Investment Opportunities in Iran’s Oil Industry

Ali Forouzandeh

Director General of Public Relations

The petroleum industry needsto absorb $200 billion in investment in the coming years to develop its projects mainly in the upstream and downstream sectors. That was announced recently by Minister of Petroleum Javad Owji who said that agreements had been signed under the 13th administration to that end. He added that there were still attractive opportunities for investment in the petroleum industry. He said Iran welcomed foreign and domestic investment within the framework of Iranian law.

The main upstream projects prioritized by the Ministry of Petroleum include maintaining crude oil and natural gas production capacity, development of jointly-owned oil and gas fields, EOR and IOR projects, completing development of the South Pars gas field, and building gas compressor stations, developing other joint gas fields, developing Kish and North Pars gas fields, crash plan for enhancing gas production from ICOFC-run fields, as well as development of independent offshore fields and onshore fields administered by NISOC.

According to estimates, Iran would need at least $160 billion in investment in the upstream oil sector over eight years, $90 billion of which would go to oil and the remainder to gas projects.

Meantime, Iran also reckons bringing its petrochemical production to 140 million tonnes a year by 2035, for which purpose, 55-60 new projects would become operational.

In the refining sector, the most important plans include the construction of new refineries,enhancing production capacity, and improving the quality of refined products.

The Iranian petroleum industry, benefiting from the fruits of energy diplomacy, is open to investment by foreign companies under win-win deals.

Iran Invites Investors to Its Oil, Gas Sector

Gas Exporting Countries Forum (GECF) member states have condemned sanctions imposed on hydrocarbon reserves owners and the politicization of the energy sector. The 7th Summit of the GECF, accounting for 70% of global gas reserves, in Algeria on 2 March 2024 announced in a closing statement that imposing sanctions against GECF member states would jeopardize gas trading and supply security. Iran, Venezuela, and Russia are three GECF member states to have been sanctioned. Sanctions have slowed down investment in these countries, which would mean disruption in energy supply security. Addressing the Ministerial Meeting, Iran’s Minister of Petroleum Javad Owji said that the development of the gas industry in the world and the realization of natural gas supply and demand security in global markets would require global peace and depoliticization of energy trading.

Western countries cannot call for sustainable energy development and environment protection while continuing to sanction energy proprietors. Sanctions are nothing but a lose-lose game, which would finally threaten the security of the gas supply. The undeniable fact is that the 13-member GECF is instrumental in securing global gas supply. GECF member states account for 40% of global gas exports and more than half of LNG exports.

From 15 December 2011, when the GECF held its first Summit in Doha, until the 7th one in Algeria, the body has experienced ups and downs to stabilize its position in global gas trading. Although Minister Owji has said that the GECF is still a long way from the favorable point, the GECF members have tried their best to expand international cooperation and convergence in a bid to guarantee stable gas supply while protecting constructive and meaningful talks between producers, consumers, and other stakeholders to secure supply and demand, boost market stability and protect consumer markets without any discrimination in the natural gas sector.

5.2% Annual Gas Hike

Iran, which sits atop the world’s second-largest gas reserves, is among the key founders of the GECF. Iran’s gas industry has been subject to sanctions over the past four decades and the US imposed tough sanctions on Iran in 2018 after withdrawing from the 2015 nuclear deal, officially the Joint Comprehensive Plan of Action (JCPOA). Despite such tough restrictions, Iran has never halted its oil and gas production. Iran’s natural gas supply has pursued an upward trend since 2011.

Owji told reporters in Algeria that the US’s "unlawful and extraterritorial" sanctions had failed to halt or slow down Iran’s gas production growth. He said Iran’s natural gas production grew on average 5.2% year-on-year from 2012 to 2022, or 2.5 times the global average growth rate.

Meantime, the Iranian Ministry of Petroleum has announced that $70 billion would be needed to be invested in the gas industry to enable Iran to bring its production capacity to 1.3 bcm/d. Iran has already crossed the 1 bcm/d gas output. Iran has developed infrastructure in the gas industry. Sanctions have pushed Iran to upgrade its technical capabilities in oil and gas engineering.

Openness to Joint Investment

The 7th Summit in Algeria offered a chance for Iran to express its openness to any kind of cooperation with fellow GECF member states. Iran has one of the largest internal natural gas distribution networks. Minister Owji said GECF members could cooperate in the exploration, drilling, development, operation, and distribution of natural gas, particularly through joint ventures and natural gas swaps. Iran has also welcomed cooperation on the framework of gas contracts, developing and exporting technical and engineering services, sharing technical know-how, and improving specialized human resources.

Iran has a brilliant technical and economic record in expanding its internal pipeline network and CNG stations and it can share its experience with fellow GECF members.

Ever since taking office, the 13th administration has centered its policy on expanding multilateral cooperation with other countries. Cooperation with OPEC and GECF member states has taken up added significance now. Meantime, Iran has joined the Shanghai Cooperation Organization (SCO) and the BRICS alliance. Iran’s membership in international organizations has created an opportunity for it to neutralize sanctions while expanding economic ties. Iran welcomes any opportunity to attract investment in its gas industry.

Win-Win Investment Game

Iran’s President Ebrahim Raeesi told the GECF Summit that Tehran’s regional strategy was to enhance gas production and export rates and facilitate access to this clean and value-generating energy. He said Iran was fully ready to become the regional energy hub and become a safe route for the distribution and transit of gas between producers and consumer markets.

Raeesi also took the chance to invite GECF member states to invest in Iran’s gas sector, adding that the capacities developed in Iran’s gas industry would offer appropriate ground for GECF member states in the upstream and downstream sector of the natural gas industry and its trading.

Iran also called on GECF member states to embark on systematic cooperation for exchanging information and experiences in the extraction, processing, transmission, and trading of gas and associated technologies to make joint investments in the gas industry.

Gas, Future Energy Route

Environmentalists may oppose investment in the petroleum industry due to climate change. In their view, investment in this industry would mean further global warming and subsequently further pollution. Therefore, they have over recent years drafted strict regulations for investment in the petroleum industry. The fact is that the role of oil cannot be ignored in the development of nations. However, one option for the transition to clean energy would be to invest in the gas sector. Minister Owji has noted that any fast abandonment of fossil fuels for transition to clean energy would stoke up existing risks to global energy security and deepen energy poverty in many parts of the world, particularly underprivileged regions.

Highlighting the constructive role of transition period fuels, which may be gas, the minister said: “Gas has been recognized as the facilitator of energy transition while guaranteeing energy security.”

Owji said within the framework of just, regular, and inclusive energy transition, global investment should accelerate in the gas industry as well as oil and gas industry decarbonization technologies to reach stable conditions in energy supply and countering global warming.

The 7th GECF Summit closing statement has dismissed any use of climate change as justification to preclude investment in gas projects and arbitrary discrimination or hidden restriction in direct conflict with international trading regulations.

Climate Change

The current climate challenges in the world mainly result from the activities of industrialized countries over the past 200-250 years. Owji has said that Iran would support global joint decisions and actions for

containing climate change and countering their destructive impacts.

The policies on the energy sector that have been enshrined in the COP28 decisions under the title of global efforts for capping global GHG emissions in the mid-term and long-term include pieces of recommendation for each country to comply with its national conditions while sticking to the principle of common responsibility.

In addition to clean energy development, these policies support decarbonization technologies including CCUS and low-carbon hydrogen, which would enable the oil and gas industry to continue to play a prominent role in the global energy supply.

“This approach is indicative of the fact that, unlike some existing radical attitudes, the global community feels compelled to adopt comprehensive, inclusive, and balanced policies in countering climate change. Of course, we should try our best to give a boost to this approach more than ever in global negotiations, including in climate change talks,” said Owji.

RIPI Awarded

Thanks to a follow-up by the Iranian Ministry of Petroleum’s Directorate of OPEC and Int’l Energy Fora, the Research Institute of Petroleum Industry (RIPI) was awarded by the GECF’s Gas Research Institute (GRI).

The GRI is an achievement of cooperation between GECF member states. It has a technical and scientific working group comprised of GECF member states. The working group was inaugurated before the GRI was launched and it examined 30 plans submitted by various GECF member states, five of which were chosen to be implemented. One of them was about the management and capture of flare gas, proposed by Iran.

The GECF awarding event is held every two years, during which elite and research institutes are praised for their prominent work in the gas industry. In 2024, Azim Kalantari Asl, the head of RIPI, was chosen to receive the GECF award for long-term commitment to natural gas.

Tehran to Host GECF Ministers

The Algeria Summit provided President Raeesi and Minister Owji with the chance to hold bilateral meetings to expand Iran’s energy cooperation with fellow GECF member states. Owji met his counterparts from Algeria, Russia, Iraq, Angola, and Venezuela as well as the Secretary General of OPEC and Secretary General of GECF to discuss how to implement agreements.

During the meetings, negotiations were held for signing new agreements on the development of Iranian oil and gas fields, integrated development of joint fields as well as trading of gas and products, mechanisms of payment, and technical and engineering services exports.

In his meeting with Owji, GECF Secretary General Mohamed Hamel praised Iran for its research work in the gas industry. Owji’s meeting with OPEC Secretary General Haitham al-Ghais was focused on the impacts of geopolitical factors on global oil prices, and increased global demand for oil due to economic growth and investment in oil projects.

Iran will be hosting GECF ministers for the 26th ministerial meeting by the end of 2024.

2011-2024

The first GECF Summit was held in Doha on December 15, 2011. Participants reiterated that the GECF was assessing options to settle existing challenges in the regional and global gas markets while making arrangements between gas producers and consumers and facilitating effective dialogue between them. Other issues that were discussed during the Summit included determining the status and role of natural gas in a low-carbon economy, consistency with alternative energies’ development, and promoting the environmental advantages of this clean fuel. 

The second Summit was held on July 1, 2013, in Moscow. Boosting global cooperation for safeguarding the interests of member states, protecting the principles of international transactions, upgrading the fundamental role of long-term contracts, and continuing to support gas pricing based on the price index of oil and petroleum products formed the agenda of the Summit.

Tehran hosted the 3rd meeting on November 23, 2015. Supporting the collective interests of member states by implementing coordinated policies and strategies at the international level to upgrade the general socio-economic interests of natural gas resources of member states, increasing natural gas consumption as the cleanest fossil fuel with its vital role in the global energy mix to reach the objectives of sustainable development for a clean source of energy to be reliable and effective, and boosting efforts for joint investment by GECF member states with a view to reliable natural gas supply to global markets were discussed during the Summit.

The fourth Summit was hosted by Bolivia on November 24, 2017. Developing and implementing policies for the production and consumption of natural gas as a clean, reliable, efficient, and vital resource in the global energy portfolio that ensures the achievement of sustainable development goals, expanding and promoting efficient ways of cooperation between gas producers and consumers in cooperation with regional energy organizations and the world to facilitate the achievement of global gas consumption, the development, and implementation of coordinated policies and actions among GCEF member countries to promote long-term gas contracts constituted the agenda.

The fifth Summit was held on November 29, 2019, in Equatorial Guinea. Maintaining the sovereign rights of the member countries over their gas resources, helping transition to clean energy and achieving sustainable development goals, attracting capital in gas infrastructure projects, and supporting cooperation among GECF member countries were among the focal points in this meeting.

The sixth Summit was held on February 22, 2022 in Doha. This meeting was held with the slogan “shaping the future of energy” at the same time as the fluctuation of energy prices and paying attention to the fastest growth of this hydrocarbon fuel in the world. In the statement, it was emphasized to promote natural gas as an abundant, affordable, clean, and reliable energy source and as the fuel of choice to meet the world’s growing energy needs address climate change, and improve air quality.

And the 7th Summit was held in Algeria with the slogan of “Natural Gas for a Secure and Sustainable Future”. The declaration adopted in the conclusion reiterated support for robust and meaningful dialogue among producers, consumers, and other relevant stakeholders, to ensure the security of both demand and supply, foster market stability, and advocate for open, transparent, unhindered, and non-discriminatory natural gas markets, the paramount importance of security of natural gas demand, transparent non-discriminatory legal and regulatory frameworks and predictable energy, trade, fiscal, and environmental policies in natural-gas-importing and -transit countries, and the member countries’ condemnation of all unilateral economic restrictions undertaken without the prior approval of the United Nations Security Council, and any extraterritorial application of national laws and regulations against GECF member countries that negatively impact the development and trade of natural gas and jeopardize the security of natural gas supply.

Iran, Russia Sign 19 Cooperation Documents

A Russian economic and business delegation comprising more than 200 economic and private sector actors visited Tehran to attend the 17th meeting of the Russian-Iranian Business Forum on February 26-28. In addition to following up on the implementation of agreements signed during previous meetings, the delegates sought to explore new avenues for cooperation with Iran in a variety of domains. At the end of the meeting, 19 documents of cooperation were signed. Addressing a joint press conference with Russia’s Deputy Prime Minister Alexander Novak, Iran's Minister of Petroleum Javad Owji said eight oil field development agreements had been signed with Russia, which had added 200 tb/d to Iran’s oil output. The minister said that more agreements would be signed with Russian companies shortly for developing oil and gas fields.

Iran and Russia have experienced ups and downs in their ties. The two oil and gas-rich nations have been friendly on some occasions and rivals on others. However, the point is that under President Ebrahim Raeesi and President Vladimir Putin, Tehran, and Moscow have decided to remain friendly chiefly in economic and political domains. Although analysts and experts give a positive assessment of Russia’s political, security, and military ties, their economic ties are not favorable and satisfactory. The heads of both states have acknowledged this issue, while believing that broad economic ties would guarantee Iranian and Russian policies at the regional and international levels, in which case, the oil, gas, refining, and petrochemical industries may help upgrade economic ties between them.

Experts say the construction of the Rasht-Astara railway as part of the International North–South Transport Corridor (INSTC) is a key element of Iran-Russia cooperation. This railroad would enhance trade exchanges along INSTC, not to mention install diverse technological infrastructure at various levels.

Enhanced Cooperation

Ever since the 13th administration took office in Iran, Tehran, and Moscow have significantly boosted their economic and political ties in the face of US unilateralism in the region. In his meeting with Novak, Iran’s First Vice President Mohammad Mokhber underlined the significance of joint projects by the two nations. He said: “Implementing some of these projects would represent an exceptional opportunity for this region. Construction of INSTC and development of Iran’s southern ports would be important and strategic for both nations and the entire region.”

Touching on the significance of INSTC construction for Iran and Russia, he said: “Iranian officials have been following up on the completion of INSTC and the Rasht-Astara railway every week, which indicates the significance of this great project in Iran. We hope that in partnership with the Russian side, completion of INSTC would pick up speed.”

For his part, Novak emphasized the expansion of cooperation with friendly and neighboring Iran, noting that in the light of the positive view of senior Iranian and Russian officials, trade between the two countries has significantly jumped under the 13th administration.

Novak praised a statement signed by Iranian and Russian foreign ministers for acting against forceful measures and sanctions, Iran-Eurasia free trade agreement, and Iran-Russia comprehensive cooperation pact, saying: “Completion of INSTC is one of the most important agreements between the two countries that Iranian and Russian presidents have been precisely pursuing. In cooperation with Iranian officials, the Russian party is ready to embark on the preliminary measures for building the Rasht-Astara railway as soon as possible.”

“Once remaining issues with the INSTC agreement are resolved, we are ready to sign the joint statement for INSTC construction,” he said. 

Historic Chance

Minister Owji said Iran-Russia cooperation has reached all-time highs, adding: “As the chair of the Business Forum, I am convinced that a historic opportunity has emerged for the two countries to get closer to each other.” 

He said Iranian and Russian presidents had supported decisions adopted by the two countries, adding: “The Russian delegation’s visit to Tehran is indicative of the firm determination of both parties for expanding cooperation.”

“A review of the trend of exports shows us significant growth in all sectors. Iran’s exports to Russia have increased in terms of both value and weight. In addition to clearing the way for Iran and Russia to develop further, it would help other nations in the region. Despite close commercial ties, Iran and Russia are not top trading partners. Russia’s billion-dollar market can be a good chance for Iran, while Russia can export agricultural products to Iran. Through proper planning and adopting necessary measures, we can achieve significant growth and cooperation.”

Owji said: “During the Russian delegation’s presence in Tehran, we finalized various memoranda and documents in the commercial, economic, political, energy, and transport sectors to facilitate cooperation. Proper steps have been taken and if we make more efforts, cooperation will accelerate and fruitful results will follow.”

“During the three-day event, the two sides held serious talks in 11 areas,” he said.

The minister added that some of the fields Russian companies had agreed to develop have become operational.

“Cooperation for establishing a gas hub, gas trading, swapping petroleum products, upgrading inter-banking and financial systems, upgrading agricultural cooperation, expanding cooperation in transportation, particularly in manufacturing cars and train carriages, continuing talks for commercial contracts on the Rasht-Astara railway, electrification of the Garmsar-Incheboroun railway, removal of customs barriers, establishing a power plant and expanding peaceful spatial and nuclear cooperation would be other instances of Iran-Russia cooperation,” said Owji.

200 tb/d Output Hike

Owji said that agreements signed with Russian companies to develop eight oil fields in Iran had yielded an extra 200 tb/d. Negotiations with Russian firms for signing agreements to develop more oil and gas fields were finalized during the business event in Tehran, which would result in new agreements in the future.

The minister said exporting technical and engineering services, enhanced oil and gas recovery, and oil and gas swap were among other topics of discussion between the two sides.

Of a total of 15 MOUs signed between Tehran and Moscow, 4 pertained to energy, Owji said. “Russian companies are highly interested in Iran’s petroleum industry. They have shown a willingness to get involved in petrochemical refinery and mini-LNG plant construction, petrochemical value chain, and exporting petroleum products.”

Gas Hub in Assaluyeh

Owji said serious talks had begun with leading gas producers and exporters for the establishment of a gas hub in Assaluyeh, adding that Russia has backed the idea.

“Russia, Iran, Qatar, and Turkmenistan hold the world’s largest gas reserves. Iran has also a major infrastructure in terms of pipeline and gas compressor stations, which can be of great help in gas transit. We’re currently producing 1 bcm/d of sour gas,” said the minister.

Owji said that the 13th administration had not contented itself with signing MOUs with neighboring countries, adding: “We’ve signed good agreements with Russian companies for developing oil and gas fields. Iran and Russia have made good agreements. Banking ties would clear the way for development in other sectors like transport, energy, nuclear and agriculture.”

Iran Exports to Russia

Novak said Iran-Russia trade hit a new cord in 2022 each $6 billion. He said Iran had exported $2.1 billion worth of products to Russia in that year.

“Capacity development in the energy sector in parallel with cooperation in the oil, gas, petrochemical, car manufacturing and services is underway. At the Business Forum, we examined ways how to increase the volume of exchanges. Direct cooperation has increased between the two countries and we are trying to work out necessary mechanisms and build infrastructure,” the Russian deputy prime minister said.

Noting that banking obstacles between Iran and Russia were being overcome, he said: “A significant mechanism has been worked out for financial exchanges. In the meantime, an agreement has been signed with leading Russian firms to manufacture machinery and parts that would be needed in oil fields. MAPNA is active in knowledge-based technology and Russian companies are interested in its products.”

19 Documents Signed

Concluding the three-day event in Tehran, Minister Owji and Novak oversaw the signing of 19 documents of cooperation.

The first document, signed by Owji and Novak, was the final statement of the 17th meeting of the Russian-Iranian Business Forum. It was followed by the roadmap for scientific and technical cooperation in the oil and gas industry, which was signed by Deputy Minister of Petroleum for Engineering, Research and Technology Vahid Reza Zeidifard and Russia’s Deputy Energy Minister Pavel Sorokin. An MOU on health and medical education, an operational plan between the Iranian Ministry of Road and Urban Development and Russia’s Ministry of Construction, Housing and Utilities, a trilateral geologic MOU between Iranian Geology Organization, Iranian Mines & Mining Industries Development & Renovation (IMIDRO) and ROSGEO as well as a petrochemical cooperation MOU (between CEO of National Petrochemical Company Morteza Shah-Mirzaei and deputy-CEO of Russian Chemists Union) were among other documents Iranian and Russian officials signed.

An MOU for cooperation between the Anzali Free Zone and Russia’s Lotus Free Zone, an MOU between the National Iranian Oil Company (NIOC) and Russia’s ZN Vostok, an MOU between Modarres Knowledge-Based Company and Russia’s scientific research center and MOU between Federation of Iranian Energy Export Industries and Russia’s Petrochemical Export Union were also signed.

A document for boosting academic cooperation on exchanging professors and students, practical research, and short-term education, MOU on cooperation in innovation and development of entrepreneurship between Semnan Science Park and Russian Technological University, MOU for academic cooperation between Zanjan University and Russia’s Ural University, agreement on scientific and research exchanges between Amir Kabir University of Technology and Russia’s Southern Federal University as well as MOU on cooperation between Allameh Tabatabaei University and Russia’s Southern Federal University were among the documents signed between the two parties

Iran-Russia Energy Ties

Iran and Russia, holding together about 37% of global gas reserves, enjoy a great deal of opportunities for presence in global energy markets, particularly gas.Russia sits atop 35 tcm of gas or 19% of the world's total reserves. Iran comes second with 33 tcm of gas reserves, i.e. 17.1% share of global reserves. Despite their longtime energy cooperation, Iran and Russia have upgraded their ties under the 13th administration which has adopted cooperation with friendly nations. Despite being rivals in some markets, Tehran and Moscow have benefited from the opportunities provided by the energy market.

National Iranian Oil Company (NIOC) has signed an MOU with Russian firms, including Gazprom, for investment in the development of oil and gas fields, investment in LNG projects, investment in floating LNG (FLNG) and mini-LNG projects, gas and petroleum products swap, building the high-pressure export pipeline, and sharing oil and gas technology. The MOUs are worth $40 billion, enough to meet major petroleum industry capital needs.Iran is largely expected to benefit from these opportunities as Western sanctions bar investment in Iran.

New Era

The new era of cooperation between Iran and Russia started in January 2022 when Minister of Petroleum Javad Owji visited Moscow. A year later, Minister Owji again traveled to Moscow, this time as the Iranian chair of the Russian-Iranian Business Forum. During his visit, key protocols were inked for developing oil and gas fields, building refinery-integrated petrochemical plants, and sharing technology. Following that visit, the minister said: "I can say with certainty it was one of the most fruitful visits, and I got more than expected."

During Owji’s visit, ways of expanding economic ties, removal of banking and customs barriers, upgrading energy cooperation, and joint investment in infrastructure energy projects were discussed. A comprehensive and complete roadmap for cooperation with Russia was adopted for the development of oil and gas fields in the upstream sector and the development of petrochemical plants and refinery-integrated petrochemical plants in the downstream sector along with the transfer of equipment and technology.

Furthermore, given its infrastructure, Iran said it was ready to swap Russia’s gas with other neighboring nations. Iran also offered proposals for converting gas to LNG and its export, for which Russian technology would be used. The two countries also agreed to establish a joint plant in Iran.

Russian Delegations in Tehran

Although relations between Iran and Russia are at a satisfactory level from the standpoint of political, security, and military experts, these relations are not favorable and satisfactory in the economic sector, anissue that the presidents of the two countries acknowledge and believe that extensive economic relations may guarantee the macro policies of Iran and Russia at the regional and international level.

Iran had a meager 2% share of Russia’s external trade in 2018, which put it in the 50th rank among Russia’s foreign partners. Owji told Russian business delegates in Tehran last May that Iran and Russia planned to raise their trade from $4 billion to $40 billion.

Russia's Deputy Prime Minister Alexander Novak said Iranian President Ebrahim Raeesi’s visit to Russia in January 2022 had given an impetus to cooperation between Tehran and Moscow. He said the two governments had to implement key agreements reached between the Iranian and Russian heads of state.

Iran and Russia have had extensive cooperation in the oil, gas, and petrochemical sectors over the past two years, which could help the two nations meet their energy needs, let alone its contribution to stability in the global energy market.

Oil and Gas Swap

Iran intends to swap Russia’s gas in a bid to increase gas exports to Pakistan and Iraq. Russia has said it would build the Pakistani section of the Iran-Pakistan gas pipeline.

Due to energy sanctions imposed on Russia, most investors have left Europe to work in the US, Canada, and even East Asia. That would damage mainly Europe’s top chemicals producer which is Germany. Consequently, Russia would turn to new markets in South Asia. Growing demand for gas in regional nations, particularly Pakistan and India, has added to the significance of this region for Russia.

The most important issue about Russia’s access to these new markets is Iran-Russia gas cooperation. Iran has three options to deliver its gas to Pakistan and India. The first and most important option would be a gas swap with Iran and completing the Iran-Pakistan-India gas pipeline, by which gas would be pumped from the South Pars gas field in southern Iran

to its eastern neighbor before going to India. In return, Northern provinces would receive the equivalentvolume of gas delivered to Pakistan and India from Russia.

The main advantage of Iran swapping Russian gas is to reduce gas transmission tariffs. Furthermore, there is a 5-10% loss on the South-North route. That represents a significant volume of gas particularly in winter. Iran would also receive financial compensation in return for the gas swap. Furthermore, receiving gas during the swap process would help fix the gas imbalance.

Iran is faced with a serious gas imbalance, maybe more than 250 mcm/d. Iran’s consumption is too high to have any extra gas for cold months. Iran’s long-term gas deals remain effective in moderate and warm seasons and therefore there is no threat in this regard.

Iran-Russia gas cooperation would be of great help to Iran in its effort to become a regional gas hub. Iran would offer the best route for Russia to deliver commodities and energy to East Asia.

Due to the current emergency conditions for Russia, if gas is purchased at a reasonable price from this country to be sold at a higher price, Iran’s interests would be secured. Swap can also have advantages for Iran. Generally speaking, if Iran becomes a gas swapper, it would see its regional position improve in terms of supplying regional energy needs. Enhancing gas ties with Russia may lead to the transfer of technology to Iran. Russia may for instance help Iran in building infrastructure for offshore transfer. Iran needs Russian pipeline technology for its projected gas exports to Oman. Swapping Russian gas would also add to Iran’s political weight in the region.

Neutralizing Sanctions

Given US and European sanctions on Russia, Iran can be of help to Russia. Neutralizing sanctions imposed on both nations, and access to advanced technology would lead to investment in Iran, let alone open a new oil and gas market for Russia.

A Russian energy expert has said the idea of swapping Russian gas with Iran via the Former Soviet Union’s breakaway republics and then delivering the gas to other nations would be an attractive idea that would be profitable to all sides involved. That would empower Russia to export its extra gas to new markets and make hard currency income. For its part, Iran may increase its hard currency revenue and reduce its dependence on oil revenues.This project faces challenges, the most important of which is the absence of necessary infrastructure for the transfer of Russian gas to Iran to be delivered to other nations. Such infrastructure needs to be developed, which would require big investment. Another challenge is that Western nations are likely to oppose this project which they would see as an effort made by Russia to skirt around sanctions.

History

Russian companies’ partnership in Iranian petroleum industry projects over the past 44 years may be divided into three periods. The first period (1979-1989) saw Russian companies take part in developing oil and gas fields in Iran. One case in point is the development of the Salman oil field. The second period (1989-2005) saw a decline in Iran-Russia oil and gas cooperation due to political discrepancies between them. But since 2005, Tehran and Moscow have again boosted their oil and gas cooperation, including the development of the Gonbad-e Kavous, Nosrat, and Yadavaran oil fields. Russian companies have over recent years been further involved in oil and gas field development in Iran. That is mainly due to US sanctions barring Western companies from cooperating with Iran.

Russia has 10 LNG facilities with the capacity to produce more than 100 million tonnes a year. Therefore, it can be of great help to Iran’s petroleum industry in LNG technology and liquefaction of natural gas. Transfer of technology, investment, and technical partnership would empower Iran to benefit from Russia’s experience and know-how.

Iran and Russia may also cooperate in the petrochemical sector. An Iranian knowledge-based company exported about $9 million worth of catalysts to Russia in the first half of the current calendar year. During the last calendar year, Iranian catalyst exports to Russia fetched $8 million.

Russia is currently exposed to Countering America's Adversaries Through Sanctions Act (CAATSA), which is a United States federal law that imposed sanctions on Iran, North Korea, and Russia. Therefore, Russia needs Iran’s cooperation.

US officials have regularly expressed concern about Iran-Russia oil cooperation. They believe that cooperation between them can increase Iran’s oil exports, which would in turn enable Iran to circumvent Western sanctions and achieve its regional objectives.

The US recently said it would strictly stick with oil sanctions against Iran, noting that the US would seek cooperation with nations reducing oil imports from Iran.

US officials are also worried that Iran-Russia oil cooperation would ally the two nations, which would threaten regional security. Such cooperation would enable Russia to boost its clout with the Persian Gulf region via Iran.

However, US officials acknowledge that Iran-Russia oil and gas cooperation would be inevitable and believe they have to find ways to manage this cooperation and minimize its consequences for American interests.

Sepehr, Jofair Lift Iran Oil Output

Sepehr and Jofair oil fields are the first to have been developed under the newly established Iran Petroleum Contract (IPC) framework. Iranian contractors have been developing the fields for $2.8 billion over 20 years.

President Ebrahim Raeesi, on 8 March 2024, inaugurated the first phase of the Sepehr and Jofair development project which is to add 50 tb/d to national oil output. Official data show Iran’s oil production increasing continuously over the past three months despite US sanctions being in full effect. Minister of Petroleum Javad Owji has stated that Iran’s oil production has increased 60% over three years, with natural gas output of 50 mcm/d, oil refining capacity of 210 tb/d, and gas refining capacity of 50 mcm/d.

Sepehr and Jofair are two independent fields located next to the West Karoun cluster of fields. They were discovered in 1976, but they have remained untapped due to their sophisticated geological structure. Once they were decided to be developed under the buy-back scheme, but nothing happened in practice. Finally, in 2017, the National Iranian Oil Company (NIOC) assigned the development of both fields, which have interconnected structures, to Pasargad Energy Development Company (PEDCO). When the 13th administration took office, it had 15% progress, but under the government policy of maximum oil output, development of these fields picked up speed, and on 8 March 2024, the first phase of this project came online.

Minister Owji said Sepehr and Jofair would be producing 75 tb/d next calendar year, up from the current 50 tb/d.

PEDCO has agreed to reach 110 tb/d oil output in these two fields with an accumulated 512 million barrels over 20 years. The direct and indirect costs for this project are estimated at $2.427 billion and $413 million, respectively. The agreement, which would include three phases, would require 135 wells to be drilled.

Among key measures that have been taken in the development of these fields is the domestic manufacturing of well-completion equipment for the first time in Iran to bear 10,000 psi. So far, more than 60,000 meters of drilling have been done in this project. Seven drilling rigs running simultaneously have set a record of 6,100 meters of drilling. Reducing the drilling time from 330 to 90 days in the deepest well, implementing and completing 51 km of oil pipeline, and building more than 32 km of access roads constitute other measures for the development of the two fields. Sepehr and Jofair lie in the northeastern part of the sedimentary zone of Abadan Plain, more specifically 60 km southwest of Ahvaz and next to the Azadegan and Yadavaran oil fields.

West Karoun Output at 450 kb/d

On the sidelines of the inauguration, Owji visited West Karoun projects. The oil fields located in West Karoun are intact and undeveloped. They extend from the vicinity of the city of Ahvaz, as far away as Iran’s border.

The West Karoun area is like a rectangular oil zone extending from the western bank of the Karoun River as far as the Iran-Iraq border and also from the south of Chazabeh to the west of Darquain. It comprises two oil areas, known as Azadegan (North Azadegan, South Azadegan, North Yaran, and South Yaran oil fields) and Yadavaran (Koushk and Hosseinieh oil fields). These fields are estimated to hold 67 billion barrels of oil in place. They are expected to produce 1 mb/d.

West Karoun sits atop 86% of the oil reserves Iran shares with neighboring countries. The CEO of NIOC Mohsen Khojasteh-Mehr has said the agreements signed for the nine oil fields located in West Karoun are valued at $20 billion.

Owji said: “West Karoun fields are yielding 450 tb/d of oil and 130 mcf/d of gas.”

Given the priority of developing joint fields, joint fields account for three times as much output as independent fields.

Noting the capability of Iranian contractors in developing oil and gas fields, the minister said: “Developing West Karoun fields was dependent on foreigners 20 years ago, but today no foreign consultant is present in West Karoun.”

“Under the 13th administration, West Karoun has been transformed and there is no field for which no agreement has been signed. We have finalized agreements for developing Yaran, Yadavaran, Sohrab, and Azadegan,” he said.

Owji said the first phase of the South Azadegan field would come online later this year with a $2 billion investment, adding it would be producing 200 tb/d.

South Azadegan has 206 wells, including 201 production wells and 5 waste disposal wells.

The Yaran field contains 1.7 billion barrels of oil in place. Its first phase had been developed by an Iranian contractor under a buyback deal. Yaran has been producing 20 tb/d after first-phase development. Downhole pumps account for 45% of oil production from this field. Yaran would be yielding 46 tb/d after second-phase development.

The second-phase development of the Yaran field, in northern and southern sections, would be carried out under a 10-year agreement with NIOC and Persia Oil and Gas Development Company (POGDC). The agreement would be worth $227 million with an extra production of 39.5 million barrels of oil expected to be recovered.

For the first time, downhole pumps have been used in the Yaran field. IOR and EOR technology would be also applied to this reservoir.

The investment envisaged for the development of the Yaran oil field is $400 million, including $227 million in direct and $60 million in indirect costs. Moreover, production costs are estimated at $113 million.

The Yadavaran oil field, which is next to Sepehr and Jofair, is highly attractive to investors. It is shared with neighboring Iraq. Yadavaran is estimated to hold 17 billion barrels of oil in place, 3 billion barrels of which is recoverable. 

Development of the Yadavaran field was resumed by the Petroleum Engineering and Development Company (PEDEC) in February 2023 after a 6-year hiatus. The second phase would be completed with $400 million, requiring drilling 24 wells, which would bring output to 42 tb/d.

The first phase of the Yadavaran oil field had already been completed by China’s Sinopec in 2016 with 110 tb/d production capacity. Sinopec was expected to handle the second phase too, but talks were halted by the then minister of petroleum.

The Economic Council has demanded that production from the Yadavaran field reach 152 tb/d.

Iran’s Oil sector Four-fold Growth despite US sanctions

The Iranian oil sector’s growth reached 22.4% during the first three quarters of the current calendar year to 20 March 2024, up from 5.7% compared with the same period last calendar year. According to the Minister of Petroleum, the economic growth of Iran’s oil and gas sector is expected to exceed 20% in the first quarter of 2024, and hopefully, this trend will continue in 2024.That indicates a four-fold growth in this sector year-on-year. Iran has realized such growth despite US sanctions continuing to remain in full force and effect. Currently, Iran’s oil production capacity has reached 4 mb/d, while the country’s oil exports have significantly increased.

Iran’s enhanced oil output drew ire inside the US. A group of US Senators acknowledged, in a letter addressed to President Joe Biden that the American sanctions against Tehran had failed to block the country’s development and economic progress.

Under the former administration, Iran had reached a critical threshold concerning oil sales and relationships with neighboring countries. But under the 13th administration, although the US toughened its sanctions, the Islamic Republic managed to neutralize sanctions and heal the ailing economy.

Economic growth is amongthe key indicatorsof economic status in any country and the changes in various sectors, varying from energy to services could be studied on its basis.

Whereas the oil and gas industry constitutes the bulk of Iran’s economy, the role of this sector in economic growth is undeniable. The oil and gas sector shrank to the point of driving the economic growth rate to below zero under the former administration.

According to the statistics published by the Central Bank of Iran (CBI) and the Statistics Center of Iran, the economic growth of Iran’s oil and gas sector in the first, second, and third quarters of the current calendar year has been announced as 19.8%, 25.6%, and 21.8 %, respectively, and the growth figure is expected to be still above 20% in the fourth quarter.

Minimization of Sanctions’ Impact

Once the 13th administration took office, it focused on thwarting oil sanctions and finding solutions to improve this sector. In the first step, Iran’s oil exports grew 40% in its first year into office, although US sanctions had not changed.That was how the first signs of improvement emerged in the economic conditions. Last calendar year to 20 March 2023, Iran’s oil production and export growth helped drive up national economic growth to the positive territory and subsequently, inflation was contained.

However, one of the key results of the growth in the oil and gas sector was to plug the budgetary deficit that the 13th administration had inherited from its predecessor. As Iran’s oil sales to traditional customers increased and new markets were found, the budgetary shortfall was made up for without any additional money supply.

This growth went on into the current calendar year. Iran’s economy grew 33% year-on-year thanks to oil, while the economic growth rate without oil was -12%.

Comparing these numbers is indicative of the significant impact of oil on national economic growth. While other sectors experienced economic shrinkage, the oil sector grew 22.4% during the first three quarters to compensate for the loss in other sectors of the economy.

Oil sector 22% growth in 9 months of 1402

The growth of the oil sector in the 9 months of this year was 22.4% and in the same period last year was 5.7%. According to these figures, the economic growth of Iran’s oil sector in the 9 months of this year shows a four-fold growth compared to the 9 months of 1401. A growth that is visible in other economic issues and madethe pie of Iran's economybigger.

This increase caused the International Monetary Fund (IMF) to announce the 5.4% growth of Iran's economy in the year 2023 in its latest report of the series of world economic outlook reports that are published every three months. This report announced a 3.8 percent growth in Iran's economy in 2022.

In 2024,the International Monetary Fund (IMF)has also revised its forecast of Iran’s economic growth to 3.7 percent compared to its report three months ago. In the IMF October report, 2.5% growth was forecasted for Iran’s economy in 2024.

A glance at Iran’s petroleum industry performance is indicative of the fact that the National Iranian Oil Company (NIOC) has managed to adopt effective and strategic decisions in a bid to fulfill its obligations effectively and take a great stride in favor of Iran’s prosperity. Central Bank of Iran (CBI) data show that oil and gas have made a significant contribution to national economic growth.

Such economic growth is not limited to the current year. Enhancing oil and gas condensates production significantly, under the 13th administration, Iran’s petroleum industry set foot in new markets and compensated for the IRR 4,500 billion budget deficit. From the same standpoint, NIOC is responsible for a big share of the materialization of the 8% growth rate envisaged in the 7th National Economic Development Plan.To that effect, NIOC has announced the guaranteed purchase of drilling rig services.

The economic attractiveness of this project stems from the fact that Iran currently holds about 340 billion barrels of oil equivalent (boe). That means oil and gas recovery would go on for one hundred years, and therefore investing in the drilling sector would be always profitable.

Under the 13th administration, NIOC has faced growing demand for further contribution, varying from increasing oil and gas production to finding new markets, capturing flare gas, and presenting pioneering projects for economic development.

Over the past twoand a half years, NIOC has managed to boost its oil production capacity and increase its oil exports significantly. Iran does not release oil production data due to sanctions. NIOC also managed to sell about 90 million barrels of oil parked in tankers on water and receive its funds.

It is noteworthy that in this government, 132 incomplete oil projects worth 28 billion and 500 million dollars have been completed and 50 new projects worth 48 billion and 500 million dollars have been designed and are being implemented.

NIOC Investment Chief:

Investment Opportunities Numerous in Iran'sOil Sector

Mahnaz Mohammad-Qoli

Under the 13th administration, the National Iranian Oil Company (NIOC) has focused on absorbing financial resources for enhanced oil and gas recovery projects. A working group comprising senior NIOC directors was established to proceed with this strategy and make decisions on overcoming obstacles in the way of ongoing processes. Fereidoun Kord-Zangeneh, NIOC’s director of investment and business, tells “Iran Petroleum” that despite sanctionssome success has been achieved.

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

How many investment projects have NIOC on its agenda?

In the upstream oil sector, crude oil production capacity preservation, development of joint fields, development, and maintenance of independent fields, as well as IOR/EOR projects are prioritized by NIOC. In the upstream gas sector, gas production capacity preservation, completing the development of the South Pars gas field and constructing gas compressor stations, developing other gas fields shared with neighboring nations, developing the Kish and North Pars gas fields, crash plan for increased gas recovery from ICOFC-run fields and developing independent offshore and onshore fields owned by NISOC are on the agenda. Furthermore, good projects have been defined for supplanting foreign vessels with homegrown vessels, restoring low-yielding oil wells, building the Maka Special Economic Energy Zone off the Gulf of Oman, crude oil storage capacity building in partnership with the private sector, enhancing crude oil processing capacity under public-private partnership deals, some of which have been implemented.

How much investment is needed for these projects?

According to our estimates, enhancing crude oil output capacity to more than 5.5 mb/d and natural gas production capacity to more than 1.5 bcm/d over eight years would require more than $160 billion investment in the upstream petroleum industry, which would be broken down to $90 billion for oil and $70 billion for gas projects.

Are any talks underway for using foreign finance for projects?

As far as foreign finance is concerned, good and promising measures are underway. Here at the Directorate of Investment and Business, we are pursuing financing projects from various channels, where foreign finance is prioritized. However, we are not waiting for any foreign country to step ahead, and we believe that Iran’s petroleum industry is attractive enough to domestic and foreign investors. We intend to minimize the timeframe for endorsing the financial capacity of investment applicants so that in case a private company fails to produce necessary documents attesting to its financial capacity, we would be able to embark on talks with a private firm in the shortest possible time to achieve our goals. We are in talks for foreign finance to replace them if our talks do not pay off in other sectors for any reason whatsoever. 

What are the countries providing finance?

We welcome investment by all companies, individuals, and financial institutions willing to finance NIOC projects. Numerous requests have been submitted by foreign parties to the Directorate of Investment and Business. They will be put into the process of financial assessment before making any decision about them. It is noteworthy that we have received proposals from Russian, Chinese, European,and Arab investors.

What has been done to attract investment into joint oil fields, particularly the Azadegan field?

The first measure taken in my capacity as the director of business and investment was to hold joint meetings with the banking sector for synergy and maximum use of domestic financial capacity for operating NIOC’s priority projects, including the development of joint fields. A meeting was held in February 2022 with the CEOs of banks and their affiliated financial institutions, during which various models of investment in NIOC projects were explained. Subsequently, a meeting was held with the Minister of Petroleum [Javad Owji], CEO of NIOC [Mohsen Khojasteh-Mehr], as well as CEOs of banks willing to invest in the upstream oil and gas sector. A framework for investment in the joint Azadegan field was adopted and for the first time, a consortium of E&P companies and banks was set up to steer this national project. Talks are also underway on striking a deal for developing this field. They are in the final phase. If NIOC is convinced about the efficiency of the development plan submitted by this consortium, an agreement would be signed in compliance with IPC principles. NIOC is currently operating development of this field and no activity for maximum use of this joint oil field has stopped, nor has it been tied to reaching a deal with the consortium.

How many banks are involved in this project?

Five banks – Melli, Mellat, Tejarat, Parsian, and Shahr – as well as the National Development Fund of Iran (NDFI) form the financial arm of this consortium.

Which companies are present in the technical sector?

MAPNA and Petropars, both E&P companies, form the technical arm of this consortium.

How much capital has the consortium raised?

The registered capital of this consortium amounts to IRR 180 trillion, fully paid by shareholders. Furthermore, in case of finalization of the contract, increasing capital and providing the requiredfunds would be on the agenda, which would be instrumental to the effect of the contract. There is, of course, consensus with shareholders in this regard.

Is the Azadegan field being developed as an integrated field?

Yes, according tothe views of oil experts and the elite, separating this field would not be in national interests both technically and economically. Therefore, it is to be developed in an integrated form before being awarded to the consortium. Within the framework of this contract and under a long-term plan, this field would have been developed in 7-8 years. The private sector is also seeking to maximize output before the timeframe expires. 

What would happen to North Azadegan and South Azadegan contractors then?

The contractors involved with the North and South Azadegan fields would continue their work within the framework of a transition plan and in compliance with rules and regulations governing current contracts. Of course, they can also take part in new tender bids for the development of the field. Naturally,what the consortium is expected to do is accelerate exploration and production. For this purpose, using the potential of current contractors would be in favor of accelerating the project provided that they show good performance.

Have any talks been held with foreign companies?

Yes, NIOC has held talks with companies from China, Russia, the Persian Gulf littoral state, as well as Europe.

Is Dasht Azadegan Arvand Oil and Gas Production Company (DAAOGPC) tasked with absorbing those companies?

In case a final agreement is reached with the consortium, every cooperation would be through this consortium. However, contract mechanisms contained in the IPC agreement need to be respected. The fact is that this project is extensive. In addition to domestic potential, external potential should be also used to reach maximum recovery. For instance, these companies are required to provide at least 30 foreign rigs, which could be purchased or leased. Some equipment should be also sourced from overseas,

as there is no possibility to supply them internally.

Is it likely that new foreign rigs will be added?

Fortunately, most rigs owned by domestic fleets are operational in NIOC fields. There is no extra rig to be used. Rig construction has begun in the country, but it would be time-consuming. We cannot wait for rigs to be prepared because we have development plans for oil and gas fields.

What happened to the talks held with Sinopec for the Yadavaran field?

Sinopec has neither verbally nor in writing offered to cooperate with us. It has claims about previous contracts, which it intends to settle first. However, talks are underway with Sinopec, and we hope that talks will be fruitful for the second phase of the Yadavaran field. In parallel, necessary measures have been underway to get permits from the Economic Council.

Are there any options otherthan that of Sinopec?

Other private companies from Iran China and Europe have expressed readiness, but NIOC prefers to wait for Sinopec to make up its mind first before taking the next step.

One of NIOC’s priority projects is to build gas compressor installations at South Pars. What has been done to finance this project?

We have drawn up a clear perspective. Our current priority is to develop gas fields to supply national gas needs, the most important element of which is gas compressor facilities at South Pars. Should we fail to take action about gas compression we would be facing a fundamental challenge in gas supply to the point of pressure fall-off. A working group comprising NIOC’s directorates has been working on this issue since four months ago. The project’s consultant has offered proposals for two scenarios of onshore and offshore gas compression, based on which decisions would be made. The consultant for this project is an Iranian firm cooperating with two foreign companies.

Have necessary predictions been made for both scenarios?

Yes, we need equipment that has to be supplied overseas. Talks have begun with 3 to 4 countries. What matters is that this national project needs all-out official support, particularly for financing. In case financing is resolved, NIOC would have nothing to worry about about equipment supply and we can go ahead in parallel with Qatar in gas compression.

How much investment is needed?

In the onshore sector, $10-15 billion is needed while in the offshore sector, $20 billion is estimated to be needed.

What has been done for the Kish gas field?

The Kish gas field is among the most valuable gas fields in the country. Phase 1 of its development is underway. In this phase, we are seeking to buy equipment and pipes. We hope to be able to transfer 28 mcm/d of rich sweet gas from Kish to South Pars in one and a half years. This project is attractive to both domestic and foreign investors and is a priority project for us. After South Pars, Kish is among our priority projects. Based on information obtained from Phase 1, we would share information with the investor for further development phases. Although European companies have offered to develop this field, an MOU has been signed with Russia’s Gazprom for the development ofthis field.

How much investment is needed?

For Phases 2, 3, and 4, $8 billion in investment is needed.

What has been done about investment in North Pars?

The consultant and the developer have been chosen, while technical talks have been held with local companies. Like in Kish, we have signed an MOU with Gazprom and technical talks are underway. We expect Gazprom to notify us of its viewpoints in two months to let us decide.

When will construction begin in the South Pars oil layer?

For the South Pars oil layer, an agreement has been signed with a foreign company and an Iranian E&P company with an investment estimated at $500 million. Construction has already started. 

As Iran and Saudi Arabia are improving ties, have you held any talks on developing the Farzad A and Farzad B fields, which are NIOC priorities?

As weshareFarzad A and B with Saudi Arabia, we are trying to start talks for joint development of this field. We have made some proposals to Saudi Arabia to invest in this field so that we can supply LNG to that country, which would be useful and attractive. Saudi Arabia does not have significant gas fields and it had better use this method. If we can develop this field under a comprehensive deal with Saudi Arabia, it would be in the interests of both nations.

What happened to the Iran LNG project?

This project, which had been halted, has two major shareholders. NIOC and the Oil Industry Pension Fund (OIPF) have made big investments there, but it has yet to come online. Over recent months, talks have been held with the Central Bank of Iran (CBI), the government, and OIPF. We have managed to obtain financing for the first phase of the Iran LNG project, which we will receive before 21 March 2024. We hope to be able to launch the first train of this project with a capacity of 5.3 million tonnes of LNG within two and a half years.

How about its compressors?

A European company makes the 14 compressors destined for this project. The bulk of their costs have been paid, but they are stuck due to sanctions. The Ministry of Foreign Affairs and NIOC are in talks to have them cleared. No new order has been placed for the compressor.

It is said there have been talkson selling gas from the Salman field to the UAE. Could you tell us about it?

Yes, we have started talks with the UAE for selling gas from the Salman field. The UAE would invest $400 million in this field. The UAE has sent positive signals to us and we hope it would agree to invest in this field. A platform with a train of compressors would be installed in the Salman gas field.

What measures have been taken aboutthe development of 10 ICOFC-run fields?

As far as independent gas fields of ICOFC are concerned, due to gas imbalance in the country, we have arranged for a crash plan to recover gas from those fields and we have got approval from the Economic Council for that purpose. Petrochemical companies and steel mills have voiced readiness to invest in the gas fields. MOUs have been signed with some petrochemical companies and talks are in the final phases for striking contracts with them. We are also following up on alternative scenarios for special conditions.

How much investment is envisaged?

Investment varies from $60 million to $740 million. About $4.4 billion is needed in ICOFC fields.

Is there anything else you would like to mention?

The petroleum industry is the pioneer and engine of all economic sectors. Many types of contracts, as well as the PPP model, have been used to attract investment. Here in the Directorate of Investment and Business, we are following up on the affair seriously. We have constant communications and good cooperation with banks, financial institutions, funds, leading energy consumers as well as private investors. We will push ahead with these efforts until we conclude development contracts.

FPSO Cyrus, Iron Island off Persian Gulf

Negar Sadeqi

When one mentions Iran and Qatar, it is the South Pars gas field that comes to mind. South Pars, a giant gas field, is shared by Qatar (70%) and Iran (30%). But South Pars reserves are not limited to gas; Iran and Qatar also share its oil layer. Both are currently recovering from the oil layer although the difference is huge. Unlike Iran, Qatar is not under sanctions and it can benefit from the presence of international companies and can have access to modern technologies for oil and gas recovery. Despite this unequal rivalry, Iran has not remained idle in the face of the Qataris. Relying on its own savvy and technology, it has managed to keep this industry afloat for more than four decades now.

A couple of years ago, a report was published on the South Pars Oil Layer (SPOL). Now, the present report deals with floating production storage (FPSO) Cyrus. An FPSO unit is a floating vessel used by the offshore oil and gas industry for the production and processing of hydrocarbons and for the storage of oil. An FPSO vessel is designed to receive hydrocarbons produced by itself or from nearby platforms or subsea templates, process them, and store oil until it can be offloaded onto a tanker or, less frequently, transported through a pipeline.

This is the second time I am stepping into this terminal, which is different from previous times. We stayed one full night on FPSO Cyrus, a memorable experience.

We started flying in a helicopter over Kish Island for a 180 km distance. We flew over Hendourabi and Lavan islands to reach FPSO Cyrus after nearly an hour-long flight. I was on board with eight staff members of FPSO Cyrus. When the helicopter was preparing to land, I saw a 300-meter-long vessel sailing on the sea. It was blowing and the sea was calm. The weather was pleasant thanks to the rainfall of the day before.

Sole FPSO

As soon as we arrived, the head of HSE told us about safety measures we had to take into consideration, telling us what to do in the face of threats. Each of us received a number marking a spot where we had to rush very quickly in case of any unpredicted accident to give proof of life.

We entered the conference room. The deputy director of the platform said: "FPSO Cyrus is the only FPSO of Iran for crude oil processing."

Referring to the Surena and Persian Gulf storage vessels, administered by Iranian Offshore Oil Company (IOOC) as well, he explained their differences as follows: “Unlike them that had no role in oil processing and limit themselves to oil storage and exports, FPSO Cyrus is conducting extraction, processing, storage, and export of crude oil at the same time.”

SPOL lies 100 km from Assaluyeh and 93 km from Lavan, more specifically at the border with Qatar. SPOL installations include a wellhead platform and an FPSO. Oil recovery from SPOL began in March 2017 to mark the nationalization of Iran’s petroleum industry, after seven wells had been drilled there.

Special Vessel in Iran

Amin Shademan, deputy head of FPSO Cyrus, touched on the significance of production, processing, storage, and export in the vessel, saying: “The heavy crude oil in SPOL with an API gravity of 20 is the most important reason which led us to use FPSO Cyrus because transporting heavy crude to onshore on a large distance would be costly and unjustifiable.”

Shademan said 100 to 150 such vessels were operating across the globe, adding that flexibility in its displacement was a big advantage of these vessels.

For more clarity, the first oil FPSO was built in 1977 on the Shell Castellon field, located in the Spanish Mediterranean. One of the world’s largest FPSOs is the “Kizomba A”, with a storage capacity of 2.2 million barrels. Built at a cost of over $800 million by Hyundai Heavy Industries in Ulsan, Korea, it is operated by Esso Exploration Angola (ExxonMobil).

Staff of FPSO Cyrus say the good appearance of the vessels is because of regular painting of offshore structures which would have otherwise experienced rusting and corrosion. Storage tanks are at the center of the vessel, while balance tanks are on both sides. FPSO Cyrus is held by 13 giant chains measuring about 750 meters long. That would keep the vessel stable on a Persian Gulf area 60-70 meters deep.

The refining installations on the top drive are similar to those of offshore and onshore refineries. These installations include equipment for separating water from oil, separating gas, injecting water, and treating wastes among other tasks. This vessel has been designed to receive oil from the wellhead platform of SPOL to be refined and stored.

44 Cargoes Loaded

Once oil is produced and transported from the wellhead platform to FPSO Cyrus, exporting starts, which is a tough and complicated process.

FPSO’s nominal loading capacity is 700,000 barrels of crude oil; however, to control risk and exercise better management, loading had better be between 400,000 and 600,000 barrels. Under normal circumstances, it is possible to unload 30,000 barrels per hour. Over the past five years, 44 cargoes have been loaded and exported. The timing of loading varies depending on the volume of oil export. For instance, exporting 500,000 barrels of oil from FPSO Cyrus would take 20 to 30 hours.

Reza Kharazmi, director of FPSO Cyrus storage tanks and loading, outlines the export process. “When we are planning to load oil, we have too much stress because the entire operation takes place on the sea. The vessel is not stable and wind and water currents affect the stability of the FPSO. That takes up added significance. During loading, every unpredicted accident may happen to bring the operation to a halt. Under such circumstances, shifts are divided between persons present there to connect the export hose to the tanker”.

One of the service workers said: “In some cases, we have only several millimeters left to the final connection, but a shock is enough to disrupt everything. We need to be careful to prevent any shock to the vessel. In such cases, everything becomes breathtaking.”

Captain Hamid Reza Karimi, who steers oil vessels, said: “For vessels to dock at the terminal, four to five tugboats are used. When we face either water or wind it would be easy to decide, but when we face both, we need to strike a balance between them.”

Safety on Top

The necessity of compliance with HSE obligations was the point highlighted upon our arrival at FPSO Cyrus. Everyone there has to undergo the safety course. FPSO Cyrus holds safety drills from time to time to be fully prepared for emergency conditions. During our presence, a maneuver was performed. Sirens wailed and everyone showed up at predetermined points within five minutes.

Shademan said: “Normally, due to respecting safety requirements, we rarely face danger. Everything becomes so normal that we no longer think of any accident for which we have to be prepared. But if do not prepare ourselves regularly, we will be harmed. Accidents are always unforeseen.”

“Safety training is done regularly. Without any exception, everybody must attend such courses. We repeat this process until everything is stuck in our mind,” he said.

Maritime Cable Car

Exactly in front of FPSO Cyrus lies the wellhead platform of SPOL. The key point is that these two parts are linked by a cable car which is one-of-the-kind in the petroleum industry.

Shademan said the idea of building this cable car came from the director of the Kish operational zone, saying: “Two persons are always deployed on the wellhead platform. Therefore, they should receive food and necessary materials regularly. Throughout the week we need to perform maintenance on the platform and people should go to the wellhead platform. For this purpose, we used tugboats until years ago, but under such conditions in case of bad weather it was no longer possible to move persons to the wellhead platform. Sometimes, we may face bad weather conditions for several days. On the other hand, leasing these tugboats and their fuel cost is high. Therefore, it was decided that we use cable cars. We designed and built it.”

We boarded the cable car. Two wire ropes connect FPSO Cyrus to the wellhead platform. On the face of it, it does not look secure, but it is so exciting that I prefer to experience it. We have five minutes to walk a 100-meter distance from the vessel to the wellhead platform. Shademan said the life vest we were wearing would save us even if we fell into the water. The cable car system does not look like complicated. Shademan said some modifications were being made to make it more comfortable and safer.

FPSO Cyrus Vigils

It is 11 pm. We go to the control room which has a section for processing, and another for storage tanks. Three persons are covering the graveyard shift. Mohammad Shahsavari, a 34-year-old petroleum engineer from Shiraz, has experience working in Siri Island and Gachsaran. He prefers by far Siri Island.

Kharazmi serves us coffee so that we can stay awake. As he was talking to us, he had an eye on the monitor. The staff here stay on the vessel for two weeks and then they have two weeks off. It may look attractive at first, as one would be with family for two full weeks. While sipping his coffee, Kharazmi said: “This job has advantages and disadvantages. You spend half of your life far from your family, far from relatives, friends, and home. There are moments when the silence of the sea is no longer attractive as it makes you sad rather than happy. Being here on the FPSO Cyrus is a sign of love for my job.”

When I said he did not look like to be stressed, he smiled and said: “It is silent and calm here, and sometimes this silence makes us feel sleepy during the night, but sleeping is out of the question here. We have to stay awake. But our job of monitoring is so stressful that we can never get rid of it. Our mind is awake even when we feel sleepy.”

Mohammad Ahmadi, the operator of the loading section, is 33. He comes from Khorramabad. He has already worked in mines. He said that the alternating shiftwork there divided life into voluntary and involuntary parts.

Utilities: Beating Heart

Morteza Torabi, head of utilities, took us to the engine room of FPSO Cyrus. It was 1:00 am. He said: “Water, power, and steam supply for oil processing is a must. This section is functioning well. We stay there for one hour.”

It is 2:00 am and we are back in the control room. My peer feels exhausted. Kharazmi offers to serve us coffee. I never turn down such an offer, even my colleague who normally evades coffee accepts the offer. We drink coffee a second time. Everyone is working silently. We say goodbye to them and we go to the top five. From the spot I am standing FPSO Cyrus is surrounded by oil and gas platforms in the Persian Gulf. It is blowing gently. FPSO Cyrus’s light is in contrast with absolute darkness dominating the sea. It reminds me of Dostoevsky's White Nights. The landscape is beautiful. For me, the sea is attractive only for several hours due to its silence. But I am sure I cannot stay there for two weeks, in which case even sunrise would no longer be beautiful. The silence of the sea and oil and gas platforms would no longer look beautiful. I would like to set foot on the ground. On the sea, I feel threatened every moment without having any way to escape. Those working there have a tough job. They are producing oil amid unequal rivalry with the Qataris, regardless of sanctions.

More Local Companies Involved in Oil Projects

Faced with tough sanctions, Iran’s petroleum industry has over recent years, sought to minimize its dependence on foreign companies in implementing key production and development projects. Although that has inflicted damage on this industry, not to mention sanctions, what used to be a mere slogan – “We can” – is now a reality. According to the latest statistical data, 65% of first-time manufacturing projects have been implemented under the 13th administration. Iran’s petroleum industry has taken supportive measures in favor of knowledge-based companies to facilitate conditions for domestic manufacturing. Gholam Reza Khansari, director-general of technology supply and commercialization of the Ministry of Petroleum, has said: “More than a decade has passed since the petroleum industry embarked on efforts for the domestic manufacturing of petroleum industry parts and equipment and local development of technical knowhow. The Ministry of Petroleum has not backed down over these years.” He put the value of first-time manufacturing projects in the petroleum industry at $80 million under the 13th administration.

Sanctions-stricken Iran has facilitated the involvement of knowledge-based companies in the petroleum industry in a bid to fill the void left by foreign companies. To that effect, knowledge-based companies have been added to the long list of petroleum industry manufacturers. Moreover, special privileges have been given to such companies.

Government support for local manufacturers has been to the extent that Khansari has said planning was needed for the future presence of these companies in the petroleum industry. Local markets might be saturated with products that these companies would supply, which may pose challenges in terms of marketing products. That explains why the 13th administration has been holding a special view on the export of technical and engineering services.

663 Local Companies

Currently, more than 663 knowledge-based companies are cooperating with Iran’s petroleum industry. This number was 500 last March. Currently, 420 knowledge-based companies are on the Petroleum Ministry list with the rest being involved in research projects for the petroleum industry. Such growth in the number of knowledge-based companies shows that the 13th administration has practically supported knowledge-based companies. According to the Office of Vice President for Science and Technology, 189 of these companies are nascent, 336 are innovative and 138 are technological. According to the same

data, the Ministry of Petroleum came first in domestic manufacturing in the past two years. More than 54 agreements have been signed for first-time domestic manufacturing. The Ministry of Petroleum has signed agreements with 43 knowledge-based companies. Furthermore, the first-time manufacturing agreements concluded so far amount to $80 million, up 500%. Therefore, in terms of value, the 13th administration accounts for 80% of all first-time manufacturing agreements signed so far. Owing to these agreements, more than $350 million has been saved in first-time manufacturing.

The first-time manufacturing agreements have been signed by the four main subsidiary companies of the Ministry of Petroleum. Of a total of 54 signed agreements, 22 belong to the National Iranian Oil Company (NIOC), 21 to the National Iranian Gas Company (NIGC), 7 to the National Iranian Oil Refining and Distribution Company (NIORDC), and 4 to the National Petrochemical Company (NPC). These agreements are worth $80 million, while more than $127 million in agreements are underway for first-time manufacturing. These figures show a significant growth in first-time manufacturing in the current calendar year compared with the preceding year.

The Ministry of Petroleum currently has 81 agreements worth $77 million with universities and research institutes. Except for first-time manufacturing agreements, the rest have been signed with the Ministry of Defense. There are 7 agreements with the Ministry of Defense for $2 billion plus IRR 10 billion.

$20mn Catalysts Sold to Russia

Selling $20 million worth of catalysts to Russia, cooperating in Venezuela’s El Palito refinery, and using more than 65,000 Iranian-made commodities at this refinery are among such supportive measures. Iran is also providing technical and engineering services to petrochemical plants in Venezuela, estimated to be worth $100 million.

Knowledge-based manufacturing companies have been mainly involved in domestic manufacturing by supplying commodities for domestic use. However, some of these products have been used at petrochemical plants or refineries. In some nations, where sanctions have inflicted heavy damage or European commodities are costly, Iranian products have become popular. Due to sanctions, Iranian companies have managed to acquire the necessary technical know-how and they are currently exporting technical and engineering services.

To support domestic manufacturing, the Ministry of Petroleum has banned the purchase of foreign commodities. More than 205 items of commodities have been introduced by the minister of petroleum to the subsidiaries of the ministry. Furthermore, about 86 more items are under review.

Today, the issue of exporting technical and engineering services and reviving diplomacy with other nations is of high significance. Iran’s diplomatic ties with Russia, South Africa, Latin America, China, and regional nations represent a good example of such interaction. The roadmap designed for Russia is very solid, based on which some agreements have been signed.

Lab Quality

As it would cost local knowledge-based companies high to receive international quality certificates while the process of issuance of international certificates for exporting companies is complicated, Iran has established an international credit scoring center, seeking to connect Iran’s Petroleum Association to the international quality system. To that end, talks have been held while some permits have been received, which will be endorsed by the Petroleum Association in the coming months.

Due to these changes in quality determination, the petroleum industry plans to arrange its labs. Although the labs have already received an ISO 17025 certificate, they cannot offer services to the petroleum industry equipment at a high-quality level. Therefore, Iran has managed to rearrange these labs to minimize accidents in the petroleum industry. These labs are mainly private and outside of the petroleum industry.

First Mini-LNG Project Construction Kicks Off

Vahid RezaZeidifard, deputy minister of petroleum for engineering, research, and technology, has said construction has started for the first mini-LNG project in the country.

He said the mini-LNG facility was aimed at coping with the gas imbalance challenge at Arfa Iron and Steel Co. (AISO).

He said that liquefied natural gas (LNG) development projects are two decades old now in Iran, adding that several phases of the giant South Pars gas field had from the very beginning of development in the early 2000s been envisaged for LNG. “At the same time, four massive LNG projects were defined for Iran to join the global LNG trading,” he said.

“For the operation of these four projects, several non-American oil and gas giants agreed to participate, and subsequently technical and economic feasibility studies got underway, but the projects were halted as sanctions were tightened,” he added.

Zeidifard said: “Despite challenges and ups and downs, the Ministry of Petroleum, via the Oil Industry Pension Fund (OIPF), has managed to push ahead with one of the four projects acceptably; a power plant and storage tanks have been built for Iran LNG.”

“For this project, negotiations were held with an international company. One key objective sought by the Ministry of Petroleum during negotiations was to pave the ground for the transfer of technical know-how in LNG production and storage and narrowing the technological divide” he said.

KOGPC Oil Output Up 145%

Hassan Shahrouei, CEO of Karoun Oil and Gas Production Company (KOGPC), said the company had enhanced its production by 145%.

“Over 27% of Iran’s required oil is supplied by KOGPC. Following a plan formulated by the National Iranian Oil Company (NIOC) and building necessary infrastructure, particularly in equipment and pipeline reparation, we have achieved a 145% output increase,” he said.

He said about 350 km of pipeline was assessed, adding: “Launching 15 cathodic protection stations andmaking 25 processing modifications are among measures taken.”

“Supporting domestic manufacturing is a key sector helping the stability of the system. For this purpose, knowledge-based companies manufactured 220 items, and 3,000 parts worth more than IRR 140 billion. Furthermore, more than 170 items (1,500 parts), worth IRR 200 billion, were repaired. Then we prepared our equipment for operation,” said Shahrouei.

“We have taken very good measures in terms of well workover, restoration, and development, which were all unprecedented. That hasincreased 163 tb/d of oil production.

Post-Sanctions Oil Output Record Hit

Ali Reza Daneshi, the CEO of the National Iranian South Oil Company (NISOC), has said that the highest oil production level since the 2018 re-imposition of sanctions on Iran’s petroleum industry has been achieved.

“After so many years, we are currently in the best post-sanction production conditions. That has been achieved thanks to efforts made by local manufacturers and knowledge-based centers,” he said.

Noting that about 19,500 items of commodities had been domestically manufactured for the upstream petroleum industry, he said: “7,500 items of basic commodities that had pinned down the former administration in the oil production sector due to sanctions are planned to be manufactured.”

Daneshi said a bottleneck in the petroleum industry was manufacturing rotary machinery, adding that manufacturing such machinery was being pursued seriously.

He said that five new items of commodities were unveiled during the recent petroleum industry equipment exhibition in Ahvaz, Khuzestan Province, adding that 8 agreements had been signed.

$8.4bn Investment Needed in ICOFC Projects

Iranian Central Oil Fields Company (ICOFC) Chairman Peyman Imani has said that $8.4 billion would be needed for developing oil and gas fields, as well as building gas compressor stations.

“Construction of gas compressor stations at Kangan, Homa, Varavi, Naar, Tang Bijar, Shanol, Dehloran, and Sarkhoun would require $880 million, $423 million having been attracted for Homa, Varavi, and Dehloran compressor stations and Tabnak separation center,” he said.

Regarding investment in the development of ICOFC gas fields, he said: “The investment needed for developing gas fields stands at $3.4 billion. These fields include Halegan, SefidZakhour, SefidBaghoun, Dey, 2nd phase ofAghar and development of the Farashband refinery, Madar, Paznan, Eram, Khar Tang, Gardan, Tous, Baba Qir, and Bistoun. So far, $100 million has been provided for developing the Dey, 2nd phase of Aghar, Khar Tang and Tous fields and agreements have been signed.”

Imani also touched on the development of oil fields, saying: “The oil fields up for development include Aban, West Paydar, CheshmehKhosh, Dalpari and East Paydar, Dehloran EOR, Shakheh, Shoroum, Kuh Rig, Doroud,Saman, Sumar and Delavarn.

$275bn Investment Needed in Oil & Gas Fields

Ahmad Rajabi, the director of corporate planning at National Iranian Oil Company (NIOC), said about $275 billion would be needed to be invested in crude oil and natural gas production during the 2024-2041 period.

“Pioneering and strategic projects for crude oil and natural gas production have been defined at NIOC,” he said.

Regarding pioneering projects, he said achieving 5.5 mb/d oil output by 2031 and preserving production by 2041 was planned with an investment of about $150 billion. Furthermore, he added, production of 1.5 bcm/d of gas by 2031 and preserving output by 2041 was planned by about $125 billion in investment.

Referring to investment in the oil sector and increased production, he said: “By investing about $600 million by March 2024, oil production is forecast to reach 3.6 mb/d, which would reach 4 mb/d by March 2025 via investing about $3 billion".

Rajabi said under the 13th administration, oil production increased from about 2.1 mb/d to 3.4 mb/d.

Under the 13th administration, $4 billion worth of agreements have been signed for developing five oil and gas fields, three of which Iran shares with neighboring countries.

Iran Oil & Gas Production to Continue for a Century

Mohsen Khojasteh-Mehr, the CEO of National Iranian Oil Company (NIOC), has said oil and gas production in Iran would go on for a century.

“Given the current volume of oil and gas reserves, oil and gas production would continue in Iran for 90-100 years,” he said. “Iran is rich in underground resources, requiring long-term objectives.”

Khojasteh-Mehr put Iran’s crude oil and natural gas reserves at 340 billion barrels of oil equivalent (boe), adding that unconventional reserves were still excluded.

“We are making arrangements for shared oil and gas reserves and gas hydrates to be added to Iran’s oil and gas reserves,” he said.

“More than 50% of the investment needed for developing an oil and gas field pertains to drilling, which can affect the economic viability of a development project,” he added.

“The oil and gas industry is the main sector of national economy,” he said. Citing official data, he said the oil and as sectors had contributed 19.7% and 25.6%, respectively in the first and second quarters to national economic growth.

Khojasteh-Mehr said the drilling industry was cost-intensive but lucrative, adding: “In the past, we did not promise that those who get involved in this sector would receive privileges.”

He said that the drilling fleet had to be renovated and upgraded to guarantee oil and gas production surge.

“Iran is producing oil and gas from 5,000 wells. New wells need to be drilled to see a surge in production. That requires a drilling rig, downhole pumps, desalters, and other equipment,” he added.

“The bulk of Iran’s oil production comes from onshore fields, while its gas production mainly comes from offshore fields. Therefore, we need both light and heavy rigs,” he said.

The NIOC chief also said it was decided by the NIOC Board of Directors that 10-year service agreements would be signed with the private sector so that they would have peace of mind.

“Another point is that the agreements would be signed in foreign currency and advance payment would be made for purchasing or leasing drilling rigs. We have facilitated conditions for the macro-economy to become more popular,” he said.

“In the future, major agreements would be signed for oil and gas output hike, for which we would need drilling rigs,” he added.

Khojasteh-Mehr also said that gas compression project would require $20 billion in investment, which would be operated for the first time in the country.

Iran Joins LDPE 1969 Producers Club

Iran has started producing the LEC 1969 grade of low-density polyethylene, known as LPDE 1969, which is used in coating extrusion.

Iran is now the third country to produce this grade in the world, which would save $15 million in hard currency a year and let the country produce higher-value products for more profitability.

This product is developed as general-purpose application in extrusion coating segments. LEC 1969 can be used on low and also very high-line speed extrusion coating and lamination processes. When processed on suitable hardware, LEC 1969 exhibits excellent draw-down ability, good edge stability, and low neck-in. Due to its excellent draw-down ability and good adhesion, very thin coating layers can be applied on the substrate.

The most important applications of this grade are in aseptic multilayer packaging, the inner lining of paper cups, coating on printing paper, packaging of injection syringes, postal envelopes, packaging of food and health sachets, disposable hospital sheets, and other similar cases.

Mostafa Ranjbar, director of polymer processing at Arya Sasol, said LEC 1969 was the first grade specialized for coating extrusion in Iran.

Referring to growing global demand for this product, he said: “Iran is the third producer of this grade in the world, behind Saudi Arabia’s SABIC and Dow Chemical.”

He said the first commercial-scale production of this product was in November 2022, adding: “In addition to being used by several domestic companies, it was provided to several foreign customers who gave positive feedback.

Persian Gulf Star Refinery Desalting Capacity Up

Ali Reza Jafarpour, the CEO of the Bandar Abbas Gas Condensate Refinery, has announced that the treatment facility has seen its desalting capacity increase by 100 tb/d.

He said the world’s largest condensate refinery, commonly known as the Persian Gulf Star, would be able to export kerosene.

Following modifications to the naphtha and gasoil hydrotreating units, the desalting capacity of these units had increased 40 and 65%, respectively. Overall, the hydrotreating capacity of these two key units increased 48 kb/d.

“The operation of the second gasoil hydrotreating unit of this refinery had been out of service due to a rotary gas compressor and other control problems in recent years, but now 42 tb/d has been added to the hydrotreating unit of this product,” said Jafarpour.

“In view of the possibility of changing the operating mode of the kerosene desalting unit, it is possible to feed more feedstock into this unit and facilitate treatment of 10 tb/d of hydrogen,” he added.

Jafarpour also said that the Persian Gulf Star refinery could now produce and export euro-5 kerosene rather than exporting valuable components required for gasoline production in the country.

“By delivering the refined components of gasoline to National Iranian Oil Products Distribution Company (NIOPDC) and creating a value chain of this valuable product, it is now possible to produce 10 ml/d of gasoline,” he said.

Jafarpour said that gasoline delivery to NIOPDC had increased from 33.5 to 43.5 mb/d over the past two years, thanks to modifications in the operational sections of the refinery.

Hydrogen Technology Requires Scientific, Governing Structure

Majid Chegeni, the CEO of the National Iranian Gas Company (NIGC), has said the development of hydrogen technology in Iran would require a governing and scientific structure.

He said that Persian Gulf Arab states were ahead of Iran in terms of hydrogen technology development.

He noted that hydrogen would undoubtedly be a key link in the energy chain, using its special features towards sustainable development and clean energy.

“Today, hydrogen is a good choice for clean fuel supply, as well as supplying energy to vehicles, households, and power plants,” said Chegeni.

Emphasizingthe necessity of planning for presenting a comprehensive image of the hydrogen value network and capacities for producing various grades of energy in Iran’s gas industry, the NIGC chief said it would be a strategic and key step towards developing a comprehensive view of this technology that has various stages.

“Identifying and analyzing the hydrogen value network would be the first phase in this plan, including data gathering,” said Chegeni.

“Planning, identifying, and assessing all capacities of hydrogen production with an approach for optimization and effective use of various resources in the country is the most accessible choice in the country. By formulating a comprehensive image of the hydrogen value chain from the gathered data, a comprehensive and complete image of the hydrogen value network in the Iranian gas industry will be presented, which would include the volume of production, consumption, transport, and capacities of hydrogen use,” he added.

MOGPC Meets Targets at 100%

Qobad Nasseri, the CEO of Maroun Oil and Gas Production Company (MOGPC), has said that the company has fully achieved its production objectives.

“Despite obstacles caused by oil sanctions imposed on our country, we managed to fully realize the NIOC-instructed production plan by relying on the potential of service workers and collaboration of manufacturing companies and knowledge-based companies, as a result of which we have been delivering high-quality products as feedstock to refineries and also for exports,” he said.

“Designing and reforming processing at the Shadegan separation center and production centers 3 and 4 of Maroun to facilitate production hike up to 120 tb/d and installing a desulfurizing hydrogen tower at production center No. 5 with a capacity of 40 tb/d are among the main modifications aimed at output hike,” he added.

Nasseri said that Walworth welded valves, as well as Wagi valves had been repaired for the first time at the Maroun injection station. Besides, the overhaul of oil pre-heating furnaces at Maroun 3 and 4, the overhaul of desalters in Maroun 1 and 4 adding one train to the Maroun-4 compressor station, and gathering 15-20 mcf/d of flare gas had been done.

“Risk assessment of MOGPC pipes for 3,800 km, building 35 km of 10-inch pipeline (26 km from Shadegan cluster to Maroun 3 and 10 km from Maroun 3 to Maroun 4) to enhance production by 20 tb/d, boosting safety and replacing defective parts have been effective projects,” he said.

Nasseri said that capturing more than 90% of associated petroleum gas and reducing gas flaring to below 7% was the most significant service rendered by the petroleum industry to people and the environment.

South Pars Compressor Projects Need $20bn Investment

Minister of Petroleum Javad Owji has said that $20 billion would be needed to be invested in gas compressor projects of the giant offshore South Pars gas field.

“Implementing gas compression projects is among key projects of the petroleum industry. It will get underway soon,” said the minister.

He also reiterated the need to hire as much local manpower as possible, adding: “Last [calendar] year, 753 contracts worth $392 million plus IRR 72 trillion were signed with knowledge-based companies involved in the petroleum industry.”

Noting that sanctions did not keep Iran’s petroleum industry from going ahead, he said: “Nearly $150 billion has been invested in the Pars Special Economic Energy Zone (PSEEZ) in recent years, while technical and engineering services have been delivered to other countries. Of course all administrations have experienced development, but it accelerated in the 13th administration.”

He said Iran faced serious challenges in oil exports when the 13th administration took office in September 2021, adding that the challenges were overcome, while the completion of 133 incomplete projects, worth $28.5 billion, was propelled up the agenda to boost production.

Elaborating on the petroleum industry achievements under the 13th administration, Owji said: “60% increase in oil production, achieving 1 bcm/d of natural gas and 760 tb/d of condensate production, achieving 96 mt/y of petrochemical production capacity, enhancing the refining capacity by 230 tb/d after operation of the second phase of the Abadan refinery development plan, increasing gas production and processing capacity by launching the refinery of SP14 and subsequently 50 mcm/d processing capacity are all achievements of the petroleum industry.”

He also said that 50 new projects had become operational with a view to increasing production and generating value-added in the upstream and downstream sectors.

“By implementing new refining projects, nearly 2.2 mb/d of new refining capacity would be built in the country. We have also started quality upgrade projects at refineries,” said Owji, adding that the gasoil quality upgrade project at the Isfahan refinery had come online.

“At the SP11 development project, which was our last offshore spot in the no man’s land, the project was entirely operated by Iranian engineers under the 13th administration. Five wells have come online while 12-15 mcm/d has been added to national gas recovery capacity.

Quality Upgrade at Iran Refineries

Four decades ago, Iran’s refining capacity stood at 1.1 mb/d. The country is currently processing 2.2 mb/d of crude oil. Iran’s recoverable hydrocarbon reserves were estimated at 88 billion barrels in 1978, but now despite the extraction of 50 billion barrels over these years, the country still sits atop 160 billion barrels of oil equivalent. Ever since taking office, the 13th administration has embarked on huge efforts to boost the quality of refined products and it has achieved acceptable success despite sanctions in effect. Building and launching advanced refining units under refining development plans and manufacturing necessary refining equipment and in some cases necessary catalysts have all been the achievement of resisting sanctions. In addition to becoming self-sufficient in the oil and gas refining industry, Iran is also overhauling refineries in Latin America.

Environmentally-Friendly Persian Gulf Star

Natural gas supplied by the giant offshore South Pars gas field makes up a big share of the country’s fuel basket. Its increased production should naturally go on. For this purpose, arrangements have been made in recent years to receive gas condensate for feeding the Bandar Abbas Gas Condensate Refinery, commonly known as the Persian Gulf Star Refinery.

The refined products supplied by the Persian Gulf Star facility are more environmentally friendly than those of other refineries. The head of the National Standards Organization has acknowledged that the aromatics content of Persian Gulf Star products, including benzene, is acceptable. The head of the Department of Environment also maintains that the Persian Gulf Star refinery is fitted with clean technology which is instrumental in removing environmental pollution. Its products include gasoline with octane over 91 and its below-one-percent benzene is more environmentally friendly. Truly speaking, it may be said that the supply of high-value products by this refinery would incentivize the car manufacturing industry to import cars with less pollutant engines.

Imam Khomeini / Bandar Abbas Refineries

Following the Perian Gulf Star refinery, the Imam Khomeini refinery in Shazand is producing 17 ml/d of high-quality gasoline and 11 ml/d of gasoil. Increasing the rated processing capacity from 169 tb/d to 250 tb/d, increasing gasoline production from 4.6 ml/d to 17 ml/d, cutting fuel oil production, and desulfurization of products in compliance with the euro-5 standard have been among the objectives of the development of the Imam Khomeini refinery.

The Bandar Abbas oil refinery, supplying 15 ml/d of gasoil and 12 ml/d of gasoline, is another treatment facility helping upgrade refined products both quantitatively and qualitatively. Once completed and finalized, it would see its gasoil treatment unit come fully online. The main objective of quality upgrade at the Bandar Abbas refinery has been to improve the quality of products in line with environmental objectives and reduce the sulfur content of gasoil production in compliance with the euro-5 standard, an objective realized by installing isomerization and diesel refining units.

Chief among the points taken into account when the project was being implemented, were the heavy crude oil fed into this refinery, energy management, as well as reducingfuel used in the refinery, and the amount of waste. Adding 5 ml/d to the refinery’s gasoline production and upgrading the quality of gasoil based on the euro-5 standard by building new units have been among the objectives of this project, which have come fully online.

Isfahan Refinery

The processing development plan, enhancing the quality of products at the Isfahan refinery to increase gasoline production from 41 tb/d to 120 tb/d and upgrade the quality of products up to European standards was recently adopted. To that effect, increasing gasoline production by 3 mb/d based on euro-5 standards, removing octane enhancers, the possibility of premium gasoline production as well as euro-5 diesel production have become operational. Currently, gasoline production units and associated facilities have come fully online and other projects are being completed. Recently, its gasoil hydrotreating project was launched to bring the refinery’s euro-grade gasoil output to 20 ml/d.The Isfahan refinery is currently producing 12 ml/d of gasoline, playing a key role in high-quality fuel production and supply.

The gasoil refining unit of the Isfahan refinery recently came on-stream. In addition to boosting the quality of gasoil at the refinery and producing more than 16 ml/d of euro-5 gasoil, it would be possible to produce 26 m/d of euro-5 gasoil shortly in the cultural capital of Iran.

By commissioning this massive environmentally friendly project, besides supplying all euro-5 gasoil needed in Isfahan and other provincial cities, key environmental steps would be taken to implement the “Clean Air Act” by this facility which has recently become a petrochemical refinery. This project was launched to boost the quality of petroleum products and reduce sulfur contents while protecting the environment at the Isfahan oil refinery. Its implementation has resulted in reducing the sulfur content of gasoil at the refinery from 10,000 ppm to 10 ppm, while 300 tonnes a day of sulfur would no longer be emitted into the air.

The capacity of the gasoline refining project at the Isfahan refinery is 100 tb/d, producing nearly 17 ml/d of gasoil conforming to euro-5 standards.

By launching the gasoil hydrotreating unit of this refinery, more than 20 ml/d of euro-grade gasoil (sulfur content less than 50 ppm) would be produced in the country. Overall, more than 70 ml/d of euro-grade gasoil would be produced, which would be a breakthrough for Iran’s Ministry of Petroleum.

Fuel Supply in Northwest

The gasoline production unit of the Tabriz refinery has, in recent years, helped distribute 3 ml/d of high-quality gasoline in northern and northwestern Iran. The desulfurization unit of the Tabriz refinery has come online. By completing the commission process of this project, 6 ml/d would be added to the national euro-5 gasoil production capacity. The quality upgrade project at the Tabriz refinery would include designing and installing the CCR-type naphtha refining unit and the gasoil refining unit to reduce the sulfur content of gasoil based on the euro-5 standards. The quantitative and qualitative

upgrade of gasoline to produce high-octane fuel based on euro-5 standards, removing MTBE from the gasoline, and supplying 750 b/d of gasoline to the Tabriz petrochemical plant, as well as euro-5 gasoil production are among the objectives of this project.

Tehran Refinery Quality Gasoil

More than a decade has passed since the Tehran refinery started producing gasoil and gasoline of high quality. The facility is currently producing 7 ml/d of gasoline and 12 ml/d gasoil, both euro-grade. The main objective sought in the product quality upgrade at the Tehran refinery is to improve the quality of products in line with environmental objectives and reduce the sulfur content of the gasoil and kerosene in line with euro-5 standards. Upgrading the quality of gasoline by increasing the octane number of light naphtha to be blended with the gasoline and making efforts to obtain the euro-5 standard for gasoline, gasoil, and kerosene production is another objective sought in the development of the Tehran refinery. This project is currently operational.

Lavan Island

The first consignment of euro-5 gasoline (8,000 liters)from the Lavan refinery was loaded two years ago to be used domestically. It was the contribution of the Lavan refinery to high-quality refined product supply. The first phase of the plan to improve the refining process of this facility came online in 2011 to increase the treatment capacity of the facility from 30 tb/d to 55 tb/d. Two years later, the light naphtha hydrotreating and isomerization unit of the refinery became operational. In 2015, the hydrotreating unit of the middle-distillate products of the refinery came online while two years later, the sulfur production as well as gasoil and kerosene desulfurization unit became operational to supply products in compliance with euro-4 and euro-5 standards.

The planned increase in capacity and improved processing of the Lavan refinery for capacity increase, reducing pollution, upgrading the quality of products to euro-5 standards, increasing light products output, reducing low-quality and heavy factions like fuel oil and energy efficiency program have become operational at this refinery. The project is aimed at increasing the refining capacity to 50 tb/d, adding to euro-grade gasoline production, desulfurization, and euro-grade production.

Mideast Oldest Refinery

The second phase of development of the Abadan refinery came online in March 2023 by designing, building, and installing the largest distillation unit in West Asia with a capacity of 210 tb/d and the vacuum distillation unit with a capacity of 100 tb/d.This megaproject is endowed with many features, setting some regional and global records. The design, construction, and installation of the largest hydrocracking unit in the Middle East with a capacity of more than 42 tb/d is a key feature of this massive oil project. Furthermore, designing, building, and installing the largest hydrogen furnace in the Middle East, weighing 1,500 tonnes, has created a regional record for this project.

Besides, designing, building, and installing the tallest refinery flares, measuring 120 and 125 meters, is an outstanding feature of this oil project. The refinery also enjoys the largest naphtha hydrotreating unit with a capacity of 65 tb/d.

Polisher at Kermanshah Refinery

The polisher unit of the Kermanshah oil refinery was installed and launched in February 2023. Using the returned gas condensate to feed boilers for steam generation is a high-risk issue at all refineries. Therefore, building all units including DM and polisher is instrumental for gas condensate refining.

Nearly 13 years ago, a polisher package was purchased from a British company. It was located, installed, and launched by Iranian experts despite all restrictions.

Due to insufficient technical information and a lack of knowledge about instructions, the technical and engineering division managed to launch the unit with water, but in the final state, they had to inject acid and base into the system. The second phase was launched after the implementation of the necessary repair work. Owing to relentless efforts made by engineers and collaboration on the part of operation units, the polisher unit came on stream after one and a half years of work. A condensate polisher is a device used to filter water condensed from steam as part of the steam cycle, for example in a conventional or nuclear power plant (powdered resin or deep bed system). It is frequently filled with polymer resins which are used to remove or exchange ions such that the purity of the condensate is maintained at or near that of distilled water.Condensate polishing typically involves ion exchange technology for the removal of trace dissolved minerals and suspended matter. Commonly used as part of a power plant’s condensate system, it prevents premature chemical failure and deposition within the power cycle which would have resulted in loss of unit efficiency and possible mechanical damage to key generating equipment.

Recently, as new quality upgrade projects have become operational, euro-4 gasoline is being distributed all over Iran. With the completion of Bandar Abbas oil refinery, Bandar Abbas gas condensate refinery, and Tabriz oil refinery, the overall gasoline production conforming to euro-4 and euro-5 grades has increased to 90 ml/d. Iran’s gasoline production was 59 ml/d in 2012, which has now reached 107 ml/d.

Petchem Projects Go On with Value Completion Chain

Iran’s petrochemical industry production capacity has already crossed 95 mt/yr. Plans are underwayto more than double it by the end of the 8th National Economic Development Plan.

AbdolAli Ali-Askari, the CEO of Persian Gulf Petrochemical Industries Co. (PGPIC), said recently that the company would be operating more than 28 projects, some of which would be ready to come online by the end of the current calendar year.

The Hengam ammonia project, the Nakhl Asmari petrochemical plant, and the ethylene oxide unit of the Maroun Petrochemical Plant are among the projects set to come on stream this calendar year. Moreover, six projects operated by PGPIC’s Petrol subsidiary are expected to become operational. They include the Sadaf Petrochemical Plant (green tire production), Arghavan Gostar Ilam, Armand Lordegan Crystal Melamine, Urmia Poly Aluminum Chloride, Mahshahr Petro Parak Pouya and Sonqor Methyl Amide.

The present article aims to reviewthe projects underway in parallel with the value chain completion initiative.

Hengam Project

The Hengam petrochemical plant’s ammonia and urea project is located in the Pars Special Economic Energy Zone (PSEEZ). A contract was signed with several foreign companies in 2008, but they pulled out under the threat of sanctions and the project was halted. In the following years, the project was revived. The Hengam petrochemical plant is close to operation with capacity to produce 2,200 tonnes a day of ammonia and 3,500 tonnes a day of urea, lying on 25 ha.

This project has set a record due to 18 million person-hours of accident-free work. Ali-Askari said recently in coincidence with the Hengam petrochemical plant, Jetty No. 17 would come online. With the inauguration of this jetty, it is possible to load ammonia on vessels to be exported.An exclusive intelligent and mechanized system for precisely locating vessels and unique loading arms are among the outstanding features of this jetty, which could be described as the first cryogenic arm made in Iran for loading ammonia.

Nakhl Asmari

The investment made in Nakhl Asmari Petrochemical Company is estimated at €35 million for ongoing projects and €430 million for new projects. Located in the Mahshahr Special Economic Zone, the Nakhl Asmari project has remained mothballed for years. It has been revived by the 13th administration. Its production capacity stands at 66,000 tonnes of formalin, 6,000 tonnes of acetaldehyde, 10,000 tonnes of paraformaldehyde, 15,000 tonnes of pentaerythritol, 10,000 tonnes of sodium format, 60,000 tonnes of biodegradable plastic and 40,000 tonnes of POM. The final products of this company are at the end of the petrochemical value-added chain, being supplied for the first time in the country.

The pentaerythritol unit is fed with formalin and acetaldehyde. Methanol, as the raw material for formalin production, is supplied by a petrochemical plant while ethanol, as the raw material for acetaldehyde, would be supplied by provincial companies in Khuzestan. The final products supplied by the Nakhl Asmari project are at the end of the value chain, being produced for the first time in the country.

Maroun Ethylene Oxide

This project has been implemented to prevent the sale of MEG products. Maroun Petrochemical Company’s investment in this project totals €12.5 million plus IRR 1,900 billion.This petrochemical unit is also located in the Mahshahr Special Economic Zone. It can produce 45,000 tonnes of pure ethylene oxide to be supplied to the Petronad Asia project that would feed gas refineries with MDEA. The ethylene oxide project is more than 99% complete now. It is expected to come online by next March. Trial production from the pharmaceutical glycerin unit of Petronas Asia would be carried out simultaneously, which would largely supply local pharmaceutical needs.

Sadaf Petchem (Green Tire)

Persian Gulf Sadaf Petrochemical Company (PGSPC) is the largest elastomer production plant in the region, which would supply 136,000 tonnes a year of styrene butadiene tire to supply local and global markets. It lies on more than 8 ha of land in Phase 2 of PSEEZ. The idea behind this project is to implement the petrochemical unit of the styrene-butadiene tire, using the E-SBR method to supply feedstock to the tire manufacturing industry. Each tonne of products from this petrochemical plant is valued at $1,700. Therefore, the 136,000-tonne Sadaf project would be a major source of income for Iran.

Arghavan Gostar Ilam

The project has been implemented to complete the value chain of the Ilam Petrochemical Plant by converting propylene to polypropylene, creating more value-added, creating jobs, and developing downstream industries. The project can produce 150,000 tonnes of PP a year. It would receive feedstock from the olefin unit of the Ilam Petrochemical Plant and some other sources. The main issue with this project is that PP would be added to PGPIC’s mix, which would in turn end Iran’s dependence on imports. This project would create 220 direct and more than 2,000 indirect jobs.

The Arghavan Gostar project is estimated to receive €51.26 million plus IRR 17,550 billion investment. The investment in Iranian currency has been provided by banking facilities and the capital market, while the hard currency investment has been provided by PGPIC.

Lordegan Crystal Melamine

The crystal melamine project of the Lordegan Petrochemical Plant is aimed at completing the value chain of petrochemical products and creating jobs in provinces located far from petrochemical centers. The Petro Armand project would complete the urea chain. This 40,000-tonne unit would double Iran’s crystal melamine production capacity. In parallel, planning has been made for building the first melamine park near the Urmia Petrochemical Plant. Crystal melamine is widely used in the wood, paper, painting, leather, textile, glue, and tire industries among other sectors. Turkey, India, and China are among the main buyers of these petrochemical products. The necessary feedstock for the crystal melamine project would be supplied by the Lordegan petrochemical plant. Lying on 10 ha of land, it is estimated to cost IRR 14,000 billion.

Polyaluminium Chloride

Polyaluminium chloride is used mainly in urban and industrial water and wastewater treatment. With the launch of the Urmia polyaluminium chloride, the country would see its dependence on imports largely removed. This project, which shares space with the Urmia Petrochemical Plant, can produce 70,000 tonnes a year of products.

Petro Parak Pouya

With the implementation of the Petro Parak Pouya project in the Mahshahr Special Economic Zone, medical-grade caustic soda flakes would be produced for the first time in Iran. The region needs 30,000 tonnes of this product, which Iran can supply as the new project can produce 45,000 tonnes a year of medical-grade caustic soda flakes used mainly in pharmaceutical and cosmetic, battery manufacturing, metal, zinc and glass, food, dying, paper, leather, and textile industries. This small plant would create 300 job opportunities during the phase of implementation, and 150 more job positions during the phase of operation. It would also generate value-added and wealth.

Sonqor Methyl Amide

Negin Songor Chemical Industries Companycan supply 22,600 tonnes of products a year. Located in Kermanshah Province’s Sonqor Industrial Park, it would supply methyl amine derivatives including monomethyl amine, dimethylamine, and trimethylamine. The main raw materials are methanol and ammonia. It would need 31,000 tonnes of methanol and 10,000 tonnes of ammonia a year, both to be sourced locally. Necessary catalysts have been sourced by imports.

The petrochemical industry is a sector that can generate high value-added for the country after its value chain has been completed. The inauguration of every single petrochemical project would lead to the creation of jobs and bring about economic prosperity for the country.

Saipem to Appeal Brazil Sanctions Ruling

Brazil’s administrative authority Controladoria-Geral da União has served a sanctioning measure issued against Saipem SA and Saipem do Brasil.

This involves the temporary suspension from contracting with the Brazilian public administration for two years, based on alleged irregularities related to the award in December 2011 of a contract to install a gas pipeline.

The final ruling in the administrative proceedings is an amendment of the interim decision issued in late December 2022, which called for a ban on the two companies contracting with the Public Administration.

Saipem said the sanction has no impacts on its ongoing projects in Brazil as it applies solely to potential new contracts and concerns exclusively dealings with the Public Administration.

PGS Surveying Western Egypt Offshore Potential

PGS’ Ramform Hyperion is acquiring the EGY24 Nefertiti seismic survey in the Mediterranean Sea offshore Egypt, with support from the Egyptian Natural Gas Holding Co. (EGAS).

This is the latest of various surveys designed to improve understanding of shelfal and transform margin potential at the western extremity of Egypt’s offshore area.

The vessel is deploying a high-resolution GeoStreamer broadband spread to improve accurate imaging of structures over a location close to the Sidi Barrani-1 well.

Probable target reservoirs in the area are the SidiBarrani/Alam El Bueib Formation (Barremian age) sandstones and Middle Jurassic Khatatba Formation sandstones within structural traps.

Odfjell to Drill in Yme Field

Repsol Norge has contracted Odfjell Technology to provide drilling services on the jackupYme Inspirer, which produces oil from the Yme Field in the eastern Norwegian North Sea.

Services will include drilling, completion, recompletion, well intervention, maintenance, engineering and future P&A work.

The five-year firm contract starts this spring with two three-year optional periods. Estimated value of the firm period is NOK400 million ($38 million) and NOK1 billion ($95 million) including all options.

Odfjell Technology has also secured a contract from OSM Thome to perform upgrade and modification services on the Heidrun B FSU in the Norwegian Sea, owned by Heidrun operator Equinor and its partners.

Valeura Resumes Drilling Offshore Thailand

Valeura has issued an update on drilling campaigns at its producing fields in the Gulf of Thailand.

Late last year the company completed an infill drilling program on the Jasmine Field followed by infill drilling on Nong Yao. In total, last year the company added 26 wells, with all the campaigns delivering new production and a probable extension to the field’s economic lives.

In mid-December 2023, Valeura mobilized its rig to the Wassana Field, where a new infill drilling program of three horizontal development wells is now underway.

Santos to Resume Barossa Pipelay in Australia

The Federal Court of Australia has ruled in favor of Santos in a court case brought by Munkara against Santos NA Barossa Pty.

The court dismissed the application and discharged the injunction that had prevented offshore pipelay activities in the Timor Sea south of the kilometer 86 (KP86) point along the route of the Barossa gas export pipeline.

Santos can now resume in accordance with the environment plan. In December 2023, NOPSEMA, the Australian regulator, accepted Santos’ Barossa development drilling and completions environment plan.

COP28: Europe Tough Road to Renewables

Shuaib Bahman

The 28thConference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC), was held in Dubai, United Arab Emirates, from 30 November to 12 December. COP28 reviewed progress made by world nations about respecting the Paris Agreement on taking action to cut greenhouse gas (GHG) emissions and counter climate change. Representatives of nearly 200 nations attending COP28 agreed to gradually phase out fossil fuel consumption. They agreed to push ahead with the transition from fossil fuels in a fair, regular, and just way with a view to net zero by 2050.

While US climate negotiations have failed to make significant progress in achieving the set goals after three decades, the common position of EU member states at the COP28 event has oncemore become controversial; EU members unanimously emphasized carbon neutrality, phase-out of fossil fuels, and enhancing the capacity of renewable energies. This point of view of the Europeans is associated with the resolution of the European Council (EC) ahead of the COP28.

Evaluating the EC’s resolution and the plan raised by the EC chair at COP28 is highly significant. First and foremost, the Europeans’ view of the future climate conditions deserves praise because this ambitious climate project is aimed at saving the planet, global economy, and people by guaranteeing a just transition to economies and communities resistant to climate change.

The EU sought to adopt a unique position during COP28 in a bid to send a signal to the world that it is leading global efforts on the climate issue, noting it would keep negotiations until the Paris Agreement takes effect. According to the EC press release, “the main agenda items of COP28 are expected to be: the first global stocktake, the mitigation work program, the global goal on adaptation climate finance, including financial arrangements for Loss and Damage”. Member states also highlighted the importance of substantially scaling up global climate ambition to keep the 1.5°C objective within reach, in line with the Paris Agreement.

Challenges Ahead

Despite Europe’s ambitious outlook, there are serious challenges in the way ofmaterialization of these countries’ goals because the EU plans to reduce its net GHG emissions by at least 55% compared to 1990 by 2030 and achieve carbon neutrality by 2050 while it is unlikely that other major economies take serious steps in this direction. Reluctanceby others to join such plans does not only mean the failure of climate plans in the world, but it can remove Europe from the circle of major economic competitionbecause the transition from fossil fuels to clean fuels along with investment in renewables imposes double costs on the Europeans. It is likely that while Europe is paying these costs, rivals will think of outpacing economic activity and continue to use fossil fuels without spending any money.

On the other hand, the EChas called for global action towards the tripling of installed renewable energy capacity to 11 TW and the doubling of the rate of improvement in energy efficiency by 2030, while respecting each country’s national energy mix.Considering the considerations related to the national energy mix of each country indicates that others do not follow EU policies. Developing nations lack the necessary potential and capital to transition from fossil to renewable energies. Current estimates of the availability and consumption of energy in the world show that contrary to the Paris Agreement, GHGemissions have not declined; rather they would set a new record in 2023. It means that UN climate talks have failed to take any key step in achieving climate objectives.

Fossil energy producers remain firmly opposed to any abandoning of these energies. While the EU has called on governments to focus on renewables and phase out fossil fuels, producers of fossil energies stand against such a decision. That is why COP28 stopped short of calling for “abandoning fossil fuels” and it only called in its final statement for faster action in fuel transition.

Another factor that can block Europe’s ambitious plans is the exorbitant sum needed for energy transition. A new study conducted by the Potsdam Institute for Climate Impact Research shows Europe could wean itself off fossil fuels and create a self-sustainable energy sector by spending around € 2 trillion ($2.1 trillion) on solar, wind, and other renewable sources by 2040.

The report, led by the Potsdam Institute for Climate Impact Research, said the continent would require annual investments of €140 billion by 2030 and €100 billion a year in the decade thereafter to get there.

Big Investment in Renewables

Based on what was said above, Europe would need to make big investments in renewables to realize its ambitious objectives. Phasing out fossil fuels would not be that easy. However, it does not mean Europe’s idleness because the EU firmly believes that this objective is worth making an effort. Elimination of fossil fuel would be useful for Europe’s economy as it would help create new and sustainable jobs. The EU maintains that fossil fuel phase-out would be of help to public health. Fossil fuels are a major source of air pollution, whose elimination would reduce mortalities caused by pollution. Therefore, despite all challenges and difficulties, Europe is expected to take serious steps towards renewables.

The Postdam study also said while most of the sum would be needed for onshore wind expansion, solar, hydrogen, and geothermal resources would be additional pillars of a strategy that would enable Europe’s electricity needs to be powered exclusively from renewables by 2030.

“These figures are considerable, but it is important to remember that the European countries are estimated to have spent an additional €792 billion in the last year just on the status quo system to protect consumers from the impacts of the energy crisis introduced by the Russian invasion into Ukraine,” the study said.

Chances for Qatar-Iran Energy Cooperation

Shuaib Bahman

Qatar which is the world’s second-largest exporter of liquefied natural gas (LNG) is mainly known for selling fossil energies. However, in 2022, in coincidence with hosting the World Cup, it joined the market for renewable energy generation. Although Qatar had lagged behind its neighbors – the UAE and Saudi Arabia – concerning renewable energies, it has taken key steps in recent years. Inauguration of one of the largest solar plants in the Persian Gulf region and making efforts to produce blue ammonia while showing an inclination to invest hundreds of millions of dollars in Egypt and Britain for green hydrogen and ammonia production areamong Qatar’s important measures that can transform the future of this country in the energy sector.

The clean technology sector is rapidly growing in the world, which is due to the urgency of finding sustainable solutions and the need to reduce carbon emissions. The global market for clean energy technologies is expected to exceed $650 billion by 2030 or three times the current value.

Qatar is currently leading Arab nations in terms of investment in renewables. According to the Organization of Arab Petroleum Exporting Countries (OAPEC), Qatar, the UAE, Egypt, Jordan, Morocco, and Oman top the list of solar power in 2022. Doha is expected to concentrate on these sectors and launch more projects in the energy sector to boost its power of generation. Qatar has so far invested significantly in solar energy and blue ammonia sectors.

1st Solar Plant

In October 2022, Qatar inaugurated its first solar power plant, one month before the 2022 World Cup. The Al Kharsaah Solar PV Independent Power Producer (IPP) project is the country's first large-scale solar power plant and is set to significantly reduce its environmental footprint.The Al Kharsaah solar power plant was built in two phases of 400 megawatts-peak (MWp) each and therefore has a full capacity of 800 MWp. During its first year of operation, it is expected to generate almost two million megawatt-hours (MWh), the equivalent energy consumption of approximately 55,000 Qatari households.

The start-up of the Al Kharsaah solar power plant represents a milestone in the country’s energy history since it is set to produce 10% of its peak electricity demand at full capacity. Over its lifespan, it will also enable Qatar to reduce its CO2 emissions by 26 million metric tons.

The Al Kharsaah solar power plant covers 1,000 hectares (the equivalent of approximately 1,400 soccer fields) and features two million bifacial solar modules mounted on trackers for achieving substantial power gains.

The use of 3,240 installed string inverters further increases annual yield by allowing for better tracking of the maximum power point at the string level. The plant also features a semi-automated cleaning system for the solar modules that cleans the dust and sand off every single module once every four days.

Al Kharsaah is possessed and operated by SPV Siraj, a consortium formed by TotalEnergies and Marubeni (40%) and Siraj Energy (60%), the latter being a joint venture between QatarEnergy and QEWC (Qatar Electricity & Water Co.).

Apart from these facilities Qataralso plans to build two more giant solar power plants up to 2035 to generate more than 5,000 MW of renewables. In August 2022, QatarEnergy awarded a contract worth $630.33 million to Samsung C&T to build its industrial cities solar power project, which includes the construction of two solar photovoltaic (PV) plants with a combined clean power generation capacity of 875MW.Samsung C&T is executing the engineering, procurement, and construction (EPC) of the solar power plants.

QatarEnergyalso plans to build the world’s largest “blue” ammonia plant, which is expected to come online in the first quarter of 2026 and produce 1.2 million tonnes per year.

While conventional ammonia production emits CO2 if it is made with fossil fuel, during the production of blue ammonia any carbon dioxide generated is captured and stored.

The cost of the Ammonia-7 project is approximately $1.06 billion, according to a press release issued by QatarEnergy subsidiary, Industries Qatar.

The facility will capture and sequester 1.5 million tonnes of carbon dioxide a year through the manufacturing process.

Ammonia is mainly made from hydrogen produced from natural gas and nitrogen from the air. It does not emit CO2 when burned.

It is principally used as a raw material for fertilizers and chemicals, but it can also be used as a low-carbon fuel in power stations.

Iran-Qatar Cooperation

Given the existing potential, there is ground for cooperation between Iran and Qatar in the energy sector. It should be kept in mind that Iran and Qatar along with Russia were the three major countries to establish the Gas Exporting Countries Forum (GECF). Therefore, Iran-Qatar energy cooperation in this sector can turn the two countries into a gas hub in the region. Iran and Qatar are respectively the second and third largest holders of gas reserves in the world. Further coordination between them in global forums can help both in dealing with gas customers.

Qatar, owing to its 3 million-strong population and low domestic gas demand, exports more than 60% of its natural gas, accounting for a big share of global LNG supply.Given Iran’s geographical position, there is a chance for Qatar to export gas via pipeline to other nations.

When it comes to renewables, since Qatar is preparing itself to enter a new phase of manufacturing solar panels, there is ground for cooperation between Doha and Tehran. While global demand has increased for solar panel manufacturing with Qatar planning to become a polysilicon exporter, Iran can be a destination for Qatar’s products.

Iran and Qatar can also exchange information and know-how in such sectors as developing intelligent networks, using renewables, and boosting energy efficiency as both nations are faced with technological challenges concerning the renovation and digitalization of power networks.

Qatar and Iran can also make joint investments in renewable energy generation. Qatar is willing to invest in innovative technology and supply Iran’s renewable energy needs, which would be a proper ground for cooperation.

Navigating the International Oil Market in 2024

Fereydoun Barkeshli

Energy Market Analyst

The future of oil and energy has moved back to center stage in the economic and political debate at the national and international levels. Prompted by concerns for global warming, we have entered a phase of policy rather than market-driven energy transition aimed at fossil fuels production and consumption. The oil and gas landscape changes frequently, but today a large segment of the world population mostly in Western countries has begun to address the oil producing nations as culprits. According to a poll conducted by the Keel Institute for International economics of Germany in 2022, for ranking the priorities and suitability of industrial activities, among ten industries worldwide oil was ranked number nine just before tobacco,classifying oil and gas as the top most hated businesses in Europe.

OPEC+ ministers engaged in two in-person conferences and five virtual meetings during 2023. During the sessions, member countries agreed to cut 2.56 mb/d of output the bulk of which is from Saudi Arabia followed by Russia. Seven ministerial conferences in one, though most via video conference is a record by itself. In fact, the alliance meets every month for the Joint Ministerial Market Monitoring Conference (JMMC).

Global oil markets well-received the signals by late summer 2023, when oil prices passed $90 per barrel in August and went up to $97 per barrel in September. It is needless to reiteratethat markets remained volatile and hesitant towardOPEC+ members to comply with quotas. As oil prices went up amid volatility, a wave of rampant profit-taking by hedge fund managers, disrupted the trend and blamedthe Saudi energy minister for causing instability in the market. However, following price hikes,some market observers began to question the viability of possible three-digit numbers for prices. They believed that the international oil prices were overvalued and needed correction.

Markets initially believed that a maximum $10 to $15 per barrel reduction of oil price from July-August highs was justified. This view was shared by OPEC+ circles as well, although most members desired, higher for longer market conditions. Saudi Arabia has ambitious development plans and Russia is at war. Other members of the coalition also backed high oil prices for different reasons.

Signs of OPEC+ discomfort appeared when prices opted for a free fall. Ministers demonstrated their dismay when they met virtually on 30th November in an ordinary OPEC ministerial conference and added the equivalent of voluntary cuts of some 5 percent of the global oil consumption. Markets were up for some days but ignored OPEC+ output decisions. No happy ending for oil prices now that the market is preparing for 2024. Rampant speculative market practices are one of the most destructive business behavior by traders that undermines OPEC+ policies in stabilizing the world oil markets. Below I am going to discuss the issue with more details.

Key Factors

Role of Speculation Practices

I wish to begin with the role of speculators in driving the international oil market, up or down. Speculative profit-taking has been in the market for a long time but, they are immensely active in recent months. Speculation is not a remote business in the market. They are powerful and backed by major news outlets and impactful business houses. As far as I gather, three times in the recent history of OPEC, Important members of the organization directly pointed at speculators and blamed them for their market destabilizing role. During the 1980s and then in 2001, the OPECconference directly blamed speculative practices for market disruptions. Speculators keep overpricing and underpricing crudes for profit-taking.

Think Tanks Turned Into Players

Before going into the market fundamentals, I would like to talk about International Energy Agency(IEA), and the United States Energy Information Administration (EIA). There have often been differences between the statistics and figures that they produce. Some discrepancies are normal in that different secretariats use different methodologies and models to estimate oil demand and supply in the market. However, under various market scenarios, the IEA provides highly exaggerated figures for supply and demand.

One such exaggerated and misleading statistics was released by IEA in late November when they estimated 102.4 mb/d for 2024 which poses over a 2 mb/d difference with the OPECSecretariat demand outlook. The EIA also disseminated its quarterly report supporting what the IEA published earlier. The publication of these reports on the eve of the COP28 inauguration in the United Arab Emirates was intended to signal a gloomy outlook on the market that supply exceeded demand by over 2 mb/d and that OPEC+ should cut still more. In fact, major think tanks in the US and Europe have been weaponizing statistics and economic models to undermine the credibility of the OPEC and the alliance.

We have not yet entered the first quarter of 2024 but international media has been busy forecasting since the fourth quarter of 2023. Market players argue that OPECand the alliance indicate higher demand for 2024 but at the same time, keep cutting output. As such something is missing somewhere.

Back to fundamentals, the demand story is controversial. More controversial than that of 2023. The question mark is about China. “How is the recovery going forward?”The world economy and the global oil market have been used to seeing very high, and sometimes even double-digit growth figures from China. The best-case scenario for Chinese GDP growth stands at 5 percent for 2024. The pessimistic scenario is a little less than around 4.5 percent of GDP growth which is still quite high and would translate into 0.9 mb/d additional oil consumption.

In the meantime, China is a big exporter of refined products. China exported 2.8 mb/d of different refined products. Then China also re-exports imported crude oil from other sources. Chinese inventory capacity is huge and the country buys oil when it is cheap and exports while prices are higher. As such China’s demand estimation is complicated. When it comes to demand growth, we need to focus on Asia.For oil demand growth, the future is Asian.

India is an important crude oil importer, too. Nevertheless, India’s refined product exports are also on the rise. ASEAN countries are adding to their oil and energy consumption and imports. But those emerging markets started their energy consumption from a low base and as such the increase in demand is not substantial. ASEAN countries are also moving forward to renewables at a rapid pace.

The increase in Europe’s oil demand growth is something of the past. European oil demand is expected to grow to 9.32 mb/d in 2024. This is going to be 0.6 percent higher than 2023. In fact, coal is gaining a higher share in the European energy basket than oil. Weak economic performance, negligible population growth, and industrial immigration from Europe to energy-rich countries have contributed to less economic growth and lower oil demand.

Supply Side

The United States has considerably enhanced oil production. The country produced 13.2 mb/d of crude oil in 2023. The highest volume of crude ever produced by any country. The share of shale oil is 5.7 mb/d. America’s conventional crude oil production is on the decline. There are signs of fatigue in shale oil production already in November and December 2023 and expected to perform badly in 2024.

The United States is taking OPEC+ share. This shapes the OPEC+ dilemma. OPEC+ cuts output are used to defend prices and US shale benefits. However, for shale oil production to prosper and profit, a piece range between

$45 to $65 per barrel is essential. In shale oil production, running costsare high. Unlike conventional crude oil production whichincurs initial high costs and then the running costs and expenses are relatively low, in shale production costs are high.

This is what the press media sensed from OPEC+ delegates in the November 30th 2023 virtual ministerial conference. OPEC+ needs to draw a limit to its voluntary output cuts beyond which would cease to contribute further. Angola’s withdrawalfrom membership in OPEC will not have any significant impact on the working of the alliance but is an indication that OPEC+ should not cut so that others takethe members’ marketshare.

Most international experts believe that Peak Shale Oil is on the horizon and by early to themiddle of 2025, US crude oil production in general and shale oil in particular will fall drastically. One reason that Russia is under the radar in OPEC+ output curb calculations is its being under sanctions. Russian crude oil is under sanctions and still, the country has to contribute to the collective production cuts of the alliance.

Geopolitical Aspects

It is noteworthy that currently, two major wars are going on in Europe and the Middle East, both in high oil market-sensitive areas. Despite sanctions and US hooliganism in the global oil markets, international oil prices are on a downward trend. OPEC+ is determined to balance the market and some indications will succeed in maintaining price stability.

As mentioned above briefly, OPEChas adopted a wait-and-hope policy that will work. During the OPECconference of 30th November 2023, all ministers emphasized that they were willing to curb production for as long as it takes to achieve a market balance. OPECmembers and the OPECSecretariat have voiced their common status in combating the tyranny of statistics released by the IEA now and then.

The United States sanctions on huge volumes of oil have severed global movements of oil. The price of oil is on the bearish but final consumers and end users donot benefit. Shipping and insurance costs have gone up. Russia and other oil-producing countries under sanctions have to move around their cargoes, taking distant routes to make sure that buyers will have oil at the right time. Therefore, the lower price of oil is compensated by high shipping and insurance costs.

On the geopolitical front, competition between the US and China will possibly be heightened in Latin America and Africa. China has been actively participating in oil, gas,and energy projects in those countries. America’s engagements in the Ukraine war and now in Zionist Regime aggression in Gazaprovided China withopportunities to fast-forward its economic objectives in minerals and energy projects in Africa and Latin America, where Iranian companies have been active too.

Refined product exports have also added to market confusion and price instability within the new geopolitical and eco-political spheres. Some oil producing, as well as oil-consuming countries have enhanced their refining capacity. Product exports arenot included in the statistics. It is not within the quota and ceiling. Therefore, quite a few oil producers and consumers are net product exporters. Shale oil is a very light crude oil. There arenot many refineries in the world and the United States that can refine shale oil. Shale oil producers complained that refineries asked them to slow down production because the inventories were full in the refineries.

This shale oil must be blended with gradesof crude so that other refineries can process and refine shale. After a series of mergers and acquisitions, Exxon Mobile purchased substantial stakes in Texas shale oil production sites. Those big companies initiated a partial lifting of sanctions against the Venezuelan oil sector so that heavy grades of crude from Venezuela moved legally to the US for blending and processing in more refineries in the country and abroad. The United States also imports crude oil from Canada and the Middle East for refining and consumption or exports.

Given the current energy trends during 2023 and the confusion that prevailed, the predictability of the market for the coming year is difficult and risky. All OPEC+ can do is to keep cutting production, member countries with extra capacity adhere to their allocated quotas, and send strong messages to the global oil markets. On the other hand, weare notsure how much that would help to support prices. Because when the market is assured of a big volume of excess capacity with the producers, it could be encouraged to pressure prices further downward.

Shale oil will be a dominant factor for 2024. Shale oil production needs a price range above $60 per barrel of oil. As such at some point in time, the ultimate interest of OPEC+ and US shale oil will possibly converge. During the September 2023 OPECInternational Seminar in Vienna, the issue was mildly observed by Chevron’s CEO. In the mid-20th century, OPECmanaged the international oil market on its own. Back then, global oil demand was 50-60 mb/d and OPEC share was over 50 percent of the total global supply. In the 21st century, OPEC had to ally to support market stability. The OPEC alliance might likely need to be further strengthened by including a wider sphere of producers.

Having touched upon some fundamentals of the global oil market factors, in the short to medium term, prices may fluctuate price-band range at $70-80 per barrel for the first half of the year 2024. However, any major conflicts around the world can change the scenario.

50 Oil Projects Worth $48bn

Iran’spetroleum minister, Javad Owji, has said the country earned $30 billion in oil revenue during the first 10 months of the current calendar year.

“Under the 13th administration, 50 new oil and gas projects, valued at $48 billion, were drawn up to become operational,” he said, adding that several projects would soon become operational in the oil, gas, petrochemical, and refining sectors. He said agreements would be signed for developing 8 oil and gas fields, worth $14 billion, before the end of the current calendar year (ends on 19 March 2024). Negotiations for these fields have been carried out with Iranian and foreign companies since the last calendar year.

Addressing a ceremony to implement 7 oil and gas projects in Khuzestan Province, Minister Owji said $2.2 billion-plus IRR 2 trillion had been invested in these projects.

“By implementing these projects and with investments made, 150 tb/d would be added to national oil production capacity and 28 mcm/d to national gas production capacity, which would generate $6 billion in national revenue,” said the minister.

The petroleum industry has witnessed positive developments since the 1979 Islamic Revolution, he said, adding: “Before the Islamic Revolution, the petroleum industry was entirely dependent on foreign companies, and no Iranian specialized manpower was engaged in this industry, but today thanks to the Islamic Revolution, no foreign advisor is involved in the upstream or downstream sector of this industry.”

He said that thanks to tens of thousands of Iranian specialists in the upstream and downstream sectors, offshore and onshore oil and gas fields are up and running.

Record Gas Feed

Owji touched on the pre-revolutionary limited gas production and supply, noting that currently, 23 gas refineries are running across the country to produce 1 bcm/d of gas.

“In cold months, thanks to the National Iranian Gas Company (NIGC), 856 mcm/d of sweet gas was fed into the national trunkline,” he said. He added that no area in Iran experienced gas cuts despite cold weather.

Owji said activities picked up speed under the 13th administration, referring to the implementation of 132 incomplete projects, worth $28.5 billion, under the current administration.

Mohsen Khojasteh-Mehr, the CEO of the National Iranian Oil Company (NIOC), also said that oil production in Iran totaled 81 billion barrels, 70% of which belonged to the post-revolution period. He said that half of the oil and gas fields have been developed after the Islamic Revolution.

Some projects to have come online include the renovation of the Qale-Nar pipeline, Shadegan pipeline, centralized desalination unit in Ahvaz, increased production from Cheshmeh-Khosh, Dalpari, and East Paydar, the start of production from the jointly-owned Sohrab field, drilling 60 wells in the South Azadegan field and the offshore pipeline of Phase 16 of the South Pars gas field.

Accelerated Work

Minister Owji said activities in the petroleum industry had accelerated under the 13th administration.

He said that currently, 23 refineries are supplying more than 1 bcm/d of gas, adding that 10 oil refineries and more than 70 petrochemical plants are operational. He said the petrochemical industry earned $14 billion from exports last calendar year.

“Just in Assaluyeh, more than $150 billion has been invested in gas production and petrochemical plant construction, turning the zone into an energy hub. More than 70% of gas in Iran comes from South Pars,” he said.

Owji said Iran’s gas production ceiling had outpaced that of Qatar, adding that the bulk of Iran’s gas is used by industries, power plants, and petrochemical plants.

The minister noted that petrochemical plants were among the key high-tech centers in Iran. He added: “All petrochemical grades and products are currently supplied by petrochemical plants in the country. Of 95 catalysts needed by the petrochemical and refining industry in Iran, 92 catalysts are manufactured domestically.”

According to Owji, in addition to self-sufficiency in the petroleum industry, technical and engineering services are exported. He said that in one case Iranian engineers renovated a refinery in Venezuela.

Noting that no other nation has faced as many tough sanctions as Iran in the world, he said: “Despite all these sanctions, Iran’s petroleum industry has become self-reliant.”

Owji said after US advisors left Venezuela, major petroleum industry activities in this country were halted. He added: “Venezuela’s oil production fell from 3.8 mb/d to 400 tb/d. Its refining capacity also dropped from 2.5 mb/d to 500 tb/d.However, after Iranian experts were engaged, the refining capacity of a refinery that had declined from 140 tb/d to 5 tb/d was brought back to 110 tb/d. More than 3 million industrial parts have been manufactured and sent to Venezuela.

132 Half-Complete Projects Completed

Owji said that 132 in-complete projects had been identified under the 13th administration. He said that 17 projects became operational during the calendar year to March 2022, while a year after 47 projects were inaugurated. Moreover, 67 projects have come online in the current calendar year(ends on 19 March 2024). 132 projects, worth $28 billion, have come online to increase oil, gas, condensate, refined products, and petrochemicals.

Referring to the 50 projects drawn up under the 13th administration, he said one of them was the development of SP11, which had been delayed for two decades after various companies like France’s Total (now TotalEnergies), Royal Dutch Shell, China’s CNPC and Malaysia’s Petronas pulled out.

He said that the platform of SP12 was moved to the site of SP11, which helped bring the project online three years earlier than planned. Currently, 15 mcm/d of gas is recovered from this phase, which would reach 50 mcm/d after more wells are drilled.

Touching on the operation of the refinery of SP14 and Phase 2 of the Abadan refinery, he said: “Important measures were undertaken in oil production and we managed to boost Iran’s oil output capacity.”

Flare Gas Capture

Minister Owji said that Iran’s gas refining capacity had increased by 60 mcm/d, adding that important measures had been undertaken in associated petroleum gas (APG) gathering both at refineries and oil and gas fields.

He said that arrangements had been made for capturing all this flare gas, adding that gas gathering had reached 11.5 mcm/d, which would soon reach 14.5 mcm/d. He added that all flare gas in the country would have been captured by March 2026 to feed petrochemical plants and earn the country hard currency.

“As far as joint fields are concerned, I should say that all the joint fieldshave been decided upon. All fields are being developed or increasing output,” said Owji.

The minister said that under the 13th administration, output from joint oil fields was up 48 tb/d, while joint gas fields saw a 54 mcm/d output hike. Gas production from shared fields has reached 704 mcm/d.

Referring to the oil refining capacity, he said it had increased from 2.1 mb/d to 2.37 mb/d under the 13th administration, setting 13% growth.

He said that higher value would be generated by developing refineries and supplying refined petroleum products.

Owji also touched on gasoline production, saying gasoline production averaged 91 ml/d in the calendar year to March 2022, which currently stands at 114 ml/d following a 22% growth. Petrochemical production has come from 68 mt to 67 mt a year under the 13th administration.

Citing data from the Central Bank of Iran (CBI) and the National Statistics Center, he noted a 25.7% growth in oil and gas production during the second quarter of the current calendar year, thanks to the completion of key projects in the 13th administration.

Owji also said that the licensing process for oil and gas fields takes less time than before, down from 50 months to less than a year.

West Karoun Gas Capture Cuts Pollution

Under the 13th administration, the Ministry of Petroleum has drawn up plans to capture associated petroleum gas (APG). According to explanations by Minister of Petroleum Javad Owji around 11.5 mcm/d of flare gas is being captured, which would reach 14.5 mcm/d by March 2024. He said that Iran would have entirely captured its flare gas by March 2026. To that end, petrochemical holdings have been hired to invest in APG capture projects. That is a win-win deal. Petrochemical holding would invest in these projects in return for feedstock for their petrochemical plants, while the Ministry of Petroleum would absorb the required investment for financing its projects. A key project operated by Persian Gulf Petrochemical Industries Company (PGPIC) has been to capture flare gas in West Karoun. Afshin Kiani, the CEO of Persian Gulf Hoveyzeh Gas Refining Company (PGHGRC), told “Iran Petroleum” that flare gas capture in West Karoun would mitigate air pollution by 40%.

What is the philosophy behind the establishment of PGHGRC?

The philosophy behind the establishment of PGHGRC has been to capture APG from the oil fields located in West Karoun to feed the Bandar Imam Petrochemical Plant and convert sour gas into light and refined gas to be fed into the national gas network. A major advantage of this project has been a 40% mitigation of air pollution in the area. Besides, the granulated sulfur produced by this plant may be used in the chemical and agriculture sectors.

When was PGHGRC established?

Before PGHGRC emerged, Petroleum Engineering and Development Company (PEDEC), which is responsible for developing West Karoun fields, had signed an agreement for flare gas capture from the West Karoun fields (North Yaran, South Yaran, North Azadegan, South Azadegan, Yadavaran, Darquain, Sohrab and Jofair) so that the APG would be transported from there to PGHGRC’s plant where sour gas would be sweetened. The yielded methane would sent to the national fuel distribution network and the rest would be delivered to BIPP in the form of NGL by pipeline. Construction had begun in 2013 jointly by PEDEC and a local company for this project which was slated to come online in 48 months in two phases. However, the work was not rapid enough due to sanctions until 2016. There was also the challenge of financing. Therefore, it was decided to assign this project entirely to PGPIC due to petrochemical companies’ benefit in feedstock supply from gas gathering projects. PGHGRC, as a subsidiary of PGPIC, agreed to operate the project. The initial capital for the project was $1.338 billion-plus IRR 2,210 billion. BIPC accounted for 70% of the financing of the project through the pre-purchase of necessary feedstock, while the remaining 30% was handled by a local company.

How many phases will the West Karoun flare gas capture project have?

This project will be implemented in two phases, each of which would be receiving 250 mcf/d of gas feedstock. The plant’s products include 340 mcf/d of gas, equivalent to 6,649 tonnes, of which 250 mcf/d would be fed into the national gas network while the remaining 90 mcf/d would go to the West Karoun power plant. In addition, 41 tonnes a day of solid sulfur would be produced. In Phase one, 250 mcf/d of gas would be received, which would double in the second phase.

What is the current status of Phase 2?

Phase 2 is 82% completed, which we hope will be completed later this year so that we can start the implementation phase. I should also note that to accelerate feedstock receipt, PGPIC has decided to finance the implementation of two APG pipes for Darquain 1 and Darquain 2, as well as Sohrab and Jofair as far as the plant.

How much investment is needed for this part of the project?

The investment needed for these two parts would be $100 million to be spent on the purchase, engineering, and operation, of pipelines, compressors, and dehydration. That would feed Phase 1 entirely, while we can also feed Phase 2 partly. By launching the pipeline and dehydration in Darquain we would have up to 100 mcf/d of increased feedstock capacity, which would be 70 mcf/d for Sepehr and Jofair. We will also receive 130 mcf/d of feedstock from Yaran. That totals 300 mcf/d.

When did Phase 1 come online?

The pre-startup phase began in January 2023 and several months after, Phase 1 became operational after receiving feedstock from the Yadavaran, North Yaran, and North Azadegan fields. At the start of Phase 1, we received 104 mcf/d of feedstock, which has now reached 130-140 mcf/d, which is 50% lower than the capacity of Phase 1.

Will the feedstock from other fields be available on time?

APG from the South Azadegan gas field would supply 40% of the feedstock needed by the Persian Gulf Hoveyzeh gas refinery. Currently, the pipeline is 95% completed and it will soon be linked with the plant. Furthermore, some wellhead equipment needs to be installed to deliver the separated oil and associated gas to the refinery. These installations are to be installed by March next year. Therefore, we expect to receive the necessary feedstock from the South Azadegan field by April 2024.

How much output have you had since commissioning?

PGHGRC reached record output in November 2023 when it produced 36,905 tonnes of C2+ and 1,341 tonnes of C5+, a total of 39,246 tonnes of condensate, which is 83.55 of the planned output. PGHGRC also produced 40,215 tonnes of methane to be delivered to the national network, thereby accounting for 97% of its monthly obligations. In addition, 97 tb/d of ethane plus is produced and delivered by a 185 km pipeline to BIPP. Over this time, by receiving flare gas from West Karoun oil fields and converting it into products of higher value-added, we have mitigated CO2 emissions by about 1.5 million tonnes. Once fully operational, it would supply 14 mt/y or 345 of obligations outlined in the Paris Climate Agreement.

What has been done to supply the necessary parts?

Given the Ministry of Petroleum’s prioritization of this project, it was decided that necessary commodities for this project be procured at any price so that we can enter the phase of implementation. Therefore, we placed orders with local manufacturing companies. Some commodities like compressors had to be imported, which we did. Procuring the remaining equipment to operate some commodities like compressors required finding alternative methods. Two Iranian companies supplied the remaining equipment including a control system and seismograph. By relying on domestic manufacturers and accepting their manufacturing risk, our necessary commodities were manufactured in a short period.

Is this way of implementation of projects lucrative enough?

This project would be of high value to us. Petrochemical plants are fed with NGL. In light of the feedstock shortage PGPIC subsidiaries are faced with, investment in the upstream sector to feed petrochemical units would help stabilize our feedstock supply. In the next phase, given international conventions on compliance with environmental obligations and capping GHG emissions, Phase 1 of this project would cut pollution in Khuzestan Province by 40%.

What percentage of necessary equipment for this project is supplied locally?

We supply 85% of our equipment domestically, but we depend on imports for compressors. We may not be able to manufacture compressors, but our local companies can build their parts by reverse engineering. For instance, 22 European compressors that we have integrated into this project have some software shortcomings, but we have removed them by relying on local know-how and in compliance with standards. Furthermore, to reach self-sufficiency in chemicals supply we have been cooperating with knowledge-based companies to manufacture such products as active carbon and humidistat.

What has been the contribution of this project to creating job opportunities directly and indirectly?

It has created 1,100 direct and 5,000 indirect job opportunities.

What has been the share of local manpower in this project?

About 92% of manpower at this plant is from local manpower in Khuzestan Province, including 30-35% from Hoveyzeh and Dasht Azadegan.

How many accident-free hours have you recorded?

We have recorded 30.709 million accident-free hours, including 792 accident-free full days.

Naft Tehran Athletics Coach:

With 11 Championship Titles, We are the Best in Iran

The Naft Tehran athletics team recently managed to finish runner-up in national matches. Ever since its formation, it has recorded the best results. With 11 championship titles, it is known to be the best of any kind in Iran.

“Iran Petroleum” has interviewedAbdol-GhaffarSaqar, the head coach of this time and a former Asian champion.

You are a national champion in athletics. Could you tell us how you entered this field?

I was born in 1974 in the city of AqQola in Golestan Province. I started my career in athletics in 1992 thanks to my sports teacher Mohammad Reza Ahmadi. My first trainer in athletics was Abdol-SadeqGorgani (a national athletics champion). In 1999 I managed to upgrade Iran’s national record and I held the 100-meter running record for 14 years. Also in 2003, I won the Asian championship title in indoor athletics. A year later, I had the privilege to join the petroleum industry. At 30, I became the Asian champion, following several rounds of championship titles.

Did you start your career as a coach or did you continue your athletic activity after joining the petroleum industry?

I continued my athletic activity until 2006. It was almostthe end of my sports career that I joined the petroleum industry. Even in the athletic league, I represented Naft Tehran. I gained very valuable experience when I was in athletics and it helped me become a trainer.

The Tehran Naft athletics team has finished runner-up among national clubs. Could you tell us about that?

The Naft Tehran athletics team was present in the athletic league in 2005 and I was a team member.Naft Tehran has since taken part in the athletic league matches and finished champion 11 times and runner-up 4 times. Besides, it finished third and fourth, each once. Therefore, one can say that Naft Tehran has been the most honored team in Iran’s athletic league and holds a championship record in the league. Alongside the league, it has had trips overseas: three times in China-Taipei with an international championship title, twice in the second position, and once in the third position in Hungary in 2012.

As an athletics champion and coach, what do you think is the secret of Naft Tehran’s success over the years?

It could be arguedthat the most important reason for Naft Tehran to have made so many great achievements and hired athletic members is its technical staff who have all been former Asian champions. This team has made good on its commitments, which has added to its popularity among athletics sportspersons. The presence of managers attaching significance to the development of sport should not be ignored either.

Given the differencebetween this discipline and others, to what extent have you been able to absorb talented athletes?

If we want to review the status of absorption and training in this discipline, undoubtedly one key weakness is tough access to facilities. For instance, in Tehran, for both men and women, there are good training sessions at Shiroudi Stadium, but the issue is how this capacity is welcomed or how people have access. Another issue pertains to the talent of those interested in sports. For instance, at the NIOC sports medicine clinic, there is a section dealing with body structure. Those who refer to this clinic are put to necessary tests.

In the Tehran Naft club, what percentage of athletes are professional runners?

As required by the Department of Sports, 10% of Super League teams should be from the family members of the petroleum industry staff. Of the 25 team members, three are from the petroleum industry. Now, 80% of the technical staff are NIOC employees. Other team members are professional athletes from across the country, all of them holding records. Some athlete trainers are also training trainees at Shiroudi Stadium. So far, 17 adolescents are training in this discipline, whom we hope to hire in the Naft Tehran team in the coming years. It can be said that we are forming basic teams for athletics. We believe that we should expand athletics courses to engage more professional athletes in Naft Tehran.

Why did Naft Tehran fail to become the champion in this round of the league?

The team that finished first this round had only five points ahead of us. One reason why we failed to become champions was that one of our athletes could not compete due to sickness. Were it not for his absence, we would be a winner. I should also note investment. Naft Tehran finished runner-up with an IRR 20 billion budget, while the first team had an IRR 50 billion budget. Our course, managers have been cooperative and Hadi Afshar, NIOC’s director of sports, has promised a budget increase next year and we have promised to become a winner.

Iran Oil Agreements

Gass-Gulshayan Supplemental Agreement

Oil agreements signed ever since the start of oil exploration in Iran,form a key chapter in the history of this industry. One case in point is the Supplemental Agreement between the Imperial Iranian Government and the Anglo-Iranian Oil Company (AIOC), made in Tehran on 17 July 1949. This agreement never won parliament approval because of oil nationalization under the 16th National Consultative Assembly. The agreement is known as the Gass-Gulshayan Supplemental Agreement, named after the two signatories. 

The main points agreed upon were as follows:

1. This Agreement is supplemental to and shall be read with the Principal Agreement.

2. Any of the terms used herein that have been defined in the Principal Agreement shall have the same meaning as in the Principal Agreement, save that, for this Agreement, all references in the Principal Agreement to Persia, Persian, the Imperial Government of Persia and the Anglo-Persian Oil Company, Limited, shall be read as references to Iran, Iranian, the Imperial Iranian Government and the Anglo-Iranian Oil Company, Limited, respectively and the references to the Permanent Court of International Justice shall be read as references to the International Court of Justice established by the United Nations.

3.—(a) In respect of the calendar year ended 31st December 1948, and thereafter, the rate of the annual royalty payable to the Government under sub-clause (I) (a) of Article 10 of the Principal Agreement shall be increased from four shillings to six shillings per ton of petroleum sold for consumption in Iran or exported from Iran.

(b) The Company shall within thirty days from the date of coming into force of this Agreement, pay to the Government the sum of three million three hundred and sixty-four thousand four hundred and fifty-nine pounds sterling (£3,364,459), as a retrospective application to cover the calendar year ended 31st December 1948, of the modification introduced by sub-clause (a) of this Clause 3, taking into account the provisions of sub-clause (V) (a) of Article 10 of the Principal Agreement.

4.—(a) so that the Government may receive a greater and more certain and more immediate benefit in respect of amounts placed to the General Reserve of the Anglo-Iranian Oil Company, Limited, than that provided by sub-clause (I) (b) and sub-clause (II1) (a) of Article 10 of the IPrincipal Agreement, the Company shall pay to the Government in respect of each amount placed to the General Reserve of the Anglo-Iranian Oil Company, Limited, in respect of each financial period for which the accounts of that company are made up (starting with the financial period ended 31st December 1948) a sum equal to twenty percent (20%) of a figure to be arrived at by increasing the amount placed to General Reserve (as shown by the published accounts for the financial period in question) in the same proportion as twenty shillings sterling (s.20/-) bear the difference between twenty shillings sterling (s.20/-) and the Standard Rate of British Income Tax in force at the relevant date.

The relevant date shall be the date of the final distribution to the Ordinary Stockholders in respect of the financial period in question, or, in the event of there being no such final distribution, a date one calendar month after the date of the Annual General Meeting at which the accounts in question were presented.

Examples of the implementation of the principle set out in this sub-clause (a) have been agreed between the parties hereto and are set out in the Schedule to this Agreement.

(b) If in respect of any financial period for which the accounts of the Anglo-Iranian Oil Company, Limited, are made up (starting with the financial period ended 31st December 1948) the total amount payable by the Company to the Government under sub-clause (a) of this Clause 4 and sub-clause (I) (b) of Article 10 of the Principal Agreement shall be less than four million pounds sterling (£4,000,000) the Company shall pay to the Government the difference between the said total amount and four million pounds sterling (£4,000,000). Provided, however, that if during any such financial period, the Company shall have ceased, owing to events outside its control, to export petroleum from Iran, the amount payable by the Company in respect of such period by the foregoing provisions of this sub-clause (b) shall be reduced by a sum which bears the same proportion to such amount as the period of such cessation bears to such financial period.

Any sum due to the Government in respect of any financial period under sub-clause (a) or sub-clause (b) of this Clause 4 shall be paid on the relevant date appropriate to that financial period.
The provisions of Clause (V) of Article 10 of the Principal Agreement shall not apply to any payments made by the Company to the Government in accordance with sub-clause (a) or sub-clause (b) of Clause 4.

5.—(a) In respect of the sum of fourteen million pounds sterling (£14,000,000) shown in the Balance Sheet of the Anglo-Iranian Oil Company, Limited, dated 31st December 1947, as constituting the General Reserve of that company, the Company shall, within thirty days from the date of coming into force of this Agreement, pay to the Government the sum of five million and ninety thousand nine hundred and nine pounds sterling (£5,090,909).

(b) The provisions of Clause (V) of Article 10 of the Principal Agreement shall not apply to the payment to be made by the Company by sub-clause (a) of Clause 5.

6. The payments to be made by the Company under Clauses 4 and 5 of this Agreement shall be instead of and in substitution for

any payments to the Government under sub-clause (I) (b) of Article 10 of the Principal Agreement in respect of any distribution relating to the General Reserve of the Company, and
any payment which might become payable by the Company to the Government in respect of the General Reserve under sub-clause (III) (a) of Article 10 of the Principal Agreement on the expiration of the Concession or in the case of surrender by the Company under Article 25 of the Principal Agreement.

7.—(a) In respect of the calendar year ended 31st December 1948, and thereafter, the rate of payment to be made by the Company to the Government by sub-clause (I) (c) of Article 11 of the Principal Agreement which relates to the payment to be made in respect of the excess over 6,000,000 tons shall be increased from ninepence to one shilling.

(b) The Company shall, within thirty days from the date of coming into force of this Agreement, pay to the Government the sum of three hundred and twelve thousand nine hundred pounds sterling (£312,900), as a retrospective application to cover the calendar year ended 31st December 1948, of the modification introduced by sub-clause (a) of this Clause 7, taking into account the provisions of sub-clause (V) of Article 10 of the Principal Agreement.

8.—(a) At the end of sub-clause (a) of Article 19 of the Principal Agree­ment there shall be added a paragraph in the following terms: " If at any time either party shall consider that either Roumanian prices or Gulf of Mexico prices no longer provide suitable standards for fixing ' basic prices,' then the ' basic prices ' shall be determined by mutual agreement of the parties, or in default of such agreement by arbitration under the provisions of Article 22. The ' basic prices ' so determined shall become binding on both parties by an agreement effected by exchange of letters between the Government (which shall have full capacity to enter into such an agreement) and the Company."

(b) As of 1st June 1949, the prices at which the Company shall sell motor spirit, kerosene, and fuel oil, produced from Iranian petroleum to consumers other than the Government for internal consumption in Iran, shall be the basic prices with a deduction of twenty-five per cent. (25%), instead of a deduction of ten percent (10%) as provided in sub-clause (b) of Article 19 of the Principal Agreement.

In consideration of the payment of the above sums by the Company the Government and the Company agree that all their obligations one to another accrued up to 31st December 1948, in respect of sub-clause 1 (a) and sub-clause 1 (b) of Article 10 and respect of Article 11 of the Principal Agreement and also in respect of the General Reserve have been fully discharged.
Subject to the provisions of this Agreement, the provisions of the Principal Agreement shall remain in full force and effect.

This Agreement shall come into force after ratification by the Majlis and on the date of its promulgation by Decree of His Imperial Majesty the Shah. The Government undertakes to submit this Agreement, as soon as possible, for ratification by the Majlis.