring investment, technological measures as well as cooperation with universities with a view to enhancing output from old fields like Ahvaz, Gachsaran, Maroun, Aghajari, Rag Sefid and Parsi among others.”

HormozQalavand, NIOC chief supervisor on oil and gas production, said there were 600-700 low-efficient wells in the petroleum industry, adding: “Soon, contracts to enhance productivity of oil and gas wells will be signed with local companies, and if the goals are met, it will be extended to all oil and gas wells with low productivity.”

Overcoming Challenges

Vahid-Reza Zeidifard, deputy minister of petroleum for engineering, research and technology affairs, said enhanced oil recovery would help boost wells’ output. “One advantage of reclaiming low-efficient wells is to use the potential of knowledge-based companies as well as petroleum industry technology to overcome real challenges.”

He said in case such projects become operational, Iran would see its oil production capacity increase significantly every year.

Oil Age Not Over

Reza Dehqan, NIOC director of development and engineering, said the age of oil was not over as this energy carrier was welcomed in the world.

“According to the statistics of future studies institutes of the world's most prestigious companies, crude oil will turn from a strategic commodity into a common commodity in the future, in other words, the golden and attractive era of selling oil is now, not the future,” he said.

“The oil industry has faced many ups and downs during its life, and despite more than 110 years of oil production in Iran, only a little more than a third of the oil reserves has been recovered; while over the past five decades, an average of 4mb/d have been produced in the country,” he added.Dehqan said: “According to the latest annual statistical report of BP, this year, holding 156 billion barrels of oil in place, which accounts for 9% of the world's oil resources, Iran has been able to rank the fourth amongthe world’s oil reserves holdersfollowing Venezuela, Saudi Arabia and Canada. At the same time, with an average production of 8% of the world's crude oil, we are in the eighth place in terms of production.”

NISOC Output at 3.28 mb/d

Ali-Reza Daneshi, CEO of National Iranian South Oil Company (NISOC), said the company had set an objective to reach 3.28 mb/d output over five years.

“Operating 254 development wells and working over 546 wells would be part of our plans to that end,” he said.

“That would help us reach 1.86 mb/d,” he added.

South Azadegan

AbuzarSharifi, CEO of Petroleum Engineering and Development Company (PEDEC), said Phase 1 development of the South Azadegan oil field would come online in the second half of next calendar year.

Regarding other fields operated by PEDEC, he said: “We are currently developing Sepehr and Jofair fields in partnership with Pasargad Oil and Gas Company. We hope to produce 21,000 b/d from them by the end of the current [calendar] year. Meantime, development of the Cheshmeh-Khosh, Dalpari and East Paydar is under way in partnership with a Russian company.”

Sharifi said a Russian company was involved in the Aban and West Paydar fields, adding that PEDEC was following up on the integrated development of Yaran field with Persia Oil and Gas Industry Development Company.

He touched on the Sohrab field and said: “The second phase of Yadavaran field, the second phase of Azar, the integrated development of Azadegan and the third phase of Darquain are among other projects for which we are seeking permission. Talks are in the final stage.”

He said PEDEC-run fields held more than 90 billion barrels of oil in place. “In the Azadegan field, 30 more wells are planned to be drilled.”

Asked about PEDEC-owned fields which are eligible for EOR/IOR, Sharifi cited Cheshmeh-Khosh, East Paydar, West Paydar, Aban, Azar, Yadavaran and South Azadegan.

“For EOR, we are cooperating with some knowledge-based companies and we need these companies in other fields, too.” he said.

13 ICOFC Fields

Mehdi Heydari, CEO of Iranian Central Oil Fields Company (ICOFC), said the company was ready for maximum gas production in the winter.He added that ICOFC was ready for cooperation with knowledge-based companies and any students developing new ideas. 

“The NIOC Board of Directors has given the go-ahead for the development of 13 new fields plus development of the Farashband gas refinery and establishment of gas compressor stations at the Sarkhun and Shanul fields,” he said.

By winter 2027, he added, about 100 mcm/d of gas and 102,000 b/d of condensate would be produced to be delivered to the Fajr Jam, Parsian, Sarkhun, Farashband, Ilam, Hasheminejad and South Pars gas refineries.

West Karoun Output Capacity

AbdollahOzariAhvazi, CEO of Arvandan Oil and Gas Production Company (AOGPC), referred to methods of boosting output from the West Karoun fields, saying: “In the South Azadegan field, by workover and reclamation of 10 wells and conducting downhole operations using liner hanger we managed to boost output by a record 18%.”

Regarding North Azadegan field, he said: “By working over and reclaiming 8 wells in this field over the past one year we have seen output hike. With AOGPC cooperation, a wastewater treatment facility was launched in order to use treated water for irrigation and development of the greenery there.”

IOOC

Ali-Reza Mehdizadeh, CEO of Iranian Offshore Oil Company (IOOC), said: “In the IOR/EOR sector, 21 wells were chosen and introduced to NIOC. Soon, they will be assigned to knowledge-based companies.”

“Other projects in the field of production increase, gas extraction and installation of downhole pumps are being pursued, and the project of supplying gas to the wells of Doroud, Abouzar and Forouzan fields and installing downhole pumps in the wells of Nowruz, Esfand and Sivand fields is being carried out.”

Mehdizadeh said: “IOOC eyes lifting from 146 wells for an additional 52,000 b/d production.”

35 Wells in South Pars

ShobeirNabavi, a top manager with Pars Oil and Gas Company (POGC), touched on the development of the Kish gas field, saying: “Based on planning, the first phase of development of this field will be over with a production capacity of 28.3 mcm/d next calendar year after 14 wells have been drilled.”

He said that engineering studies were under way in the North Pars gas field.

Value-Creating Projects in Iran’s Oil Industry

Overrecent years, Iran's oil industry has enjoyed significant acceleration and progress in the exploitation of projects. By briefly reviewing the development process of the remaining phases of the massive South Pars gas field, other joint fields and implementation of various contracts in oil and gas fields, itcould be construed that the development of Iran's oil industry has never stopped notwithstanding the sanctions, and has retained its role as the driver for growth, prosperity and wealth creation in the country’s economy. The present article aims at reviewing the development of some of the most important projects in Iran's oil industry sincethe 13th administration took office until the end of Iranian calendar year 1400 (March 20, 2022).

Crossing 1bcm/d Gas Output Threshold

Focusing on the development of the South Pars gas field, taking the necessary measures and using all the available capacities to ramp up production of rich gas from thesupergiant joint field have always been among the main concerns of Iran’s oil industry. Likewise, Iran's production of rich gas has surpassed that of Qatar despite its larger share of the offshore gas field. The development of phases 13 and 22-24 has been completed and the development of phase 14 hashad over 91% physical progress by late March 2022. On the other hand, implementation of the 11th phase of the South Pars gas field development plan and the initial production forecast from this project in the calendar year 1401 (started on 21March 2022)are among the important plans in this gas field. This is while the phase had only progressed 34% by the end of the previous Iranian calendar year.

According to the Department for Planning of the General Directorate of Policymaking, Strategic Planning and Energy Management of the Ministry of Petroleum, with the support of the country's gas production jump in South Pars, Iran’s natural gas production capacity exceeded 1,000 million cubic meters per day for the first time.

The average production of rich gas from the South Pars gas field has soaredsignificantly over recent years, and this figure has grown by more than 4% in 1400 year-on-year. With the launch of the new phases of South Pars, the country's dependence on the field for supplying its demand for natural gas hit 70% during the same year. In coincidence with the development of the remaining projects in the South Pars gas field, the development plans of other gas fields operated by the National Iranian Oil Company (NIOC) were followed up. Based on this, the implementation of the gas field development plan package of the Iranian Central Oil Fields Company (ICOFC) including the development plan of 11 undeveloped fields, the development of the second phase of the Aghar field and the construction of a compressor for the Sarkhoun and Shanol fields are under way.

Revival of 750 Low-Yield Wells

Concentrating and taking the necessary measures to boost crude oil production capacity of the joint fields, and prioritizing Azadegan, Yadavaran, Yaran, Azar and Farzad oil fields, are among the main projects of the Iranian oil industry. On the other hand, planning made  to ramp up production capacity of oil fields through reviving about 750 low-yield wells by domestic knowledge-based and technological companies, the cumulative additional production of about 83 million barrels of crude oil have been carried out since the 13th administration took officeuntil the end of Iranian calendar year 1400 (ended on 20 March 2022 ), while following up on the implementation of oil production maintenance and enhancement (EPC-EPD) plans with the aim of maintaining and enhancing oil production capacity by 281,000 barrels per day within the framework of 33 packages and the requirement to use domestically manufactured goods in these contracts with emphasis on special support for manufacturing petroleum industry goods at home has been on the agenda. Likewise, theparties to the contracts are required to purchase the highly-used items inthe projects from Iranian manufacturers. It is worth mentioning that the completion of the first part of the second phase of the master plan for the renovation and reconstruction of the ground facilities of the National Iranian South Oil Company (NISOC) by an Iranian consulting company assisted by a foreign partner is one of the other plans implemented by NIOC for the development of Iran’s oil fields.

Presence of Domestic, Foreign Firms

Chief among the other measures taken in the development of oil and gas fields is the start of the development activities in oil and gas fields whose contracts have already been concluded. These fields include West Paydar and Aban that are to be developed by a consortium made up of foreign and domestic companies, Sepehr and Jofeir are to be operated by an Iranian company, Cheshmehkhosh, East Paydar and Dalperi with a foreign and domestic consortium, complementary development of the first phase of South Azadegan Field with Petropars, Farzad joint field development with Petropars and the development of Belal Gas Field with Petropars.

Furthermore, efforts have been exerted to conclude development contracts in oil and gas fields: development and operation of the Sohrab field, signing of a contract for the development of the second phase of the oil layer of the South Pars joint field in March 2022 with the participation of Iranian Offshore Engineering and Construction Company and a foreign partner, signing of a memorandum of understanding for the second phase development of Masjid Soleyman oil field with the Iranian Gostar Sina company in March 2022, development and operation of the joint Yaran field (including North and South Yaran) with a domestic company, planning to enhance recycling, production enhancement and operation of the Koupal field in the Asmari layer with the participation of a foreign company and a domesticpartner, development and operation of Parsi and Paranj fields with MAPNA Group, conclusion of a memorandum of understanding for the development of Dehloran and Danan oil fields with a foreign company, and conclusion of a memorandum of understanding for the development of Eram and Pazan gas fields with a foreign company.

Enhanced APG Collection

Collecting associated petroleum gases (APG) has been always considered one of the recurring concerns of Iran's oil industry. NIOC has implemented numerous projects to collect APG in some of its operational districts, for example with the inauguration of Bidboland Persian Gulf Refinery, part of the APG was collected from the three provinces of Khuzestan, Bushehr, Kohgiluyeh and Boyer Ahmad, while the operation of the gas collection unit of Parsi, Maroon 3, Mansouri, and Maroon 6 fields has also been carried out.

On the other hand, eight APG collection contracts were struck between Bidboland Persian Gulf Gas Refining Company and domestic companies in March. These major gas collection projects include Maroon Petrochemical Company, Persian Gulf Petrochemical Industries Company, NGL3100, NGL3200 and NGL Kharg, as well as the projects to reduce APG flaring and CO2 emission in 8 refineries located in South Pars gas complex. With the completion of the ongoing projects, the capacity of flare gas collection will increase to about 42 million cubic meters per day, and by carrying out the plan, gas flaring will be prevented in the region.

The transmissionof 12 million cubic feet per day of APG from Naftshahr and Soumar oil fields to a domestic company, 67 million cubic feet per day of flare gas from Cheshmehkhosh oil field to a domestic company with 37% physical progress, flare gas from Sarvestan and Saadat Abad fields amountingto 14 million cubic feet per day to a consortium of two Iranian companies with a physical progress of 28%, and 10 million cubic feet per day of APG from the Khesht oil field to a domestic company,are other plans for collecting flare gases in Iran's oil industry, which have countless benefits for the industry.

Iran Oil Refining Capacity to Hit 3mb/d

Under the 7th National Economic Development Plan,Iran is required to reduce crude oil and natural gas sales by developing the value chain and bring its oil refining capacity to 3 mb/d. Meantime, Petroleum Ministry is following up on the completion of incomplete refining projects in light of the imbalance in petroleum products consumption in the country.

Output Capacity

Iran’s refining and distribution industry has refined 2.2 mb/d of crude oil and gas condensate, supplied 112 ml/d of gasoil and 100 ml/d of gasoline, increased fuel supply by 23% and transferred 135 bl of petroleum products within a radius of 500 km over the past one year. This achievement has been made owing to the implementation of strategic projects and switch from fuel-based approach to profit-based approach.

In line with building a value chain in the refining industry, the 13th administration has approved construction of eight integrated refining/petrochemical complexes to run on crude oil and condensate. Today, Iranian companies are supplying nearly all necessary equipment required by the refining industry. Furthermore, Iranian technicians have the potentialnow to build refineries overseas. In addition to designing and manufacturing certain sophisticated equipment of the refining industry, Iran has managed to manufacture and fix turbines required in fuel distribution.

In light of the extensive plans envisaged by the 13th administration to develop the downstream industry with a view to value-added generation, numerous agreements and memorandums have been signed to develop the crude oil and condensate refining industry. In coming years, we must expect the refining industry capacity to grow, oil pipelines to be renovated, storage capacity to increase and fuel distribution fleet to be renovated.

Integrated Platforms, Key to Self-Sufficiency

Building integrated refining and petrochemical plants can result in preventing crude oil and natural gas sales, neutralizing sanctions, generating value-added and bringing about economic prosperity with a view to the development and growth of the petroleum industry. Compared with refineries, integrated refining/petchem plants have higher margins. In Iran, with a view to completing the oil and gas chain and creating higher value, a number of petrochemical plants have been built adjacent to refining facilities.

Undoubtedly, building integrated refining/petchem plants will help circumvent oil sanctions and create value-added and jobs, not to mention earn shareholders big profits. Minister of Petroleum Javad Owji has highlighted the priority given to integrated plants, noting that quantitative and qualitative upgrade of existing refineries has been also considered.

That was within such framework that MOUs were signed in August in the presence of President Ebrahim Raeesi for the financing of the Shahid Qassem Soleimani integrated plant with a capacity of 300,000 b/d of heavy crude oil, as well as the Morvarid-e Makran refinery with a capacity of 300,000 b/d of heavy and extra heavy crude oil.

Iran Eyes Ending Imports

The Shahid Soleimani plant is the first project integrating refining and petrochemical sectors with a view to pushing the country towards construction of integrated refining/petchem plants, generating value-added and preventing crude oil and natural gas sales.

This project is the main measure adopted by the 13th administration to head off a gasoline shortage crisis in the near future. Official data put gasoline production and consumption at rates very close to each other in Iran. Should this trend continue and the government fail to take action, Iran is likely to become a gasoline importer in the near future. Therefore, the Shahid Soleimani refining project is a measure taken to increase gasoline production capacity and supply daily gasoline needs and prevent imports. Furthermore, by supplying light fuel and petrochemical products, it would be instrumental in creating value-added in the downstream oil sector.

Arrangements were recently made for the construction of the Shahid Soleimani plant. During a meeting held with refining administrators, plans were devised for feasibility studies for the project and shareholders were specified.The land allotted to this project is 1,050 ha near the Bandar Abbas Gas Condensate Refinery, known commonly as the Persian Gulf Star Refinery. The shareholders would be the Persian Gulf Petrochemical Industries Company (PGPIC) (15%), Tadbir Economic Development Group (15%), Ahdaf Investment Company (15%), Tose-E Melli Group Investment Company (15%), Refah Kargaran Bank (15%), Bank Mellat (7.5%) and Bank Tejarat (7.5%). National Iranian Oil Refining and Distribution Company (NIORDC) will have a 10% share in the project. Iran’s gasoline consumption has exceeded 100 ml/d, up 14 ml/d year-on-year, underscoring the significance of building the Shahid Soleimani integrated plant for fuel supply over thecoming 10 years.

Gasoil has a significant share in the products of the planned integrated plant whose output would include gasoline (15%), propylene (11%), jet fuel (10%), ethylene (9%), fuel oil (8%), para-xylene (5%) and benzene (2%).

Morvarid Plant

The planned 300,000-b/d Morvarid refinery is Iran’s second step toward increasing the refining capacity and reducing crude oil and natural gas sales. The $7 billion project is to be financed jointly by PetroleumMinistry, Mofid Economic Group, Bank Mellat, Bank Melli, Bank Tejarat and Bank Parsian.

The refining facility would be established in Jask Port off the Gulf of Oman. Maximum use of homegrown equipment and feedstock privilege is a main feature of this project whose objective is to create value-added, prevent gasoline imports, increase the country’s refining capacity, create jobs, engage local firms, counter sanctions and boost resilience to sanctions.

The project is forecast to be completed by 2026. The Morvarid refinery would run on heavy and extra-heavy crude oil, 70% of whose products would be gasoline, gasoline, LPG and chemicals.

13 Projects in Progress

Over the past year, 13 refining and integrated refining/petchem projects have been unveiled, whose operation is still expected. They can totally process 2.27 mb/d of crude oil and gas condensate. A total $50 billion is estimated to be invested therein. They include the Khuzestan refinery, Anahita refinery, Mehr Khalij Fars integrated refining/petchem plant, South Adish refinery, Lavan integrated refining/petchem plant, Ghadir refinery, Shasta refinery, Morvarid Makran integrated refining/petchem plant, Entekhab refinery, Javid Energy Partov refinery, Pishgaman Siraf refinery, Setareh Sabz Siraf refinery, and Shahid Soleimani integrated refining/petchem plant.

So far, 30 refining projects have been envisioned in the country that have yet to become operational. Of them, 25 are destined to treat oil and 5 destined to treat condensate. These projects would need an estimated 4.3 mb/d of feedstock and a total investment of $90 billion.

Mideast Oldest Refinery to Rejuvenate

With the commissioning of the Abadan oil refinery development plan, for the first time in the Middle East, the largest crude oil vacuumand atmosphericdistillationunits, hydrocracker and the tallest integrated crude oil furnace will be launched in this facility. This megaproject has been implementedin partnershipwith the Chinese. It is expected to be put into operation by March 2023.

Abadan refinery, which is the oldest and the first refinery in the Middle East, currently processes about 400,000 b/d of crude oil. Due to the high age of this refinery, which was established in 1912, technical inspections are continuously carried out in this refinery and the decrepit installations are fixed or replaced. At the time of economic feasibility studies, the useful life of a refinery is considered to be between 25 and 30 years, but the actual life of refineries in Iran and in other countries is much longer due to overhaul and implementation of numerous improvement and renovation projects. Since the establishment of the Abadan refinery, periodic overhaul plans and operational inspections have been carried out.

Inspection

Prior to theimposed war, the Abadan refinery had four distillation units each with a capacity of approximately 100,000 b/d, one distillation unit with a capacity of 130,000 b/d, a large number of production and refining units for various products, as well as 850 oil storage tanks, some of which were destroyed during the war. After the end of the war in 1998, phase one of the refinery with a capacity of 130,000 b/d was rebuilt and in early 1989, the 85th distillation unit was opened and put into production.

Following the launch of the first phase, other refinery installations including distillation units 70, 80, 75, vacuum distillation units 60 and 55, catalytic conversion, gas separation, FCCU, solvent preparation and oil making plant with the round-the-clock efforts of the refinery staff and the use of the staff of other refineries became operational without foreigners’ assistance, so that now with a capacity of 400,000 b/d, products include LPG, gasoline, kerosene, gas oil, jet fuel, fuel oil, various types of base oil, various grades of bitumen, petroleum solvents, sulfur, naphtha (feedstock for Bandar Imam Petrochemical Plant’s aromatic unit) and gas (feedstock for Abadan Petrochemical Plant).

3-Phase Development

The development plan of the Abadan refinery consists of three phases, of which phase one and phase three have been put into operation. The second phase of this project includes stabilizing the output capacity of the Abadan refinery, which also includes two units. In the first phase of the development plan, the capacity of Distillation Unit 85 increased from 130,000 to 180,000 b/d, and Vacuum Distillation Unit 200 with a capacity of 70,000 b/d and Viscosity Reduction Unit with a capacity of 25,000 b/dcame online in 2005 in order to reduce share of fuel oil and supply feedstock to FCCU.

In the second phase, the plan to stabilize the current capacity and improve the quality of the products of the refinery was considered. In this project, atmospheric and vacuum distillation units and gasoline, kerosene, gas oil, sulfur production, construction of the second FCCU plant, gasoline output hike and other auxiliary units will be built.

Ahmad Farzaneh, the Abadan refinery development manager, said: “The plan to develop and stabilize the capacity of the Abadan refinery (Phase 2) is defined in the form of two parts, the first part of which has entered into operational stages since 2017 with the conclusion of a contract with the participation of a consortium consisting of “Oil Design and Construction Company”(ODCC) and a Chinese company.

The first part of phase 2 of this plan has 6 units under license and other units include atmospheric and vacuumdistillation units, LPG 2&1 and utility units. The purpose of implementing this project is to optimize and make the Abadan refinery profitable, to produce  high quality products in compliance with the Euro-5 standard, to reduce the environmental pollutants of products, to increase the production of kerosene and premium gasoline by improving the production technology, to reduce the production of fuel oil and stabilize the capacity of the refinery via phasing out old units and constructing and commissioning new phase 1 and 2 distillation units, whose capacity is 210,000 b/d and 150,000 b/d, respectively, the capacity of this refinery would be stabilized at 360,000 b/d.

Farzaneh said construction of the largest distillation units, hydrocracker, the tallest integrated crude oil furnace and the highest refinery burner in the country and the Middle East are among the features of this project.

“LPG would account for 1.5% of the production of new refinery units. The share of kerosene and jet fuel is 22%. The share of gasoline from the new phase production is 21% and the share of diesel is 24%. Heavy cuts, such as fuel oil, account for a total of 32% of the 210,000-barrel unit's products. This is while in the old unit, fuel oilaccounted for 40% of the products of the refinery,” he said.

“Stabilizing the refining capacity of Abadan Refinery, producing products based on Euro 5 standard, reducing environmental pollutants, increasing the production percentage of kerosene and premium gasoline by improving the production technology, reducing fuel oil production are among the goals of this project,” he said.

According to him, by building new units and shutting down old units, the processing capacity of this refinery will be increased by a total of 210,000 b/d.

Farzaneh stated: “The effort to implement the country's largest atmospheric and vacuum distillation units in Abadan, with a capacity of 210,000 and 100,000 b/d, respectively, required precise planning and a lot of follow-up, which put us in pre-commissioning conditions.”

“The monthly progress of about three percent of this project was realized in the conditions that the employees were working in the most difficult working conditions due to the spread of COVID-19, unprecedented heat this summer and air pollution due to the increase in dust in the south and west of the country, so that dozens of people die of heatstroke every day,” he said.

“In the second part of the mentioned plan, the construction of hydrogen refining units for kerosene, gas oil, naphtha, catalytic reforming and isomerization, along with utility units and ancillary facilities, with an estimated credit of $1.7 billion is predicted,” he added.

Farzaneh said Phase 1 and 2 would make the refinery younger to enhance its output. He said the refinery’s output hike would pave the ground for exporting more refined petroleum products.

Gasoline Production

The third phase of Abadan refinery with 13 small units to produce quality gasoline was put into operation 10 years ago, the goal of this project was to produce more gasoline and reduce fuel oil.

It is necessary to call that in the development plans of this refinery, paying attention to environmental issues is of particular importance. Different types of filters and scrubbers will be used to prevent air pollution, industrial wastewater treatment and closed circuit water cooling systems, considering that these units have new technology, the amount of energy waste will be minimized with the construction and operation of the industrial wastewater treatment unit. Also, some related problems in this field will be completely resolved.

It is noteworthy thatAbadan oil refinery is one of the largest refineries in Iran, which produces 11 types of petroleum products and supplies 25% of Iran's fuel needs. Construction of this refinery was completed in 1912, and until the start of the imposed war in 1980, it was the largest refinery in the world with the capacity to refine 628,000 b/d.

Foreign Firms Keen to Invest in Downstream Petchem

The CEO of Persian Gulf Petrochemical Development and Investment Group (PGPDIG) says the holding has currently more than $650 million worth of projects under way. He told “Iran Petroleum” some of Iran’s neighbors had called for joint venture with PGPDIC, expressing hope for the finalization of an agreement in the current calendar year.

The following is the full text of the interview Mr.Rashid Qanei gave to “Iran Petroleum”:

Would you please tell us about PGPDIC’s main projects?

We have currently prioritized five projects for operation: Lordegan Petro-Armand, Arghavan Gostar Ilam Petrochemical Plant, Sadaf Petrochemical Plant, solid flake plant and polyaluminium chloride (PAC) in Urmia. We expect them to come online in the second half of the next calendar year. Investment in the five projects totals $300 million, whose startup would add 381,000 tonnes to PGPDIC’s output capacity. Lordegan Petro-Armand which is the largest crystal melamine production facility in the country with a capacity of 30,000 tonnes is the top priority. It is complementary to the urea chain. This facility is fed with molten urea and liquid ammonia, which would be supplied by the Lordegan urea chemical fertilizer plant. We’ve purchased one of the best licenses in the world for this plant, which is expected to come online in the second half of the year. Arghavan Gostar Ilam Petrochemical Plant that converts the chemical and polymer-grade propylene produced at the Ilam Petrochemical Plant’s olefin unit to polypropylene is our second priority. Its capacity is 150,000 tonnes. Sadaf Petrochemical Plant, which would be the first E-SBR artificial tire manufacturing plant to supply feedstock to tire manufacturers is our third priority. It has capacity to produce 136,000 tonnes. The first unit of health-trade PAC with 45,000-tonne capacity is our fourth priority. It manufactures Arvand Petrochemical caustic soda to be supplied to PAC soda producers. PAC unit at Urmia Petrochemical Plant with capacity of 20,000 tonnes is our fifth priority. The plant is used in water and wastewater treatment. Currently, Iran is importing low-quality Chinese PAC. The Urmia plant would be supplying this substance at high quality.  

How much are PGPDIC’s current projects valued at?

The projects currently under way by PGPDIC are worth over $650 million. Half of these projects would come online by March 2024 and the rest up to March 2025. We believe that we would be earning $1-1.5 billion in revenue from these projects as of March 2025, which would be nearly twice the investment we’ve made.

Given the 13th administration’s willingness to expand cooperation with neighboring and friendly nations, have you received any proposals for cooperation?

So far, we have had several requests from neighboring countries. For example, the Indians wanted to have joint investment with us in the production of some products. We have also welcomed the suggestions of cooperation that have been presented and we are now in the first steps of negotiations. Considering that we are also looking for the development of our markets, joint cooperation can facilitate this for us.

Do these talks depend on the outcomes of Iran’s nuclear talks with six world powers in Vienna?

None of our negotiations is conditional on the revival of the Vienna negotiations. Due to the conflict between Russia and Ukraine, many countries have problems in their fertilizer chain and fertilizer has become extremely scarce across the world, and they are very willing to have joint investment with us in the production of these products, so we are also interested in cooperation. We welcome foreign companies in this field. We hope to reach a final conclusion regarding joint cooperation with one of the neighboring countries by the end of this year.

Do you have any plans to build a joint factory in the neighboring countries?

At the moment we don't have a plan because our main goal is to create jobs and earn foreign currency in Iran, although we have received proposals from neighboring countries such as Turkey to build a unit there, we have not rejected this proposal, so as I mentioned, our first priority is to operate in Iran.

In what sectors will you cooperate with Latin American countries?

Latin American companies are more willing to cooperate with them in the field of major repairs and joint production. Of course, I must also say that these companies have announced during the trip of the CEO of Persian Gulf Holding to Latin America that they are ready to bring the entire capital to Iran, but Persian Gulf Holding does not have financial problems and is more willing to cooperate with foreign companies to develop its own markets.

What are the stages of implementing chemical parks now?

We have planned to create petrochemical parks in the southern coast of the country. Methanol Park is our most important park in the Parsian Special Economic Zone. With the construction of this park, we will create the value chain of methanol. This park has an area of ​​1,000 hectares and 60 projects are going to be implemented there. Currently, we have done the feasibility studies of these plans and we are looking for financial and executive partners. Based on the planning, we will provide 70% of the domestic resources and the remaining 30% with international finances.

Do you have any other plans apart from the Methanol Park?

Yes, we are currently studying 12 coastal areas in the south of the country, one of our fields of study is parks specializing in modern chemical fertilizers, which currently have an attractive market in the world. Even some of Iran's eastern neighboring countries, who were informed that we want to build a park in this field, have announced that they want to pre-purchase the products of these parks. Among other high-demand parks, I can mention the Park of Pharmaceutical Industries and Pharmaceutical Raw Materials, which will be an attractive market because we import at least one billion dollars of pharmaceutical raw materials annually. So, I suppose this market will be very attractive for Iran's petroleum and petrochemical industry. We have a market of at least $150 billion in the field of downstream industries in neighboring countries, and we hope that petrol will have a good share in the market of Iran's neighbors.

What approaches do you pursue in acquiring technology?

Our first approach is to nationalize licenses as much as possible. We designed a road map to indigenize licenses step by step and use internal licenses. Regarding the technologies that we do not currently have, we have negotiated with a number of neighboring countries so that we can use their licenses.

How many knowledge-based companies have you signed contracts with?

We have signed contracts with 700 knowledge-based companies in all sectors of PGPDIC and even Persian Gulf Holding, from the value chain to the parts we use.

BBII Gas Recapturing Fulfils Iran Obligations

One of the key and prioritized programs by Iran’s petroleum industry is to prevent associated petroleum gas flaring. Despite US-led sanctions against Iran over recent years, no-flaring projects have never stopped. One case in point is gathering associated gas at the Persian Gulf Bidboland gas refinery (BBII), which would significantly mitigate environmental pollution.

To that end, a $1.109 billion agreement was signed in 2018 by Persian Gulf Petrochemical Industries Company (PGPIC) and National Iranian South Oil Company (NISOC), which was implemented by PGPIC subsidiary Persian Gulf Bidboland Gas Refining Company in October 2019. The project alone would cover 98% of Iran’s commitments under the Paris agreement in the oil and gas sector.

One of the reasons that convinced the Petroleum Ministry to strike this deal with PGPIC was to stabilize the refinery feedstock by preventing the flaring of associated gases while protecting the environment. BBII, which has the largest facilities for gathering and processing associated petroleum gas, is in charge of implementing the project covering four provinces – Khuzestan, Kohguiluyeh& Boyer Ahmad, Bushehr and Fars. It would involve 27 subprojects categorized under three groups: five projects in gas injection, 10 projects in gas gathering and 12 projects in renovation of installations. For this purpose, about 300km of pipelines would be constructed. NISOC is the client in the project.

An important point to note is that the conceptual design of the flare gas capturing project had begun in October 2019, which would be finished in 41 months. However, due to non-allocation of budget from the National Development Fund of Iran (NDFI) and some modifications in the project by NISOC, the project has not come online.

However, when the BBII refinery became operational in February 2021 to allow for the supply of refined products, the required budget was provided and the project entered an acceptable phase.

The basic engineering design of this project has been done by an Iranian company with more than 1,000 engineering plans and documents certified by NISOC.

Given the significance of the project, a working group was formed, comprising one representative from BBII and four from NISOC, to handle the administrative procedure for the project.

Prioritization

Twenty-seven strategic projects were prioritized at the beginning of the implementation of the improvement plan and the construction of the gas gathering facilities. First, five pre-compression projects, including pre-compression 900, pre-compression 1000, Pazananrecovery, Gachsaran gas injection and Bibi Hakimeih gas injection, along with their electrification projects, were included in the implementation plan. These five projects were the projects that had received the least investment but the most impact on the supply of feedstockto BBII. The initial estimate of the capital required for these projects was around €130 million to €140 million.

Also, the three projects of pre-compression 900, pre-compression 1000 and Gachsaran gas injection along with three electric substations will be put into operation adjacent to each project this calendar year. They would respectively supply 900 mcf/d, 350 mcf/d and 170 mcf/d of gas to BBII as feedstock. In addition, the Paznan restoration project will come online in the first 6 months of next calendar year. The 400 KV substation, which is one of the largest substations in the country, will be put into operation early next year. In this way, the feedstock supply toBBII will exceed 1 bcf/d.

Flare Gas Gathering

Also, flare gas gathering projects include Rag Sefid, Aghajari 1, 2, 3, 4, 5, Maroun 3, 5, Ramshir and Pazanan. All these projects have been assigned to contractors. These projects have various progress rates and, in this group, the highest progress is 50%.

All the equipment and all the contractors selected during the tendering process for the improvement and construction of the flare gas gathering facilities were made by Iranian manufacturers. This project is supposed to be completed by the end of the 13thadministration in 2025, but the subprojects of this project will be put into operation during these four years. Currently, 5,000persons are working directly and indirectly in these projects, who are generally local manpower.

Financing

Providing financial resources is one of the most important reasons for the delay in this national and important project. Initially, NDFI was supposed to allocate $700 million to BBII for the implementation of this project, which did not do so; however, that did not stop the project. Currently €870 million has been allocated.

The BBII refinery has capacity to process more than 56 mcm/d of flare gas. It would receive 13.5 million tonnes a year of sour gas from NGL 900 and NGL 1000 and 2.25 million tonnes of sweet gas from NGL 1200 and NGL 1300. Once fully operational, it may earn the country $1.5 billion in annual revenue.

With the completion of this project, the BBII facility would be receiving 2 bcf/d of gas. Furthermore, 600 mcf/d of gas would be recovered, 490 mcf/d of which would be directly fed into the BBII refinery. The remainder would be given by NISOC to stakeholders.

New Petchem Hubs Expected in Iran

Iran brought its petrochemical production from 3 million tonnes in 1978 to 83.5 million tonnes by March 2021. Currently, 50 new projects are close to operating, whose commissioning would bring national petrochemical output to 130 million tonnes by March 2026. Iran has currently capacity to supply at least 90 million tonnes a day of petrochemicals.

Petrochemical industry officials in the 13th administration have laid emphasis on increased feedstock supply by the giant South Pars gas field in coming years with a view to building new petrochemical plants in coming years mainly in new petrochemical hubs. Currently, Mahshahr with 21 petrochemical plants with total production capacity of 25.6 million tonnes a year and Assaluyeh with 13 plants with production capacity of 24.3 million tonnes a year, constitute the main two petrochemical hubs of Iran.

As development of industrial hubs has been always one of the important factors in the industrial development of countries, and the favorable and sustainable development of petrochemical industries in these hubs depends on providing general and specialized infrastructure related to this industry. On this basis, National Petrochemical Company (NPC) is studying and examining areas as the main hubs of development based on the criteria of proximity to feedstock, water supply, and access to petrochemical products export infrastructure among other factors in a bid to guarantee sustained development. A case in point is development of a special economic petrochemical zone in Mahshahr, an energy-intensive industrial zone in Parsian, Lavan Island, Qeshm Island, Jask and Chabahar.

According to the petrochemical industry’s roadmap and the 7th National Development Plan, 36 new projects would be established in the new hubs, which would add 60 million tonnes to the petrochemical output capacity. That would mean the third jump in the petrochemical sector, which includes the Makran petrochemical project.

Future development of the petrochemical industry is not limited to Bandar Imam and Assaluyeh; rather it involves four other hubs off Persian Gulf Waters or the Gulf of Oman. The Parsian Special Economic Zone, the Jask Free Zone, the Chabahar Free Zone and the Iranshahr Special Zone constitute these four hubs, in addition to which, establishment of four methanol and urea/ammonia projects with capacity of over one million tonnes in Lavan and a number of inland GTP plants are envisaged. Due to the abundance of available natural gas in the future, the NPC plans to use GTO and GTP technologies to produce olefin in the country due to its key role in the downstream sector development.

NPC managers say investment in the Persian Gulf and Gulf of Oman littoral zones will continue. 

All coastal areas of Persian Gulf and the Gulf of Oman have the ability to become petrochemical hubs due to easy access to feedstock and high seas, but Chabahar, Jask and Parsian are among the new hubs that are currently witnessing construction by the private sector because a gas pipeline with a transmission capacity of 105 mcm/d has been built in the southeast of Iran, and in the future, if negotiations prove positive, Pakistan will receive only 25 mcm/d of gas from this pipeline; therefore, pipeline is able to supply more than 75 mcm/d of gas feed to petrochemical plants in these areas. On the other hand, the existence of ports and railways in the southeast of Iran, as well as the existence of the Chabahar Free Zone in this region may be attractive to investors. Currently, the creation of necessary infrastructure is also considered in the areas of Jask, Parsian and Lavan.

In the meantime, Iran has made proper investment in the construction of a petrochemical hub in the Parsian zone, and it will soon become a new hub for the petrochemical industry. Twenty mcm of gas has been allocated to this zone, and the transfer of other feedstock to this area is under planning. It is small, and in addition to oil and gas feedstock, transfer of basic products of the Assaluyeh petrochemical zone as feedstock is being studied. 2.200 hectares has been allotted for the development of petrochemical projects in this zone, and development of petrochemical projects will help prosperity and employment in the region.

Furthermore, for the creation of a future petrochemical hub in Chabahar, preliminary studies have been conducted, legal permits have been obtained, and the necessary land has been allocated for construction. In this way, Chabahar is expected to become a new petrochemical hub after Mahshahr and Assaluyeh.

According to NPC plans, , a target has been set for the production of 15 million tonnes of petrochemical products, and according to preliminary estimates, to produce this volume of products in Chabahar, $20 billion in investment, 20 mcm/d of natural gas and 3.6 million tonnes per annum of ethane are needed.

One of the objectives of the development of petrochemical industries in Chabahar is to complete the production chain of petrochemical products from upstream to products, and according to the experience of building petrochemical units in Mahshahr and Assaluyeh, Chabahar will develop in such a way that there is no need to export upstream products such as ethylene and methanol.

Iran, Good Option for Investment

Iran has unique advantages in the development of the petrochemical industry, because it has abundant liquid and gas feedstock required by these industries. In terms of gas and oil deposits together, Iran enjoys the world’s top position. In addition, there are other advantages in Iran. For instance, having long waterways in the Persian Gulf and the Gulf of Oman may provide great economic benefits for foreign investors to transport their products to the target markets by ship, which is the lowest-cost means of transportation.

Furthermore, the presence of young and experienced educated workers, as well as the presence of active companies in the fields of design, engineering, construction and installation, which have proven their potential over the past decade, could be another strength of Iran. Most importantly, Iran, with a population of more than 80 million and its proximity to important consumer markets such as Central Asia, Iraq, India, and China among others could be considered a good advantage for investors. In addition, the existence of special and free zones in

Iran is another advantage of investing in the country, because according to law, foreign investors could invest up to 100% in these zones and be exempt from paying duties and taxes for up to 10 years.

Iran is considering more than 105 mcm/d of methane, 2.8 million tonnes of ethane, 2.1 million tonnes of propane, butane and liquefied gas, as well as four million tonnes of naphtha annually as feedstock for its new petrochemical projects in the future, and therefore, investors and domestic and foreign companies active in these projects will not have to worry about supplying the required feedstock in the future. The petrochemical sector is a water and energy intensive industry, therefore many petrochemical plants are currently facing water and export problems.

During the last 10 years in the country, the process of creating infrastructure in new areas for the presence of domestic and foreign investors has been done very slowly, therefore, in the event of restoration of the Iran nuclear deal and subsequently foreign investment in Iran, development of infrastructure in the new hubs would be one of the first priorities in the country's petrochemical industry.

40 Export Destinations

One of the goals of the Iranian petrochemical industry in the 2025 Horizon is to achieve the first place in the region in the petrochemical industry. Iran is now an exporter of petrochemical products to more than 40 countries in the world. Thanks to energy diplomacy, new opportunities have helped create conditions to benefit from the target market of around 400 million people in neighboring countries, and considering Iran's geopolitical position, these markets are very important. Iran plays an important role in supplying basic needs of other countries. With the operation of development projects in the petrochemical industry, by 2025, Iran’s share of the Middle East petrochemical output will reach 41%.

Over the past 10 years, the process of providing necessary infrastructure for investment in the petrochemical industry has been slow due to sanctions. The 13th administration has made efforts to improve the petrochemical industry. If we look at the events of the past few months, we will see many activities in the petrochemical field. In fact, the petrochemical industry will play an important role in increasing profitability and strengthening Iran's position in the economic relations of the region. However, in the presence of strong rivals we need to pay more attention to this industry.

According to official statistics, the petrochemical sector earned Iran $12.5 billion in revenue last calendar year.

On the other hand, provision of financial resources through new instruments of the capital market, including a private investment fund for the petrochemical industry and establishment of public joint stock companies for the implementation of downstream projects was considered. To that effect, financing projects through tapping National Development Fund of Iran (NDFI) and using Chinese finance and local banks’ credit was done.

Downstream Petchem

The importance of development of the petrochemical industry has increased with regard to the complementary branches of the value chain, and therefore the strategic plans of the petrochemical industry with the aim of smart development of the industry and for the development of the value chain and the production of variety of products required by domestic industries in the 3 groups of combined feedstock, propylene production and other projects is planned.

New petrochemical projects in the six chains of methanol, propylene, ethylene, benzene, butylene and urea are based on local market demand. These projects will encourage investment in their downstream chain due to their high profitability. By 2025, a total of 35 projects would bring Iran’s installed petrochemical capacity to 140 million tonnes per annum.

The key point is the increased share of mid-stream and downstream products in the petrochemical mix.

54% Output Hike

The current petrochemical production capacity is estimated at 91 million tonnes, which is expected to increase to 140 million tonnes, up 54%, by the end of the 13th administration’s tenure.

On the other hand, in addition to making money, such industries, especially petrochemicals, could be seen as a tool for the development of welfare and job creation in less-developed areas. It seems that the approach of the new administration in the development of infrastructure and requirements of this industry indicates that the 13th government pays special attention to the development of infrastructure and enhancing the attractiveness of this industry. Considering the special conditions of our country and the position of Iran in the exchange of energy carriers, as well as the type of reserves, paying more attention to the petrochemical industry is an important and strategic decision. Now, the current administration is creating the necessary infrastructure with the support of the private sector. Various areas such as the coasts of the Persian Gulf and the Gulf of Oman are for the presence of domestic and foreign investors in the petrochemical industry, the petrochemical industry has always had the necessary coherence for the presence of domestic and foreign investors during the past decades.

Big Advantages

The aforesaid advantages could make Iran a major hub of the petrochemical industry in the future and attract investors. In the world, Iran is a country that has all the tools, capacities and resources needed for a profitable and active petrochemical industry, so that no country in the world has these conditions at the same time. Therefore, our country has a new and rare opportunity that no investment in the world has ever enjoyed. Undoubtedly, improving Iran's international relations and attracting more investments will lead to a brighter future for the petrochemical industry.

By completing about 60 incomplete plans left from previous administrations, which have had between 10 and 90 percent progress, the current capacity of the annual production of petrochemical products could be boosted. Furthermore, with the implementation of 36 new projects that require $41 billion of investment, the annual production capacity will exceed 180 million tonnes per year. Increasing the country's petrochemical capacity over recent years has been considered with the aim of increasing the national income and also preventing crude sales.

Due to the importance of this issue, last calendar year the process of implementing petrochemical projects accelerated. Due to this importance, several petrochemical projects were put into operation last year, which added about 7 million tonnes to the country's petrochemical capacity.

These projects include feedstock supply to the Parsian Sepehr refining plant with capacity of 3.3 million tonnes per annum, the ammonia and urea unit of the Masjed Soleyman petrochemical plant with capacity of 1.7 million tonnes per annum, the Sabalan petrochemical plant’s methanol project with capacity of 1.6 million tonnes per annum, the Exir Hallal Assaluyeh petrochemical plant with capacity of 50,000 tonnes a year and the Ibn Sina Petrochemical Plant with capacity of 100,000 tonnes a year.

COP27 Ends Without Major Decision

Theannual meeting of United Nations Framework Convention on Climate Change (UNFCCC) was concluded on November 2 without any major decision being taken. The convergence of several crises in 2022, including the tension in Ukraine, global inflation, the spread of COVID-19and of course climate disasters had caused the risk of any ambitious climate decision to increase.

According to the Sharm el-SheikhImplementation Plan, adopted at the conclusion of COP27, the biggest development in this year's climate negotiations was related to the protection of victims of climate change. The developing countries were able to get the agreement of all members to create the "loss &damage fund" that they had worked so hard for, although this success was achieved provided that the financial burden of paying the damages should not fall upon rich countries. Negotiations on the main contentious issues, including which countries will pay and who will benefit from the fund, have been postponed toCOP28 in the UAE.

Participants at COP27 failed to extend agreements reached in COP26 to eliminate coal and other fossil fuels and promote low-emission program. The European Union's climate chief, Frans Timmermans, said: “What we have in front of us is not enough of a step forward for people and the planet.”

“It does not bring enough added efforts from major emitters to increase and accelerate their emissions cuts. It does not bring a higher degree of confidence that we will achieve the commitments made under the Paris Agreement and in Glasgow last year,” he added.

“It does not address the yawning gap between climate science, and our climate policies.The European Union tried to bridge these gaps. As you know,wedisplayed our commitment to ambition by being fully in line with a 1.5 scenario and even being able to update our NDC.We tried to get us all on a firm path to 1.5. with a global emissions peak by 2025, and with a clear statement of our intention to phase out unabated fossil fuels. We have heard this week that more than 80 countries now support this goal. Sadly, we don't see this reflected here,” he said.

According to experts, the final document of the Sharm el-Sheikh meeting is not a step back, and it is not a big leap forward, either.

The results of the negotiations on the key issues raised in the meeting are briefly as follows:

Fossil Fuel Mitigation

At COP26 in Glasgow, the chairmanship of the meeting, referring to the need to address the most ambitious temperature limit in the Paris Agreement, tried to "keep alive the 1.5 degree" temperature target and for the first time named coal as a climate problem, and countries agreed to reduce its consumption. In Sharm el-Sheikh, India, whose country's energy portfolio relies on coal, tried to shift the focus of reducing coal consumption to other fossil fuels. To advance this vision, the country took advantage of a broad coalition consisting of more than 80 developed and climate-vulnerable countries (without Egypt as COP27 chair).

Egypt, as the president of COP27 and responsible for drafting the text of its decisions, not only did not include the phrase "gradual mitigation of fossil fuels" in this text, but even promoted the consumption of natural gas by signing agreements on the sidelines of the meeting. Behind closed doors, countries including Saudi Arabia and Russia argued that oil does not cause climate change, but is one of the emission factors.

In the text of the document “Sharm el-Sheikh Implementation Plan”, besides the need to promote renewable energy, it also emphasizes the development of "low-emission" energy. Low-emission energy can mean natural gas that produces less pollution when burned than coal, or it can mean fossil fuels using carbon capture and storage technology.

Although the COP27 document keeps the Glasgow agreement on preventing the temperature rise to 1.5°C and phasing out coal, it does not go beyond that, stating that meeting the 1.5°C target "requires rapid, deep and persistent reduction in the global emission of GHG, so that the net amount of global emissions will decrease by 43% in 2030 compared to the level of 2019.”

Loss & Damage

Three decades ago, small island

nations and poorer nations began to file claims for compensation for the damages that climate change would inflict on their societies, while the word "compensation" had become taboo they finally managed to include it in the COP27 agenda. Rich nations, reluctant to commit financial resources, initially offered a "mosaic of solutions" such as insurance and early warning systems in the framework of technical assistance to compensate for losses, but developing countries were determined to create a new dedicated fund for this issue.

In the last two days of the meeting, EU negotiators finally gave the green light to create such a fund. They said they would support the creation of a fund for losses if the fund's resources and donor base were expanded, if it targeted the most vulnerable developing countries, and if COP27 agreed to strong action to reduce emissions. These conditions of the European Union were met to some extent and the developing countries accepted the proposal of the European Union. With the agreement of the United States and other rich countries, the members of the Climate Change Convention agreed to create a "damage response fund".

The European Union specified that the support of the fund should only be provided to the so-called "vulnerable" countries from climate change.

Low Emission

In the text of the agreement of COP26 in Glasgow, the countries mentioned that it is projected that in 2030, the amount of global GHG emissions will be 14% higher than the level of 2010 emissions. Hence, to limit global warming to 1.5°C, global emissions must be reduced by 43%. To pursue this goal, countries agreed to set a "work plan to urgently increase ambition and implement reductions in this critical decade."

In Sharm el-Sheikh and during the negotiation process of the COP27, countries discussed manner of structuring this work plan, but the views of the countries in this regard were far from each other. Developed and vulnerable countries wanted negotiations to be long, strong and specific, but emerging economies supported short, weak and broad negotiations. In the meantime, the efforts of the European Union, the United Kingdom and small island countries to ensure stronger commitments in the field of reducing GHG emissions and setting the year 2025 to achieve the peak of global emissions have failed.

Bridgetown Agenda

Serious discussionson the need and manner oftransferring trillions of dollars to green investments and resistant to climate change has been taken into consideration by climate negotiators.

The International Energy Agency (IEA) estimates that by 2030, $4 trillion will need to be invested annually in renewable energy for the world to achieve net-zero emissions by 2050. Developing countries alone need $5.8 to $5.9 trillion to achieve their goals by 2030.

COP28 agreed that providing such a budget and capital requires "changing the financial system and its structures". They called on multilateral development banks (MDBs) and international financial institutions to increase access to climate finance, simplify the process of accessing it, and ensure that their activities contribute to a "significant increase in climate ambition". These items reflect the recommendations of the financial expert group within the framework of G20.

However, the main proposal put forward by Barbadian Prime Minister, Mia Amor Mottley for using the International Monetary Fund (IMF)'s instrument, known as Special Drawing Rights (SDR), to finance carbon emission reduction projects is not included in the text of the COP27 decisions. She believes that the IMF’s guaranteed $500 billion may increase the possibility of climate finance to trillions of dollars. In any case, the negotiations in this field and the aforementioned structural reform will continue in the spring meetings of the IMF and the World Bank.

Carbon Trade

At the Glasgow meeting, the negotiators agreed on a broad framework for the creation of a new global carbon trade scheme, and in Sharm el-Sheikh, they completed the details of this framework. According to the text of the agreement, a two-tier carbon market will be created and different regulations will apply depending on who buys the carbon credits and for what purpose. The Glasgow Climate Agreement prohibited double counting of traded emissions reductions. That is, if a country buys emission credits from another country to use for its own purpose, the host country must make an accounting adjustment.

In the new market in the second layer, the carbon credits are called "participating reductions". A company can buy credit from another country and the host does not need to change its emissions inventory, while the name of this carbon credit suggests that the buyer does not have to use it to offset their emissions, but there is no means to prevent it. Environmental groups warn that this issue opens the door to double-claiming and corporate greenwashing of net-zero emissions commitments.

Just Energy Transition

The energy crisis was the background of COP27. A number of countries increased their production of coal, oil and gas to deal with the short-term energy supply crisis. In Sharm el-Sheikh, countries "recognized" that the current energy crisis highlighted the need for "rapid transformation of energy systems," including by accelerating the expansion of renewable energies. Agreements between rich and emerging economies to accelerate the transition away from coal, known as an equitable energy contributor, have been highlighted as a way to accelerate emissions reductions.

At the same time, COP27 agreed that a "just and fair energy transition" should be implemented based on each country's national development priorities and include support measures and social solidarity, such as retraining programs and support for coal workers, which energy transfer is damaged. They decided to create a work program on "just transition" and convene an annual ministerial round table as part of this work process.

Adaptation

A year ago, Egypt introduced COP27 as the "Adaptability COP" with the keyword "resilience", but later replaced it with the word "Implementation" and set the goal of COP27 turning words and promises into action. At the same time, the issue of determining the "Global Goal on Adaptation" (GGA) was one of the important plans of COP27. Adaptation to the effects of a changing climate has always been of particular importance to countries that have been on the front lines of facing these impacts, and its importance has never diminished in climate negotiations, but it should be kept in mind that measuring the amount of progress on the issue of adaptation is harder and more difficult than counting the amount of carbon reduction.

At COP 27, progress was made on the definition of GGA, but it did not meet expectations. Countries agreed to create a framework to guide the achievement of the adaptation goal and quantify progress towards adaptation. This issue should take into account the vulnerability and capacity of countries to deal with climate change and take into account a range of issues including water, food and agriculture and poverty and science-based indicators, criteria and goals, but the issues related to the proposal to prepare a report,especially on adaptation from the Intergovernmental Panel on Climate Change (IPCC) it got nowhere.

The important point is that if the adaptation agenda has a low and weak budget, not much progress can be imagined for it. The text of COP27 decisions noted "with serious concern" the gap between current levels of adaptation financing and what is needed to respond to climate impacts. Furthermore, in this text only developed countries are "encouraged" to "immediately and significantly increase the budget for climate finance." They have also been asked to speed up technology transfer and capacity building in the issue of adaptation for developing countries.

In another part of the adaptation decisions, developed countries are invited to increase the amount of their contribution in two funds for less developed countries and the special climate change fund. Last year, 26 developed countries pledged to double the adaptation budget to $40 billion by 2025. At COP27, these pledges were not repeated and the Adaptation Fund attracted only $230 million in new commitments.

Financing

Rich nations are lagging behind in delivering the $100 billion by 2020 to help developing countries reduce emissions and tackle climate impacts that they promised in 2009, according to independent source Oxfom's net amount of climate finance. The financial aid has been estimated at $21 to $24.5 billion. In such circumstances, perhaps it should not be surprising that the negotiations on setting a new collective quantified goal (NCQG) for 2025 started at a very slow pace. Practically, there is no news of a decision in this field until 2024, and the text of COP27 in this regard is mainly a procedure that defines the approaches governing the issue.

In the COP27 Implementation Plan, it is stated that the new financial goal "takes into account the needs and priorities of developing countries". This is not just about the quantity, but also the quality of donations. Contributors (developed nations) prefer to lend for carbon reduction projects and “mobilize” private sector finance where possible, but recipients (developing nations) demand grants from public funds, especially for implementation of adaptation projects, which are normally profitable to implement.

COP27; Climate and Energy

FereydounBarkeshli

Energy Market Analyst

Once in a year, delegates from almost 200 countries gather togetherseeking ways and means to keep climate change from spiraling out of control. This time, they met in Sharm El-Sheikh, Egypt, for the 27th Conference of the Parties (COP) that was originally shaped up back in 1994 when members of the United Nations agreed to convene and officially address climate change with an unprecedented determination. COP gained momentum and moved into center stage during Paris Conference of the Parties when decision was made to move from words and declarations to accountability, costs and damages. This institutionalized COP and countries began to address the topic at national, regional and international levels.

COP27: Hopes and Despair

As last year’s COP 26 in Glasgow proved a disastrous show, many people around the world weren’t sure about the outcome of COP27 in Egypt. However, conclusions of this summit proved to be the most positive and a step forward to reach a goal. I would say that the most solid texture of Sharm El-Sheikh was the involvement of true players of energy sector, oil and gas in particular to which I will arrive shortly.

Emergence of Global South with almost identical voices pushed the summit towards a relatively better understanding of the subject matter. COP27 galvanized climate action and accountability on loss and damages(L&D) that goes beyond talk shop. For developing countries, oil rich or oil poor, L&D finance is the key negotiation point. Economic Loss and Damage from climate change is expected to be on average around 1.8 percent of their GDP annually by 2050. This volume of L&D for net oil and gas exporting countries is even higher.

The current climate finance architecture to which Iran is a party, fails to acknowledge, let alone address L&D within its preview. The rise of unprecedented and widespread climate disasters globally has caused profound impacts on human sustenance and survival, with disproportionate consequences for Global South. Between 2008 and 2018 alone, the overall economic toll was recorded highest for Asian countries at $55 billion, followed by Africa at $30 billion and Latin America at $26 billion. Notwithstanding the mitigation and adaptation efforts the developing countries will be compelled to undertake, the impact of climate change in annual residual damages cannot be prevented and Global South is likely to face a loss of some $290-580 billion as early as 2030. This is particularly very damaging since the United States has weaponized climate change issues in its international policy mix towards certain countries namely; Iran.

The imperative calls for L&D financing in COP27 emerged as a crucial pillar for climate change summit. However, the recent climate change summit was nearly failing since the rich industrial countries which are most responsible for pollution and carbon emissions wanted the South to be penalized most rigorously for its energy consumption and still pay even more to clean up the mess that the Western economies are responsible for. COP27 was different from precedent COPs in that it showed the Global South the way forward. Unity and persistence is a key to success in international forums.

Fossil Fuels: From Defensive to Offensive

Powerful presence of National Oil Companies as well as other major players in international energy chains, helped to balance the theme of COP27 summit, though marginally. A Goldman Sachs contributor said:” $3.8 trillion of investment in renewables moved fossil fuels share in global energy consumption from 82 percent to 81 percent between 2000 and 2020. You heard it right. This is simply mind blowing. However, the world is now reversing course and moving backwards from gas to coal. This is a reality. After the war in Ukraine and imposition of sanctions on Russian gas supply, several countries in Europe and Asia are moving back to coal which is much more polluting than gas and oil.

In Paris and then in Glasgow climate summits of Heads of State, finger- pointing was the name of the game. OPEC and non-OPEC countries were the main culprits. The theme of summits were designed as if all blames is on the producers of oil and gas and consuming nations were the innocent victims of all carbon emissions.

In COP27, no delegate mentioned gas supply interruptions from Russia but blamed the US for double standards. The US president travels to the Middle East to ask for more oil and then championed disinvestment from oil and gas in his own country. The irony is that the United States is digging deep into its Strategic Petroleum Reserves (SPR), which is meant for security emergencies for market balancing and price appeasement and then demand that the world must stop to invest in oil and gas.

COP27 owes its relative success to the tension in Ukraine. Many analysts and oil market observers came forward and sounded vocal in condemning previous oil and gas policies of the Western countries and UN false assumptions. Back in 2021, British government banned presence and sponsorship of oil companies in Glasgow summit. In COP27 in Egypt, presence of oil companies were powerful and omnipotent. In COP26, a country like Poland was harshly criticized for still allowing coal industry to carry out its mining. In COP27, Poland was praised as a successful instance of energy self-reliance.

Green Politics

The last couple of COPs were influenced

by “green movements” and expansive political extremism in Europe. Since 2015, a global anti oil and gas movement led by European ultranationalist parties organized regular demonstrations all over Europe in favor of decoupling growth and fossil fuels. Renewables and green energy was the game of the game. Europe began to phase out refineries while petrochemical plants were in full operation. Green movements went further in phasing out nuclear power plants, too.

Europe was addicted to abundant, cheap natural gas from Russia for several decades, and had taken Russian gas for granted. Most heavy industries of the continent,in particularGermany were built around cheap Russian gas. War in Ukraine suddenly changed everything. The greens went on offensive and oil and gas found a breathing space away from fictitious scenarios that overshadowed the realities of the climate change.

Oil and gas supply crunch helped to bring the consuming energy world to their senses. There was a lack of consensus over the role and future of gas with clashing options voiced at events and at the sidelines during the first week of COP27 climate summit in Sharm El-Sheikh. However, gas was once again viewed as a bridge fuel in the energy transition. Though its role may still be short-lived and unstable. We noticed that given the lack of substantial investments in gas industry, the world economy has limited time to begin moving away from gas to renewables by 2050.

One of the most vocal supporters of gas at COP27 was French TotalEnergies which emphasized that the company’s growth strategy in gas has been reinforced by Europe’s understanding that gas is an essential component of the continent’s energy mix. This was more evident when Russian gas was sanctioned by OECD members. During the summit TotalEnergies said that the company intends to move away from oil to gas. This made net gas exporting countries jubilant. This means to indicate that gas was recognized as the transition energy carrier within the next three decades span. Gas completes the intermittency of renewables.

Nevertheless, no Western country or company advocated investment in oil upstream sector as they believed that oil will be phased out by 2050. This leaves investment on oil upstream mostly and almost solely on National Oil Companies (NOCs). In fact NOCs are mostly technologically advanced to undertake investments on their own. For one, the United Arab Emirates head of state who spoke in the summit that his country is committed to expanding oil industry.

COP28: The Way Forward

COP28 summit is scheduled to commence in UAE. This is considered a positive sign of strength from OPEC producers who have been marginalized in couple of past environmental summits. It goes without saying that COP27 was held during one of the most critical geopolitical backdrops. Tension in Ukraine and sanctions against Russian energy was particularly challenging since it involves a major source of energy i.e. natural gas.

The package that was agreed, reaffirmed the usual commitments that was expected for limiting global temperature rise to 1.5 degrees Celsius above pre-industrial era levels. The package also strengthened actions by countries to cut GHG emissions and adapt to the inevitable impacts of climate change, as well as boosting the support of finance, technology and capacity building needed by developing economies.

Creating a specific fund for L&D marked an important point of progress, with the issue added to the official agenda and adopted for the first time at COP27. Governments took the groundbreaking decision to establish new funding arrangements, as well as a dedicated fund to assist developing countries in responding to L&D. Governments also agreed to establish a transitional committee to make recommendations on how to operationalize both the new funding arrangements and the funds at COP28 in UAE next year. The first meeting of the transitional committee is expected to take place by the end of March 2023.

Parties also agreed on the institutional arrangements and quantify the network of L&D for technical and financial assistance to the affected developing world that are particularly vulnerable to the adverse effects of climate change. As such COP27 saw significant progress on adaptation of specific countries such as landlocked and island states.

Though the issue of finance was discussed, it was decided that no transfer of money be made before 2024. This is a disputable factor amongst countries attending the summit. Developing countries announced that no payment is transferred to them for a specific climate-related project. Developing countries’ Heads of State also announced that all transfers that has been so far made has been the regular loans or payments by international agencies such World Bank and International Monetary Fund (IMF).

What I learned from COP27 is that, environmental issues can not necessarily be handled by an international institution. Climate issues and related aspects of environmental topics should be best dealt with on regional basis. Different regions of the world face different environmental challenges. Middle East and oil producing regions face different sets of challenges, compared to Europe or Africa. Existing regional pacts and treaties can also be evolved in a way as to institutionalize climate affairs. America is in the business of politicization of all international organizations. This isn’t a perfect framework within which all countries may fit. Possibly a regional COP can shape up within COP27.

COP28 will be crucial for the future of oil and gas industries. This requires a great deal of lobbying prior to November 2023 when the word leaders gather in the UAE.

Brazil E&P Entrants Boost Production

Mid-cap upstream operators entering Brazil’s E&P sector will make $10 billion of capex investments over the next decade, according to a report from Wood Mackenzie.

As these entrants take on fields sold by Petrobras, they will likely raise production from these assets to a peak of 485,000 boe/d by 2027 (but tailing off thereafter) and increase their remaining reserves by 980 MMboe by 2035.

“For several years, Petrobras has pulled back on its investments in mature assets, which has provided an opportunity for mid-cap operators to renew drilling in these areas and develop more efficient production operations,” said Amanda Bandeira, Latin America Upstream analyst for Wood Mackenzie.

Egypt Awards BP More Offshore Blocks

Egyptian Natural Gas Holding Co. has awarded bp two exploration blocks in the eastern Mediterranean Sea.

For the Northwest Abu Qir Offshore Area, bp will operate with an 82.75% interest, with partner WintershallDea holding 17.25%.

The 1,038-sq-km concession over water depths ranging from 600 m to 1,600 m is west of the recently awarded North King Mariout Block (bp 100%) and north of the Raven gas field.

UK North Sea Emissions Higher

Greenhouse-gas (GHG) intensity from production in the UK and Norwegian averaged 12 kg CO2e/boe in 2022, according to S&P Global Commodity Insights.

Close to two-thirds of the overall production was found to have an intensity below that of the basinwide average. But certain other facilities accounting for 20% of total production generated half of the basin’s total GHG emissions.

S&P’s analysis found wide variability, ranging in GHG intensity from less than 1 kg CO2e/boe to nearly 150 kg CO2e/boe, with this range consistent across all the regions explored to date.

Storage Tanker for Wassana Project Offshore Thailand

Valeura Energy has entered a definitive agreement with PT SamudraAlam Transport to charter a crude oil tanker to store production from the Wassana oil field development in the Gulf of Thailand.

The Panamax tanker, MT Vula, with a storage capacity of 460,000 bbl, will likely be renamed MT JakaTarub.

Following an imminent program of cleaning and modification work, it will be made compatible with the Wassana Field’s mooring and crude oil offloading systems.

Australia Court Rejects Barossa Decision Appeal

The Full Federal Court in Australia has dismissed an appeal against Justice Bromberg’s decision in September to set aside NOPSEMA’s approval of the Barossa Gas Project’s drilling environment plan.

Santos operates the field development in the Timor Sea off northwest Australia.

The company said it had consulted with Traditional Owners and their representatives on the impact of the project since 2016 and would continue to do so, taking into account guidance provided by the court.

West Oil Comeback to Venezuela

Shuaib Bahman

Theoil market has faced a relatively challenging situation over the past year. Although the United States prevented anupsurge in oil prices this year by releasing more than 200 million barrels from its strategic petroleum reserves (SPR), this situation is not stable and new conditions have emerged in the world markets.While the growth of American shale oil production has declined, Russian oil exports have been affected by such sanctions as setting a price cap of $60, and Saudi Arabia’s oil policy and exports indicate a possible reduction in the OPEC production level, the West is looking for reliable alternatives to meet its own energy needs.However, the West’s options are very limited. Libya is in a state of chaos and war, Iran is under sanctions, and other countries do not have much capacity to increase production. In the meantime, Venezuela is one of the few countries that can partially respond to the energy supply challenges of the West. For this reason, the US and Europe have given green light to oil companies to cooperate with Venezuela.

The signing of contracts between the Venezuelan government and Chevron to resume cooperation has given rise to debate about the future of Washington-Caracas relations and its impact on global oil markets. While trying to interpret the return of Western companies to Venezuela as the way America and Europe may overcome the problems caused by the decrease in oil supply in the world, facts on the ground indicate otherwise.

Restrictions

First of all, it should be noted that the Chevron permit has many restrictions. With the permit issued by the American government, Chevron cannot help Venezuela in the development of fields. In fact, this permit is just a way to partly clearits multi-billion-dollar debt through Venezuela’s state-run PDVSA through the sale of crude oil. This permit also allows the American company to import necessary materials to help refine this country's crude oil into the types (grades) of exportable oil.

What is important in between is the permit of oil field service companies Baker Hughes, Halliburton, Schlumberger and Weatherford International. Although the US government will probably allow activities in these fields due to the conditions in the world markets, these fields cannot significantlyhelpenhance Venezuela’s oil production, at least in the short term as most of these oil fields are not developed and cannot quickly enter the oil production cycle.Based on this, if Chevron succeeds in restoring its previous agreements, it may only produce about 200,000 b/d. Because this company exported only this amount of oil to the whole world through four joint ventures with PDVSA in the pre-sanctions period. It is quite clear that this amount of oil exports cannot have much impact on world markets.

On the other hand, Venezuela’s oil industry has faced various challenges in the past years in such a way that the oil revenues of this country have decreased by more than 90% over five years. Caracas will have about $3.5 billion in oil revenues in 2022, which is not even a tenth of the $56 billion revenue five years ago. Over recent years, due to US and European sanctions, the oil revenues of this country have decreased even to the level of $700 million, which shows a 99% drop compared to the normal revenues of $56 billion.

While Venezuela was producing about 3.2 mb/d in 2002, this amount decreased to 400tb/d in 2020 and reached the production level of 1934. Of course, in the last two years, the amount of oil production in this country has increased to about 700tb/d. Although Caracas has announced that it couldenhance its oil production by 2 mb/d, there are serious doubts about this, at least in the short term.The fact is that Venezuela's oil industry has been severely damaged since 2018, when the country faced tough US sanctions. Of course, this damage is not only limited to the recent US sanctions, but since years ago, due to the lack of investment in infrastructure, mismanagement, as well as widespread corruption and lack of timely maintenance and repairs, the efficiency of Venezuela’s oil industry had started a downward trend.

Outlook

News of the signing of the contract between the American and European oil companies and the Venezuelan government, had it not been published before the war in Ukraine, would have been considered a shock to many observers. Because US and its European allies did not hesitate to take any action to overthrow Maduro's government and help the opposition led by Juan Guaido. However, it is not difficult to understand now why America and Europe have stopped the coup attempt against the legitimate government of Venezuela, and are signing new oil contracts with the country.The outbreak of the war in Ukraine has intensified the tension in the relations between Russia and the West, and the United States and European countries have been forced to change some macro policies towards Venezuela in order to supply their oil needs. In fact, a country whose president was facing overthrow plots is now seen as a source to meet the energyneeds of the West.

However, the stinginess of the Americans in lifting the sanctions they have imposed against Venezuela does not provide very favorable conditions for the activities of various Western oil companies in this country. Although the US has made the removal of most of the sanctions subject to the continuation of the dialogue between the government and the opposition, there is still a major problem. Because even if the sanctions on Venezuela are lifted quickly, the exhaustion of the country’s oil industry cannot lead to new conditions in oil supply.In fact, the sanctions that the Americans and Europeans thought they had imposed against Maduro's government in the past are now backfiring against them. Because Western countries, by imposing oil sanctions, caused dilapidation in Venezuela's industries and lack of technical and financial investors in this country. Now that the West needs to increase itsenergy import, Venezuela cannot help America and Europe much, at least in the short term.

West-Russia Oil Conflict; Winner Loser

Shuaib Bahman

On 2 December 2022, G7 countries plus Australia agreed to the price cap of $60 per barrel of seaborne Russian-origin crude oil, to be enforced by the G7 nations, the European Union and Australia, came on top of the EU's embargo on imports of Russian crude by sea and similar pledges were announced by the United States, Canada, Japan and Britain.

The price cap allows Russian oil to be shipped to third-party countries using G7 and EU tankers, insurance companies and credit institutions, only provided that the cargo is bought at or below the price cap.As the world’s major shipping and insurance firms are based in G7 countries, the cap could make it difficult for Moscow to sell its oil for a higher price.

While some believed that with the implementation of this plan, which is considered some sort of embargo on the purchase of Russian oil under certain conditions, the price of oil in the world markets would increase, not only it came true, but the world also witnessed a decline in the price of oil. According to the above process, the question arises as to which side will be the loser and which side will be the winner of determining the price ceiling for Russian oil exports?

The price of oil has experienced various fluctuations since its discovery and extraction at different times. Since 1860, when the use of oil as an industrial commodity flourished, it has gone through various periods in terms of pricing. In the period of 1860 to 1913, due to the use of other fuels, oil was not center of much attention and it was only used as a source for lighting and lubrication.As a rule, during this period, political issues did not have much impact on the price of oil. In the years 1914 to 1950, when the world witnessed the occurrence of two world wars followed by economic prosperity and recession, the discovery of huge oil reserves in the Middle East changed the energy equation in the world. Between 1950 and 1973, along with the growth and development of technology, oil acquired political and even anti-colonial aspects.

Since 1974, oil has gone through one of its most political eras. In a way that in all wars, negotiations and crises, it has always been an important factor and different actors have had to take into account the role of energy in all their equations. Over recent years, oil has always had an important impact on global developments and has caused different alignments among different actors.

Ukraine War, Energy Conflict

Since the start of the Ukraine war on 24February 2022, one of the most important issues and components that have always been discussed in the investigation of the dimensions of this war was the energy issue and the possible consequences of cutting off the supply of oil and gas by Russia or embargoing its purchase by Western countries. Although the possibility of a complete embargo on the purchase of Russian oil and gas by European countries was so low, the passage of time showed that the Europeans see Moscow as a security threat that may challenge their existence and survival in the future.Therefore, they tried to make this country understoodvia taking various measures, including setting a price ceiling for the purchase of Russian oil, that even in spite of the existence of many difficulties in the field of energy supply, at least in this area, they will not surrender to Moscow.

Currently, the Group7 price cap decision for Russia’s oil has been met with pros and cons. Some countries, such as Poland, opposed this decision as they considered the ceiling to be insufficient and wanted to set a price ceiling much lower than $60. The president of Ukraine,VolodymyrZelensky, also reacted to this decision and said that the world appeared very weak by setting the ceiling at that level. In this way, with its decision, the G7 could not satisfy the countries that expectsome more serious measures against Russia.

On the other hand, Russia called this decision a gross interference in the energy market and claimed that it was in contradiction with the rules of free trade. At the same time, Moscow has emphasized that even if it is forced to reduce its oil production level, it will not sell it at the set prices. In such a situation, Russia is forced to sell its oil to countries that operate according to market conditions. In fact, Russia may have to sell oil to some countries at even lower prices to cover its costs.For this reason, global energy markets were not much affected by the decision of the G7 to set a price ceiling of $60 for purchasing Russian oil. In fact, Russian oil will continue to be supplied to the markets, but its customers and buyers can change. Moreover, since the beginning of the Ukraine war, the Russians themselves have taken steps to change their target markets and changed the destination of their oil exports from Europe to East Asian markets.

Winner and Loser

Indetermining the price of crude oil, there has always been a general rule based on which each party tries to change the price to their advantage so that buyers try to reduce prices and sellers try to increase prices. Although in the past, an important part of this deal went through the process of bargaining and negotiation, but now the world has entered a new era and process with the Ukraine war, where the buyers intend to impose their terms and conditions on one of the most important oil sellers in the world.

Examining different dimensions shows that setting a price ceiling against Russian oil will not only cause a serious reduction or shortage of oil in the markets, but because Moscow is forced to sell its oil to other customers at a low price, it will actually affect the prices as well. At the same time, it should be kept in mind that Russia has enough access to oil tankers and can send most of its exports to any place in the world regardless of the price range. As a result, the G7’s decision to limit Russia’s resources seems largely ambitious and impractical.

Of course, in the meantime, there is still a serious issue that can affect the equations of the energy market in the future, and that is the issue of oil supply to Western countries. In a situation where these countries have deprived themselves of Russian oil and the Arab countries of the Persian Gulf are not willing to help Western countries in this situation, this trend can actually affect the markets in the medium term. By setting a price ceiling for Russian oil, the Western countries have practically faced a challenge that may not have any clear results for them.Because the ceiling of $60 cannot stop Russia from continuing the war in Ukraine or destabilize the country’s position in the global energy markets. It should not be forgotten that currently the price of a barrel of Russian oil fluctuates around $65, which is only slightly higher than the ceiling set by Europe; an issue that indicates the limited impact of the mechanism of Western countries in determining the price ceiling for Russian oil, at least in the short term.

Qatar 2022 World Cup

Oil and Gas Impact on Sports

Qatar is one of few countries that has been able to make good investments in sports with the principled and useful exploitation of natural resources, while gaining international reputation. Qatar’s LNG exports have given the country a prominent position at the international level. The South Pars gas field, which is known as North Dome in Qatar, is the world’slargest gas field, located in the Persian Gulf. One-third of theshared field lies in Iranian territorial waters and two-thirds in Qatar territorialwaters.

In the politics of Qatar, addressing the issue of sports has been approved as one of the important strategies aimed at identifying and strengthening the presence of this country in international forums. This small Emirate, relying on its gas revenues and huge gas resources, has made significant investments to support sports competitions and local and international sports clubs in the within sports diplomacy, and in a short period of time, the country has become a global sports center.

Over recent years, by attracting sports enthusiasts, Qatar has hosted many of the most prestigious and income-generating sports tournaments, and one of the most important instances of the success of this country's sports diplomacy is hosting the 2022 World Cup.

Sports Diplomacy

Paying attention to sports diplomacy, in addition to strengthening the internal components of power, such as vitality and social mobility, expansion of national pride, economic prosperity and social cohesion, will contribute to the promotion of the international dimensions of Qatar’s power. Attracting foreign investments from the point of view of sports is also one of Qatar's diplomacies.

Sports diplomacy promotes the prosperity of foreign investments in many ways. Dealing with sports diplomacy has made Qatar not only an attractive country for sports fans and practitioners; it has also led toattractionof foreign investment. Many commercial-economic companies and media companies have sought to market their products in the country in order to benefit from the opportunities available there and use the focus of public opinion during sports competitions, so that many prominent commercial brands have heavily invested in the country.

One of the most important components of sports diplomacy is helping to expand sports infrastructure, which has been center of attention in Qatar. The establishment of large international gatherings and/or events, especially in the field of sports, which has many domestic and foreign audiences and stakeholders, requires the implementation of infrastructure projects to be put on the agenda more than normal conditions. This issue has made this small country look like a big construction zone, so that in the last five years, it has spent something like$225 billion to implement infrastructure projects, including highways, airports, stadiums and new hotels.

Cutting Edge Technologies

The World Cup 2022 was hosted by Qatar, running from November 21 to December 18. This is the first World Cup to be held in the Middle East and in an Arabcountry, and due to the weather conditions of the host country, it is held in the fall. In addition, this is the second time that a country from Asia is hosting this tournament. Japan and South Korea jointly hosted these competitions for the first time in 2002.

Also, this tournament will be the last tournament in which 32 teams will participate, and 48 teams are planned for the 2026 World Cup and after that. Due to the geographical and climatic conditions of the host country and taking into account that the usual months of holding competitions coincide with the beginning of summer in this country and the temperature of this region reaches at least 40 degrees Celsius at this time of the year, the World Cupwas decided,for the first time,to be held in the autumn.

The organizers of the games have pledged to use modern technology to reduce the temperature of the stadiums for the sake of the present. According to this commitment, these technologies should reduce the 43-degree air temperature in the stadiums to 19 degrees Celsius. During the World Cup, Qatar planned to use solar energy and carbon neutral technology to cool the stadiums so that the stadium temperature does not exceed 27 degrees Celsius. Eight stadiums hosting the 2022 World Cup in Qatar used cooling technology.

It will be a wonderful experience and for the first time in the history of the World Cup, the games will be held under such weather conditions. The methods used to cool the World Cup stadiums are 40% more resistant than other technologies. Stadiums are cooled down only two hours before the start of the game. Also, another feature of this technology is its design, which is rotating and can keep cool air inside the stadium and remove hot air from the stadium.

Two Diplomacies Meet

Before this, Qatar had not participated in any football World Cup and this is the 22ndWorld Cup held in Qatar. FIFA has voted for Qatar to host the 2022 World Cup in the conditions that America, South Korea, Japan and Australia had also announced their readiness to host the World Cup.

Until the last minute, due to the small size of Qatar and unfavorable weather conditions, everyone thought that the chances of other hosting candidates were higher. But in the end, Qatar was chosen as the host of the 2022 World Cup. It should bealso added that the World Cup that was held in Qatar was not similar to any of the previous World Cups due to its climate conditions. The money spent on stadiums and infrastructure is staggering, and about 140 billion pounds is equal to 200 billion dollars. This money has helped build seven stadiums in the sand fields around Doha.

The main and most magnificent stadium is Lucille Stadium, which will host 10 games, including the World Cup final on December 18; a building with a capacity of 80,000 spectators, built in the heart of the desert, with a design similar to a traditional twisted lantern or cooking bowl. In general, Qatar has been able to properly guide and manage God-given gas resources and become a symbol of connecting the power of energy diplomacy with sports, something that exposes the ambitions of this small country to the world.

Review of Oil Industry Influential Men

Dr. Fatemi, No. 2

Part I

The nationalization movement of Iran’s petroleum industry is not only limited to Dr. Mohammad Mossadeq and Ayatollah Abol-QassemKashani.There are also prominent figures who had a great impact on Iran's contemporary historical and political developments. Dr. Hossein Fatemi is one of these figures who became a victim of the struggle against colonialism. A man who tried to face the British and Americans. Here we go through the personal life and also term in office of Dr. Fatemi, who served as Iran’s foreign minister during the nationalization movement.

Hossein Fatemi is a name that cannot be erased from the contemporary history of Iran. Many of the Pahlavi-era politicianshave tried to overshadow the memory of the executed Iranian minister via distorting the events of the nationalization of the oil industry, but he had such an impact on the nationalization movement of the Iranian oil industry that, according to many experts and analysts of history and politics, was Number 2 man of this movement. It may not be out of context to say that the third name that comes to mind in the nationalization movement of Iran's oil industry, after the names of Mossadeq and Kashani, is Dr. Hossein Fatemi. He shot to such prominence that he was angled following the 1953 coup against the Mossadeq government.

A Brilliant Journalist

Hossein Fatemi was born in Naein city in 1917. His father, who passed away during his childhood and made life conditions harder and harder for Hossein since childhood, was one of the great scholars of Naein. The situation was difficult for the young Hossein Fatemi until he officially entered the profession of journalism. In his book "The Biography of Contemporary Political and Military Men of Iran", BaqerAqeli writes about this period of Hossein Fatemi's life: "In 1936, when his brother NasrollahSeifpourFatemireceived the licenseto publishBakhtar newspaper, he collaborated with him. Hossein soon learnt the twists and turns of the press and became a harbinger in all newspaper matters.In 1937, he left Isfahan for more press activity and moved to Tehran, and was introduced to Setareh newspaper, which was owned by Ahmad Maleki, on the recommendation of several people, and was hired for 20 tomansper month. His innate talent in the art of writing and his diligence and seriousness in his work led him to be assigned the chief editorship of the newspaper and he was almost the main manager of the newspaper. In 1940, upon the insistence of his brother, who had to leave Isfahan due to his employment in Shiraz Municipality, he returned to Isfahan and after a while, he was transferred to Tehran to manage Bakhtar newspaper, and a company was formed to manage it, and its management was entrusted to him.”

Aqeli also explains how Hossein Fatemi shot to prominence in political and press circles in Tehran and Isfahan. “Bakhtar newspaper opened its place in the political and press circles of Tehran due to its strong and at the same time documentary articles and cooperation with a group of prominent writers, especially since it was a political, news and critical newspaper. Bakhtar newspaper was published under the management of Hossein Fatemi until 1945. In the same year, Fatemi decided to travel to France to study journalism and press training in Europe. First, he went to Geneva as a press representative in the work conference, then he continued his studies in Paris.During his stay in Paris, Fatemi was in financial trouble, but his brothers SeifpourFatemi and Mesbah and sometimes Shahab Khosravani helped him financially. During his stay in Europe, he did not cut off his relations with the Iranian press and wrote and sent articles to Mard-e Emrouzand Setareh newspapers. In 1948, he returned to Tehran and decided to publish a newspaper, and in 1949, the license of BakhtarEmrouz newspaper was issued in the name of Hossein Fatemi. Two days after the end of the tenure of the 15th parliament and the suspension of an oil contract, the first issue of BakhtarEmrouzwas published with an article entitled "Either Death or Freedom" and from the very beginning it criticized the ruling body and the government apparatus. Honest disclosure and statement of facts put BakhtarEmrouz newspaper in the forefront of Iranian press.”

Joining Mossadeq

Hossein Fatemi's journalism became a gateway for him to enter the endless world of politics. The world that at a particular point in time had shown favor to Dr. Mossadeq and his friends, and since 1950, whispers of oil and national wealth could be heard from within the parliament and certain political circles.

Bakhtar newspaper was a good platform for the oil industry movement and Hossein Fatemijoined Dr. Mossadeq's friends and relatives in such a situation. It may seem a little strange, but Dr. Mossadeq himself said that the first proposal for the nationalization of the oil industry was made by Dr. Fatemi.

Anwar Khamei, in an article on Dr. Fatemi, puts it as follows: “By March 1950, following the formation of the National Front,Fatemi sided with Dr. Mossadeq and made his newspaper the mouthpiece of the National Front. Through this newspaper, he published the thoughts and opinions of the National Front and was actually the director of the National Front and a close advisor to Mossadeq. According to the clear testimony of Dr. Mossadeq, the initiative to nationalize oil industrywas made by Dr. Fatemi. The rivals of the late Fatemi, led by Mirashrafi, Payandeh and Faripour, slandered him that "he was baptized in the American school of Isfahan and does not follow religious and moral standards in any way." … On the other hand, some people who were around Dr. Mossadeq, apart from Hossein Makki and other people who were in the political parties of that day, started to disagree because they did not know Dr. Fatemi. Journalists wrote a letter and analyzed Dr. Fatemi's biography. In that biography, Dr. Fatemi was introduced as a trusted British agent, and later Dr. Mossadeq said in a speech: “If he is a trusted agent as you say, he has repented and in my opinion he is free.”

Gorgan and Charming Beauties

Gorgan is one of the green and beautiful cities in northern Iran and the provincial capital of Golestan. Given the city's numerous attractions and entertainment facilities, you will be enchanted by its natural beauty in any season of the year, from the historical city of Jurjan and the historic Great Wall of Gorgan to forest parks and countless waterfalls.

The following is a brief review of the main natural attractions of Golestan province.

Alangdarreh Forest Park

Alangdarreh forest park has a four-season and spectacular nature. In any season you travel to this forest, you will find it immersed in beauty and wonder. However, the forest park takes on the face of thousands of colors and dreams in autumn, which is so eye-catching. The park is one of the seven exemplary tourism areas of Iran, which covers 185 hectares and is considered one of the famous forests in the north of Iran. There are many waterfalls and springs flowing inside this forest. The Malashi River flows from the middle of the forest and from the south to the north. There are three springs flowing around the river. The vegetation of Alangdarrehcomprises alder, maple, oak, willow, milkweed and wise trees.

Ziarat Waterfall

The Ziarat waterfall is located 5 km south of Ziarat village and 11 km south of Naharkhoran. The path leading to this waterfall is one of the most beautiful mountain landscapes in Golestan province, where you would be enchanted by its beauty in any season of the year. Along the way, the harmony of the sound of the water flow and the wind blowing through the trees gives any tourist a pleasant peace. Next to the waterfall, you can visit Ziarat village, which is one of the tourist attractions of Golestan province. Don't forget to watch the handicrafts of this village and take a walk in the village.

Naharkhoran Forest Park

Naharkhoran is the name of a forest in the south of Gorgan city with an area of about 300 hectares. The history of this forest park dates back to the Jurassic era and about 40 million years ago. Animals such as boars, jackals, bats, minks, mice, squirrels, eagles, turtledove, hawks, owls, and forest lizards live in this park. The vegetation of Naharkhoran forest is also of the Hyrcanian foreststype. The trees that are currently growing in Naharkhoran forest park include oak, mulberry and raspberry among others.

Gorgan Palace Museum

The Royal Palace of Gorgan is one of 12 palaces of the Pahlavi family, which was built during the reign of Reza Shah in 1938, and during the first and second Pahlavi reigns, it became the residence of this family and the place where they received their guests. But in 1964, it was decided to open the doors of this palace to the public and convert the palace to a museum. The palace is located in the venue of the former library of Gorgan and is surrounded by the City Park and tall palm trees. Gorgan Palace Museum is built on 2 floors and on the foundation of a building belonging to the Safavid era, with an area of 250 square meters. Objects donated by Europeans and famous statues of the city are displayed in the museum. The museum is the first museum built in the north of the country.

Museum of Natural Resources

Gorgan Archaeological Museum, dating back to 1976, was first opened as a tombstone museum. In February 1998, by adding somearchaeological objects to the collection, promoted to an archaeological museum. The museum consists of two sections:the inscription and archeology section. The inscription section, located outdoor, houses tombstones from the 8th to the 10th centuries AH. In the archeology section, the history of more than 7,000 years of Iran and the Golestan region is on display.

600km of Oil and Products Pipeline

Thedirector of the northern division of Iranian Oil Pipelines and Telecommunication Company (IOPTC), Mehdi Jamei, has stated that about 2.73 billion liters of oil and petroleum products has been transferred to northern Iran – Mazandaran and Golestan provinces, as well as parts of Tehran Province, over eight months. In an interview with “Iran Petroleum”, he said the data stability rate was 99.999%.

How much oil and products has been transferred in the northern district and how is it handled?

The northern area covers the three provinces of Mazandaran and Golestan and parts of Tehran, totally 600 km long, where petroleum products including gasoline, gasoil, kerosene, and premium gasoline are transmitted by 8, 10, and 16-inch pipelines. The oil products transfer capacity of this region is 320,000 b/d and its oil transfer capacity is 500,000 b/d. The operation of transmitting the products produced at Tehran refinery and the products required by Mazandaran province is carried out by 12 and 16-inch Rey-Sari pipeline. Also, receiving and transferring the product through import for the purpose of swapping oil products and supplying part of the products needed by Mazandaran province, including motor gasoline and premium gasoline, is done through import by the 16-inch Neka-Sari pipeline. The transfer capacity of the line is 45,000 b/d, equivalent of 7 ml/d.

Golestan province's fuel is supplied through 10 and 8-inch pipelines with a capacity of 41,000 b/d, equivalent to 6.5 ml/d. 30 and 32-inch pipelines are also considered for swap operations, which will be activated if the oil swap is activated.

How much oil product was transmitted in this region in the last eight months?

In the last eight months, 2,729,383,724 liters of products have been transported to the northern region. Of this amount, the share of Mazandaran province is 2,092,486,770 liters and the rest is the share of Golestan province. Also, the share of gasoline is 1, 552,425, 372 liters and gasoil is 1,111,982,915 liters and the rest is kerosene.

How stableis oil and petroleum products transmission pipelines in this region?

Considering that the monitoring of the lines is done round the clock, as soon as there a problem rises in the pipeline, the operational forces immediately repair the line, so the stability of oil and product transmission in this area is very high. Also, the stability of the telecommunication network in this region is 99.999%, which means we will reach 100% soon. I would also like to add that the pipeline in the region is always exposed to erosion due to extensive floods and landslides, so our operational units always secure the lines.

Do you have any plans to enhance the transmission capacity of the pipeline?

Considering the growth in the consumption of the products in the country, enhancing the transmission capacity of the pipeline to double the current one is among our plans, so that if the consumption of the product increases during travel seasonand displacements, we will not have any problems in transmitting the products.

When did you last perform smart pigging on the pipelines?

As I mentioned, this area is one of the young areas of IOPTC, the last pigging was performed 9 years ago, so we need to do smartpigging on the pipelines again.

Do local companies handle pigging?

The smartpigging technology through which all the information including weaknesses and internal problems are taken and interpreted has not been indigenized in Iran. But currently, knowledge-based companies have entered this sector, and are developing the technology. Of course, some foreign companies are willing to carry out these operations in Iran, and we are currently consulting to carry out smartpigging.