Iran Eyes Regional Gas Hub Status

Ali Forouzandeh

Director General of Public Relations

Development of energy diplomacy, particularly in the region, has been a major objective pursued by the Ministry of Petroleum of the 13th administration. Two years into office, it has not left it as a mere slogan; rather, valuable achievements like enhanced oil and gas production and exports, signing contracts with local and foreign firms, exporting technical and engineering services, particularly in the refining sector, and resumption of gas swap with Turkmenistan have been made.

Iran has the world’s second-largest gas reserves. With 33 tcm of natural gas in place, it makes up 16% of global natural gas reserves worldwide. The bulk of Iran’s natural gas reserves is concentrated in the offshore massive South Pars gas field in the Persian Gulf, which is shared with neighboring Qatar. Iran’s gas production capacity currently stands at 1 bcm/d, which is planned to grow to 1.5 bcm/d in eight years with new gas development projects.

Despite these God-given reserves, Iran has long been dreaming of becoming a regional gas hub. Such an objective could be achieved only if development plans are implemented to increase production, particularly in attracting investment and applying cutting-edge technologies. Over recent years, many Iranian contractors have managed to bring key petroleum industry projects to fruition without any foreign help; however, the Ministry of Petroleum always welcomes the presence of IOCs and foreign investment within the framework of its positive law. Minister of Petroleum Javad Owji has said Iran is working with Russia, Turkmenistan, and Qatar to set up a gas hub in Assaluyeh.

Iran’s geopolitical status in the Middle East, access to the high seas, availability of required infrastructure for transmission of natural gas,and establishment of natural gas storage infrastructure constitute Iran’s advantages to become a regional gas hub.

It seems that Iran’s new economic ties with Russia and the development of Iran’s active energy diplomacy at the regional and global levels provide the country with a historic opportunity to become a gas hub in the region. Not having any gas reserves, regional nations have to import natural gas,which may facilitate Iran’s presence in their energy market.

Iran Petchem Output Set to Hit 110 mt/yr

Negar Sadeqi

Iran’s petrochemical industry is a key non-oil revenue generator in Iran. Despite oil sanctions, Iranian petrochemical manufacturers have managed to find new markets and have invested in the downstream sector of the petrochemical industry to earn Iran hard currency revenue. Iran’s petrochemical industry production capacity stands at 92 million tonnes a year (mt/y). So far, $85 billion has been invested in this industry. National Petrochemical Company (NPC) plans to invest another $15 billion in the petrochemical industry within two years to bring the production capacity to 100 mt/yr. Hassan Abbaszadeh, NPC’s director of planning and development, told Iran Petroleum Iran's petrochemical production capacity would reach 200 mt/y by the end of the 8th National Economic Development Plan.

The full text of the interview is as follows:

Iran’s petrochemical production capacity is set to reach 200 mt/y by the end of the 8th National Development Plan. How many development projects are set to come online under the 13th administration?

Currently, 66 petrochemical projects are underway with an annual capacity of 51 million tonnes. They require $35 billion in investment, $10 billion of which has already been provided. Petronad Asia, Pad Jam, Urea and Phase 2 of Ammonia of Kermanshah, and Arghavan Gostar PP in Ilam are among development projects to come online by the end of the current administration, which would bring the petrochemical production capacity from the current 92 mt/y to 110 mt/y. 

How much investment will have been made in the petrochemical industry by the end of the 13th administration?

Currently, $85 billion has been invested in the petrochemical industry, which would increase by $15 billion to reach $110 billion.

The petrochemical industry needs $7-10 billion in annual investment. How much investment has been made over the past two years?

Over the past years, on average $3.5 billion has been invested annually in this industry, which has been mainly made by holdings.  

What measures are to be taken based on talks between the Ministry of Petroleum and foreign countries?

As far as foreign relations are concerned, several issues are pursued in the petrochemical industry. Providing capital, technical know-how, and more importantly marketing and market development are among them. NPC is focused on these three points. We need to find our markets in some countries. Brazil has a big market and we have focused on Brazil over the past one and a half years. We have entered into talks with some countries like India and China for technical savvy cooperation. Talks have been also held with Russia to attract investment. A Russian company has offered to invest $500 million for value chain completion, for which are reviewing feedstocks supply options. As Iran’s petrochemical industry capacity is set to reach 200 mt in the coming years, we would have to export the bulk of this volume. Therefore, we need to find our place in the market.  

What domains is Iran presenting its capabilities?

Russia, which is grappling with war and sanctions, is firmly willing to cooperate with Iran in various sectors. Venezuela is willing to use Iranian technical know-how to renovate its petrochemical units. Venezuela’s petrochemical industry capacity is 12 mt, only 2 mt of which is active. Challenges could be easily surmounted by activating the inactive capacities. Talks have been held with the Venezuelan side and they have become familiar with Iranian companies’ capabilities. They are supposed to provide us with details of the problems of their units and we would then focus on their units using our equipment and services. In the second step, we proposed to give them a 10-year development plan with available feedstock, which they welcomed.

Statistically speaking, what trend has Iran’s petrochemical industry been through over the past two years?

Statistically speaking, I should say that Iran’s petrochemical industry production capacity was about 90.2 mt by March 2022, which reached 91.5 mt a year later. Now, with new projects having become operational, it has reached 92 mt. Petrochemical production capacity has varied in different years. Petrochemical production was 65.3 mt in the calendar year to March 2022, while a year later it reached 69.7 mt. The value of petrochemical exports has increased from $14.8 billion in the calendar year to March 2022 to $16 billion a year later. In terms of volumes, it increased from 25.5 mt/y

to 27.6 mt/y over the same period. Domestic sales rose from 10.2 mt to 12 mt during the same one-year span, which saw income rise from $8.2 billion to $10.8 billion.

What was the reason for the decline in the value of petrochemical exports during the first quarter of the current calendar year?

We are witnessing the decline in the value of petrochemical exports for several reasons with the most important one being the decline in the global price of petrochemicals. The global price of some petrochemicals has declined year-on-year. For instance, we see an 80% decline in global prices for ammonia. The average price of ammonia was $790 per tonne during the first quarter of last calendar year, which currently stands at $165 per tonne. Urea, propane and butane, methanol, and polyethylene have also seen their average global prices fall 50%, 45%, 30%, and 21% respectively.

Why have global prices declined?

Numerous reasons explain this price fall. As oil prices fall, so do some petrochemicals’. For instance, the global fall in oil prices would affect China’s economy and as Iran is exporting the bulk of its methanol to China, Iran’s methanol is affected. The Russia-Ukraine war initially affected the global price of urea fertilizers, but finally, alternatives to Russia intervened in the market and the prices went down anew.

How do you break down the petrochemical industry production capacity in terms of upstream, downstream, and midstream?

By the end of the 7th National Development Plan, 58 mt (45%) would go to basic products, 26 mt (20%) to hydrocarbon materials, 14 mt (11%) to midstream products, and 31 mt (24%) to final products.

The 13th administration has mainly concentrated on completing the value chain of the petrochemical industry. What has been done over these two years?

We have reached significant success over the past year. In line with identifying investment opportunities and introducing them, as well as facilitating their implementation in the future, NPC has moved to comprehensively study the value chain of the petrochemical industry and presented chances for investors to get involved in the five propylene, methanol, ethylene, aromatics, and butylene chain with an annual rated capacity of 3.8 mt with $4.2 billion investment for an output capacity of $4.4 billion of downstream products. This project was introduced to holdings with the framework of national self-sufficiency plans and some holdings have volunteered to invest in this field, for which we are issuing licenses. Furthermore, value chain projects were introduced to the private sector so that investors would have the necessary information on the value chain projects.

How much value-added would be generated by the value chain projects?

The difference in the price of product and feedstock in these projects is estimated at $2.4 billion. Assuming 20% costs, we can calculate the value-added at 46% for the value chain projects. About 23,000 jobs would be created in these projects.

How many investors have so far been finalized for these projects?

So far, 36 heads of agreement have been issued for an annual capacity of 5 mt for value chain projects. Seven more projects are waiting for new investment. Most petrochemical projects pertain to the propylene chain. Licenses are being issued for two methionine projects for which investors have already been determined. They would be implemented by the Abadan Petrochemical Company and Maroun Petrochemical Company, next to the Abadan refinery which would supply the required feedstock. Negotiations have been also held with investors for an acrylonitrile project. In the methanol chain, except for a silicone project, all projects have already found investors. Most value chain projects have already

found investors and basic agreements have been made. Some of them have made good progress, like SAP, methylamine, and acetic acid projects. We hope that most of these projects will start construction before this administration's term in office ends.

How are these projects financed?

NPC’s priority in financing is the National Development Fund of Iran (NDFI) and the Bank of China for value chain completion projects. Following talks between the CEO of NPC and NDFI, the latter agreed to finance all value chain projects that do not require high investment.

What is the share do holdings in the value chain completion?

These projects are in parallel with the projects that the private sector is implementing to complete the value chain. The idea is to have an alternative plan in case the private sector fails to implement a project. Some projects overlap. For instance, PVC projects do not lie in our value chain projects, but given the tumultuous market for PVC, PET, or PTE, the NPC has required the Persian Gulf Petrochemical Industries Company (PGPIC) to operate them.   

What is the value and volume of projects operated by petrochemical holdings?

About 1 mt for an approximate value of $1.5 billion.

Isn’t there any challenge concerning technical know-how for value chain completion projects?

Technical know-how was maybe the Achilles’ heel, but now we can receive the required technical savvy from a foreign country. Furthermore, NPC is in talks with an R&D company in that country to become a partner for Petrochemical Research and Technology Company (PRTC) and supply technical savvy which may not be accessible in Iran. One or two of such projects would be enough for Iran. Therefore, mastering their technical savvy would not be cost-effective and would be time-consuming. Therefore, we have to either purchase their know-how directly or get second-hand units.

How many value chain completion projects are defined under the 7th and 8th national development plans?

More than 30 projects have been defined for value chain completion, construction of which would begin under the 7th Plan to be completed under the 8th Plan.

Could you explain the main strategy of NPC under the 13th administration?

The 13th administration is pursuing its strategies in several domains in the petrochemical sector, the most important of which would be completing the value chain development and supporting knowledge-based companies, and domestic manufacturing of catalysts. Another strategy we are pursuing is to activate inactive projects to finalize the case of projects that have long been abandoned or find alternatives to those that are no longer possible to implement.

Will petrochemical development projects be reconsidered under the 7th and 8th plans to match global market developments?

Yes, the projects would be revised from two aspects; the basic revision would be based on gas imbalance. All holdings have been told to revise natural gas-based projects, like methanol, urea, ammonia, or MEG projects, and we are ready to introduce alternative projects to them. Therefore, petrochemical development projects, particularly those envisaged under the 8th Plan, would be subject to fundamental changes.

What about the 7th Plan projects?

Since the 7th Plan projects have had about 40% progress, it would be irrational to modify them. The only change that we would be following up on is to accelerate the implementation of some value chain projects through engaging the private sector to come online by the end of the 7th Plan, in which case the quality of products would improve, not to mention the diversity in the petrochemical mix.

Iran Gas Hub Ready for Winter

The giant South Pars gas field meets 70% of Iran’s national gas needs. Any disruption in gas recovery from this field can lead to irreparable damage to the national economy and welfare. Therefore, it would be important to conduct an annual overhaul of facilities there.

Thousands of petroleum industry staff have been mobilized to preserve gas production from South Pars, the giant offshore field shared with neighboring Qatar, to make sure Iranians would face no gas shortage in winter. To that end, they are working round the clock under the toughest climate and geographical conditions, installing necessary equipment for gas extraction, transmission, refining, and injection into the national trunkline from the Persian Gulf deep waters. It is even hard to imagine working 15 hours a day under 40 degrees Centigrade and 95% humidity under searing sun. But on Bushehr’s coasts and near the border with Qatar, a large group of Iranians are putting their life at risk and working there to guarantee a safe winter for us and keep our houses warm.

Maintaining production and building compression platforms for South Pars is repeated everywhere by oil officials. This important issue is now beyond a mere industrial factor, as more than two decades have passed since the first phases of this field came online and South Pars is set to see a significant pressure fall-off in coming years.

More than a decade ago, foreign engineers and experts entirely left South Pars. Therefore, work has since been entirely handled by local companies. When the development of South Pars started in the 1990s, it was impossible even to build a jacket in the country. Even laying one meter of subsea pipeline needed technology which Iran did not have. However, the development of South Pars enabled Iranian engineers to learn offshore technology to a large extent. Today, South Pars has become the symbol of petroleum industry development while the country is under tough sanctions.

The average output from South Pars is 670 mcm/d, which is key to national energy security. Currently, 95% of Iran’s population is connected to the gas network. An overhaul is crucial at this reservoir to make sure the 37 platforms of the gas field will keep supplying gas in the winter.

South Pars experienced a different overhaul operation this calendar year. Overhaul started in June under tough hot weather conditions and ended in November. The order for overhaul was as follows: 5, 6, 7, 8, 9, 1, 17A, 17B, 18A, 18B, 15, 10, 11, 14A, 14B, 14C and 14D. Each platform overhaul lasted one to three weeks.

In some cases, an overhaul of platforms may require a halt to refining operations. To minimize the time of halt, in some cases, two or three platforms may undergo overhaul, in which case, other platforms would offset gas shortages.

SP11, Most Challenging Phase

Phase 11 development of South Pars was long delayed due to the sanctions. Over two decades, foreign companies came to develop it, but they pulled out as soon as sanctions were imposed on Iran. Finally, it was Iranian companies who brought it to the production phase. Iran’s Petropars operated the project.

That was done despite the imposition of tough US sanctions on Iran. However, some records were set throughout this project. For the first time in Iran, a platform was moved from one offshore position to another offshore position. Platform 12C, where production was no longer economical, was detached and moved to be installed on the site of Platform 11B.

Completion of SP11 would be a key step for achieving energy independence and geopolitical stability. Gas production capacity from South Pars would rise. SP11 is set to supply 56 mcm/d of gas, 50 tb/d of condensate, and 750 tonnes a day of sulfur.

Acidizing

In coincidence with the overhaul, acidizing operations were carried out at 15 wells of SP22, SP23, and SP24. Acidizing is done regularly to help reach maximum gas production capacity and maximum efficiency rate. The acidizing has added 400 mcf/d to the gas production capacity of the three phases.

Technical inspection this year showed a rupture in the connection between the platforms of SP1 and SP15. Ignoring this rupture would lead to a sour gas leak. To repair it, it was necessary to turn on a valve

that had not been touched for 23 years. Therefore, 100-tonne jacks were needed because most bolts and nuts had rusted. It was done in 20 days in the summer.

Wellhead equipment and downhole safety valves are the most important physical assets of Pars Oil and Gas Company (POGC) in South Pars. Preventive maintenance is required periodically to guarantee safe and sustainable production, which would subsequently add to the longevity of this equipment. In the current calendar year, more than 80,000 person-hours of overhaul was done at South Pars. Two 18-tonne valves were replaced at Platform 8.

A couple of years ago, a vessel struck Platform 13A, leading to the shutdown of some wells. Arrangements were made in the current calendar year by POGC staff to repair the damaged wells at SP13. Gas recovery is done from some of the wells at 13A up to the end of the current calendar year. Of a total of 8 wells drilled in the offshore sector of this platform, workover on five wells was taken into consideration.

Gas Compression

South Pars is largely expected to experience a pressure fall-off within five years. Should no action be taken on the field, which Iran shares with Qatar, we would see its output drop 25 mcm/y. As a preventive measure, Iran’s Petroleum Ministry has adopted various methods like regular planning to drill new wells, acidizing existing wells, and designing gas compression platforms to maintain pressure in the South Pars reservoir. In parallel, the National Iranian Oil Company (NIOC) is planning studies on onshore and offshore platforms as a preventive measure.

The question is to know what role gas compression platforms would play. The wellhead pressure required for the transfer of 1 bcf of gas onshore is normally 120 Bar. Now if this pressure falls to 100 Bar it would be difficult to transfer 1 bcf of gas. At 90 Bar, only 700 mcf could be transmitted. That would also result in a production decline. That underscores the significance of gas compression platforms which would in the end help prevent a decline in production.

Gas compression platforms at each phase of South Pars would mean the multiplication of production from its gas wells. Therefore, the ability to design and build such platforms would be highly profitable for Iran in the future. According to some estimates, about 20 gas compression platforms are needed at South Pars in the future, thereby necessitating sufficient precision and sensitivity.

NIOC is currently reviewing various models of such platforms both onshore and offshore. The pressure boosting platform with 2 bcf capacity, will be able to boost the pressure by 90 Bar.

Iran plans to build its compression platforms at its yards, but since each platform weighs about 20,000 tonnes and in the absence of any experience in building platforms of over 7,000 tonnes, the required infrastructure in the country should be upgraded.

Sophisticated design, the necessity of proper arrangement of equipment, safety, and operational issues are among the features of gas compression platforms whose installation requires the float-over method whose technology does not exist in Iran. Therefore, the basic and conceptual design of the gas pressure compression platform needs to be done by an international consultant so that an effective model can be provided to Iran to be used in other phases of South Pars.

$20bn Investment

Over the past three years, more than half of NIOC resources have been spent on South Pars projects in a bid to accelerate its phase development. However, investment is still needed particularly for constructing compression platforms so that Iran would not be outdone by Qatar. POGC has said that $20 billion in offshore investment would be needed to preserve pressure at South Pars.

The existing yards at Iranian oil installations may not accommodate giant 20,000-tonne platforms, but with some fundamental changes, they may serve other South Pars phases.

According to experts, due to the gas pressure decline in some South Pars reservoirs, this phenomenon will gradually extend to the entire field. It is necessary to examine measures to enhance the gas pressure before delivery to the refinery. Therefore, POGC has assigned the feasibility study project of using pressure compression platforms to Petropars, and while concluding a contract with an international engineering company/reputable consultant, Petropars is studying the optimal conceptual design of a gas pressure booster. In this regard, various options are under technical, operational, and economic investigation. These studies are being carried out on the platforms and the tank of SP12, and after summarizing the studies and choosing the best option by POGC, it will be extended to all the phases of the South Pars field for standardization. The proposed options include enhancing the gas pressure offshore and onshore.

Given the 24 development phases and 42 platforms in South Pars, separate studies are underway for them with 1,000 and 500 mmscf/d capacity separately or 2,000 and 5,000 mmscf/d capacity jointly.

The installation and commissioning of pressure compression systems will provide the possibility of gas recovery from the South Pars field for about twenty years. In the design of pressure compression platforms, the existing facilities for installation and transportation and the construction of internal contractors have been considered. Although platforms of up to 7,000 tonnes have been built inside the country and installed, domestic contractors may develop the mentioned facilities to reduce the costs and time of construction and installation of their yards.

Gas turbo-compressors are among the main equipment of these pressure compression platforms. The selection of their type has been investigated with an international manufacturer, and the maximum effort is made to transfer the know-how for manufacturing this equipment to Iran.

Currently, the conceptual design of these platforms is almost completed and it is expected that after the completion of the pressure compression platform studies, the obtained results to be submitted to POGC to finalize the final option for the basic design.

Parsian Refinery, a Leading Gas Supplier

Mahnaz Mohammad Qoli

Located in southern Iran, the Parsian gas refinery is a leading gas supplier. It became operational in two phases with a nominal capacity of 80.5 mcm/d of gas. It currently accounts for 8.6% of the national gas supply.

Alamdar Babaei, CEO of Parsian Gas Refinery, has talked to “Iran Petroleum” about the activities of this refinery.

Where does the feedstock ofthis refinery come from?

The Parsian refinery is designed to process feedstock supplied by local independent fields. Currently, four independent fields are feeding gas. The Tabnak field feeds Parsian 1, while Homa, Varavi, and Shanol are feeding Parsian 2. Parsian 1 was launched in 2003 and Parsian 2 in 2006. The main product of this refinery is natural gas that is fed into the national grid. The condensate produced by this refinery is carried to Assaluyeh. In 2010, a downstream unit was launched at the ethane recovery unit of this refinery.

How much condensate and ethane have been produced during the first half of the current calendar year at this refinery?

During the first half of the current calendar year, 7,677 mcm of gas was treated at this refinery and fed into the national gas trunkline. Ethane recovery reached 660 mcm, while gas condensate output reached 2 million barrels.

How much feedstock is supplied to the ethane recovery unit?

The ethane recovery unit is part of the value chain completion. It is fed by the Parsian gas refinery. Last calendar year, 1 bcm of ethane was recovered from this unit.

What measures have been taken for output stability at this refinery?

The main activity has been annual overhauls. It was done this year too, which ended in October. This refinery is now ready to go ahead with its stable production through winter.

What is the achievement of the refinery overhaul?

Two years ago we adopted a plan to optimize overhaulto reduce time spent on overhaul and we have made good progress. Methods were modified and detected, while risk assessment was done to prevent hazards, which led to effective results concerning overhaul. This refinery has been basically designed to receive sweet gas, but due to changes in the behavior of wells at gas fields, some modifications have been made to feedstock, leading to corrosion and other impacts. Pipelines have been changed, while equipment has been renovated in this regard. Slug catchers have been renovated in recent years, while molecular sieves have been replaced. A domestic manufacturing company has supplied the necessary molecular sieves to this refinery. More than 80% of equipment purchases are made domestically and equipment supply has posed to challenge to sustainable production.

Have any measuresbeentaken to prevent any changes in feedstock?

Yes,the Iranian Central Oil Fields Company (ICOFC) is building a separation center in the Tabnak field, which would be instrumental in feedstock supply to this refinery. This separation center is expected to come online next calendar year. Meantime, compressor stations are planned to be built at the Varavi and Homa fields. The Varavi compressor station is due to come online this calendar year. Other measures are also underway to reduce H2S and inject chemicals to modify the H2S content, which is fed into this refinery.

What is being done to enhancethe feedstock supply to this refinery?

Iran’s Ministry of Petroleum has comprehensive plans for that purpose. It has been decided to transmit gas from Pazanan and Eram fields to this refinery.

How much gas is being received?

With gas supply from these fields, it would reach 80 mcm/d, the full capacity of the refinery. Development of Pazanan has already begun, while a permit is being sought for developing Eram.

What has been done to prevent gas flaring?

The refinery has taken inclusive plans in recent years. Plans have been drawn up to cut the current levels of gas flaring. Last calendar year, gas flaring was down 19% year-on-year.In parallel, we envisage auctioning off the flare gas.

How much does it add up to?

It is about 40 mcm a year, 20 mcm of which would be returned to the production cycle. We intend to auction off 20 mcm a year.

What environmental measures have been taken?

The projects currently underway are valued at IRR 90 billion. They include flaring reduction, high-pressure flare network separation, installing energy-efficient lighting systems, and installing LED lamp packages. Future projects are valued at IRR 250 billion, Including installation of two online monitoring systems for the chimney, receiving necessary permits to build a monitoring and measuring system, high-pressure flare network separation, building management system (BMS), installing energy meters in the buildings, solar energy supply, industrial kitchen and lab buildings,gas exchanger for thermal gas recovery, water separation process, upgrading flare chimney with air assistant by installing a blower and building a 1.5 MW solar power plant.

How has been cooperation with knowledge-based companies?

An innovation center has been established in this refinery, in which cooperation agreements have been signed with Fars Province Science and Technology Park and universities in the region. In addition, the Domestic Manufacturing Self-Sufficiency Committee is also active in this refinery for first-time manufacturing of necessary equipment. More than 80% of the commodity supply to this refinery is from local manufacturers. The refinery currently needs a variety of thermal oil and silica gel, which local knowledge-based companies are expected to supply. These substances are American and European, but their domestic manufacturing would break the monopoly on their supply.

What significant measures were taken for the value chain completion of the refinery?

A working group relaunched a 100MW power plant at the refinery last calendar year. Two units of the power plant are now operational, while the remaining two units would come online shortly. Toenhance gas condensate storage capacity, a 70,000-cubic-meter storage tank has been under construction by the Iranian Gas Engineering and Development Company (IGTD). It is now close to coming online. There were four 25,000-cubic-meter gas condensate storage tanks at this refinery. The new 70,000 cubic-meter tanks would bring the total capacity to 170,000 cubic meters. Regarding value chain completion, the permit has been given for feeding a mini-refinery. Some modifications were made to receive feedstock for gasoline production to supply feedstock to the mini-refinery. The capacity for designing this mini-refinery is 10 tb/d for each phase. The Parsian gas refinery has already supplied a 100 tb and a 50 tb consignment of feedstock to this refinery.

Iran Eyes Regional Gas Hub Status

Iran’s strategy of expanding oil and gas interactions with regional and other nations and enhancing its share of the global economic market includes a scheme for the country to become the regional gas hub thanks to its infrastructure and energy diplomacy. In cooperation with Russia, Qatar, and Turkmenistan, Iran intends to turn Assaluyeh into a gas hub. Minister of Petroleum Javad Owji has said necessary arrangements have been made for this purpose.

The second largest natural gas reserves in the world are located in Iran. Iran has 33 tcm of natural gas reserves, accounting for 16% of the world’s total. The bulk of Iran’s gas reserves is concentrated in the Persian Gulfin the offshore South Pars gas field, which is shared with Qatar. Mohsen Khojasteh-Mehr, the CEO of National Iranian Oil Company (NIOC), has put Iran’s current gas production capacity at 1 bcm/d, which would increase to 1.5 bcm/d in eight years, as new development projects are expected to come online.

The existence of this huge potential in Iran’s gas industry and the necessary investments for the development of joint and independent gas fields have highlighted Iran’s approach to establishing a gas hub in the region. In addition to the development of its gas fields, this country intends to accelerate the formation of a gas hub with its experience in gas swap between Turkmenistan and Azerbaijan and the export of gas to its western neighbors. On the other hand, the existence of various economic relations between Iran and Russia and the relationship between the two countries can have some positive impacts.

Russia has the largest gas reserves in the world. According to the International Energy Agency, Russia’s gas reserves are estimated at 38 tcm. In 2021, its gas production reached an unprecedented figure of 762 bcm, which helped it preserve its status as the second-largest gas producer in the world. Historically speaking, Europe and Turkey were the biggest buyers of Russian gas, but after the conflict between Russia and Ukraine and the Russian embargo, Turkey remains the only major consumer of Russian gas. China is now the main destination for Russian gas exports through pipelines. Russia also exports liquefied natural gas (LNG). Europe’s LNG imports from Russia grew significantly in 2021.

Iran’s geopolitical position in the Middle East region, access to high seas the existence of necessary infrastructure in gas transmission lines, and the formation of natural gas storage infrastructure constitute the advantages of Iran to become the gas hub of the region.

Iran-Russia Cooperation

Minister Owji traveled to Russia in October to attend the RussianEnergy Week in Moscow. During his visit, he held talks onthe expansion of Iran’s energy diplomacy and strategic cooperation between the two countries in the energy sector.

Development of oil and gas interactions between Iran and Russia and taking practical steps to create an Iran-Russia gas pole in the Persian Gulf were highlighted during Owji’s meeting with Alexey Miller, the CEO of Gazprom. In this meeting, Owji described the prospect of strengthening energy exchanges between Iran and Russia and creating a gas corridor for both sides through neighboring countries in the framework of regional cooperation, and referring to the positive view of the presidents of Iran and the Russian Federation on the creation of a gas pole in the south of Iran. He called for taking practical steps to establish a gas pole between Iran and Russia on the northern shores of the Persian Gulf. In this meeting, the CEO of Gazprom also announced his readiness for new cooperation with Iran, referring to the growing trend of Tehran-Moscow relations. What is certain is that Iran and Russia have a serious determination to expand energy interactions in the field of oil and gas, because the relationship process of both countries in this field is expected to be win-win.

Qatar/Turkmenistan Potential

A review of Qatar’s gas potential shows it is seriously following up on LNG production from the North Field. It is expanding its production capacity and has targeted an annual production of 126 million tonnes compared to the current 77 million tonnes. Qatar is the first choice of European gas buyers after anti-Russian sanctions led to a decrease in gas supply from Moscow to Europe. However, the deal turned out to be more difficult than expected because Qatar prefers to commit to long-term purchases, while Europe avoids such deals. Turkmenistan, on the other hand, is the largest country in Central Asia but is not well known outside this region. According to BP, the country has the fourth largest natural gas reserves in the world at 19.5 tcm. The production of this country was small and in 2020, it reached about 59 bcm, most of which was exported to China due to the relatively small domestic consumption. Turkmenistan also exports gas to its neighbors in Central Asia. The main policy of the country has been the maximum recovery from its gas resources and the diversification of the export markets of produced gas through the construction of gas transmission pipelines to various countries including China, Iran, Afghanistan, Pakistan, India, and even the European Union.

Natural Gas Exports

Development of new economic relations between Iran and Russia, on the one hand, and the expansion of Iran’s active energy diplomacy in the region and the world will further strengthen Iran’s historical opportunity to become the gas hub of the region. On the other hand, the regional countries’ need for gas and these countries’ lack of gas resources may facilitate Iran’s presence in the energy market of these countries.

The CEO of the National Iranian Gas Company (NIGC), Majid Chegeni, has reported a 16% growth in gas and a 22% surge in LPG exports year-on-year, adding that Iran and Iraq were in talks to renew their gas deal.

On the other hand, Turkey also wants to extend the gas purchase contract from Iran, while the negotiations for gas export to Oman, the revival of the contract with Pakistan, and gas trade with Russia are ongoing, and the European countries are negotiating with Iran to import gas from Iran through Turkey; however, it has not yet come to fruition. At the same time, with the settlement of Turkmenistan’s debt in three installments, the volume of gas swap withTurkmenistan has increased from 4.5 to 8 mcm/d.

According to the latest statistical bulletin of the Organization of the Petroleum Exporting Countries (OPEC), Iran’s net gas export in 2022 and 2021 was about 18.79 and 18.43 billion cubic meters, respectively, and compared to 2020, it has grown by more than 60%. According to Chegeni, the jump in gas exports in the last two years took place while Iran has seriously entered the gas imbalance in the winter since 2021, but it has not only fulfilled its export obligations throughout the year but has also increased this amount.

Gas Supply to Armenia

Currently, Iran’s gas exports to Armenia are also carried out within the framework of the energy barter agreement between the two countries, and the negotiations of the expert delegations of the two countries have focused on the issue of the contract period, the amount of exports, and the exchange rate of electricity and gas. In this context and based on the new addendum, the volume of gas exported to Armenia has increased, the exchange ratio of gas with electricity has been revised in favor of NIGC, and the contract terms and conditionshave been extended until 2030.The Iran-Armenia gas pipeline may handle more than 1 bcm a year of natural gas, but only one-third of its capacity has been used.

Gas Exports to Oman

Relations between the Islamic Republic of Iran and the Sultanate of Oman are of particular importance due to the economic, geopolitical, and political characteristics of the two countries. Iran and Oman share a common sea border in the Strait of Hormuz, and the distance between the two countries reaches 37 kilometers at this point. The geopolitical importance of the Strait of Hormuz has caused the two countries to have long-standing security cooperation to maintain the security of maritime transport through this strait.

Oman has limited oil and gas resources in the Persian Gulf and has many weaknesses in this field. Therefore, it needs its neighbors to compensate for its energy needs.

Political and border issues and disputes between the two countries of Oman and the United Arab Emirates have made Oman not consider this pipeline a safe place to meet its long-term needs, and the United Arab Emirates may put pressure on Oman in this way. Oman can solve this problem in only one way, and that is Iran’s huge gas resources in the north of this country.

Currently, Iran is following several strategies regarding gas export to Oman, which include the integrated development of the Hengamfield, LNG export, and even Russian gas swap to Oman. In any case, the export of Iranian gas to this country is potentially on the agenda of the Ministry of Petroleum of the Islamic Republic of Iran; and Oman is seriously looking for the formation of these relations.

It seems that Iran’s gas export program to the Persian Gulf countries is a serious option on the agenda of the officials of the Ministry of Petroleum of the Islamic Republic of Iran, and this country intends to provide a suitable response to the needs of all gas requesting countries by forming a gas hub in Iran. The model of responding to the needs of these countries is different; however, with the formation of this hub in the Persian Gulf and Assaluyeh region, the wide dimensions of Iran’s gas relations with the countries of the region are defined.

Gas Hub

A gas hub is a place or an indicator for gas transactions, which includes gas from various sources such as domestic production, import via pipeline, and LNG. In these hubs, physical and financial transactions are made in the form of spot transactions in the form of cash and delivery of less than a week, and future transactions for longer dates and even more to increase the number of gas transactions and facilitate gas exchanges and lead to less physical delivery. Gas hubs in the world have started their work seriously since the late 1990s, and are formed in both physical and virtual forms.

The main task of these hubs is to establish communication in the field of buying selling and exchanging natural gas, delivery of natural gas based on future contracts and spot transactions, pricing of natural gas, and the like.

NISOC Develops 16 Oil, Gas Reservoirs

CEO of National Iranian South Oil Company (NISOC) Ali Reza Daneshi has said 16 oil and gas fields run by this company have been developed.

He said the achievement had been made despite decrepit installations at 28 oil reservoirs.

He added that implementation of feasibility studies on four more gas reservoirs were over, adding that for the first time in post-sanctions year, the first development oil project had been inaugurated.

Touching on increased oil production in the country, Daneshi said: "Under the 13th administration, NISOC accounts for the bulk of oil output hike."

He added that despite good status of production in NISOC-run areas, the life conditions were not favorable to service workers. He said that the staff and service workers had severe demands.

NISOC has implemented key projects including flare gas capture in Khuzestan and Kohguiluyeh and Boyer Ahmad Province (Persian Gulf Bidboland Petrochemical Plant) with a view to gathering 593 mcf/d of gas, as well as Ahvaz, Karoun, Ramhormoz, Masjed Soleyman and Maroun Petrochemical Plant with a view to capturing 249 mcf/d of gas. These projects are 56% completed, which would become operational in one and a half years.

Full Readiness for Stable Winter Gas Supply

CEO of Iranian Gas Transmission Company (IGTC) Gholam Abbas Hosseini has announced the successful overhaul of gas pipelines and compressor stations in the country, saying the company was ready to guarantee stable gas distribution next winter.

“Given the results of smart pigging and the length of pipelines and in light of planning, the overhaul of pipelines and installations is complete in order to have no problem during winter,” he said.

“With more than 39,000 km of pipelines and 90 compressor stations, this company is ready for constant gas transmission," he added.

Hosseini said Iran’s gas transmission capacity reached 273.8 bcm last calendar year.

He said that three gas compressor stations had become operational, while five more were being planned to come online.

Hosseini said operation of 1,152 km of high-pressure gas pipeline would be instrumental in the coming winter’s gas supply.

“IGTC is currently able to distribute 950 mcm/d of gas, which we hope would reach 1.1 bcm/d,” he added.

Gas Supply Renewal to Baghdad Due

CEO of National Iranian Gas Company (NIGC) Majid Chegeni has said Iran and Iraq would soon extend gas supply to power plants in Baghdad.

“A working group comprising Iranian and Iraqi experts is working on the extension of the contract for gas supply to Baghdad’s power plants so that it would be extended before the end of 2023,” he said.

Referring to a recent meeting between Iranian Minister of Petroleum Javad Owji and Iraq’s electricity ministerZiad Ali Fazel, during which the Iraqi side showed willingness for the development of Tehran-Baghdad gas relations, he said: “Currently, the two nations enjoy a high level of ties in the energy sector and both sides are willing to upgrade these ties.”

Chegeni said Iran has been supplying energy to Iraq for years, adding: “The agreement for selling gas to power plants in Baghdad Province was nearing its end, and the Iraqi side is seriously seeking to extend it.”

“There is necessary infrastructure for more gas transmission to Iraq,” said the NIGC chief.

“Iran and Iraq have good proposals with regard to gas trading, which would be discussed by joint working groups in the future,” he said.

Southern Iran Gas Output Up 2%

The head of dispatching of National Iranian Gas Company (NIGC), Saeed Aqili, has said that gas production in southern areas had grown 2%.

“Furthermore, more than 12 mcm of flare gas was gathered to be restored to the gas network,” he said.

“In the industrial sector, 2 bcm of more gas was delivered from the year before, which would mean more value-added expected from it,” he added.

Aqili said that the overhaul of refining and transmission facilities was completed in the current calendar year.

“The Gas Dispatching Center runs 39,000 km of network, 22 refineries and upstream industries in order to be able to steer the delivery of 850 mcm/d of gas across Iran,” he said.

Aqili said 93% of electricity generation in Iran depended on gas, adding that 5 bcm more gas was delivered to gas-fired power plants during the first eight months of the current calendar year.

Referring to gas storage, he said that 14% more gas was stored in the Shourijeh and Sarajeh storage tanks, adding that gas injection was increased from 810 to 820 lines in four days.

Power Plant Fuel Stored

Jalil Salari, CEO of National Iranian Oil Refining and Distribution Company (NIORDC) has said that fuel storage at power plants for winter use has increased 21%.

He said that 304 billion liters of products was distributed last calendar year, showing 11% growth year-on-year.

“If we pay attention to power plants and increase their output, we can save the equivalent of 47 billion barrels of fuel, which is a big figure,” he added.

Salari said 57 billion liters of products was planned to be distributed by pipeline last calendar year, which practically reached 68 billion liters as the pipelines' capacity was used up.

He said that maritime transportation of petroleum products reached 6.3 billion liters, which had been done on eight vessels.

Salari said that 1.8 billion liters of kerosene had been distributed among households last calendar year, adding that gasoline consumption was up 11% year-on-year.

 Minister Owji: OPEC+ Cooperation Positive

Iran’s Minister of Petroleum Javad Owji has given a positive assessment of cooperation among OPEC member states and their partners, collectively known as OPEC+.

“Our efforts are focused on institutionalizing cooperation with non-OPEC producers within the framework of the OPEC+ alliance,” he said.

Speaking following the 187th OPEC’s ministerial and OPEC+ 36th ministerial meeting, Owji said: "Member states clearly laid emphasis on the necessity of preserving the oil market stability and supporting OPECcollective decisions.”

“During the 36th ministerial meeting of OPEC+, it was noted that this alliance is closely watching global crude oil market conditions, as well as supply and demand balance. There is readiness for decision-making depending on oil market conditions, while OPEC+ would make required arrangements in favor of market stability,” he said.

“The oil market is experiencing a challenging period. Oil supply hike by some producers outside the OPEC+ alliance alongside doubts governing global economy, global market perspectives, oil market speculation and the consequences of such developments bear warning messages to oil market stability,” he added.

“OPEC+ agreements and ministerial meetings’ decisions have resulted in significant achievements consistent with the shared interests of OPEC and non-OPEC countries. Preserving this successful momentum in the future would be crucial for market stability and securing oil producers’ interests,” said Owji.

“What may be said from nowon, is that OPEC+ is regularly watching global oil market developments and effective factors, and like previous years, it would make necessary decisions to help stabilize the oil market,” he said.

“If the US and other top consumers in the world are worried about the oil market and energy supply security, it is due to US policy of pressure on OPEC+ and producers, politically-motivated pressure on some top oil and gas producers through unjust and unilateral sanctions, as well as stoking up geopolitical tensions through political intervention and supporting war in the Middle East,” said the minister.

“OPEC agreement and decisions contribute to eliminating oil market fluctuations, helping improve global economic conditions, encouraging investment in the global petroleum industry and supplying energy,” he said. “We believe that OPEC+ consensus and cooperation among top producers of oil would be the only option for global energy security in the short- and long-term.”

Several OPEC+ Voluntarily Cut Output

The OPEC Secretariat noted the announcement of several OPEC+ countries of additional voluntary cuts to the total of 2.2 mb/d, aimed at supporting the stability and balance of oil markets.

These voluntary cuts are calculated from the 2024 required production level as per the 35th OPEC Ministerial Meeting held on 4June 2023, and are in addition to the voluntary cuts previously announced in April 2023 and later extended until the end of 2024.

These additional voluntary cuts are announced by the following OPEC+ countries: Saudi Arabia (1,000 tb/d); Iraq (223 tb/d); United Arab Emirates (163 tb/d); Kuwait (135 tb/d); Kazakhstan (82 tb/d); Algeria (51 tb/d); and Oman (42 tb/d) starting 1st of January until the end of March 2024.

Afterwards, in order to support market stability, these voluntary cuts will be returned gradually subject to market conditions.

The above will be in addition to the announced voluntary cut by the Russian Federation of 500 tb/d for the same period (starting 1st of January until the end of March 2024), which will be made from the average export levels of the months of May and June of 2023, and will consist of 300 tb/d crude oil and 200 tb/d of refined products.

The group discussed 2024 output amid forecasts the market faces a potential surplus and as a 1 mb/d cut by Saudi Arabia was set to end next month.

The OPEC+ output of some 43 mb/d already reflects cuts of about mb/d aimed at supporting prices and stabilizing the market.

No Fuel Oil Burning in Tehran

Jafar Salari Nasab, the CEO of National Iranian Oil Products Distribution Company (NIOPDC), said no fuel oil was being burnt in Tehran.

“The standards of gasoil and gasoline distributed among fuel stations, particularly in Tehran, are clear,” he said, adding that the quality of fuel distributed in the country is regularly sampled and monitored.

He added that the gasoil and gasoline distributed in Tehran and other big megacities was entirely euro-grade.

Salari Nasab said sufficient euro-grade gasoil was supplied from the Arak, Isfahan, Tehran and Tabriz refineries, adding that surplus output was being distributed.

Noting that the sulfur content of euro-grade gasoil was below 10 ppm, he said: “The gasoil produced at refineries has received certificate while regulatory systems are regularly monitoring it.”

He said most fuel oil produced in the country was destined for export, adding: "We’re required to complete storage tanks for liquid fuel for power plants. Currently, power plant storage is at 80%, which is acceptable."

He added that NIGC was responsible for more than 85% of fuel use by power plants, which is natural gas.

At some power plants, he said, euro-grade gasoil is burnt. He said that power plants’ storage tanks were emptied and replenished three times last winter.

Salari Nasab said that nearly 300 ml/d of refined products was being distributed across the country, adding that about 110 ml/d of gasoline was being distributed in the country.

Salari Nasab said gasoline consumption last calendar year was up 13% year-on-year, adding that the euro-grade gasoline quality was higher than premium gasoline.

Iran Steps Into Shale Oil Extraction

The head of exploration division of National Iranian Oil Company (NIOC), Mehdi Fakour, has said that Iran has already stepped into shale oil cycle.

He said that shale oil extraction has already been tested on a lab and semi-industrial scale, adding: "The next phase is to build a plant. Iran has already entered the shale oil cycle."

“Iran has numerous shale oil plays, including Qali Kouh in Lorestan Province, where locally-developed shale oil extraction technology has been used. No foreign company has been involved,” he said.

Fakour said crude oil with the API gravity of 40 was rare in Iran, adding that shale oil would represent such API gravity.“We are trying to enhance this API,” he said.

He noted that the main task assigned to the NIOC Directorate of Exploration was to explore for hydrocarbon reserves, adding: “There is a variety of methods for the discovery of these reserves, which vary depending on conditions. However, the idealistic goal is discovery which would not change.”

“Without perseverance and new thought, no project would be completed and heavy costs would be imposed. If the current administration intends to finish the incomplete projects left from the previous administrations, it would take 15 years,” said Fakour.

He said that no other country can withstand war and sanctions for so long years while making progress, adding that Iran had defeated sanctions thanks to the creative mindset of youths.

“In order to make headway in a project, the objective should be clear while planning has to be made. Then, new methods, techniques and tactics would help overcome problems,” he added.

Petchem Equipment 80% Homegrown

CEO of National Petrochemical Company (NPC) Morteza Shah-Mirzaei has said that more than 80% of equipment and commodities needed by petrochemical projects has been supplied by local companies.

He said that 15 items used in the petrochemical industry had been developed by local knowledge-based companies.

Noting that NPC was focused upon local procurement of commodities and equipment, Shah-Mirzaei said under the 13th administration, about $10 billion had been spent on petrochemical projects commodity supply, 80% of which by domestic companies. The rest had been imported because they were mostly being used for the first time.

“Iranian manufacturers are currently providing services to neighboring and Southeast Asian nations. Nine Iranian manufacturing companies are among the leading exporters of equipment in global markets,” he said.

Shah-Mirzaei said the main strategy adopted by NPC was to complete the value chain development and support knowledge-based companies, domestic manufacturing and local development of catalysts.

“The government’s strategy is to make maximum use of installed capacity in the petrochemical industry by using domestic manufacturing,” he said.

He added that these projects would become operational with a nominal capacity of 3.8 million tonnes a year with a total investment of $4.2 billion.

In line with exploring opportunities and introducing investment, NPC has studied the vale chain of the petrochemical industry within the framework of 20 packages involving propylene, methanol, ethylene, aromatics and butylene.

Iran LNG to Yield $2.5bn

CEO of Iran Natural Gas Liquefaction Company (INGLC) Hadi Amir-Shaqaqi has said that the first phase of the Iran LNG project would earn the country $2.5 billion in revenue.

He said the project would also allow feeding gas, equivalent to two phases of the giant offshore South Pars gas field, to national gas grid.

Amir-Shaqaqi said the project had come out of eight years of stagnation to create 1,500 direct jobs.

“The first phase of the project is 53% completed, which involves subprojects like sweetening and liquefaction plants, storage tanks, connecting lines, offshore installations and mixed cycle power plant,” he said.

Amir-Shaqaqi said storage tanks included two storagetanks for storing propane and butane, each with capacity of 30,000 cubic meters, and three LNG storage tanks with capacity of 140,000 cubic meters reach. He added that the storage tanks were nearly complete.

“The next project would involve connecting lines which would include giant pipe racks, pipelines, boil-off compressors, loading arms, electricity equipment and related instruments,” he said.

“The main processing units include gas desalting and liquefaction projects. The desalting plant has two parallel trains, each receiving 28 mcm of sour gas to be processed. The first train is about 65% complete while the second one is 70% ready,” he said.

Amir-Shaqaqi said pre-commissioning of Units 11 and 12 of the desalting unit was expected in the current calendar year while the second train would become operational next year. 

“The Iran LNG project has two natural gas liquefaction trains with a total production and export capacity of 10.5 million tonnes of LNG a year,” he said.

Review of Gov’t Value Chain Completion

Issues pertaining to value chain completion in Iran’s oil and gas industry are instrumental to implementing the resilient economy policy. In one of its meetings last calendar year, the Resilient Economy Committee underscored the necessity of developing the oil and gas value chain as a prioritized project by the 13th administration. It involves 16 infrastructure projects which the Ministry of Petroleum is tasked with bringing online. That would clear the way for developing the value chain and leaving crude sales as key elements of economic resilience. The government is required to remove obstacles in implementing these projects and facilitate their implementation.Value chain completion in oil and gas projects is aimed at creating higher value from hydrocarbon resources.

Key Elements

The “oil and gas value chain development” project was adopted as one of the main strategic elements of energy security and economic resilience in January 2023. The government was tasked with taking steps to “reduce crude sales and instead increase and stabilize oil and gas chain revenue”. Upgrading 7 refineries, building 3 petro-refineries, implementing 2 petrochemical feedstock supply projects, and building 4 petrochemical plants constitute the four key elements in this project. A total of 16 initiatives and projects have been adopted for the development of the oil and gas value chain.

Upgrading the oil refineriesin Tabriz, Shiraz, Tehran, Isfahan, Bandar Abbas, Shazand and Abadan, building the 300 tb/d ShahidSoleimani, the 300 tb/d MorvaridMakran and the 120 tb/d MehrKhalij Farspetro-refinery, gathering 500 mcf/d of flare gas from the Persian Gulf Bidboland refinery, ethane recovery in 18 phases of South Pars, building the 550,000-tonne propane dehydrogenation (PDH) Alay Mahestan plant, building the 550,000-tonne PDH Tadbir petrochemical plant, building the 700,000-tonne PDH Pars petrochemical plant and building the 2.2-mt Kian petrochemical plant are among these projects.

Capacity Building for Projects

The government has been assignedthree tasks, namely: infrastructure development, steering, and facilitation. It is mainly focused on facilitation. Therefore, to remove obstacles in the way of implementing projects, it has to make necessary arrangements for the implementation of the project. The obstacles include financing and licensing, among other issues. The Resilient Economy Committee has sufficient capacity to make such arrangements. It is noteworthy that when it comes to financing, no budget share is to be allocated; rather, the government would resort to non-budget resources including bank investment, public resources, and foreign investment. It is finalizing a financing model in cooperation with relevant organs.

Oil Refinery Upgrade

Upgrading oil refineries in terms of both quality and quantity is aimed at responding to the shift in consumption from middle-distillate products to lighter ones like gasoline, enhancing the quality of products to international standards, reducing fuel oil production, cutting environmental pollution, supplying more gasoline and upgrading the quality of gasoline and gasoil to.

Euro-4 and Euro-5 grades. Given the increased gasoil and gasoline consumption in the country, embracing projects to upgrade oil refineries for fuel supply security, increasing value-added at refineries, upgrading the quality of petroleum products, and reducing environmental pollution are essential. Chief among them are the production of needle coke at the Shazand refinery and sponge coke at the Bandar Abbas refinery. Needle coke and sponge coke are respectively used in the steel and aluminum industry.

Iran’s steel and aluminum sectors respectively need 200,000 and 45,000 tonnes a year of coke, the bulk of which is imported for $100 million. Given the projected steel production capacity of 55 million tonnes by 2025, the steel industry would need 135,000 tonnes a year of coke. The needle coke production project at the Shazand refinery is being implemented with an investment of €300 million. The project is licensed by the Research Institute of Petroleum Industry (RIPI). For the first time in Iran, 70,000 tonnes of needle coke, 82,000 tonnes of light gasoil, 83,000 tonnes of heavy gasoil, 28,000 tonnes of naphtha, and 23,000 tonnes of LPG a  year would be produced. According to Majid Rajabi, the CEO of the Shazand oil refinery, the needle coke production project at the facility is 85% complete. Once online, it would be producing nearly 700,000 tonnes of coke, which would help supply local needs and let the country export this product.

The project to upgrade the quality of heavy products of the Bandar Abbas oil refinery is aimed at reducing fuel oil production and supplying higher-value and more environmentally friendly products with the focus being on sponge coke production for the aluminum manufacturing industry. Due to technical complexities and the need for relatively high investment, this project is divided into three subprojects, involving two utility and one coke manufacturing subproject. This €2.2 billion project is the first sponge coke production unit being built in Iran with technical know-how provided by RIPI. That would convert fuel oil, which is of low value, to higher-value products, thereby removing the need to import the product. Iran currently needs 300,000 tonnes a year of sponge coke, which is below the 400,000-tonne output expected at the Bandar Abbas refinery.

The 400,000-tonne annual production of sponge coke would yield $400 million, while grade-2 and grade-3 oil would yield $750 million per annum. By producing sponge coke for its aluminum industry, Iran would join the club of seven top countries producing sponge coke in the world.

3 Refinery-Integrated Petchem Plants

One of the Petroleum Ministry’s plans in the refining sector is to build refinery-integrated petrochemical complexes to diversify petrochemical feedstock and earn higher income from hydrocarbon resources. Apart from that, investors in this sector would benefit from the income produced by the value-added of converting crude oil and gas condensate to higher-value products. Sitting atop 33.98 tcm of gas in place, Iran is known to be the world’s third-largest gas producer. Ahmad Zamani, the director of coordination and supervision on production at National Iranian Gas Company (NIGC), 840-850 mcm/d of sweet gas is being produced in the country, which would be of great help in launching refinery-integrated petrochemical plants. The experience of various countries including China, Japan, the United States, and India shows that they have developed their refinery-integrated petrochemical sector to generate a lucrative product for their products. Therefore, given the availability of feedstock for such facilities as well as growing markets for petrochemicals and increased local demand for fuel, such facilities are pretty essential. There are permits for 13 refinery-integrated petrochemical projects in the country, which would be fed with crude oil and gas condensate. Three of them, which were mentioned above, are to be constructed. The main point with these projects is their modality of financing, which would be done through domestic and foreign investment.

ShahidSoleimani Project

JalilSalari, the CEO of National Iranian Oil Refining and Distribution Company (NIORDC), has said that construction of the ShahidSoleimani refinery-integrated complex would be done in four phases: one phase of utility, two phases of processing units, and one petrochemical phase. Once on stream, it would supply fuel (70%) and chemicals (30%).It would be the first project of this kind – integrating a petrochemical plant into a refinery – in the country. The purpose of refinery-integrated petrochemical complexes is to switch from mererefineries to such facilities to generate value and put an end to crude oil sales.

MorvaridMakran

This megaproject is expected to be constructed in two phases over 60 months. It would cost more than $8 billion while its Nelson complexity index would be 13.5. This 300 tb/d facility would be a state project aimed at enhancing the refining capacity and reducing crude sales.This complex would be built inJask Port off the Gulf of Oman. Maximum use of domestically manufactured equipment and feedstock availability are among the specifications of this project which is aimed at preventing gasoline imports among other advantages. The project is being built by Makran Energy Mofid Development Company and is expected to come online by 2026. Sprawling on 716 ha of land, it has always obtained anenvironmental license. Heavy crude oil would be fed into the MorvaridMakran complex to supply such products as gasoline, gasoil, LPG, and chemicals.

MehrKhalij Fars

The ground was broken for the first fully Iranian refinery-integrated petrochemical complex close to the Persian Gulf Star refinery. The complex, named MehrKhalij Fars, is under construction 18 km northwest of Bandar Abbas. The facility, which would have the capacity to process 120 tb/d of condensate, is set to cost €470 million. The two-phase project would be built on 65 ha of land. The complex is forecast to come online early next year at the latest.

Petchem Feedstock

Iran’s petrochemical industry produced nearly 70 million tonnes of products last calendar year. There are a total of 70 operational petrochemical plants with a production capacity of 92 million tonnes. Gas is the main feedstock of petrochemical plants in Iran. One proposed solution to stabilize the feedstock supply to petrochemical plants is to gather flare gas from oil and gas fields and recover ethane from gas refineries to be fed into petrochemical complexes. To that end, the project for flare gas gathering at the Persian Gulf Bidboland refinery and ethane recovery from 18 phases of South Pars are on the agenda. The refinery can process more than 56 mcm/d of flare gas. At full capacity, the flare gas gathering project wouldnearly cost Iran $1.5 billion a year. Furthermore, flare gas capture in East Karoun would save more than 6 bcm/y of gas.

The ethane recovery project is planned to increase from

the current 67% to 78% by modifying the equipment of refining units. The recovered ethane would total 1.3 million tonnes a year, which would be valued at $315 million. That would favor the environment and be instrumental in the completion of the value chain in the downstream sector. To that effect, a memorandum was signed between the Ministry of Petroleum and an Iranian company for the recovery of ethane from 9 refineries of the South Pars Gas Complex (SPGC).

Minister of Petroleum JavadOwji has said that more than 700 mcm/d of gas has already been recovered from South Pars, which would increase as SP11 has come online. Currently, 66% of South Pars refineries’ output is recovered while the rest is fed into the national trunkline.The first ethane recovery project in the country has become operational at the Parsian gas refinery. This project is expected to recover ethane from 9 refineries in South Pars, which would earn the country $250-300 million in annual revenue.The nine refineries would yield 1.1 million tonnes of ethane per annum.

4 Petchem Projects

In line with the development of the LPG value chain in the country and propylene production, a license has been given for 13 propane dehydrogenation projects, three of which have been short-listed. PDH is a process that converts a propane feedstock to propylene which is used commonly in various petrochemical applications.As one of the “on-purpose” propylene production routes, PDH has recently received much attention, and propylene production capacity via PDH is slated to grow rapidly over the next several years. Dozens of new PDH installations have been announced worldwide, and many of them are already under construction. The single feed/single product feature is one of the most attractive aspects of PDH, especially for propylene derivative producers looking to back-integrate for a secure and cost-effective source of propylene.

Iran is currently producing about 1.2 mt of propylene, which is not enough for the 4 mt needs of industries. Furthermore, propylene value chain imports were valued at $1 billion last calendar year, which would be equal to the investment required for two PDH units.

Despite its simple chemistry, industrial implementation of PDH is very complicated owing to side reactions such as deep dehydrogenation, hydrogenolysis, cracking, polymerization, and coke formation. Important aspects in catalytic dehydrogenation of propane entail near-equilibrium conversion while minimizing side reactions and coke formation. Historically, catalyst design breakthroughs have made major contributions to the development of commercial PDH process technologies. Significant efforts to improve process configurations and catalyst formulations are still being undertaken.

Details

At the Alay Mahestan petrochemical project, a PDH unit would be established, and then propylene would be converted to PP. The project, which is 17% complete, has a 450,000-tonne capacity.

Another project is the Tabdir PDH unit which would receive $1 billion in investment. The Pars PDH project is another one to produce 600,000 tonnes of propylene and subsequently 500,000 tonnes of PP.

The Kian petrochemical project is another oil and gas value chain completion project. Its first phase includes olefin (ethylene, propylene, benzene, and butadiene) and polyolefin (varieties of HDPE) while the second phase would include propylene oxide, ethylene benzene, styrene monomer, and exo-alcohol. The project has four famous licensors (Linde, BASF, Uhde, and Mitsubishi). It has the highest capacity to produce olefin, polyolefin, and aromatic products in a single site (more than 3.2 mt a year) and implement a benzene and propylene value chain simultaneously. The Kian plant would supply feedstock to polyolefin, polystyrene, and PTA units among others. Construction of this plant commenced in March 2021.

Iran Recoverable H/C Reserves up 2.6bn Barrels

The US Geological Survey (USGS) has singled out Iran, Russia, and Iraq as the top three nations with massive hydrocarbon reserves in the future. Therefore, exploration is instrumental to new oil and gas find in these countries. Currently, 26 exploration blocks are active in Iran where Minister of Petroleum Javad Owji has announced the discovery of 4 new oil and gas fields, which would add 2.6 billion barrels to the recoverable oil and gas reserves.

9 SedimentaryBasins

In Iran, more than 70% of gas and more than 50% of oil reserves has been discovered over the past 43 years. Still, huge reserves remain to be discovered. All across the globe, there are 200 sedimentary basins. Some regional nations like Saudi Arabia, the United Arab Emirates, and Qatar have one sedimentary basin each. But Iran is one of the best with 9 sedimentary areas, 3 of which are among the best-known in the world. The Zagros area is home to the highest hydrocarbon reserves. Discovery of reserves in the Persian Gulf and Mountain Zagros has offered Iran special opportunities. Currently, 16 new exploration blocks have been identified in Iran, bringing the total to 26.

Announcing the new finds, Owji named the Cheshmeh Shour gas field in northeastern Iran, the Hirakan oil field in Golestan Province, and the Tangou and Genaveh oil fields in Bushehr Province.

Details

Oil exploration in the Hirakan field began in 2021 with the drilling of the Hirakan-1 exploration well. Oil was proven to exist in this field after drilling hit a depth of 2,971 meters a year after exploration had begun. This field, which contains significant heavy crude oil reserves, lies 30 km north of the city of Gorgan in northern Iran.

The Genaveh field lies in the coastal part of Bushehr Province. Exploration drilling began there in 2020. As soon as drilling hit the depth of 4,572 meters, significant liquid hydrocarbon reserves were struck in the Sarvak reservoir.

Regarding the Tangou field, after assurances were given of the existence of reservoirs, the drilling to the Tangou-2 exploration well was considered with the main objective having been to assess the hydrocarbon potential of Asmari, Sarvak, Kajdomi, Daryan, Gadvan, and Fahlyan formations in this field. Exploration started in 2021 and lasted 1 1/2 years with a drilling depth of 4,150 meters. The Tangou field, south of the Rag Sefid oil/gas field, is located near the city of Hendijan in Khuzestan Province. Its reserves have proven to be commercially viable.

As far as the Cheshmeh gas field is concerned, it is important to note that the drilling of the CheshmehShourWell 1began in 2022, only to reach significant gas deposits at a depth of 4,505 meters. It is located in the northeast of Khorasan Razavi Province, near the Khangiran field.

Gas Exploration

An outstanding feature of recent explorations is the focus on gas deposits. It seems to be in full coordination with the energy strategy set by the Ministry of Petroleum on increasing gas reserves and production.

Regarding recent discoveries, it has to be recalled that the replacement rate is 87% in the liquid hydrocarbon sector. What has increased Iran's exploration activity over the past two years is 3D seismic surveys all across Iran. In the meantime, a 3D seismic survey has surged 300%, which would herald successful discovery in the future. Given the growth in seismic surveys in the past two years, the number of drilling rigs has increased 100% over the same period.

Top Exploration Spot

Iran claims the top spot in exploration when compared with regional nations like Saudi Arabia, Kuwait, Iraq, Qatar, and the UAE. Given its current reserves and production, Iranwould be able to keep supplying oil and gas for 100 years. CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr has said that 2.5 billion barrels of oil equivalent have been added to national hydrocarbon reserves since the 13th administration took office.

Under the 7th National Economic Development Plan, €1.5 billion is expected to be invested in drilling 38 onshore and 7 offshore exploration wells, conducting 6,750 sq km of 2D seismic survey, 6,000 sq km of 3D seismic survey as well as 10,000 sq km of offshore 3D seismic survey. Furthermore, engaging 6 onshore drilling rigs, drilling 6 wells, and testing 4 exploration wells has ended. In total, 21.514 km of onshore exploration drilling has been carried out.

Exploration Projects

Exploration activities have picked up speed in Iran. A roadmap has been drawn for oil and gas exploration, as part of Iran’s petroleum industry development plan. According to the NIOC Directorate of Exploration, identification of the jointly-owned border structures constitutes the top priority, to be followed by gas structures and Persian Gulf structures. In the meantime, a five-year exploration plan is enshrined in the 7th National Development Plan. Furthermore, a 10-year plan has progressed 70% while a 20-year plan is being formulated.

Mehdi Fakour, the head of exploration at NIOC, said all exploration wells drilled last calendar year had proven to be fruitful.

Exploration is currently underway in 19 provinces and cities.Guilan, West Azarbaijan, East Azarbaijan, Zanjan, Miyaneh, and Ardebil are experiencing their first exploration operations. There is good potential for exploration. For instance, in South Zagros alone, more than 16 billion barrels are estimated to exist.

New Exploration Blocks

Identifying exploration areas in Iran is a well-formulated plan pursued by NIOC. According to Fakour, an offshore exploration block in the Persian Gulf is estimated to hold 30 tcf of gas.Exploration activities are also underway outside exploration blocks.

The discovery of the Bamdad block in Hormuzgan Province is an exploration achievement in Iran, which has been marked by prospecting and 2D seismic lines. It has four fields with estimated total reserves of 23,000 bcm of gas.

Gas hydrate exploration in the Gulf of Oman is also being pursued in the exploration sector. Fakour said preliminary studies were close to completion in the Gulf of Oman.

Shale Oil Knowhow

Identifying shale oil and gas in Lorestan Province is another project underway for hydrocarbon exploration.What matters here is to acquire technical savvy to facilitate the identification of these resources. The NIOC Directorate of Exploration has mastered the necessary technical know-howformulated for shale oil exploration.

The shale oil reservoir in QaliKouh in Lorestan is estimated to hold 2 billion barrels of oil in place.

Catalysts for Sophisticated Refining Units

Catalyst use is of paramount significance at refineries for producing fuel, as well as middle-distillate and final products needed by society. Currently, the residual fluid catalytic cracking (RFCC) unit of the IKORCand the fluid catalytic cracking (FCC) unit of the Abadan oil refinery are two leading catalyst users among Iranian refining units. Both Abadan refinery and IKORCare using domestically manufactured catalysts at RFCC and crude desulfurization (RCD) units. This catalyst is set to be used at Isfahan and Tehran refineries shortly.

IKORCis currently using 4,000 tonnes a day of catalyst, while Abadan’s consumption reaches 1,000 tonnes a day. The Isfahan refinery is also planning to build an RFCC unit, which would help bring its Euro-5 gasoline production by 8.5 ml/d.

Catalyst Use in Fuel Production

The RFCC process is one of the most significant refining processes for transforming heavy and low-value oil fractions into high-value and light products. This unit is fed with gasoil obtained from the vacuum column. It supplies light gases, gasoline, and gasoil. Meantime, FCC is used for more gasoline production in the refining process. The difference between this method and vacuum and atmospheric distillation lies in the physical separation process. RFCC is a chemical process in which a catalyst produces smaller new molecules.

Over recent years, as new development projects have come online at refineries to upgrade the refining pattern both quantitatively and qualitatively, numerous processing units have been designed and built. For instance, in 2011 and 2012, the Abadan refineryand IKORClaunched their FCC and RFCC units, which resulted in a significant increase in high-value and high-quality production like gasoline, while low-value products like fuel oil saw a decline in output. That is while the RFCC and FCC processing units need significant amounts of catalysts for their nominal production.

Reza Kazemnejad, director of research and technology at National Iranian Oil Refining and Distribution Company (NIORDC), has said homegrown catalyst use is on the increase. He has noted that the application of modern methods in catalyst production for refining units would soon bring about economic growth and more profitability for refineries.

RFCC Catalyst Production

Imam Khomeini Oil Refinery Company (IKORC)has been a leading buyer of catalysts from domestic companies. Local manufacturers are currently filling nearly 85% of catalyst, absorbent, and chemical substances needs in the country. It was in June that the catalyst used at the RFCC unit of the IKORC was built in Iran. Iran is currently the 6th producer of RFCC catalysts in the world. Euro-4 gasoline is currently produced in Iran, using homegrown catalysts.

The main products of the RFCC unit of the IKORC are gasoline, LPG, and propylene.

Majid Rajabi, CEO of the refinery, said after sanctions were tightened against Iran, catalyst supply was a major cause of concern for the refinery. Thanks to the domestic production of such catalysts, the problem has been resolved. Iran used to import catalysts for the RFCC unit mainly from China, Russia, and Germany. In addition to the hard currencyspending, catalyst import was time-consuming. But now, Iran no longer depends on imports for this refinery.

The locally manufactured catalyst for the RFCC unit is similar to foreign ones, thereby enjoying high quality and standards, not to mention its competitive advantages. This breakthrough can also help supply the needs of other refineries like Isfahan and Abadan.

RCD Catalyst

Another key catalyst in refining units is the one used in the RCD unit. Iranian researchers at the Research Institute of Petroleum Industry (RIPI) and anIranianknowledge-based company recently managed to manufacture this catalyst to be used at the IKORC.

In the first step, one tonne a year of this catalyst was used. It was loaded at the RCD unit of the refinery last February for the test, which proved to be successful.

Jalil Salari, CEO of NIORDC, has said domestic manufacturing of catalysts for the RCD unit was highly significant and valuable.

Knowledge-based companies in Iran are currently competing with leading foreign companies. Iranian-made catalyst is currently used for gasoline production overseas.

The RCD unit catalyst production sets an example for more catalysts to be manufactured domestically. This model would be used in other units, too.

RCD, RFCC Units

Iranian-made catalysts are currently used at the Imam Khomeini refinery. The CEO of this refinery has said that all catalysts used at this refinery are supplied domestically. This refinery uses more than 10 varieties of catalysts. The IKORCis the only refining unit using RCD catalysts because of its contribution to the gasoline production process.

The RCD unit has two trains of five reactors, which need to be loaded with these catalysts, and a total of 750 tonnes of catalyst is needed for this number of reactors. By letting petroleum materials go through these reactors and extracting the sulfur and metals of the petroleum materials, Euro-grade gasoline is obtained.

It must be remembered that 1,500 tonnes of catalyst should be used at the reactors of this refineryfor 15 months. It would be a time-consuming process, which has been facilitated thanks to local manufacturing.

Catalyst imports cost the refinery €10 million each time, but now the hard currency is saved as all catalysts used at the IKORCare manufactured domestically.

It is noteworthy that for the first time in Iran, the hydrotreating unit of the RCD unit has been built with a capacity of 69 tb/d to cut sulfur, nitrogen, and metal output. The hydrotreating unit is facilitating the conversion of heavy fuel oil to gasoline and other lighter products.

RCD is a process for desulfurizing residues from the distillation tower. This process is mainly aimed at reducing HDS and other pollutants from the feedstock for the RFCC unit. Meantime, reducing catalyst use in the RFCC unit is economically justified, which explains the location of this unit at the refinery.

The RFCC unit of the IKORChas been designed and built to process 95 tb/d of crude oil to supply gasoline, LPT, and light diesel. It can produce 8 ml/d of high-octane gasoline, which would be distributed after hydrotreating.

Block 30 Offshore Mexico Drilling Planned

WintershallDea has submitted an appraisal drilling plan to build on its recent Kan oil discovery in Block 30 in the shallow-water Sureste Basin offshore Mexico.

According to partner Harbour Energy, the partners aim to start drilling next year. Exploration started in October 2022 and led to the Upper Miocene Kan-1 discovery this April, drilled by the Borr Ran.

Elsewhere, Harbour reported in an operations update, drilling continues on the Layaran prospect, the first of a multi-well campaign in the Andaman Sea offshore Indonesia, designed to build on last year’s Timpan-1 gas discovery.

Galp Spuds Mopane Wildcat Offshore Namibia

The Hercules semisubmersible has spud the Mopane 2X exploration well in the Orange Basin offshore Namibia for operator GalpEnergia.

The location is in the southern part of PEL 83. According to partner Custos, it is the first of two wells to be drilled by Hercules under a contract that includes an option for testing.

PEL 83 is to the north of PEL 39, where Shell continues exploration and appraisal drilling, building on last year’s Graff-1, La Rona-1 and Jonker-1 discoveries.

Earlier this month, Galp commissioned Fugro to perform an environmental and geophysical survey offshore Namibia related to a planned exploration program.

Equinor Completes Four Wells

Four of five new infill wells have been drilled at Equinor’sStatfjordØst development in the Norwegian North Sea, according to Longboat Energy.

In July Longboat JAPEX announced a signed agreement with partner INPEX Idemitsu to acquire a 9.6% interest in PL 089, equating to a 4.8% unitized interest in the StatfjordØst Unit and a 4.32% unitized interest in the Sygna Unit, for $12.75 million. The transaction should complete early in 2024.

All wells at the StatfjordØst and Sygna fields should be fully onstream in January, Longboat added.

StatfjordØst is 7 km northeast of the Statfjord Field complex in water depths of up to 190 m and produces oil and gas through two subsea production templates and one water injection template tied back to the Statfjord C platform.

Fugro Assessing South Korean Sitre

Kredo Offshore has commissioned Fugro to perform metocean and wind measurements offshore Yeonggwang County in western South Korea.

Fugro’s scope covers the use of technology, provisioning, operations, maintenance and data reporting.

Initial investigations are in progress at the project site to determine the suitability for an offshore wind development, with four Seawatch Lidar buoys deployed to take readings from wind, waves, current and meteorological conditions.

Siem Vessel Booked for One-Year Support Contract

Siem Offshore has secured a firm one-year contract with an unnamed major oil company in Australia for use of the Siem Sapphire anchorhandler tug support vessel.

The contract is due to start next month and run through, with options to extend by up to six months.

Meanwhile, Suncor Energy has restarted operations through the Terra Nova FPSO offshore Newfoundland and Labrador.

This follows an extended shutdown of the field to complete the Terra Nova Asset Life Extension project, which involved upgrade works to the vessel.

Suncor expects production to ramp up over the coming months.

Shale Oil Economy; Ups and Downs

Shuaib Bahman

Energy markets have experienced twists and turns throughout history. The oil market is a case in point, having seen a great deal of changes ever since it came into existence. New players have regularly joined the oil market, leaving significant impacts thereon. Shale oil discovery, extraction, and processing in the US, known as the Shale Revolution, is one of the most important developments to have transpired in the oil market so far. Over the past decade, shale oil extraction in countries like the US has ended OPEC’s monopoly on oil supply and pricing globally.

However, shale oil production has not always followed a constant or growing trend. This type of oil has been heavily affected by market fluctuations in the past years, and with any increase or decline in prices, its profitability has been challenged. Although currently, the price of oil in the world markets has created a relative safety margin for shale oil extraction, it is important to evaluate the prospects of this industry.

Challenges

The production cost of crude oil in the Persian Gulf countries varies from country to country and is usually less than $10a barrel. This is whilein somecountries like Russia and most African and Asian countries, the cost per barrel is higher than that of the Persian Gulf countries. This has made the characteristic of such oil to be the low cost of its extraction, and even in the case of large fluctuations in the market, the production of oil is still affordable. This is while shale oil is more exposed to damage caused by market fluctuations and price changes.

In addition, shale oil extraction is simply not possible and requires advanced technical equipment. This has made the production of shale oil more expensive than conventional oil. For this reason, if the price level of oil decreases from a certain amount that includes the cost of extracting shale oil, or even equals it, then the production of this type of oil will not be very economical.Based on this, only those companies that can cover production costs will be able to continue competing in global markets. However, the number of such companies is limited, and for this reason, producers are looking for a major reduction in the costs of the shale oil industry so that they do not have to shut down their unprofitable facilities due to fluctuations.

As COVID-19 swept the world and Russia and Saudi Arabia fueled a price war against the West after the Ukraine crisis, many experts expected the slow collapse of the shale oil industry over the next five years. Because small companies that had gone bankrupt were acquired by big manufacturers. Some estimates showed that instead of 60 active companies in the US stock market, the number of these companies will decrease to only 10 after five years.

US Dream

The extraction of shale oil has made the United States the leader of the world’s oil-producing countries, surpassing even Saudi Arabia and Russia. Currently, the US is the world’slargest shale oilproducer, and the average amount of extraction in this country is about 4.3 mb/d.The number of direct workers in the US shale oil industry is approximately 350,000 people, working on approximately 300,000 wells spread across 21 US states. On a larger scale, the US shale oil industry is linked to a range of economic activities that employ about 1.7 million people.

Democrats mainly oppose the development of shale oil exploitation due to their programs in the field of renewable energy sources, but considering the high employment and income generation of this type of oil for the US, neither political party can ignore it in forthcoming elections. Therefore, any fluctuations in the world markets that lead to a major reduction in prices can take the shale oil industry out of the circle of profitability. Under such circumstances, the first action of US oil companies is to adjust the manpower. As in the past years, these companies have been forced to adopt strict austerity measures many times and have fired many workers. Undoubtedly, such a process can significantly affect important elections in America. Especially since the US shale oil industry is mainlyconcentrated in pro-Republican states like Montana, Texas, Ohio, and Oklahoma.

Meanwhile, most producers are extracting shale oil between $55 and $65 a barrel, and only 16 US shale companies operate in fields where the average cost of production from new wells is below $35 a barrel. As a result, when oil reaches the threshold of $65, oil production will no longer be profitable for some companies.Also, when this threshold is reduced to $55, another group of companies will consider their mining unprofitable. For this reason, in recent years, the number of idle rigs has increased and employees in the shale oil industry have faced layoffs.

However, it seems that the increase in oil prices due to various reasons has kept the shale oil industry alive and dynamic in countries such as the US. The important point is the technological advances that can reduce the cost of shale oil extraction quicklyin such a way that shale oil, like conventional oil, can cope with fluctuations.

North-South Corridor, Iran Gas Initiative

Shuaib Bahman

Geographical location has always been a key factor for Iran connecting East to West and North to South. The historical record also shows that Iran has been instrumental in international trading during various periods, the most important of which is itsactive presence on the Silk Road. Furthermore, Iran’s location between the Persian Gulf and the Caspian Sea presents it as a secure, economical, and short route for all nations in the world. Iran has also 15 neighbors, serving as a link between them.

In the past years, the desire has been raised many times that Iran can connect its landlocked neighboring countries, such as the countries of Central Asia and the Caucasus, to the warm waters of the Persian Gulf. Of course, some neighboring countries such as Russia have also sought to achieve this goal throughout history, to be able to access the warm waters of the Persian Gulf. Now there is a situation where Iran can use its transit advantage in the north-south route through participation in swap and gas transfer projects.

Project for All

In the last two years, Iran has managed to surpass active diplomacy in the field of energy. The growth of Iran’s oil exports despite the tightening of US sanctions is considered one of the important achievements of Iran’s active diplomacy. Another turning point was the resolution of problems with Turkmenistan and the resumption of gas swaps to the Republic of Azerbaijan, which brought significant benefits to Iran. In the meantime, Iran’s petroleum minister recently presented an innovative plan called the North-South Gas Corridor.Under this plan, Iran can transport gas exported from Russia and Central Asian countries and deliver it to buyers in the Persian Gulf. Such a plan is important from different aspects. It opens up new markets to Russia and Central Asian countries and promotes Iran as a safe passage for energy transfer. Meantime, the access of buying countries to energy is also facilitated.

In the meantime, it is noteworthy that Iran and the countries of the region have successful experiences in the field of gas swap and transmission. One of the most important projects in this field pertains to the gas swap between Turkmenistan and the Republic of Azerbaijan, which has been profitable for all three countries. Based on this, the innovative plan of the North-South Gas Corridor can be profitable for all the countries involved in this project. Among the components that provide the way to realize this idea and further convergence of the countries of the region, the following can be mentioned:

Iran’s unique geographical position can link Russia and Central Asian nations to the Persian Gulf in the south and give Iran the advantage of gas swap, transmission, and sales.
A pipeline connecting Russia to Kazakhstan, Uzbekistan, Turkmenistan, and Iran can facilitate agreements and contribute to their quick implementation.
Considering the deep differences with Europe, Russia needs alternative markets, and in this regard, it looks at Iran as one of its new gas markets for export to other parts of the world.
The membership of the regional countries in the Shanghai Cooperation Organization (SCO) has created a good opportunity to reach a multilateral agreement on gas transit and the establishment of a North-South gas corridor in the Central Asian region.In this organization, on the one hand, Iran and Russia have the largest oil and gas reserves in the world, and on the other hand, India and China are present, which are the largest energy consumers in the world. As a result, the SCO can be a suitable platform for the development of cooperation in the field of energy among the countries of the region.

Iran Advantages

The future of the world and the international system, in addition to military power, is formed based on the level of economic and commercial interactions of a country with other countries, and the greater the economic entanglement in a country’s foreign relations with its neighbors and other countries, the more power that country will have in the future. It has a global and international economy and plays a more prominent role.One of the important and effective indicators in economic and commercial interactions is the level of participation of countries in transit projects and their involvement with other countries in economic relations. The main and determining element in the field of transit is not only moving and carrying cargo, but this route can also include energy transmission lines, which happens to have a great strategic value.

Therefore, the creation of the North-South gas corridor would have significant benefits in economic and political fields for Iran, among which the following can be mentioned:

While transferring gas from the northern countries to the southern markets, Iran can supply part of the gas it needs in different provinces. This measure both reduces the cost of gas transmission in Iran’s internal network and helps the stability of Iran’s gas network.
Construction of the North-South Gas Corridor will increase the political alignment and interdependence of the contracting parties to Iran, which is important from a political and security point of view.
Construction of the North-South gas corridor will improve the geopolitical position of Iran, which is very important for Tehran from the transit point of view.
Construction of the North-South gas corridor means the ineffectiveness of American economic sanctions and the efforts of the West to isolate Iran in regional and international interactions.

In general, the development of cooperation in the field of energy is one of the important goals of Iran in the regional and international fields. Withinsucha framework, Iran has various plans to use its geographical advantages in swaps and energy transfer.Based on this, the construction of the North-South Gas Corridor can be a significant and unforgivable opportunity for all countries in the region. Because each of them benefits as much as Iran from such a plan. Russia and other gas-producing countries in Central Asia will find a new route to transfer their gas and can diversify the previous routes and buyers. At the same time, Central Asian countries will also benefit from gas transit.

History of Oil Pipeline in Iran

The NAFT A.P.O.C. Magazine, the news bulletin of Anglo-Persian Oil Company (APOC) in its July 1929 issue ran an in-depth report on the history of the installation of oil pipeline in Iran. Excerpts from the report are as follows:

The first oil pipeline ever constructed in Iran could carry 9 million barrels of petroleum products a month. Its only pumping station in Tombi received the entire input before crossing Kuh-e Emam Reza and Tal Khayat which separated the oil fields and the plain.

The height of the highest section of the pipeline is 1,300 feet (396 meters), while the Tombi station is 600 feet (183 meters) high. The pipeline had a combined structure, comprising a 2-mile (3.2 km) 8-inch pipeline between the oil fields’ reservoir and the Tombi pumping station, a 46-mile (74 km) 6-inch pipeline between Tombi and Vais,and a 90-mile (145 km) 8-inch pipeline extending as far away as Abadan. The higher diameter chosen for the final section of the pipeline was due to the increased output predicted from NaftSefid.

The toughest part of the job was to carry the pipes to where they were to be installed. It was seen as difficult in 1929 despite technological progress and transport facilities. Once in Abadan, the pipes were carried on cruise ships to ferries that could sail more easily in the upriver Karoun, just down the Ahvaz rapids. A simple look at the pipeline route shows that except for the Tombi-Ab Ganji section, the pipeline extends along the Karun River, facilitating pipe transport. The first cargo of pipes had to be unloaded in Ahvaz before being transferred on steam tramways about 2 miles (3,200 km) farther. Then the pipes were loaded on lighter ferries and towed to the destination on steam vessels. These pipes were finally taken on the railroad. The speed of transfer of pipes depended on the depth of water, which indicated how much could be loaded on a ferry. Later autumn, particularly in downriver Karoun, specific arrangements were needed.

Studebaker Wagon

Transporting pipes has seen major changes ever since the first pipeline was installed in 1910. Up to 1921, Jim wagons were common in the plains, which were drawn by eight mules. Of course, later on, two Marshall Tractors were used for that purpose. The maximum length of pipes that were transportable a day was 4 pieces of 8-inch pipes or 60 pieces of 6-inch pipes, i.e. 400 meters for each group. Despite this low speed, pipe installation could not keep them busy.

When the second pipeline was being installed in 1914, Studebaker wagons with the capacity of carrying 1 tonne were added to the caravan, which was drawn by 6 mules.

When the pipeline was being developed in 1921, more industrial machinery was engaged in transport, including 120- and 75-horsepower Holt tractors that towed 10-tonne Caterpillar trailers. These industrial units offered valuable services.

Scammell Lorries

In the following rounds of pipeline development, 12-tonne Scammell lorries were used to carry pipes from the jetty to the construction sites.Such progress significantly increased the speed of pipeline installation, which had then reached 141 pieces of 12-inch pipe per day.

The most difficult part of the job was to take the pipes to the hilltop. When the first pipe was under construction, it was done by two mules that moved one behind another. Once 10-inch pipes were added, four mules were needed to carry out the task. Special saddles were installed on each mule, which were similar to those used for batteries for the army.  The distance between mules was regulated by a 3-inch pipe. That was a good method for carrying pipes of up to 10 inches in diameter. But when 12-inch pipes were manufactured, transporting them became a major challenge.

Laying pipes in the plain is easy. The pipe was placed in a canal 2 feet (61 cm) wide and 2 feet and 6 inches (79 cm) deep before being covered with soil. Wherever the soil was corrosive, the pipes were installed on the surface. The problem is different in the hills. A canalof at least 10 feet (30 meters) high had to be made to let workers work. In case of pipe rupture, reparation was possible.

After the pipes arrived at the site and the canal was ready, the staff were ready for installation. Groups of 50 or so workers worked under the supervision of a European engineer. The job was done part by part and the foreman divided the job.

First, the cap of the pipe opening is removed and the inside of the pipes and their internal and external caps are cleaned to ensure the absence of contamination. Then, the male and female heads that are supposed to be joined are smeared with special oil and after that, it is time to install the pipes. They are lifted with special rods and placed inside rings of the same size as the pipe. To ensure the alignment of the male and female ends of the two pipes, the ends of the collars are placed on jacks. The boards that are dug on the channel bear the weight of the end of the pipeline and the jacks.

Since the ends of the two sides of the pipe are cut in a conical shape, their movement and connection are easy in the first few turns. After that, a rope is used to continue the work. 2 supporting tongs are placed behind the collar of the last installed pipe, and 6 pairs of clamps, with 6 people working on each of them, tighten the pipe to the rest of the line. All this time, the collar is hammered so that it does not tilt. All pipes are coated with anti-rust paint before installation inside the channel.

Wherever the environmental conditions require, the pipes are bent to match the slope of the ground. This work is done in a cold way, similar to the process of bending rails in railways. In places where the corrosiveness of the soil in the region requires the pipes to pass above the ground, considering that the temperature conditions and environmental factors have a greater impact on the pipes, it is necessary to slightly bend one out of every 10 pipes. And without an unnecessary increase in the length of the tube, give it a zigzag shape.

All these facilities and predictions may look extravagant, but all this equipment should operate round the clock to avoid any crude oil supply cut to the refinery.