Sustainable Production at NISOC-Run Zones

Ali Forouzandeh

Director General of Public Relations

Ever since the 13th administration took office and the petroleum industry management focused on deepening of structural priorities of National Iranian Oil Company (NIOC), targeted planning has been done for maximum oil and gas recovery, in parallel with exports, to help economic prosperity and guarantee national development. For this purpose, enhancing the oil and gas production capacity and completing development of the giant South Pars gas field and West Karoun cluster of oil fields among others, diversifying and boosting oil sales through the private sector and making the oil economics knowledge-based within the framework of neutralization of sanctions and business development are among the major objectives envisaged for NIOC.

In a bid to reach its real position, NIOC has focused on three basic approaches and therefore based all its objectives thereupon. The three approaches include restoring oil production to pre-sanctions levels before March 2022, stabilizing production and finally ramping up output.

National Iranian South Oil Company (NISOC), as Iran’s largest oil producer company, supplies nearly 80% of Iran’s crude oil, thereby playing a key role in the Iranian economy. NISOC’s current production capacity stands at 2.9 mb/d, which is planned to exceed 3 mb/d by March. Furthermore, NISOC intends to boost its output to 3.28 mb/d within five years.

Chief among the main points NIOC hasfocused upon under the 13th administration, has been concentrating on enhanced output and regaining pre-sanctions production capacity, which is materializing.

NISOC Output Capacity Hits 3.28 mb/d

Mahnaz Mohammad-Qli

National Iranian South Oil Company (NISOC) supplies nearly 75% of Iran’s crude oil, thereby being instrumental in Iran’s economy. Ali Reza Daneshi, CEO of NISOC, tells “Iran Petroleum”that the company is expected to raise its output capacity to 3.001 mb/d by March 2023 and to 3.28 mb/d within five years.

The following is the full text of interview with Daneshi reviewing a wide range of issues.

What are NISOC’s plansfor boosting oil production capacity?

As the largest oil producer in Iran, NISOC shoulders a significant burden in the upstream sector. NISOC accounts for nearly 75% of Iran’s oil production and we have tried our best to meet obligations set by the Petroleum Ministry and the administration. In this regard, a return to pre-sanctions levels was our first step only to be followed by the plan to ramp up production over a five-year period. We have already managed torealize part of our short-term production plan while adopting mid-term plans, 3-5 years, for next calendar year in a bid to reach our objectives for output hike. Another measure has been to resolve problems pertaining to subsurface issues and oil reservoirs. Overhaul had been ignored for years, but now we have an extensive plan in this regard. Major work has been done, which is still continuing. In the current calendar year, effective measures pertaining to overhaul are three times more than normal. By inspecting pipelines and carrying out necessary overhaul, we have made plans for the renovation of these lines. We have a short, mid and long-term renovation plan, which we are considering. Everything is clear and we know what we plan to do.

How much will NISOC add to its oil output?

We are planning to bring our oil production capacity to 3.001 mb/d by March 2023. Still more importantly, we have adopted a progressive plan for five years, at the end of which our output within NISOC would reach 3.28 mb/d. That has definitely some requirements which we would discuss with the Board of Directors of National Iranian Oil Company (NIOC).

Have you taken into account the natural decline in oil production?

Definitely! The hike in output capacity takes into account the natural decline in production.

What projects are you planning for next calendar year?

We will be working on development drilling as of next calendar year. This calendar year as all development wells were in 28 reservoirs we implemented workover plans in parallel with development drilling in wells. During the first half of next calendar, we would be focusing on well workover projects. We’ve installed more than 33 rigs for well workover. We carry out reservoir modifications and remove wells’ problems in order to reach better production. That is valuable. It started in the second half of last calendar year. The rigs are still installed on the wells and reservoirs and will be working up to the end of the year. We have always active rigs. Well workover never stops, but it may pick up speech or slow down.

How many development wells will you have?

According to our five-year plan, 315 development wells are to be spudded with a flow rate of 371 tb/d. I would also like to say that NISOC has drilled a significant number of wells in recent years. Under the former administration, permission was obtained for the drilling of development wells and provided to the 28 reservoirs. But from next calendar year, based on NIOC’s decision, we will be drilling development wells in NISOC-run regions and we will be spudding new wells.

How much is the NISOCcurrent oil and gas production capacity?

It’s currently more than 2.9 mb/d, which is set to increase to 3.001 mb/d by calendar year-end. And we also supply 16% of Iran’s gas.

What other products are supplied by NISOC?

We produce ethane plus, C2+, gas condensate and naphtha. C2+ is specifically for petrochemical plants. We also deliver condensate and naphtha to petrochemical plants. Petrochemical plants in Mahshahr entirely use gas condensate supplied by NISOC. In fact, we meet the bulk of petrochemicals’ needs. We have also adopted a comprehensive plan based on which significant investment would be made in feedstock supply to petrochemical plants.

Where does no-flaring project stand now?

We have two key agreements in this regard and we have also an initiative within NISOC. Zero-flaring is an important issue. Based on an agreement signed with Persian Gulf Petrochemical Industries Company (PGPIC), NISOC undertakes to gather 593 mcf/d of gas. This agreement took effect last calendar year in the presence of the minister of petroleum and effective measures have been undertaken since the beginning of the current calendar year, and are still ongoing. We are active in Gachsaran, Aghajari and part of Maroun. We have also signed an agreement with the Maroun petrochemical plant for gathering 173 mcf/d of flare gas produced by Karoun Company and part of Maroun.

NISOC marked history by auctioning off flare gas. Would you please tell us about that?

Yes. I think it should have been done much sooner. NISOC auctioned off flare gas to generate wealth, prevent environmental pollution, keep national resources from being wasted away, and create opportunities for investment and jobs. After the first gas auction we held within NISOC, 40 mcf over the past five years and 61 mcf now, the contractor has been chosen. The flare gas gathered from areas run by Masjed Soleiman Oil and Gas Production Company was auctioned off in four separate packages. Two local companies purchased this gas, which would be used to feed petrochemicals and generate electricity.

Do you have any new auction plans?

We’ll do the same for sour gas. It is not easy to bring flare gas to zero. All installations have flares functioning as safety valve, but we have plans for each and every one of them. We have managed for the first time to sell gas on the flare spot. Buyers warmly welcomed this initiative.

What are NISOC’s future plans?

We intend to develop reservoirs. We have planned to fully supply petrochemical plants’ feedstock needs. Petrochemical plants need feedstock which NISOC is ready to supply. In addition to the abovementioned 28 reservoirs, 16 independent gas reservoirs have been specified for development, for which NIOC has given green light. Preliminary studies have been carried out.

When will it take effect?

We’ll try to start developing these 16 fields in NISOC-run areas as of next calendar year.

Anything to add in conclusion?

Sustainability is the most important issue for NISOC. The 40-year oil production trend by NISOC bears proof to sustainable production. NISOC is currently plan-oriented and it has a specific roadmap. We are making efforts to overcome challenges. Given a variety of plans and projects at NISOC, we predict a good future for this company. We are looking to generate oil into wealth inside the country with a view to using it in creating a value chain. The conditions are promising. We are not frustrated and moving forward.

3 Oil Field Development Projects Due Soon

National Iranian South Oil Company (NISOC)’s plan to develop 28 reservoirs, with the focus being on output preservation and enhancement, is accelerating. Ali Reza Daneshi, CEO of NISOC, said thatobstacles in the way of development of the 28 reservoirs, including contractors’ supply of commodities and payment issue, have been taken into consideration. He expressed hope that the Nargesi, Kaboud and Lali Asmari fields would have been developed by March 2023.

Preserved and enhanced oil recovery constitutes the main development project undertaken by NISOC in the aftermath of the 1979 Islamic Revolution. Spanning five southwestern provinces, the projects are prioritized by Petroleum Ministry and National Iranian Oil Company (NIOC). The primary objective of this projects is to ramp up oil output by 341 tb/d, which would materialize with the development of 28 reservoirs operated by NISOC.

Supporting domestic manufacturing by requiring contractors to use domestically-manufactured equipment and development of the surrounding regions by allocating 4% of the project's credit to social responsibility is another goal of the project.

$4.3bn Investment

In terms of the amount of investment, this project is considered the largest field development project in Iran’s southern oil regions, consisting of 27 contract packages with an estimated investment of more than $4.3 billion relying on the capabilities of domestic companies.

Achieving the outlined goals in line with the mission and vision of the PetroleumMinistry, increasing NISOC’s maximum efficient recovery, optimal management of production costs by using appropriate and advanced technologies, renovation and reconstruction of existing facilities, use of well-oriented technologies in order to increase the flow rate of the wells, use of facility-based technologies in order to optimize and enhance the production and processing capacity of oil and gas,constitute one of the goals of this national plan.

Project Screening

What is the current status of the development plan of 28 oil reservoirs? What has happened so far in the development plan of 28 reservoirs is related to 26 reservoirs because one reservoir still does not have the permission of the Economic Council and a contract has not yet been concluded for one reservoir.

Contracts have been signed for the 26 reservoirs in different ways since March 2019 until December 2021.

“In NISOC, we have put all these projects to a general screening. We required all contractors to meet their obligations. On the other hand, we also feel compelled to honor our obligations set forth in these contracts,” said Daneshi.

Nonetheless, in the process of implementation of projects, some contractors had weaknesses and they were helped to overcome them.

42 Wells Drilled

Currently, 24 drilling rigs are operational in the 26 reservoirs. So far, 42 wells have been drilled while 20 more are being drilled. Furthermore, 8 wells have been worked over and one well is being worked over.

Well No. 6 of the Kaboud field in the Bangestan reservoir is the first well spudded for boosting the output capacity. The well struck oil last April with a flow of 1 tb/d.

The achievements from the successful drilling of Well No. 6 of the Kaboud field include gathering maximum new information about the extent and dimensions of the reservoir, studying the output capacity of Ilam Formation of the Bangestan reservoir of the Kaboud field, complying with environmental obligations, management of wastes and NISOC’s transfer of knowledge and experience to private oil firms.

According to planning made, it was decided that by introducing structural changes into NISOC and redistributing employer forces, the projects could be accelerated. Furthermore, such working groups as the Financial and Commodity Working Group were established to explore and resolve problems fundamentally. In addition to these projects, negotiations with foreign investors are also nearing finalization.

Thanks to the NISOC efforts, the three projects of Nargesi, Kaboud and Lali Asmari are nearing completion.

Eleven contacts involving Ahvaz 1&4, Ahvaz 2&3&5, Maroun 2&5, Maroun 1&4, Maroun 6, Siah Makan, Mansourabad, Solabdar, Binak, Bibi Hakimieh and Golkhari had some problems which NISOC managed to resolve thanks to its coherent planning.

Forex rate fluctuations have occurred during the implementation of these projects. This issue has been raised with the Management and Planning Organization (MPO).

Gas Gathering Station

The 28 reservoirs are located in the provinces of Khuzestan, Bushehr, Kohguiluyeh and Boyer Ahmad, Fars and Ilam. The bulk of work is in Khuzestan Province. The requirement for using domestically manufactured commodities, allocation of 4% to social responsibility, hiring local manpower and complying with environmental obligations are among the outstanding features of the project.

These projects require 124 surface projects and 651 well stimulation operations. Furthermore, 100 surface projects including construction of oil pipelines and pumping stations with a budget allocation of $230 million would be implemented. Regarding gas and liquefied petroleum gas equipment, a gas gathering station valued at $650 million would be established.

One of the outstanding features of this project is gathering associated petroleum gas and reducing environmental impacts. Furthermore, 15% of drilling costs goes to zero discharge projects by spending several hundred million dollars.

“NISOC will spare no effort with regard to the implementation of these projects. It even provided some commodities supplied with hardship to these contractors so that the projects would not be halted,” said Daneshi.

He said that some projects were modified mid-way, while some others went ahead as planned.

The supervisory model developed by the former administration had changed the structure of regions, which slowed down work. But with some modifications in the process of implementation, the projects were back on the right track and currently NISOC’s Directorate of Engineering and Construction is pursuing these projects.

Expelling Unqualified Contractors

Four projects were cancelled with contractors after they later said they could no longer handle them. They involve development of Gachsaran Khami and Ramin, Zilaei, Chalingar and Garangan. They would be awarded to new contractors soon.

NISCO is ready to put these projects out to tender immediately.

According to Daneshi, the subsurface section of these projects is satisfactory, but contractors face a variety of problems and challenges on the surface specifically in the commodity supply and payments.

Iran to Boost South Pars Pressure

The production capacity of the giant South Pars gas field, which Iran shares with neighboring Qatar, has reached 705 mcm/d. Iran is currently making maximum  efficient recovery from its 30% share of the offshore reservoir; however, the country is set to face pressure fall-off in coming years. CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr has announced the planned design and construction of well pressure compression in South Pars for the first time in Iran.

“Building wellhead pressure compression installations is a new technological achievement, which would guarantee sustainable production from South Pars in coming years,” he said, while addressing a ceremony on signing the first agreement on the rehabilitation of oil wells in Iran.

He touched on the construction of necessary facilities to boost SP wells pressure, adding: “Basic studies for this project are concluded and construction of two compressors is under way onshore (84% complete) and offshore (30% complete).”

He said an EPC contractor was being chosen for this project after France’s Total pulled out of the project.

He said Iran would be bringing its oil production capacity to 5.7 mb/d over eight years from the current 3.8 mb/d. “We need to undertake some projects to that end. Rehabilitation of low-yielding oil wells, implementing enhanced recovery, drilling and exploration are part of Iran’s plan to reach those objectives,” he added.

The NIOC boss said enhanced oil recovery (EOR) projects would add 9 tb/d to Iran’s oil output.

Khojasteh-Mehr referred to the implementation of technological methods in some countries for oil production, saying: “For the first time in the country, we have started injecting water into the Ahvaz Bangestan field, as a pilot at the Research Institute of Petroleum Industry (RIPI). If the feedback is ok, it would be a major achievement.”

He said the process of selecting low-yielding and inactive wells to be awarded to knowledge-based companies was complicated. “We have held many briefings and technical meetings so that these projects would be awarded to these companies as soon as possible.”

He said 750 wells had been selected out of a total 6,000 low-yielding or inactive wells. “We tried to pick sweet spots in order to not discourage knowledge-based companies.”

“The Economic Council also adopted a $500 million plan for the rehabilitation of these wells. Then we forwarded the job to the Petroleum Industry Innotech Park to avoid tender formalities,” he said.

5 Wells to Each Company

Khojasteh-Mehr said: “With consultation and planning, we assessed the risk of the wells and identified and examined them based on high, medium and low risk, and companies can choose up to five wells for rehabilitation based on their capabilities.”

He termed the revitalization of the wells by knowledge-based companies as the biggest technological event and added: "Fortunately, this path has led to success, but we are still at the beginning of the path and we have a long way to go prior to reaching the desired situation, and this path is always continuing."

Pointing to the importance of increasing the life of wells to improve production, the CEO said: “Sometimes the influx of gas or water leads to the thinning of the oil column and impossibility of production. That along with pressure drop or low permeability or porosity of the reservoir rock or asphalt sediment reduces the amount of oil production.”

Saying that solving these problems may increase production, Khojasteh-Mehr said: “Our duty is to turn well issues into technological issues and expose them to companies, and we look at knowledge-based companies as performers of special work and common work and we don't expect easy task from them.”

NIOC Technological Pilot

Explaining the definition of the chain in the processes, he said: “By defining the chains of exploration, drilling, production, production and processing, we examined the challenges and we are looking for its technology.”

Khojasteh-Mehr listed lack of deep drilling equipment as one of the challenges of the drilling industry and said: “This equipment cannot be purchased and since it leads to our progress, they will quickly stop it, and this was only in National Iranian South Oil Company (NISOC)-run areas where we have 16 highly-valuable deep wells.”

“Fortunately, we started drilling by relying on the domestic potential and now, in cooperation with knowledge-based companies, we designed the wellheadinstallations for these wells, and after testing and checking, they are now in the commercial production stage,” he said, adding that wellhead equipment with 15,000 pound-per-square-inch (psi) was manufactured to be installed in the Sepehr and Jofair fields.

33 NISOC Wells

Ali Reza Daneshi, CEO of NISOC, said: “Increasing the life of wells may affect the economy of projects and lead to cost reduction.”

According to him, this action is one of the solutions that will prevent the oil production crisis in the future.

He said that NISOC had offered 33 wells to be rehabilitated, adding: “The expert and engineering body of this company is very eager to hire knowledge-based companies for new and knowledge-based work affecting wells in this company.”

Referring to the Bibi Hakimieh reservoir, he said: “The Bibi Hakimieh reservoir is one of the most important reservoirs in the south of the country and is very special. Due to the decrease in oil production of this well, the company's oil production rate has decreased. We hope to see an increase in production with this plan, and we are ready to cooperate with this knowledge-based company to rehabilitate the Bibi Hakimieh wells.”

Intelligent Wells

Mohammad Esmaeil Kefayati, director of Innotech, said: “Knowledge-based companies’ technologies may be used in normal wells too, to clear the way for NIOC to make wells intelligent.”

He said that many companies had expressed readiness for rehabilitating NIOC low-yielding and inactive wells, adding: “After examining their qualifications, some of them were selected and the technological plans of most of them were accepted.”

He added the companies that had expressed willingness to rehabilitate wells had demanded access to wells’ data, which NISOC provided data on 89 wells to them. He said the companies presented their proposals, which were still under review.

Kefayati said two companies had been short-listed, with one of which an agreement was signed.

Stating that the work of reviewing the proposed plans is very complicated and many departments are involved, he said: “Favorable technologies have been presented that if it leads to a successful experience upstream, ordinary wells can also benefit from these technologies.”

Bibi Hakimieh

Ali Reza Nasrollahnejad, CEO of the knowledge-based company to rehabilitate the first group of low-yielding wells, said: “TheCompany joined the Oil and Gas Park in 2016 and has worked on rehabilitating low-yielding and inactive wells since 2019. IT is also focused on artificial lifting.”

He said that gas lifting technologies and ESP pumps were the basis of his company’s work, adding: “We have moved to make gas lifting intelligent and we intend to boost wells’ output.”

He said that three wells would be considered for rehabilitation in the Bibi Hakimieh oil field.

Gas recovery from the giant South Parsoffshore gas field, which Iran shares with Qatar, has reached 705 mcm/d. Minister of Petroleum Javad Owji has said natural gas consumption by domestic and business sectors has increased 60 mcm/d year-on-year. A review of Iran’s gas consumption through the 1986-2016 period indicates a 10% growth in gas consumption, which requires renewed production to head off any shortages in cold months. That is why efforts are under way to reverse the upward trend in gas consumption.

National Iranian Gas Company (NIGC) dispatching system officials have forecasted domestic gas consumption to exceed 650 mcm/d. Iran’s domestic sector is witnessing an annual 60 mcm/d hike in gas consumption. That is while Iran is currently recovering 977 mcm/d of rich gas and delivering 843 mcm/d to the national gas grid.

Maximum Capacity

Currently, winter arrangements have been made in Iran's gas transmission network and all pipelines are transmitting gas at maximum capacity, repairs and technical inspection of pipelines and refineries have been done and all units are fully prepared for stable gas transmission. It should also be noted that although the daily production of gas has increased by 25 mcm compared to last calendar year, the consumption in the domestic and commercial sectors has increased abnormally, and this has caused the Petroleum Ministry to focus on maximum concentration on the production and transmission of gas to the national network during winter.

Owji said recently that $70 billion in investment was needed over a period of 10 years to help increase gas production capacity in Iran. Therefore, Iran has called for investment by either local or foreign financiers.

Gas Refineries Fully Ready

In 2007, there were 9 gas refineries with a total production of 470 mcm/d in Iran. By March 2022, the number of refineries reached 22 with a production capacity of 850 mcm/d, which represents a 70% growth. In the first seven months of the current calendar year, NIGC defined and executed an intensive overhaul program of refinery equipment for 18 gas refineries that are currently operational in order to ensure the winter with gas supply. By carrying out this operation, the purpose of which is to maintain the system in efficient conditions, the reliability in the refineries will increase, and in this way, the amount of processing may be maximized to guarantee clean, safe and efficient transmission of gas.

3rd Natural Gas Producer

In 2020, Iran produced a total of 250 bcm of gas, which is equivalent to 6% of the gas produced in the world. According to OPEC Annual Statistical Bulletin, in 2021, Iran’s natural gas exports increasedabout 60%, and at the same time, Iran’snatural gas production increased by 3%. Iran is the third largest gas producer in the world after the United States and Russia.

Iran has the world’ssecond largest proven gas reserves, and the country’s gas reserves in 2021 remained unchanged from the previous year at the level of 33.98 tcm. Based on this, the total gas production in the world in 2021 has grown by 5.8% compared to the preceding year. Comparison of Iran’s natural gas production and consumption statistics among the countries of the region shows that despite producing 36% of gas in the Middle East, Iran also consumes 42% of natural gas in the Middle East. On the other hand, with the inauguration of the 13thadministration in Iran, negotiations to restore gas relations with Turkmenistan began once again to better manage the country's energy crisis in the winter in the northeastern and western provinces of the country.

South Pars Output Up 6%

Gas production from South Pars increased 40 mcm/d to reach 740 mcm/d by March 2023.Thanks to increased production from phases 11, 13 and 16, the field would experience a 6% output hike this winter.

Since 2000s, with the development of the South Pars gas field, Iran has started the development process of its industries and energy with gas. This field, which is known as the world’slargest gas field, was quickly developed by Iran and Qatar.

Fueling Power Plants

Thirty percent of the total annual gas production is consumed in 89 power plants across the country. Currently, nearly 3 billion liters of liquid fuel is stored in power plants and industries’ storage tanks, which is 450 million liters higher than last year. The 13th administration has managed to prevent power outages and hasprovided sustainable fuel in the country with scientific policymaking.

The country’s power plants need about 235 to 240 mcm/d of equivalent fuel to provide electricity in winter, and the Petroleum Ministry must supply the

required fuel from natural gas, gas oil (diesel) and fuel oil. In this way, about 100 mcm/d has been promisedby natural gas and the rest must be supplied from liquid fuel. Of course, the amount of gas sent to power plants during cold days is lower than the promised amount. In total, this 240 mcm of fuel is equivalent to supplying electricity during peak time in winter, which is expected to be around 43,000 to 45,000 megawatts.

Official statistics show that this calendar year, the delivery of gas and liquid fuel to power plants has increased in hot and cold seasons, so that the share of gas in the fuel mix of power plants has increased 73% year-on-year. At the same time, the filling of power plant storage tanks has also reached a significant figure. Currently, in terms of diesel fuel, 75% of power plant tanks has been filled, and in terms of fuel oil, 60% of tanks has been filled.With the continuation of gas supply, gas consumption in Iran’s industries has grown by 10% annually.

4bcm Stored

In order to leave behind this winter and to ensure the stability and resilience of gas transmission, Iran has managed to successfully store 4 bcm in the Sarajeh and Shourijehunderground storage sites. Also, good storage has been done in the gas oil and fuel oil sector, so that if we have to impose restrictions on industries, we will not have any problems with supplying the second fuel.

The development of underground natural gas storage in the country has received more attention in the 13thadministration, and Reza Noshadi, CEO of Iran Gas Engineering and Development Company (IGEDC), emphasizing the impact of underground gas storage development on the advancement of energy diplomacy, has announced that seven fields were decided to be developed while 14 natural gas storage development projects would go on simultaneously.

Iranian Gas Transmission Company (IGTC) is ranked the first in Asia and the Middle East and the fourth in the world, only behind the US, Russia and Canada, in terms of the capacity of pipelines and operating facilities (more than 38,000 kilometers of pipelines and 88 gas compressor stations with 326 compressor units, 9 gas export and import terminals and 800 telecommunication stations, 8,000 kilometers of optical fiber network, 4,000 kilometers of microwave network). It has capacity to transfer more than 280 bcm of gas per year.

Tehran-Moscow Energy Ties Benefit Eurasia

Iranian President Ebrahim Raeesi told his Russian counterpart Vladimir Putin that cooperation between the two countries particularly in the energy sector would benefit the entire Eurasian economy.

In a phone conversation, Raeesi underlined the need for the persistent expansion of Tehran-Moscow economic cooperation, particularly in the transit and energy sector. He said that such cooperation would institutionalize instrumental ties for both nations, as well as regional countries.

For his part, Putin described economic cooperation as highly fruitful to Iran-Russia ties, saying: “Expanding capacities and cooperation between the two countries, including in the transit and energy would benefit the economies of the entire Eurasian region.”

Meantime, First Vice President Mohammad Mokhber said implementation of Iran-Russia agreements for developing oil and gas fields was of high significance.

He told Igor Levitin, advisor to Putin, that continued meetings and increased arrangements between Tehran and Moscow would help the two nations realize their joint plans. “Meetings between officials would result in the fast implementation of bilateral agreements,” he added.

Petchem Exports to Hit $18bn

The director of planning and development at National Petrochemical Company (NPC) has said Iran’s petrochemical exports would reach $18 billion by the end of the current calendar year in March 2023.

Hassan Abbaszadeh said Iran’s petrochemical exports reached $15 billion last calendar year.

“We expect the volume of exchanges and export of Iranian chemicals and catalysts to Russia’s market would increase in 2023,” Abbaszadeh said.

The official said that Iran and Russia had signed an agreement for selling products through education and exchange of trainers.

“Iran has in recent years built good capacity in the petrochemical industry and we are now one of the top nations in Asia in this sector,” he added.

Bijan Chegeni, NPC director of control, said: “Petrochemical production during the first 9 months of the current calendar year totaled 53 million tonnes (71% of installed capacity), up 7% year-on-year. We predict the petrochemical output to reach 75% of rated capacity by the end of the current calendar year.”

New Petchem Projects Due to Come Online

CEO of National Petrochemical Company (NPC) Morteza Shahmirzaei has said that new petrochemical projects would come on-stream in coming months to enhance the petrochemical production capacity.

“We are determined to indigenize the petrochemical industry for completing the value chain with the help of actors and investors in the petrochemical industry,” he said.

“There are currently 70 petrochemical plants operating with an annual capacity of 90 million tonnes. New projects, expected by the end of the current calendar year, would add 4 million tonnes,” he added.

Shahmirzaei announced plans for more than doubling the petrochemical production capacity by the end of the 8th National Development Plan, saying: “Based on this plan and with the revision of the plans and licenses given to this industry, the value chain of the petrochemical industry will be completed and all the products needed by other industries will be produced to prevent the importing the products of the petrochemical chain.”

He also highlighted the downward trend in oil and gas products consumption in the world.

Supplying Companies to Be Protected by Producers

CEO of National Iranian Refining and Distribution Company (NIORDC) Jalil Salari has said that supplier companies would be protected by manufacturers of products.

“The companies with supplying pints would be doing production in parallel, which is a big step in branding,” he said.

“The first step of this plan was taken in Tabriz refinery in a limited way and it was decided to be implemented in one of the big cities so that we can gradually build the transmission capacity and the region itself can supply the product,” he added. “We hope to be able to form and organize real branding in the company. The licenses that were provided in the past in this sector have been screened and if these covers are done, in practice both the customer and the manufacturer will protect their product and in some way the fuel consumption management policy will take place in the country.”

“The supply of the product by the manufacturer was one of the objectives of the branding scheme that the station and the supplier are the owners of the transport and receive the product from National Iranian Oil Products Distribution Company (NIODPC) and deliver it to the consumer destination,” said Salari.

Iran Natural Gas Use at 228 bcm Annually

The gas distribution chief coordinator at National Iranian Gas Company (NIGC) has said that Iran’s annual natural gas consumption stands at 228 bcm.

“The country’s annual natural gas consumption is upwards of 228 bcm, 70% of which is used in the industrial sector and 30% in the household and business sectors,” Moslem Rahmani said. “But this ratio is reversed in winter when 70% of gas is used by households and business sector. In some cases, this figure reaches 80%.”

“Thanks to rich gas reservoirs in South Pars and other regions, Iran is rich in gas and major measures have been undertaken in this regard,” he said.

Rahmani said: “In a country with more than 28 gas refineries, 38,000 kilometers of gas transmission lines and more than 440,000 kilometers of gas distribution network, more than 36,000 villages and 1,220 cities connected to gas network, one can say this is  a breakthrough in the development sector, but it requires further action.”

SPGC Supplies 186mb Condensate in 9 Months

The head of supervision on production of South Pars Gas Complex (SPGC) has said more than 186 million barrels of gas condensate was produced by the plant during the first three quarters of the current calendar year to March 2023.

Ali Ahmadi said SPGC is the biggest producer of condensate in the Middle East with a supply of 7 tb/d of condensate at 13 refineries.

“During the first nine months of the current calendar year, more than 186 mb of gas condensate was produced at SPGC, which was significantly higher than that of last year,” he said, adding the product was delivered to the Persian Gulf Star refinery, Borzouyeh petrochemical plant as well as other plants in central Iran.

He said there was nothing to worry about exporting and delivering condensate.

Ahmadi also said: “Another strategic product of SPGC is ethane with a production capacity of 15,500 tonnes a day at 13 refineries, which is delivered to petrochemical plants like Morwarid, Kavian and Jam.”

He also said that SPGC had exported more than 480,000 tonnes of sulfur to East Asia.

“There is capacity for producing 2,300 tonnes a day of sulfur in South Pars. We managed to export to East Asia in full safety and in full respect of environmental obligations,” he added.

Ahmadi said: “SPGC is one of the largest producers of gas and byproducts in Iran and the Middle East. Gas production from the 13 refineries of this complex reaches 570 mcm/d now.”

He said SPGC had seen its three-quarter output grow 2.6% year-on-year, adding: “This processed gas is fed into national trunkline for businesses, households and major industries. It also feeds the Bushehr and Kangan petrochemical plants, as well as Kangan petrochemical/refining plant. We also supply up to 40 mcm/d of feedstock to the Fajr refinery.”

“SPGC is the largest producer of LPG in Iran and one of the top producers of this product in the Middle East with a production capacity of more than 22,000 tonnes a day. This product is dispatched to East Asia by tankers or ships. During the first three quarters of the current calendar year, LPG production increased 25% year-on-year mainly due to increased storage,” said Ahmadi.

He said SPGC was also the only producer of odorizers in the Middle East with capacity to supply 50 tonnes a month.

Work Resumes on Goreh Oil Storage Tanks

Work has resumed to build strategic crude oil storage tanks in Goreh in the southern province of Bushehr, a project manager said.

Marjan Ahmadi expressed hope the storage tanks would become operational by March 2024.

The plan to build strategic crude oil storage tanks was defined with goals such as market management and control of fluctuations in oil supply and demand, flexibility in production management, creating alternative capacity in emergency situations such as damage to transmission pipelines and pump houses, as well as the occurrence of severe weather conditions in export loading docks, while complying with the requirements of civil defense.

Mohammadi said it was a must for a petrostate like Iran to build strategic storage tanks, adding: “Such tanks would be a key privilege for Iran to play a role in the regional oil market.”

“Due to the international restrictions caused by sanctions, absence of these tanks imposes a lot of costs and risks on the country. Therefore, the Board of Directors of National Iranian Oil Company (NIOC) decided to accelerate the completion and launch of these storage tanks,” she said.

No Flaring Seen in 2026 Horizon

The deputy minister of petroleum for planning has said that Iran would be gathering associated petroleum gas entirely by 2026.

Houshang Falahatian said: “We expect the gathering of 50% of flare gas in the country by March 2024 and the remaining flare gas would have been gathered by March 2026.”

He said that flare gas had already been cut by about 1.5 mcm/d.

“Based on planning, we would be gathering 8.2 mcm/d of flare gas by the end of the current calendar year or early next calendar year. Next calendar year, another 18.2 mcm/d would be added to this amount while for the following two years, 17 mcm/d and 7 mcm/d respectively would be added to flare gas gathering volumes,” said Falahatian.

“The NGL 3100 project is now a flare gas gathering project, which is 78% completed. Once operational, it would eliminate 5.5 mcm/d of flare gas. NGL 3200, which is to gather about 6.3 mcm/d of flare gas, is 94.5% completed. Furthermore, the Kharg NGL, now 65% completed, would gather 7.4 mcm/d of flare gas,” he added.

He said the $1.1 billion project for the Bid Boland Persian Gulf flare gas capture was under way with 36% progress so far, adding that another flare gas gathering project in East Karoun was under way with 36% progress.

$69bn Oil and Petchem Projects Envisaged

First Vice President Mohammad Mokhber said a total $69 billion oil and petrochemical projects had been defined.

Breaking down the figure, he said $13 billion went to 21 petrochemical projects and $56 billion to 16 oil field projects.

He added that six industrial projects, worth $7 billion, had been also defined to be implemented.

“The economic capacities and opportunities of the country are very wide and unique, but it is not possible to do big things with the limited resources of the government and through annual budgets, and it is necessary for the private sector and economic players to step in, and the government can serve as facilitator and policymaker,” he added.

Recently, 16 special plans for the development of the oil and gas value chain were approved at the meeting of the Resilient Economy Committee.

According to the oil and gas value chain development plan, considering the importance of development of the oil and gas value chain as one of the strategic pillars in creating energy security and strengthening the economy, it was approved under articles 13 and 15 of the general policies of resilient economy in the concept of reducing crude sales and increasing and stabilizing oil and gas revenue.

Upgrading and optimizing seven refineries, building three refineries, implementing two petrochemical feed supply plans and building four large petrochemical plants to complete the upstream value chain are the four main pillars of this plan.

Iran Leads Mideast Oil/Gas Project Starts

The Middle East is expected to witness 621 projects to commence operations during the period 2023-2027. Out of these, upstream projects would be 81, midstream would be 141, refinery at 84 and petrochemicals would be the highest with 315 projects.

Downstream (refineries) and petrochemical projects together constitute about 64% of all upcoming oil and gas projects in the Middle East during 2023-2027. The midstream sector follows next, with the pipeline segment alone constituting 40% of all projects, followed by oil storage and gas processing with 23% and 21%, respectively.

Newbuild projects lead the upcoming projects landscape in the Middle East, constituting around 78% of the total projects across the value chain. The share of newbuild projects is especially high in the petrochemicals sector, accounting for 60% of the total newbuild projects across the value chain. On the other hand, development projects dominate the downstream (refineries) sector with 43%.

In the Middle East, more than half of the projects are in the construction and commissioning stages and are more likely to commence operations during the outlook period 2023-2027. About 34% of the projects are in the planning stages, and the rest have been approved or awaiting approval.

Oil Bonds to Be Unveiled Soon

CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr has said oil bonds would be soon introduced.

“These bonds are in foreign currency and convertible at ATC rate and negotiable in the secondary market,” he said, adding that the Economic Council had given go-ahead for their issuance.

“We will unveil these bonds at a ceremony. This is a highly valuable plan which can help financial management and cash flow in NIOC upstream projects,” he said.

Noting that these bonds never mature, the NIOC chief said: “These bonds may be converted to oil and NIOC can even store oil in land tankers in order to deliver it as soon as cargo is salable.”

“Iran comes second in terms of gas reserves in the world. Development of reservoirs requires attracting investment. Upstream projects are time-consuming and capital-intensive, lasting 5 to 7 years. However, they are lucrative,” said Khojasteh-Mehr.

He said important decisions had been taken for gas field development projects, some of which were being implemented now.

A case in point is Phase 11 of the South Pars gas field, he said, adding production from this development phase would start soon.

Referring to the Kish gas field development, he said: “To develop this field, two drilling rigs are being moved. Commodities have been ordered and we are ordering commodities for a 200km transmission line.”

Khojasteh-Mehr said feasibility studies were under way for developing Phases 2, 3 and 4 of the Kish gas field, adding: “Studies have also started for developing the North Pars gas field. For these new gas projects, we intend to lay 1,100km of pipeline. For the first time, Iranian companies are involved in implementing this $1 billion project.”

He said crash plans were under way for gas recovery from the fields administered by the Iranian Central Oil Fields Company (ICOFC). “Gas production in this way is among NIOC plans for new gas production,” he added.

Khojasteh-Mehr also said talks were under way with Iran’s neighbors for gas swap, adding: “Our colleagues at National Iranian Gas Company (NIGC) have been following up on these talks.”

Gas, Iran Bargaining Chip

Iran's gas export and equations for the transfer of theclean energy to its neighboring countries is a program that is being pursued more and more by the PetroleumMinistry. In the latest move, Iran's Minister of Petroleum Javad Owji has held intensive negotiations with senior Turkish officials to extend the gas and energy trade agreement, which seems to be a very important issue in the economic relations between the two countries.

The present articleis aimed at reviewing Iran’s gas exports to neighboring countries and its transformation into the regional gas hub.

Holding 18% of the world's gas reserves, Iran is ranked second in terms of this valuable and environmentally friendly energy resource. Iran's gas reserves is estimated to be around 32 tcm, 5 tcm less than Russia’s. In terms of production, Iran comes second after the United States with 914 bcm in 2020, and Russia with 638 bcm. Iran is the third gas producing country in the world with 250 bcm, far from the top producers.

Iran's policy is to expand cooperation with neighboring countries and the main strategy of the PetroleumMinistry is to cooperate with other countries in the field of energy. Iran has considerable gas resources and reserves in the Persian Gulf, which could be fruitful through constructive and progressive cooperation and a win-win formula. Hossein-Ali Mohammad-Hosseini, director of corporate planning at National Iranian Gas Company (NIGC), has said more than 287 bcm of rich gas was produced and delivered to refineries last calendar year. He said Iran’s five-month gas exports in the current calendar year was 20% higher year-on-year.

Maziar Sayyahnejad, head of supervision, measurement and control of gas quality at NIGC Directorate of Dispatching, said Iran exports 6% of its gas production to Turkey, Iraq, Armenia, Nakhichevan and Azerbaijan. That is a meagre share of Iran’s output, which is blamed on unbridled domestic consumption.

9bcm Delivered to Turkey

Based on a 25-year contract, Iran has been exporting gas to Turkey since 2001. This contract remains in effect until 2026. Based on the terms and conditionsof the contract, the maximum volume of gas sent from Iran to Turkey is 10 bcm and the minimum volume is 8.5 bcm a year. This gas is sent from Tabriz to Ankara through a 2,577 km pipeline. Last year, according to Majid Chegeni, CEO of NIGC, more than 9 bcm of gas was exported to Turkey.

There are two gas export contracts with Iraq. The first one is the gas export contract to Baghdad, which was signed in 2013, and the second one is the gas export contract to Basra, which was signed in 2015. Both contracts are in effect and Iraq is one of the buyers of Iran's gas. Meantime, good plans have been prepared for Iraq in the PetroleumMinistry. Mohammad Reza Jolaei, NIGC dispatching director, says, Iran's relationship with Iraq is a strategic relationship and Iran would raise its gas exports to Iraq.

Talks for Contract Extension

According to Sayyahnejad,Iran's gas production has increased by 4 bcm in the first half of the current calendar year. Therefore, Iran’s PetroleumMinistry is considering extension of the gas export agreement with Turkey as it is close to expiration. During his visit to Turkey in October, Minister Owji discussed the extension of the gas contract and energy trade in a meeting with the Turkey’s energy and economic officials.

One of the most important topics discussed was the extension of Iran's gas export contract to Turkey, the principles of which are agreed upon by both parties, and it was decided to form a joint working group to work on the issue of contract extension. In this trip, they also discussed the issue of increasing the volume of Iran's gas exports to Turkey and building a new gas export pipeline to enhance the capacity of gas transmission through this route.During Owji’s visit to Turkey, two scenarios of increasing gas exports through a new contract or in the form of an extension of the previous contract were discussed.

Jolaei has also referred to a meeting with Turkey’s Botas officials. He has said that proper agreement wasmadeon Iran’s gas export to Turkey. He said that over the coming six months, the two sides would go ahead with repair, cathodic protection and coating of Iran-Turkey pipelines and renovation of the Bazargan station among other plans.

Caspian Energy

Iran and the four countries bordering the Caspian Sea, as the world’slargest gas reservesholders, gathered last month at the second Caspian Economic Conference in Moscow, while the hard winter of Europe is coming and the crisis between Russia and

Ukraine is very effective in this difficulty. Therefore, Iranian negotiators tried to create the greatest cooperation in the field of energy between the countries during various talks and speeches in this conference. Today, it is clear that the geopolitical region of the Caspian Sea is the most important region in the world energy market in terms of hydrocarbon reserves.

The Caspian Sea, with its abundant hydrocarbon reserves, is among the three most energy-consuming regions in the world out of four regions, along with China, Europe, and India, and the fact that Iran today is determined to develop activities and operations in the South Caspian region shows that Iran's correct policy and investment in creating infrastructure are essential. After the Persian Gulf and Siberia, the Caspian Sea is the world's third source of energy, which shows that the Caspian Sea, in addition to its geopolitical location, is of crucial importance to the countries bordering the Caspian Sea in terms of oil and gas reserves.

In line with the foreign policy of the 13thadministration, the Islamic Republic of Iran seeks to expand all-round cooperation with neighboring countries, especially with the coastal countries of the Caspian Sea, and considering its geopolitical and geoeconomic position as the connection point of the Caspian Sea to the southern shores and warm waters of the Persian Gulf, the Gulf of Oman and the Indian Ocean is determined to create momentum in economic and trade cooperation between the coastal countries of the Caspian Sea.

According to Owji, the transit and swap of oil and gas from Russia will turn Iran into the energypole in region, and the country will receive a lot of foreign currency income. As gas exporting countries, Iran and Russia have cooperated a lot in the field of energy swap. The planning of the two sides to cooperate in the development of the North Pars and Kish fields and the creation of pressure boosting facilities in the South Pars field is an important issue for Iran.

In the field of gas export to Pakistan and Oman, memorandums have been signed and the construction of the export pipeline to this neighboring country will be done jointly by Iran and Russia.

Owji, who traveled to Russia with the First Vice President and the Iranian delegation to participate in the second Caspian Economic Forum, on the sidelines of this forum, referring to the cooperation between Iran and Russia in the field of energy, said: “By transit and swap of oil and gas from Russia, Iran turns it into energy pole inthe region and the country receives a lot of foreign currency income.”

Iran's cooperation with the countries of the Caspian basin will be strategic as far as oil, gas and energy is concerned, and it seems that the swap agreement and the purchase of 15 bcm of gas through Turkmenistan will be completed within the next few weeks.

Regional Gas Hub

Undoubtedly, the cutoff of Russian gas exports to Europe and the change in international conditions have made Iran able to be the bridge for the transmission of Russian oil and gas products to other countries and become the gas hub of the region. According to Ahmad Assadzadeh, deputy minister of petroleum for international affairs, Tehran expresses hope that Moscow and Turkmenistan will reach an agreement regarding the transit of Russian gas to Iran within swapframework, in which case, the gas swap agreement between the two countries will be implemented by the end of the year. The agreement between Russia and Turkmenistan, the swap agreement and the purchase of Russian gas by Iran will be implemented by the end of this year.

Currently, there is an infrastructure for the annual import of 30 bcm of Russian gas from Azerbaijan and Turkmenistan. By buying this gas at a "reasonable price" and using it in the Northern provinces, Iran may export its gas from the south (place of production) at a higher price to its neighbors such as Pakistan and Oman, instead of saving money and transferring it to the north. It could also increase the volume of gas exports to Iraq and Turkey.

In fact, buying gas from Russia, in addition to saving on transmission costs, helps Iran become the gas hub of the region.

Higher Gas Revenue

The export of natural gas to neighboring countries and the development of energy diplomacy in the last one year have provided a new chapter in the revival of energy diplomacy relations for Iran. In addition to the signing of the tripartite gas swap agreement with Turkmenistan and the Republic of Azerbaijan, the income from gas exports increased from one billion dollars in 2009 to $4 billion last calendar year, of which nearly $1 billion was related to arrears of the past years, which were finally received, but under the same conditions, in terms of volume, 1 bcm more gas was sold year-on-year, and Iran's obligations in the contracts were fulfilled.

Improving Iran's position in the field of gas trade by recording the highest sales volume of gas concentrates in the last 3 years, 64% increase in gas export revenues, 11% increase in the volume of gas exports to Turkey, continuing negotiations to increase gas exports, collecting about $1.6 billion. Regarding Iran's gas demand from Iraq, the 138% increase in gas swaps, the continuation of gas clearing with Armenia's electricity, and conducting negotiations with different countries with the priority of neighboring countries to increase Iran's share in the international gas market are among the gains from gas trade. It seems that Iran is the most favorable option for gas trade and becoming the gas hub of the region due to the existing gas transmission infrastructure and suitable geographical location.

2022 Oil Market Review and 2023 Forecast

Fereydoun Barkeshli

Energy Market Analyst

As the international oil market warms up for 2023 let’s take a look at major events that had immense impact on the world oil markets in 2022. The global energy market was just done with Pandemic that hit demand early 2020 jeopardizing the supply chain most severely. Producing countries need to be praised and acknowledged for the wonderful job of adjusting skillfully with the demand destruction leading to a swift balance in the market. However, early in 2022 the international oil and energy market was confronted with a severe blow when the Russian conflict with Ukraine broke out on 24February 2022.

The conflict was initially gas-induced but in an increasingly globalized energy market, crisis in one type of energy has immense potential to spread to a wide spectrum of mineral resources and onward. Oil prices jumped to $130 per barrel right after conflict. However, it did not stay that high for a long time. Chinese Zero-COVID policy came to the rescue. Chinese economic slowdown led to a lower oil demand and international benchmark Brent leaned back to a double digit range and hovered around$80 per barrel as we are writing this piece late December 2022.

What to Expect for 2023

To be frank, I tend to believe that 2023 is already with us. I can’t foresee a much different prospects for the world oil market for the first quarter of 2023. However, several factors may influence our expectations on both demand and supply side. Let’s begin with the demand side. Chinese Zero-COVID policies was perplexing once it entered into the second year. A country with 1.45 Billion population and the second largest economy in the world cannot afford to shut down entirely for such a long period of time. An economy that experienced double digit growth only ten years ago to fall in the vicinity of one percent growth meant so much for the world economy. Growth engine of global oil demand is switched off.

However, early December 2022, China declared a swift shift from its Zero-COVID policy and reopened parts of the economy.OPEC+ hailed the news and markets celebrated with a 12 percent oil price rise that stabilized the oil market well above $80 per barrel. Markets will keep up $80 plus range into the winter of 2023. As for the second quarter beginning April 2023, markets should wait for the strength of demand side not only from China but from India, too.

Indian economy is poised for a major show of year on year growth in 2022-2023. A rate of growth of around 6 percent for Indian economy means an average of 5.1 mb/d of crude imports for 2023 some 0.46 mb/d above 2022. As such Indian crude imports will exceed that of China by 0.46 mb/d. In fact, major oil producers are already negotiating long term oil exports contracts with India. However, both China and India are major crude oil refiners. They refine and export oil products to other major consuming countries in Europe, Africa and Latin America.

We aren’t certain on how President Xi Jinping envisages to continue his third term in office as far as the economic texture of China is concerned. China has virtually acted as the factory of the world for some three decades. There are signs that China wouldn’t want to keep manufacturing for the rest of the world anymore. This means much for the world economy and the international oil markets. In case China decided to move towards an inward looking economy for the current decade and probably next decade, oil consumption will not be in commiserate with growth. Global oil market scenario will have to undergo change of direction. As such oil producers will have to gradually shift focus towards new destinations.

A shift in economic outlook from export-led growth to domestic-oriented growth doesn’t necessarily mean a decline in energy consumption, but as China moves towards a service economy and reliance on its own population for most of its production, types and patterns of energy use changes from oil to gas and most

notably new sources of energy like hydrogen. In the meantime, reliance on other sources of minerals such as lithium will also increase at a higher rate. Though, this is the case for other industrial countries such as Europe, too. Nevertheless, oil and energy traders cautiously watch China’s next Zero-COVID move in order to evaluate and see signs of the direction of the economy and level of oil that would be required to maintain the pace in 2023 and possibly beyond.

Nevertheless, I still cautiously expect to see how the world oil markets will react to Russian oil price cap policy that will go into effect at 12 Midnight of January 2023. It is interesting to note that the $60 per barrel oil cap is already high for Ural trading at $57.73 per barrel in late December 2022.

Gas Factor

Gas markets have historically followed oil. Most gas pricing formulas are oil-related. This has often been the case for LNG, as well. The year 2022 was the year of gas. Europe imported over half of its gas requirements from Russia via pipelines; and with the commencement of conflict between Russia and the Western countries and consequent disruptions of Russian gas supply to European Union, gas demonstrated its powerful appearance in the international energy scene. Gas price is now oil-indexed. In fact, in certain cases, oil market is gas-related and not the reverse.Having said that since gas has always been regarded as a regional energy phenomenon, it hasn’t been seen to require logistics that have been in place for oil and oil products.

OECD countries have SPR(Strategic Petroleum Reserves) for oil. This is a compulsory emergency logistics that was designed since early 1970’s after Arab oil embargo on US and three other countries. International Energy Agency(IEA) required OECD members to store equivalent of 60 to 90 days of oil consumption in their reservoirs. There has never been Strategic Gas Reserves. Nobody ever heard or talked of it. Companies do have commercial gas storages but not for emergency disruptions.

After Ukraine conflict and imposition of sanctions by the United States that was followed by two major explosions in Nord Stream 1 and Europe realized that two major blunders have been committed on gas fronts namely; full reliance on one giant supplier and; then being too timid towards the US.

Building costly gas storage facilities and procurement of gas carriers have been considered important events in the history of gas that affected price of gas, as well. This should surely need to be sped up during 2023 and onwards. A new phenomenal texture of international gas markets. Developments on the gas front doesn’t end up here. Europe is still importing close to 10 percent of its gas requirements from Russia through various routes. Europe has to rely on the US for purchase of LNG. This costs Europe four times the price of natural gas imported via pipelines from Russia prior to sanctions. Costs on LNG carriers have been raised, too. LNG cargo ships charge more than twice what they charged before and are in short supply, too. I call this the golden moment of gas. The revenge of gas. Gas will pose to be a dominant player in the energy market in 2023.

Not yet done with gas-driven oil prices, we’re also confronting with the issue of product-driven international crude oil prices. Europe has virtually abandoned investments on building new refineries. Europe has preferred to move away from the dirty and environmental harming refineries to importing refined products from other sources in Asia or South America. For Europe, refining is something of the past. However, countries such as China, India and Middle Eastern NOC’s preferred to buy crude oil, refine and export to Europe. Once crude oil is affected by geopolitical risks or any other disruptions that signals supply security threats, refineries raise product prices of crudes that were imported long before prices went up.

Markets Sentiments vs Market Fundamentals

Rising oil prices as 2022 draws to a close signal, a return to bull market conditions in 2023 with oil expected to go on a rally within the top and bottom range of around $50 per barrel or more. In fact, the dimension and gap between the high and lower price range has never been as wide as that of 2022. There’s no evidence to believe that violent price fluctuations will not continue in 2023.

Persistent concerns about the potential health of the world economy is going to be even stronger in 2023. As such oil market remain volatile but weak demand seems to be the least of its worries. It’s hard to suggest that crude oil prices dropping below $80 per barrel for average of 2023. However, there are too many factors pointing to a sizable breakout in oil prices.

Now that we’re moving towards demand variable, there would be no wayout but to start with China. Easing Zero-COVID policy may prove to be tricky. Still in December and with limited easing of Pandemic restrictions, new cases of COVID-19 and surge in hospitalizations and even death rates is reported. As such while COVID policy easing means more factory hours and production and more importantly much more traveling and movements, it may also mean a subsequent spread of pandemic and delayed lockdowns. There’s no hard evidence to believe that the current easing of COVID policies that began in mid-December may necessarily stay in place well into 2023.

However, another major factor beyond oil market fundamentals is health of the world economy. The United States of America is the most indebted country in the world. US dollar is the backbone of the country’s economy. Once Russia underwent sanctions by America, Southern block economies began to consolidate. From Beijing to Riyadh and Dubai began talk tough on Washington, and openly discussed non-dollar international transactions. Global economy is about to reinvent itself after the series of powerful disruptions. First, with the pandemic and the war in Ukraine and the sanctions imposed by the US. Most economists and energy market observers believe that given economic and market behaviors of the US Federal Reserves in non-stop interest rates hikes, the era of cheap money supply might have reached its limits and as such the possibility of inflationary recession in 2023 cannot be ruled out. This will have a severe impact on the world economy but oil is going to be a prime target of a recession.

A full-fledged recession may be distant but even the fear or sentiment of emergence of recession will slow down oil demand. Here comes the issue of non-dollar transaction of oil markets that has been talked about time and again. In

2021, some 83 percent of traded crude oil was priced in US dollar. After the imposition of sanctions against Russian crude oil, Moscow demanded Ruble for its oil trade. This was again discussed in full length when Chinese president visited the Middle East November 2022. The issue had been taken up between Iran and China in previous negotiations, too. Once a recessionary trend begins to roll out in the US and the Western economies, the notion of non-US dollar oil transactions will emerge as a real possibility as early as 2023.

As for theUS Federal Reserve and Congress, printing money is the best and possibly the only solution to tackle most economic problems. The US Federal Reserve has printed over $7.2 trillion during the last five years and 65 percent during President Biden’s term in office. This amount of money is lavishly used to finance wars and together with it inflation around the world. The US economy experienced 7.4 percent inflation during the last quarter of 2022. An inflation rate that was experienced during 2007-2008 recession. Most European countries are also experiencing inflation rates not seen in years.

International oil market is sensitive towards inflation or even a burst of stagflation. That’s one reason why major oil companies prefer not to invest their windfall profits from higher oil prices in oil industry. Emergence of stagflation means that oil prices will lose a hefty part of its 2022 record price to lowered economic growth.

SPR Factor

Strategic Petroleum Reserves (SPR) was designed early 1970’s in the wake of Arab oil embargo. It was the idea put forward by Henry Kissinger. Later OECD members created IEA that regulated SPR by member states. To this end the US erected SPR that could support the country’s needs of 90 days of consumption. However, SPR was only used twice for strategic and security purposes. Over recent years, US presidents have concluded that SPR has virtually lost its relevance for security and militarized objectives. US is currently drawing from SPR for commercial reasons and oil trade policies.

As such SPR has posed as a challenge and rival for OPEC and oil producers. During 2022 American government drew up to 1.7 mb/d of SPR in order to battle OPEC + in cutting oil prices and more importantly contribute to ease gasoline prices at the pumps. This was particularly evident in run off to US November mid-term election.

US government drew from SPR at $65 per barrel. However, reserves must be filled and replaced by new oil. SPR exists because it is filled up from time to time. Level of US SPR was registered at 245 Million barrels, the lowest since SPR was first built. Current oil prices is at $81 per barrel. Government is tempted to draw even more so that it can benefit. Biden administration intends to keep filling reservoirs when oil price is at 65 to $70 per barrel. The problem is that in case all other OECD members decided to withdraw from their SPR, market may face a sudden risk of oversupply and then once they decide to refill reservoirs, an unwarranted push for demand. The perception by the major consuming countries that SPR is no more relevant and required or that oil is available in abundance is indicative that oil might be on the wrong side of history.

Nevertheless, this is another risk factor for the international oil market and an added complexity that needs to be addressed by OPEC +. Commercialization of SPR is one of the factors that leads to market fragmentation. SPR release and sale in the open market is considered toxic barrels. Countries are certainly free to keep and stockpile as much as commercial crude or products but SPR commercialization is new phenomenon for the global oil market.

2023 Onward

What we shall experience in the global oil market in 2023 may have a more lasting impact that will possibly be experienced through the middle of the current decade.

To narrow down my concept, I would like to refer you to COP27 Climate Summit in October 2022 in Egypt and compare it with the earlier summit in Glasgow. COP27 was a retreat from most of those sweet talks on climate and zero-emissions policies that have negative impact on oil and gas consumption.

COP27 was overshadowed by the war in Ukraine and US sanctions on Russian energy supply. There weren’t any shouting against oil and gas and even coal. COP27 showed that today heating for G7 is much more relevant to saving the planet some hundreds of years later.

COP28 will be hosted by OPEC member UAE that’s an aspiring producer within the Organization. I believe that UAE climate summit is going to be important in that it is going to bridge the gap between oil and gas producing and consuming countries. As such COP28 will have an important impact on issues related to carbon emissions and clean energy enthusiasts.

As we bid farewell to 2022 we may have to prepare for an even harder and more volatile 2023.

Petrobras Concludes AlbacoraLeste Field Sale

Petrobras has completed the sale of its interest in the producing AlbacoraLeste Field in the Campos Basin offshore Brazil to PetroRio (PRIO) subsidiary PetroRio Jaguar Petróleo.

The transaction concluded with a cash payment of $1.635 billion, on top of the $292.7 million that Petrobras received when signing the agreement last August. The company expects further payments in the future, contingent on Brent prices.

PetroRio now operates AlbacoraLeste with a 90% stake, in partnership with Repsol Sinopec Brasil (10%).

The field spans more than 511 sq km in the northern part of the basin, in water depths ranging from 1,000 m to 2,150 m, and 120 km from Cabo de São Tomé.

Added Wells Lifting Production in Ghana

Tullow Oil forecasts average oil production of more than 100,000 bbl/d later this year from the deepwater Jubilee Field offshore Ghana.

Up to six wells should come on-stream from mid-year onward.

In second-half 2022, two wells were drilled in the Jubilee South East area and a third is currently drilling. Some of the deeper reservoirs penetrated have encountered additional resources that could be developed in future.

The new wells will start up following installation and tie-in to the Jubilee South East project subsea infrastructure.

Equinor Takes Up PGS 4D Monitoring Option

Equinor is extending a framework agreement with PGS by a further two years.

The program, which started in March 2021, covers 4D monitoring surveys on Equinor fields offshore Norway and the UK. Equinor retains a further two-year extension option.

Under the current agreement, PGS will acquire a 4D survey over the Gullfaks Field and a 4D survey over the Gudrun Field, both in the North Sea, this summer season.

Exxon Mobil Exploring Carbon Capture Ventures in Malaysia

Petronas has signed agreements with Exxon Mobil to jointly pursue carbon capture and storage (CCS) development projects in Malaysia.

The two companies will work on maturing technical scopes for a CCS value chain, assess fields identified for CO2 storage, and devise a suitable commercial framework and advocacy plan to support regulations and policy development related to CCS projects.

It follows the signing of a memorandum of understanding between both companies in November 2021.

Record Renewable Energy Generation in Australia

Australia’s national electricity market (NEM) had a good fourth quarter for the climate.

During the last three months of 2022, the country broke records for high renewable activity, low energy demand and low greenhouse gas emissions, according to an Australian Energy Market Operator (AEMO) report.

New utility-scale wind and solar development meant the two energy sources alone generated 20 percent of the NEM’s energy from October through December.

Transition to New Order in Oil Market?

The Iranian Petroleum Ministry’s Directorate of OPEC and Int’l Energy Fora has analyzed the oil market to conclude that last year’s developments gave rise to a new tug-of-war, which will soon result in a new balance of forces. In the new order envisaged for the oil market, Western governments will see their monopoly decline on the oil market which would turn into a regional market with a lower level of integration. However, the trans-Atlantic energy market between North America and Europe is projected to show further integration.  

High Fluctuations

In 2022, we witnessed an unprecedented wave of government interventions by Western countries in the energy market and specifically the oil market, the root of which can be seen as prioritizing energy security and affordability compared to other goals such as sustainability. The aforementioned shocks, along with increasing uncertainty regarding the future of the oil market in 2022, caused oil prices to experience significant fluctuations.

The price of Brent variedwithin the range of $76 to $133 per barrel in 2022, and the difference between the price of Brent light oil and the heavy crude oil of the Dubai index increased to $17 a barrel. In addition, the oil market in 2022 was mostly in a very deep backwardation situation, which reflected the expectation of a severe supply shortage for market participants.

However, in the last months of the year, especially in December, the oil market returned to the contango situation, which indicates that traders expect the oil market to face an oversupply in the short term. Another significant consequence of the big shocks of 2022 in the oil market has been the sharp increase in the price of petroleum products, especially diesel. Diesel refining margin reached $75 per barrel in October. Of course, in Northwest Europe and American markets, it exceeded the $80 dollar in the same period.

But despite these extreme and unprecedented fluctuations in prices, the global oil market quickly adjusted against these shocks and the oil supply did not undergo much change. Even surprisingly, in 2022, the oil market faced an oversupply of 470 tb/d. This is despite the fact that in the previous year there was a supply shortage of 2.3 mb/d. The complete cancellation of the OPEC+ oil production reduction program, the release of strategic oil reserves in consumer countries, especially the United States, and the ability of Russia to replace new customers for crude oil and oil products in Asia instead of Europe made it possible to not see oil supply restrictions in 2022. In the meantime, the relative weakness of oil demand in 2022 is also the reason for the oil market to be in a balanced state last year.

Although from the point of view of the balance of global supply and demand, the oil market is in a proper condition and has resisted the mentioned big and deep shocks, but it should be noted that this resilience resistance was not without cost. The oil market has undergone fundamental changes in 2022, which has an important impact on its analyses and forecasts in 2023.

The present piece of writing is aimed at briefly reviewing the most important fundamental developments in the oil market following the shocks created in 2022.

Trade patternShift

Undoubtedly, the most important evolution of the oil market could be seen in the shift in the pattern of oil trade, especially from Russia to Europe. Crude oil imports via EU marine routes from Russia fell from 1.8 mb/d in January and February (before the Ukraine war) to 180 kb/d in December. The decline in imports of petroleum products from Europe was more limited, falling from 1.6 mb/d in January and February 2022 (before the Ukraine war) to 1.15 mb/d in December 2022. In contrast, the import of Russian crude oil by India, China and Turkey increased from 1.1 mb/d in January and February last year to 1.4 mb/d in December.

Europe has also increased the purchase of crude oil from the Middle East, North Africa and America to replace the import of Russian crude oil. According to statistics published by Kpler, the volume of EU imports from these three sources increased by approximately 830tb/d between January and December 2022. Of course, it should be noted that a part (340tb/d) of Europe's crude oil consumption is supplied internally through the North Sea.

Another important point that should be noted is the dependence of European refineries on medium and sour Ural crude oil as feed, which has traditionally been used as an index crude oil for years and is not compatible with the light and sweet crude oil of America and North Africa. To overcome this challenge, European refiners used to blend Iraqi sour crude oil with American light crude oil in order to reach crude oil of the same quality as Urals as feedstock.

It is noteworthy that Europe has increased the import of petroleum products, especially diesel and jet fuel from the Middle East, India, China and the United States in from January to December 2022 by about 650tb/d. Therefore, it could be seen that in a short period of time, we have witnessed a great paradigm shift in the oil trade in the world.

Market Fragmentation

The COVID-19 pandemic in 2020 initially caused oil market actors to focus on supply disruptions in the global oil supply chain rather than focusing on the price and cost of purchase, but with the recent geopolitical events and especially the tension in Ukraine, the dimensions of this issue have expanded. Managers of large oil trading companies such as Trafigura have announced that buyers are now asking oil trading companies more questions, which are more related to the source of oil supply.

Buyers want to know who produces the oil, or through which route and supply chain the crude oil is shipped to them, prior to paying for the cargo, how much carbon emissions it causes and how and when it would reach them. After they get clear answers to these questions, they ask about prices.

The extreme divergence of the price of sanctioned crude oil compared to the other crudeoil prices following the recent developments indicates a decrease in the efficiency of the global oil market system and the weakening of its integrity, which is known asthe partitioning of the oil market.

In the current situation, commercial transactions with crude oil trading companies are also affected by this issue, and these companies require that the leased tankers have not transported crude oil cargoes originating in Russia for a certain period of time in order to trade crude oil. Even exchanges such as ICE London have banned the trading of Russian diesel.

Senior managers and experts of commodity trading companies believe that the efficient global system and the integrated and global supply chain of oil will not return to the previous situation even if the war in Ukraine ends in the near future. On the other hand, regionalization of oil trade and development of non-integrated parallel supply chains are expected to increase in different regions of the world. In fact, we are moving towards a new oil business model in the oil market, where buyers of crude oil prefer security of supply sources and route over efficiency and cost of crude commodities.

Pricing Discovery Disruption

The removal of Russian Ural crude oil from the European market has disrupted the sour crude oil pricing discovery process in the world and reduced the efficiency of interregional arbitrages. The pivotal role of the Ural as the main benchmark of the pricing of sour crude oil exported to Europe has ended. For decades, the Ural has been the most important baseload crude oil feedstock for European refineries and has been freely traded on European cash markets.In addition, many producers in the Middle East used Ural crude oil in the methodology of announcing official selling prices (OSP) for their crude oil exports to Europe. Now, in the situation that the Ural crude oil does not reflect the European refining economy, the crude oil price discovery process in the world has been disrupted, especially for medium and sour crude oils.

Low Transparency

The transparent trading of Russian crude oil and petroleum products has become extremely gloomyin the aftermath of the tension in Ukraine. Russian oil sellers are trying to circumvent EU and US sanctions for financing, insurance and shipping. Evidence of Russia's opaque dealings abounds. The price of Ural oil is no longer officially announced. In addition, Russia relies on a fleet of so-called shadow or dark tankers, whose mobility is very challenging to track using conventional means, to divert shipments of crude oil and petroleum products and avoid insurance and shipping restrictions.

In addition, most Western oil trading companies such as Vitol, Trafigura and Gunvor are not willing to trade Russian oil and oil products due to the imposed sanctions. Therefore, new companies such as Bellatrix, Sunrise and CoralEnergy have replaced them in the market, whose activities are outside Group-7 countries and whose task is to sell Russian oil.These institutions, which have no credit history or experience in oil business, and there is no information about the details of their performance, even their personnel and employees are changed regularly so that there is no information leakage. It seems that these companies will play an important role in the oil business in 2023. They create new supply chains and infrastructure and open up new trade routes for Russian oil, while there is no information about them.

Non-Dollar Transactions

Due to the increase in Chinese and Indian crude oil imports from Russia, the share of oil trade with non-dollar currencies is increasing, and there is a great demand from these countries to buy oil based on national currencies such as the yuan and the rupee. In a recent meeting in Saudi Arabia, the president of China called for yuan-denominated oil and gas trade. The Reserve Bank of India has also implemented a trading mechanism for the Russian crude oil trading in rupees.

Of course, it should be noted that this process of replacing the US dollar in the trade of crude oil and petroleum products does not have a good momentum, and so far none of the Persian Gulf countries have committed to selling crude oil based on the yuan. The mechanism of the Indians to buy Russian crude oil in rupees is not operational yet and the cost of buying Russian crude oil is settled in dollars.

Market Monopsony

Even though Russia has succeeded in changing the route of its oil shipments, the country's customer base has greatly decreased and it has become highly dependent on a few countries such as China, India and Turkey. Except for Turkey and several European countries that have been exempted from crude oil sanctions against Russia, most of Russia's customers are located east of Suez, and in this region, about 90% of Russia's exports to China and India take place.Therefore, these two countries have a lot of market and bargaining power against Russia. In addition, shipments of Russian crude oil and petroleum products will have to travel longer distances than in the past, so the Russians will be forced to offer more discounts despite higher shipping and insurance costs, which will further limit their profits or rents and negatively impact their oil income.

Russian Weak Position in OPEC+

Russia is unlikely to be able to maintain its current production capacity under the current sanctions and without access to Western companies and quality equipment. Therefore, it is very likely that Russian oil production will decrease over time.

According  to Energy Intelligence, Russian oil companies were able to boost their output by supplying 10.9 mb/d of crude oil and gas condensate in December 2022, 150 tb/d higher than the 2022 average output. However, due to the reduction of Russian crude oil exports in December to 4.1 mb/d and the slight increase of 100tb/d in refining capacity, a significant part of the production has been transferred to storage sites.

But Russia does not have extensive infrastructure to store this amount of crude oil, so the country's oil production is forecast to decrease in 2023. In this regard, Alexander Novak announced last month that the country's crude oil production will decline between 500tb/d and 700tb/d, most of which hitting the refining and feedstock sectors.

Russia's crude oil production in December 2022 was lower than the quota set for this country and even lower than the base production level. However, one of the consequences of this event could be the weakening of this country's position within OPEC+, especially when other members of this alliance, such as Saudi Arabia and the United Arab Emirates, have ambitious plans to increase production capacity and potential exports.

Government Intervention

One of the key features of the oil market in 2022 is the reaction of the consumer countries ‘ governmentsto the war in Ukraine. These interventions were in various forms, such as bailout packages for consumers, price and income caps, windfall taxes, and finally imposing sanctions on energy imports from Russia. But in the oil market, the most important government interventions are the release of strategic reserves and the imposition of a price cap on the import of Russian crude oil and oil products.

The US’s use of strategic storage as a tool to manage the oil market cap has been one of the most important government measures to control the market in 2022. Last year, the United States supplied about 221 million barrels of crude oil on the market, although Russia's oil production has also had a very limited downward trend compared to 2021.

But the issue is beyond these, in fact, by releasing SPR, the Energy Information Administration (EIA) sent the signal to the market that intends to set the maximum and minimum limits of oil prices in the market and manage expectations in the oil market through this channel. It seems that the United States intends to continue this policy in 2023 and the interesting thing is that the American government has plans to repurchase crude oil and fill its strategic reserves so that while guaranteeing the demand for its oil industry, it will keep US oil prices within the range of $67-72 per barrel. Therefore, this key component should be also considered in the analysis of the oil market in 2023.

Another government intervention of the consuming countries in the oil market is the application of a price cap by G7 on the import of Russian crude oil and oil products to non-European destinations. This measure has been adopted with the aim of avoiding the formation of an oil supply shock and at the same time controlling the oil revenues of the Russian government. Although the operational dimensions of this policy are very vague and have confused oil market participants, it seems to be one of the most important factors influencing the status of the oil market in 2023.

The Russian government's policy towards oil trade is different from gas; because the retaliatory action to reduce oil production will harm Russia's important commercial oil partners, namely India and China, which are the world's largest oil importers, and will cause these countries to favor Russia's competitors in the oil market, namely the countries of the Middle East. Therefore, in response to these interventionist policies of Western countries, Russia is trying to continue its oil trade through financial and physical channels independent of the West. This can be costly for the oil market during the transition to the new order, but ultimately it will create a new and more decentralized model of the oil market.

In conclusion, it should be mentioned that the oil market is a global and mature market with financial and physical layers intertwined and numerous players in the supply and demand sector, which has faced various impulses during the past decades. But the year 2022 could be considered a turning point in this market because the shocks which hit oil market have been completely different in nature and the oil market has not displayed enough resilience to government interventions, and this issue couldbe added to the layers of uncertainty in this market.

The effort to develop solutions to bypass the banking and international payment system and crack the hegemony of the dollar in the financial markets, along with the development of insurance systems and parallel and independent supply chains from Western countries, shows the unity and firmer determination of non-Western countries to reduce dependence on Western energy infrastructure.

It is noteworthy that the interventionist actions of Western countries could be also a warning for OPEC countries because by applying these policies, Western countries have warned oil exporting countries that, contrary to their apparent support for international free trade, they are ready to jeopardize the oil trade of oil and gas exporting countries byfollowing protectionist and interventionistmeasures justified in the context of escalating geopolitical tensions.In any case, logic dictates that major OPEC member countries take this warning of western countries seriously and invest and cooperate more for the development of parallel energy supply chains and a decentralized financial system.

Natural Gas and LNG market outlook

The Russian – Ukraine political tension  and subsequently imposition of embargo on Russia largely affected the global natural gas market in 2022. Heavily dependent on piped natural gas (PNG) imports from Russia, the European Union significantly reduced its dependence on Russian gas. Global LNG trade reached 38.4 million tonnes in 2022, up from 34.63 million tonnes in November. A review of LNG market  shows that LNG trade market would remain lucrative all through 2023.

The venue is changing in the global gas trade. Players are reconsidering their strategy with a view to winning a bigger share of the market. Although renewable energies have seen their share increase over recent years, official data show that gas continues to enjoy a privileged status in the energy mix of both developed and developing nations.

According to the latest Gas Exporting Countries Forum (GEFC) monthly report in January 2023, global gas market has been studied in terms of supply, production, consumption, trading and pricing.

EU Gas Demand Down 13%

The EU saw its demand for natural gas drop 13% in November 2022 year-on-year to reach 41 bcm, which was attributed to a moderate winter in Europe and relatively high natural gas prices that limited gas demand in the household and industrial sectors. 

In Britain, natural gas demand in December 2022 was down 0.9% year-on-year to reach 8.1 bcm, mainly on account of increased use of renewables. Demand for gas dropped 7% in the power plant and 4% in the industrial sector. However, households saw their gas demand grow 1%.

US Gas Consumption Up

In the US, demand for natural gas in December 2022 grew 18% year-on-year, which is mainly attributed to subzero temperatures and improvement in economic activities there. The demand for gas increased 35% in the household sector, 35% in the industrial sector and 18% in the trade sector. But power plants cut their gas consumption by 19% over the same period.

China Ups Gas Output

China’s natural gas consumption grew 1.9% to reach 33 bcm in November 2022, which was due to the easing of COVID-19 restrictions and an improvement in economic activities there.

In Southeast Asia, natural gas consumption increased due to high electricity consumption and cold weather. Japan saw its natural gas consumption grow 1.3% to 10 bcm, South Korea 9% to 7.5 bcm. South Korea recorded 17% growth in electricity consumption.

The US, the EU and China respectively consumed 96 bcm, 41 bcm and 33 bcm of gas to become the three top natural gas consumers in 2022.

Gas consumption in Japan reached 10 bcm in December, up 1.3%, due to cold weather and increased natural gas consumption for power generation, as well as the closure of three nuclear power plants.

South Korea increased its natural gas consumption 9% to 7.5 bcm as power plants ran on gas. Power plants in South Korea increased their gas consumption 17% year-on-year in December 2022 to 2.1 bcm.

As far as natural gas production is concerned, it has to be noted that gas production follows demand and is mainly seasonal.

EU natural gas production fell 4.8% in November 2022 to 16.4 bcm. It is explained by gas supply by the EU’s main producers: Norway with 10.4 bcm, Britain with 3.17 bcm and the Netherlands with 1.3 bcm.

Data show that natural gas production in China increased in November 2022 18.9% year-on-year, while accumulated gas production during 11 months of 2022 was recorded 197 bcm, up 6% from a year ago.

US gas production reached 84.9% in December 2022, up 0.7% year-on-year. In India, gas production, at 2.8 bcm, increased 1% in November year-on-year and 2% month-on-month.

EU Piped Natural Gas(PNG) Down 36%

The bulk of global gas trade is by pipeline and LNG. The EU piped in 14.6 bcm of gas in December 2022, up 8% from November. However, EU natural gas imports in December fell 36% year-on-year due to a decline in Russian gas imports.

EU natural gas imports from Russia reached 63 bcm for the entire 2022, down 60% on an annual basis. In December 2021, the EU had imported about 140 bcm of Russian gas. Norway’s gas export to Europe has increased 48% versus Russia’s 31% decline.

Chinese gas imports through pipeline increased 10% in November 2022 year-on-year. For the entire year, China piped in 57.3 bcm of gas, mainly from Russia.

Vying for LNG

LNG imports grew 7% in December 2022 (2.44 million tonnes) to reach 38.4 million tonnes year-on-year, unprecedented in the history of LNG trade. Moreover, global LNG imports in December were up 10% with the highest share going to the EU.

Data show Europe and Southwest Asia would compete for LNG imports in 2023. Therefore, 2023 augurs well for LNG producers and similar to 2022, spot or long-term contracts are expected to be signed.

It has to be noted that gas contracts through pipeline or LNG in Europe are often spot contracts, while in Asian market, 70% of LNG contracts are long-term with a meager share going to spot contracts.

Pipeline contracts used to be long-term, but now spot contracts are dominant because pipelines are connected to hubs.

Gas Prices Spike

In December 2022,natural  gas prices increased in most world markets month-on-month, but were down year-on-year. Spot gas prices in Dutch TTF market increased 21% from the month before to $35 per million BTU, but was down about 5% when compared with December 2021.

Spot gas prices in Britain’s BNP market grew 10.7% month-on-month to $32.6 per M BTU, which was down 10% year-on-year.

LNG spot prices in southwest Europe reached $28.9 per million BTU, which was up 19% from November, but 22% down from the corresponding period a year ago. In northeast Asia, LNG spot prices reached $30.7, up 22% from November and down 17% from a December 2021. Gas spot prices in the US market grew 2% month-on-month to $5.6 per   MBTU.

Weightlifter Eyes Olympic Championship

Colombia’s capital Bogota recently hosted the 2022 World Weightlifting Championships. Iran was represented by eight weightlifters in the men’s category and four in the women’s category. In the men’s classification, Reza Dehdar, from MelliHaffari team, bagged gold in the snatch section and silver in the 102kg category.

“Nobody imagined that I would win a gold in the snatch category,” Dehdar told “Iran Petroleum”.

Regarding the world championship and his gold medal, he said: “In the 102kg category, which is an Olympic classification, I won this medal thanks to God. I lifted a good weight in the snatch section and I expected to record 177kg, but I never imagined to reach gold with this weight. I earlier thought I would win silver or bronze with the 177kg weight.”

He said he failed in the clean-and-jerk section, adding: “I would fare better in clean-and-jerk and lift a weight heavier than 213kg and I expected more from myself. I would try to do so in future games. The Colombia tournament was the first Olympic tournament and it was really high level and all the superpowers of the world were in, especially in the 102kg category which is an Olympic category and the level was very high. Thanks God that I won the overall medal and I can enter the ranking of the Paris Olympics by winning the Olympic quota. I hope that I may become a champion in this competition and win the Olympic gold medal.”

“Nobody imagined I would be awarded, but I had really trained for such days to win a medal,” he said, adding: “I expected myself to win a medal and I have to offer my special gratitude to the Weightlifting Federation, particularly Sajjad Anoshirvarni, head of the Federation, and also the MelliHaffari Club and my own trainer Mr. Ramhormozi.”

“During this short period of time, with unfavorable economic conditions and budgetary shortfall, we received significant support for the team to attendthe Columbia tournament. This tournament was very important for me, and I think the cost of sending the team was equal to the Weightlifting Federation's budget for one year. Anyway, it is very difficult to send a team to South America and I even heard that the Ministry of Sports told the Federation not to send a team and to replace it with other competitions because the cost of travel is very high. In any case, by winning the medal, we won the trust of the country's sports community,” Dehdar said.

Regarding his future plan and presence in Asian matches, he said: “I’ll try my best to obtain better results in the coming Asian championship games in South Korea and still more importantly in Asian matches so that my record would exceed 390kg.”

As for the pro league and Haffari competitions, he said: “Thanks God, we had a good start in the league and I hope that we can lift more weights in order to become the league champion.”

He said he had managed to win a medal in Colombia despite hailing from the small city of Ramhormoz, adding: “My message to the youth who are disappointed and discouraged in their sports and life path, is that I have reached this level without any facilities and I thank God for that. No one thought that one day an athlete from Ramhormoz would win a world medal. But this happened. It is enough to have firm will and do your best. It doesn't matter where we are in this world and with what facilities we practice.”

Dehdar Performance

Dehdar successfully lifted 168kg, 173kg and 177kg weights in the snatch section to win gold. That was while a famous Qatari weightlifter, who had already won the Tokyo Olympic gold, was present and won silver.

Dehdar lost 210kg and 211kg weights in the clean-and-jerk section. However, he managed to lift the third weight, 213kg, to finish fourth.

Dehdar lifted totally 390kg to finish runner-up. He bagged one gold and one silver.