Oil Show, a Chance for All

The coincidence of the announcement by international institutes of increased oil production and exports by Iran with the Iran Oil Show 2024 proved how busy Iran’s petroleum industry was recently.

Tehran held its annual oil show in May. It is one of the largest oil events in the Middle East. The 28th edition of the oil show was held with more foreign companies present than before. The show was warmly welcomed despite unjust and unilateral US sanctions having remained in effect.

Many foreign companies are well aware of the attractive opportunities for investing in Iran’s petroleum industry, both upstream and downstream sectors. The oil show was a good opportunity for them to get further familiar with Iran. Although the Iranian petroleum industry has never waited for foreign companies and pushed ahead with its objectives using the potential of local manufacturers and E&P companies, Iran always welcomes foreign investors.

During the four-day Iran Oil Show 2024, the secretary general of the Gas Exporting Countries Forum (GECF), foreign ambassadors and diplomats visited the event attended by 250 foreign and 1,500 local companies. The number of foreign visitors was higher than before.

The achievement of this round of exhibition was panel discussions, networking between foreign and local companies and signing of MOUs and agreements in different fields.

International agencies had recently reported significant growth in Iran’s oil production and growth under the 13th administration despite US sanctions. Minister of Petroleum Javad Owji, when taking office in September 2021, had promised to undertake measures to enhance Iranian oil exports by adopting an approach for skirting around sanctions. Three years into office, the Ministry of Petroleum has made good on its pledges and has gone even beyond forecasts. Iran’s oil exports have now reached seven-year highs. The Energy Information Agency (EIA) has reported that Iran’s oil production increased 630 tb/d year-on-year, making the country a leading producer among fellow OPEC members. Iran’s oil output averaged 3.22 mb/d during the first quarter of 2024.

One may wonder how the Ministry of Petroleum has managed to achieve such success despite restrictions. Increased oil production, marketing, circumvention of sanctions and turning to overseas refineries may provide reasons.

1,700 Companies Attend Oil Show 2024

Owji: Oil Output Up 60% Under Current Administration

Tehran hosted the Iran Oil Show 2024 from May 8 to 11. In this round of the annual exhibition, 1,500 local and 250 foreign companies from 12 countries showcased their achievements. More foreign companies took part in the Iran Oil Show 2024 compared with that of the Oil Show 2023.

Addressing the inauguration of the event, HE Owji said the annual oil show would constitute an opportunity for the 13th administration to put its achievements on display. He said that thanks to local companies, Iran had seen its oil output grow 60% under the 13th administration.

Active Diplomacy

The 60% growth in oil production, as announced by Minister Owji, is coming at a time when the petroleum industry is still under sanctions. However, thanks to measures undertaken over this period, not only has Iran seen its crude oil production and exports grow, but foreign companies have been persuaded to invest in Iran. The presence of 250 companies from 12 foreign nations at the 28th show was the proof.

Owji called for domestic and foreign investment in the Iranian petroleum industry, noting that investment in Iran’s oil sector would yield a high rate of return.

The minister heaped praise on local companies for the achievements made despite sanctions. He said Iran had lifted its oil output by relying on domestic companies.

He said that the 13th administration had never waited for international sanctions to be lifted to be able to bring in foreign investment, adding that knowledge-based companies in the country had brought about major developments in the petroleum industry.

When the 13th administration took office, the minister said, oil production and exports were at no satisfactory level. However, he added, “We managed to boost oil production and exports although it may look unbelievable to some.”

He said the oil show was a good opportunity for the Ministry of Petroleum to showcase what it had achieved since two and a half years ago.

$35bn Exports

Owji referred to a 42 mcm/d gas output hike, 220,000 b/d of higher refining capacity, and an extra 10 million tonnes of petrochemical exports under the 13th administration, saying: “The bulk of these achievements was owing to half-complete petroleum industry projects that had been abandoned for 10 years.”

The minister said Iran exported $35 billion of oil last calendar year, noting that “enemies of Iran were still seizing Iranian oil cargoes” although they had failed.

He said that 79 projects worth $25 billion would become operational in the upstream and downstream sectors this calendar year. He added that completion of new petroleum industry projects would add 300-400 tb/d to national oil output, 35 mcm/d to unprocessed gas production, 50 tb/d to the refining capacity, and 3-5 mt to the petrochemical production capacity.

Owji also said that the National Iranian Oil Company (NIOC) had reached deals with local companies for developing oil and gas fields. He said four agreements had been signed with local contractors for $20 billion for gas compression at the giant South Pars gas field, as well as $13 billion worth of agreements for developing seven oil fields.

Owji said that SP11 had changed hands between various companies over the past 20 years, noting that the development phase became operational by local contractors. He said SP11 was producing 12 mcm/d, which is planned to reach 30 mcm/d under this administration and 50 mcm/d, shortly.

The minister said the former administration had suggested giving the Abadan oil refinery for free, adding: “Today we’re seeing that this refinery is of great help to petroleum products supply. Construction is to start soon on the second phase of development of the facility.”

30 mcm/d Flare Gas Capture

Flare gas capture has experienced significant growth under the 13th administration. Owji said that more than $5 billion of agreements had been signed for flare gas capture at oil fields in East and West Karoun, as well as in western Iran.

He said that 11.5 mcm/d of flare gas was being captured, which would reach 30 mcm/d by next March. The methane obtained from the processing of this gas would be fed into the national gas network, while heavier products would feed petrochemical plants to generate value.

Iran’s gas production capacity has crossed 1bcm/d and since the country would see growing gas consumption in the winter, the 13th administration is planning for gas storage. Owji said gas storage last calendar was 1 bcm higher year-on-year.

Self-Sufficiency

Owji said that Iran’s petroleum industry had reached self-sufficiency in all fields including the development of offshore and onshore oil and gas fields, offshore structures, petrochemical refinery construction, associated petroleum gas capture, and drilling horizontal and vertical wells – all by relying on local actors and manufacturers. 

Referring to planning for oil, gas, and petrochemical output hike under the 7th National Development Plan by engaging local companies, he said: “There is no restriction for investment in the petroleum industry. We invite all investors to invest in this industry and the Ministry of Petroleum would wholeheartedly support investors.”

He said the Central Bank of Iran (CBI) and the National Statistics Center of Iran had given a brilliant assessment of the Ministry of Petroleum’s performance last calendar year. He added: “The economic growth rate in the oil and gas group was 20% that year, which significantly impacted the national economy.”

400 Oil Projects

Owji said the Ministry of Petroleum welcomed the private sector into the petroleum industry, adding that investment return would materialize very quickly.

He said that the Ministry of Petroleum was faced with $130 billion of 300 half-complete and 100 new projects.

“Therefore, we assure domestic companies and manufacturers that we would continue to use their potential,” he said.

“Relying on domestic knowledge-based companies, the Ministry of Petroleum has been increasing oil, gas, petroleum product and petrochemical production. It has signed more than $1 billion of agreements with over 670 knowledge-based companies,” he added.

Owji said that the Ministry of Petroleum acquired the top rank in manufacturing last calendar year by putting an end to importing 200 items.

Iran Petroleum Industry Investment Attractiveness

The Iran Oil Show 2024 provided a chance for the four main subsidiaries of the Ministry of Petroleum to assess their performance over the past year. During the event, the CEOs of National Iranian Oil Company (NIOC), National Iranian Gas Company (NIGC), National Petrochemical Company (NPC), and National Iranian Oil Refining and Distribution Company (NIORDC) presented opportunities for investment in their sector, while calling for local and foreign investment in oil and gas projects.

VC in the Oil Sector

Mohsen Khojasteh-Mehr, the CEO of NIOC, said the two former administrations had signed $13 billion of agreements for oil and gas field development, adding that under the 13th administration, $15 billion of agreements had been signed, showing a four-time increase.

Agreements worth $13 billion were signed last calendar year for oil field development, he said, adding that $11.5 billion was for the integrated development of the giant Azadegan oil field. For the first time in Iran, six banks and two E&P companies had been engaged. He added that $1.3 billion of agreements had been signed for the second phase of development of the Azar oil field.

Referring to the drilling of 35 new wells in the South Pars gas field, Khojasteh-Mehr said recovery from SP11 would grow in the 1H of the current calendar year, while construction would start in Azadegan.

He said the gas storage record was smashed last calendar year, adding: “In addition to the old storage facilities, Bankol and Mokhtar would soon come online as storage sites. Production from the Dey and Tous fields is also expected to start in the current calendar year.”

The NIOC chief touched on NIOC’s measures for hydrogen production and AI, noting that the software division of NIOC had fared effectively. He said several wells in West Karoun and Darquain would soon become smart. He said that the future of the oil and gas industry was linked with technology and AI.

“The most sophisticated and toughest oil and gas reservoirs in the world are in Iran. However, under conditions of sanctions, oil, and gas is underway without any worrying challenge,” said Khojasteh-Mehr.

“Discovery of new reservoirs under the 13th administration has been 2.5 billion barrels of crude oil equivalent. Eight new oil and gas reservoirs have been found,” he said.

He said that increased oil production had facilitated exports, adding: “In the past, export was impossible and therefore oil production was ordered down, but today we are producing oil and selling it.”

Khojasteh-Mehr said that NIOC had stepped into venture capital, adding: “An initiative has begun for assigning 700 low-yielding and closed wells to knowledge-based and technological companies because the private sector can help keep the upstream petroleum industry chain running.”

Noting that foreign companies twice as many as last year had attended this year’s event, he said: “It shows that Iranian oil and gas reservoirs are attractive enough to absorb foreign companies despite sanctions.”

$19bn in Refining Sector

Jalil Salari, the CEO of NIORDC, said $19 billion worth of investment opportunities were available. He said: that included $14.5 billion for upgrading refineries, 41.2 billion for pipelines, and $255 million for storage. That would add 32 ml/d to national gasoline production capacity and 16 ml/d to gasoil output capacity.

“By launching the hydrocracking unit of the Abadan oil refinery, 3 ml/d would be added to the facility’s gasoil production capacity and 1.5 ml/d to its gasoline production capacity,” he added.

Salari said the desulfurization and gasoline production units of the Shiraz refinery would come online by September, adding that 4 ml/d of gasoil and 1.5 ml/d of gasoline would be added.

He said that work was underway on boosting the quality of products at the Tehran oil refinery, adding that the refinery’s production would increase from 6 ml/d to 7.5 ml/d, while the quality of gasoline would go from Euro-4 to Euro-5 grade.

Salari also said that more than 1,100 km of pipeline would become operational in the current calendar year, which would save 67 ml/d of gasoil. Additionally, 70 tb/d would be added to the refining capacity, as a result of which gasoline and gasoil production would respectively see 1.6 ml/d and 2.5 ml/d hike.

He also referred to the delivery of more than 18 billion liters of liquid fuel to power plants during the last calendar year, adding that thanks to NIORDC’s efforts, 1.6 million items were exported to Venezuela for an overseas project.

15 Petchem Projects

Morteza Shah-Mirzaei, the CEO of NPC, said 15 petrochemical projects would become operational by the end of the current calendar year to bring the number of petrochemical plants to 90.

Noting that feedstock was the top issue in the production hike, Shah-Mirzaei said NPC’s current strategy was to facilitate feedstock supply to petrochemical plants and to minimize their restrictions.

He said that some petrochemical plants had operated at 120% of their nominal capacity, adding domestic gas supply would be always favored over gas supply to businesses. Therefore, he added, energy use management, would be highly significant due to gas production in the country.

“In a bid to supply necessary feedstock, the petrochemical industry is always prioritizing investment in the upstream petroleum industry and gas storage,” said Shah-Mirzaei.

Referring to the priority of investment strategy in the value chain completion, he said: “If we want to have a world-class dynamic, sustainable and progressive industry we need to focus on completing the value chain”.

“Shortening the time spent on the overhaul of petrochemical plants and completing incomplete projects are among the petrochemical industry’s plans for increased output,” he said.

“Sanctions impose restrictions on investment in the petrochemical industry, but it cannot be an obstacle to the will of Iranian experts, it may only increase the time spent for the implementation of projects and investment,” Shah-Mirzaei said.

He said that NPC’s promise for the local manufacturing of petrochemical industry catalysts would materialize by the end of the current calendar year.

“We’ll try to increase placing orders for domestically-manufactured parts so that we may reach the summit of commodity and equipment manufacturing in four years,” he added.

The NPC chief said that new methods of investment in the petrochemical industry would be introduced shortly, calling on holdings to move in the same direction.

As far as the development of petrochemical parks is concerned, Shah-Mirzaei said: “At the Parsian Energy-Intensive Methanol Park, 7-10 million tonnes of methanol would be converted at 21 plants to products of this chain”.

Regarding gasoline production from methanol, he said: “We believe that the value-added generated from the products would be more economical than the end of the methanol chain, but the closest way to prevent crude oil sales and methanol exports and also to prevent gasoline imbalance in the country would be to implement MTG projects.”

“In a bid to increase the economic efficiency of MTG projects, up to 30% price cut is envisaged for feedstock. So far, five investors which are also methanol producers have expressed readiness to operate these projects,” said Shah-Mirzaei.

Iran, Turkey to Renew Gas Deal

Majid Chegeni, the CEO of NIGC, referred to the expansion of energy diplomacy, saying: “The agreement for gas exports to Iraq was extended for another 5 years. Talks are also underway for extending the gas agreement with Turkey. A joint working group would follow up on this issue.”

Chegeni said Armenia had asked to receive more gas from Iran, adding that relevant talks were underway.

He said that Pakistan had also shown its willingness to revive its gas contract with Iran, for which several rounds of talks had been held.

Chegeni said gas refining grew last calendar year and the rated refining and dehydration capacity increased from 1.031 bcm/d to 1.093 bcm/d.

“The gas condensate delivered to NIGC has increased about 25 mcm/d year-on-year, while gas condensate production had risen to 259 mb/y from 198 mb/y. Gas delivery to the national grid also increased from 789 mcm/d to 814 mcm/d,” he said.

Chegeni said that the urban and rural gas network had been expanded by 50,376 km under the 13th administration. He added that 20 power plants had been fed with gas, while 50 cities and 6,400 villages had been connected to the national gas network over the past two and a half years.

“Last calendar year, gas delivery to national trunklines was up 4.5% year-on-year, while gas consumption in the domestic and business sectors was down 3.1% during the same period due to gas efficiency programs,” he said.

Chegeni said gas delivery to power plants was up 11% year-on-year last calendar year. The figure was 6% for major industries. Apart from that, gas injection into oil reservoirs was 63% higher, and into gas reservoirs was 13% higher. 

The NIGC CEO said that gas storage would be a top priority of NIGC and the Ministry of Petroleum. “By completing the projects underway, a total of 25 mcm/d would be added to national gas storage capacity,” he said.

Iran, Turkey to Renew Gas Deal

Majid Chegeni, the CEO of NIGC, referred to the expansion of energy diplomacy, saying: “The agreement for gas exports to Iraq was extended for another 5 years. Talks are also underway for extending the gas agreement with Turkey. A joint working group would follow up on this issue.”

Chegeni said Armenia had asked to receive more gas from Iran, adding that relevant talks were underway.

He said that Pakistan had also shown its willingness to revive its gas contract with Iran, for which several rounds of talks had been held.

Chegeni said gas refining grew last calendar year and the rated refining and dehydration capacity increased from 1.031 bcm/d to 1.093 bcm/d.

“The gas condensate delivered to NIGC has increased about 25 mcm/d year-on-year, while gas condensate production had risen to 259 mb/y from 198 mb/y. Gas delivery to the national grid also increased from 789 mcm/d to 814 mcm/d,” he said.

Chegeni said that the urban and rural gas network had been expanded by 50,376 km under the 13th administration. He added that 20 power plants had been fed with gas, while 50 cities and 6,400 villages had been connected to the national gas network over the past two and a half years.

“Last calendar year, gas delivery to national trunklines was up 4.5% year-on-year, while gas consumption in the domestic and business sectors was down 3.1% during the same period due to gas efficiency programs,” he said.

Chegeni said gas delivery to power plants was up 11% year-on-year last calendar year. The figure was 6% for major industries. Apart from that, gas injection into oil reservoirs was 63% higher, and into gas reservoirs was 13% higher. 

The NIGC CEO said that gas storage would be a top priority of NIGC and the Ministry of Petroleum. “By completing the projects underway, a total of 25 mcm/d would be added to national gas storage capacity,” he said.

Iran Oil Show 2024 Review

Local Firms Rivaling Foreign Companies

The Iran Oil Show 2024 was held in Tehran for four days. In addition to domestic companies, 250 companies from 12 countries were in attendance. Chinese firms made up the bulk of foreign participants. More than 50 Chinese companies attended the exhibition in a pavilion in the 28th edition of the International Oil, Gas, Refining and Petrochemical Exhibition on the Tehran International Permanent Fairgrounds. Besides the Chinese companies; Russian, German, French, Japanese, Belarusian, Indian, Canadian, Italian, Turkish, Austrian, and Argentinian companies were in attendance. As our correspondent talked with foreign companies, they showed a willingness to expand their cooperation with the Iranian petroleum industry in upstream and downstream sectors. Although Iran’s petroleum industry is under sanctions, thereby exposing foreign companies working with Iran to US penalties, the high attractiveness of the petroleum industry and the capabilities of Iranian contractors have led foreign companies to see Iran as a high-yielding market with a good return on investment. That is why they had decided to attend the Iran Oil Show 2024 as the annual show is among the largest in the Middle East and constitutes the best opportunity for marketing, and a bigger share of this lucrative market.

Chinese Attending Galore

Two halls were allotted to foreign firms. At first look, it might have seemed that major Iranian oil contractors including E&P as well as oil, gas, refining, and petrochemical operators are among potential customers of these companies. Still, the private sector was the main visitor to these halls. The Chinese pavilion was highly visited. Most visitors were exchanging information. Receiving brochures and exchanging contact numbers was seen in abundance. I talked to one of the Chinese companies that was attending the show for the first time. A manufacturer of oil and gas pipelines, it is cooperating with American, South Korean, Indian, Russian, European, Middle Eastern, and Central Asian companies. It was now trying its chance, as Iran and China have already inked a 25-year cooperation pact. The exhibitor said: “During my visit to the Oil Show I never thought Iran’s petroleum industry developed at such a level. Iranian firms have achieved such success in petroleum equipment manufacturing despite being under sanctions. We’re largely hopeful of cooperating with Iran in oil projects.”

“Most of our visitors were from the private sector. They said they could join oil projects as the contractor, as the Petroleum Ministry has provided some facilities to them. They were looking for a foreign partner to manufacture equipment that is not yet being produced in Iran,” he said.

High Motivation

Sanctions have caused Iran’s international financial transactions with foreign companies to hit snags. The representative of a Chinese company involved in the petrochemical sector said: “We’re not so concerned with this sector. In case we reach an agreement with foreign companies, we would be able to handle financing.”

He said: “A great number of people visited the oil show and most visitors were involved in the petroleum industry, and were highly motivated to get into international cooperation”.

The representative of an Iranian firm representing a Chinese company said that this Chinese company had already been involved in the development of a joint oil field, whose first phase had already become operational. He said many Iranians had inquired about modalities of cooperation and commitment to deliver them commodities. “We told them that Iran was not the only country with which we have cooperated in operating oil projects. We’re already cooperating with a growing number of international companies. They would not cooperate with us when were we weak. Chinese companies have had significant growth in recent years,” he said.

Belarusian companies were active alongside Chinese companies. Their pavilion was also crowded. In addition to talks underway between them and the Iranians, many were inquiring about this company. The representative of this company said he had been attending the annual Iran Oil Show for the past 16 years. He, however, said this year’s show was more crowded than before.

As I came to realize, this company was mainly involved in petroleum products. They, however, noted that Iranian companies would not face an easy road should they decide to step into the Belarus market. In addition to quality, transportation costs are also a key factor as Russian companies can export products to Belarus at lower costs, and therefore Iranian companies are required to offer much higher quality.

I asked a middle-aged visitor to the Belarusian booth if he had anything to worry about the Belarusian company. He replied: “I have nothing specific to worry about. Although sanctions have caused many problems for us we have learned in recent years how to transact financially with foreign companies despite tough sanctions. The key issue for us is to be able to manufacture our products at the best quality and export them. We will lose the market should we ignore the quality of commodities.” 

Good Market

Iranian companies representing foreign companies were present in two other halls. One of the companies involved in the upstream and downstream oil sector over the past 15 years and enjoys a good foothold in the Iranian market, said: “We’ve been representing a Swedish company for years and our products are mainly for the petrochemical and oil sector.”

“The oil show is a good opportunity for us to negotiate with potential and existing customers of this company. We’ve got our customers and this show lets us attract more customers. Our talks throughout the exhibition were constructive and we hope that some of them would end in signing a contract.”

I also talked with the CEO of a private company involved in petroleum products exports. He said: “During the four-day exhibition, we held good talks with foreign companies to facilitate export to these countries.”

Iran would need $200 billion in investment to reach 5 mb/d oil and 1.1 bcm/d gas output. To that end, the country would welcome foreign investment. Due to sanctions, the Ministry of Petroleum is also supporting domestic manufacturers in producing some commodities and equipment widely used in the petroleum industry. The oil show was a good opportunity for unveiling this equipment and commodities. Most equipment showcased during the event is high-tech; therefore Iranian companies are self-confident in rivaling foreign companies. Although the Ministry of Petroleum supports domestic manufacturers, it has required big companies to not purchase foreign commodities that Iranian companies can supply. However, it does not mean ignorance of manufacturing standards. Due to the high sensitivity of the petroleum industry, the Ministry of Petroleum has adopted tough policies on the manufacturing of petroleum-related equipment. Loca companies would have to go through numerous stages to be included in the vendor list of the Ministry of Petroleum. There is no room for mistake. Therefore, companies would have to apply high standards to their products. A manufacturer, which was a knowledge-based company, said local companies were able to compete with foreign companies if trust was placed in them.

Technological Advancement

Mohamed Hamel, the secretary general of the Gas Exporting Countries Forum (GECF), was among foreign guests at the oil show. He was visiting the annual show for the second time. Touching on Iran’s technological progress in the petroleum industry, he said the key point was that Iran had made such achievements despite sanctions.

Hamel said he had been impressed by the capabilities of Iranian companies present at the oil show. Touching on the number of exhibitors, he said the Iran Oil Show was one of the largest oil events in the Middle East.

Noting that in terms of content and diversity of technology showcased at the exhibition, the oil show was significant, Hamel said: “What I saw at the Oil Show was indicative of Iran’s technological advancement in the petroleum industry.”

He said many of Iran’s potentialities in the oil and gas industry had remained unknown, adding that GECF could be instrumental in identifying Iran’s potential in this sector.

Tehran is to host the 2024 GECF Ministerial Meeting. Hamel has said that Iran has highly capable experts, adding that the 2005 Conference of the Organization of the Petroleum Exporting Countries (OPEC) held in Iran’s central city of Isfahan was one of the best. He said: “I believe that Iran can host the GECF meeting in the best possible way and we support Iran.”

He said he had provided the Iranian Ministry of Petroleum and the minister in person with a booklet containing the experiences of Equatorial Guinea, noting that Iran would host the meeting more successfully.

Urgency of Cooperation

Ahmad Asadzadeh, deputy minister of petroleum for international affairs and trading, has said that the Ministry was arranging for the GECF ministerial meeting. He said that expansion of cooperation within GECF could help expand global markets and facilitate liquefied natural gas (LNG) exports.

Hamel has said Iran is a founder member of GECF and one of the top gas reserves holders. He congratulated the Iranian Ministry of Petroleum on the significant oil and gas production growth in 2023.

Former US President Donald Trump pulled out of the 2015 Iran nuclear deal in coincidence with the 2018 Iran Oil Show. At that time, foreign companies present at the show said they had no idea what would happen to them in the future. They said they would face restrictions in benefiting from Iran’s lucrative market. The US has since slapped Iran with more and more tough sanctions in a bid to bring Iran’s oil exports down to zero and isolate the Iranian petroleum industry. Iran’s oil sector went through a tough period, but its export rate was never zeroed. Rather, under the aegis of the Ministry of Petroleum, local companies sought to replace foreign companies that had left. During the years following the US’s pullout of the nuclear deal, the number of foreign participants at the Iran Oil Show fell, but by adopting some measures for increasing oil and gas production, Iran sent this message to foreign companies that they can continue to cooperate with Iran despite sanctions. The number of foreign companies attending the 2024 Oil Show was twice as much as that of the 2023 show. Most exhibitors viewed Iran’s oil market as a lucrative one. In the absence of major international companies unwilling to cooperate with Iran, some other companies came to Iran and got a bigger share of the Iranian oil market. In a bid to save them harmless due to sanctions, we prefer not to mention their names or that of their Iranian partners. However, what I witnessed at the Oil Show 2024, was nothing but making efforts to enhance their share of the Iranian market.

one of the best. He said: “I believe that Iran can host the GECF meeting in the best possible way and we support Iran.”

He said he had provided the Iranian Ministry of Petroleum and the minister in person with a booklet containing the experiences of Equatorial Guinea, noting that Iran would host the meeting more successfully.

Urgency of Cooperation

Ahmad Asadzadeh, deputy minister of petroleum for international affairs and trading, has said that the Ministry was arranging for the GECF ministerial meeting. He said that expansion of cooperation within GECF could help expand global markets and facilitate liquefied natural gas (LNG) exports.

Hamel has said Iran is a founder member of GECF and one of the top gas reserves holders. He congratulated the Iranian Ministry of Petroleum on the significant oil and gas production growth in 2023.

Former US President Donald Trump pulled out of the 2015 Iran nuclear deal in coincidence with the 2018 Iran Oil Show. At that time, foreign companies present at the show said they had no idea what would happen to them in the future. They said they would face restrictions in benefiting from Iran’s lucrative market. The US has since slapped Iran with more and more tough sanctions in a bid to bring Iran’s oil exports down to zero and isolate the Iranian petroleum industry. Iran’s oil sector went through a tough period, but its export rate was never zeroed. Rather, under the aegis of the Ministry of Petroleum, local companies sought to replace foreign companies that had left. During the years following the US’s pullout of the nuclear deal, the number of foreign participants at the Iran Oil Show fell, but by adopting some measures for increasing oil and gas production, Iran sent this message to foreign companies that they can continue to cooperate with Iran despite sanctions. The number of foreign companies attending the 2024 Oil Show was twice as much as that of the 2023 show. Most exhibitors viewed Iran’s oil market as a lucrative one. In the absence of major international companies unwilling to cooperate with Iran, some other companies came to Iran and got a bigger share of the Iranian oil market. In a bid to save them harmless due to sanctions, we prefer not to mention their names or that of their Iranian partners. However, what I witnessed at the Oil Show 2024, was nothing but making efforts to enhance their share of the Iranian market.

Iran Sanctioned Oil Sales Hit Records

Sajjad Taheri

The Financial Times recently reported Iran’s oil exports had reached six-year highs with an annual revenue of $35 billion. While Western governments are debating tightening sanctions against Iran due to its legitimate response to the Zionist Regime’s missile strike on its diplomatic mission, Iran keeps exporting oil that is already under US sanctions. Increased oil sales could be seen clearly under the 13th administration. While during the final days in office of the former administration, Iran was selling only 200 tb/d of oil, international institutes currently confirm a significant rise in the country’s oil export. Minister of Petroleum Javad Owji also said recently that oil and gas sales had met the target set for last calendar year.

$36bn Oil Exports

Iran’s oil production has reached 3.45 mb/d, Minister Owji said, adding that oil exports earned the country $35 billion last calendar year. He also said that the refining and petrochemical sectors yielded respectively $8 billion and $12 billion, which would bring Iran’s oil trading value to beyond $50 billion.

Bloomberg also reported Iran’s oil production growth to 1.45 mb/d, which elicited reaction from US experts. They wonder how the Islamic Republic has managed to sell its oil without any punitive action on the part of the US Administration.

Mohammad Rezvanifar, head of Iran’s Customs Administration, said the country’s foreign trade totaled $153.17 billion last calendar year, up 2.6% year-on-year. Oil exports accounted for $35.87 billion.

Deciphering Oil Data

OPEC data put Iran’s average heavy crude price at $83 a barrel, which may be considered with a $10 price cut at $73 a barrel. Based on OPEC data, Iran exported 1.35 mb/d of oil last calendar year. Iran’s national budget had set oil prices at $85 a barrel with a production of 1.4 mb/d, which would produce $43.4 billion in revenue.

Therefore, the 13th administration has realized 83% of oil income forecasts and Iran has met 96% of its oil sales target. The main reason for the 17% difference results from the oil barrel varying between $70 and $85.

In Iran’s budget bill for the current calendar year, the oil price is set at $71 per barrel with output at 1.35 mb/d, which is highly consistent with the previous year.

In 2023, Iran raised its oil sales to pre-sanctions levels while gas exports jumped high. That is enough to prove the ineffectiveness of sanctions.

5.4% Economic Growth

The International Monetary Fund (IMF) announced Iran’s economic growth at 5.4% in 2023 when most countries across the globe did not experience favorable conditions. For instance, Middle Eastern economies had an average growth of 2%. Saudi Arabia’s economy shrank 1.1%. Developing nations also experienced 4.1% growth in 2023. The Iranian economy grew more than the average of fellow economies.

Mohammad Ali Qadiri, an energy expert, referring to the IMF report, said: “Over recent years, Iran’s oil sales channels have not been visible due to sanctions and the government has mainly sold oil via unofficial points.”

“Gas is exported by pipeline and therefore is not subject to sanctions. However, the issue is to receive money for gas sales. Iran is mainly selling gas to Iraq and we have developed an initiative for financial settlement, which has to continue. In this method, we receive fuel oil in return for giving gas to Iraq, which would be sold to the United Arab Emirates (UAE) and Singapore,” he said.

Regarding shareholding in overseas refineries and selling oil to small-sized refineries in East Asia, he said: “For security concerns, no precise data is available about which oil is exported to overseas refineries; however, this is a right method that would spare oil the enforcement of sanctions.”

“Providing other countries with technical and engineering services is a suitable policy, which has been pursued by the current administration. This policy has many advantages for the country and can earn us big revenue in hard currency. By contributing export of technical and engineering services thanks to overseas refineries, we have managed to guarantee a market. Iran has also focused on small-sized refineries that are mainly private and therefore not as much subject to sanctions as big refineries,” said Qadiri, adding selling oil to these refineries was the right decision.

Successful Diplomacy

Farshad Jame’, an energy expert, said crude oil sales hit a record while foreign investment was absorbed into Iran’s oil and gas industry last calendar year. “Iran’s ability to defuse sanctions and hit 6-year oil sales highs is a significant example of Iran’s successful energy diplomacy aimed at overcoming challenges and benefiting from global energy market opportunities.”

“Despite being confronted with significant economic sanctions, Iran has boosted its oil exports and earned significant income. This success may be attributed to the implementation of new and smart policies by the Ministry of Petroleum, which has enabled the country to market its oil effectively and maximize its potential income,” he said.

Touching on national strategic planning for access to markets, he said: “By diversifying its trading strategies and consistently with changing market dynamics, Iran has managed to preserve its strong standing in the global oil market and guarantee lucrative transactions with international buyers. This success is indicative of strategic planning and smart diplomacy as well as focus on new policies in active interaction with global partners in the available markets.”

Overseas Refineries, Key to Defeating Sanctions

The 13th administration was the first to invest in overseas refineries to reserve places for exporting oil. That would help blunt the vulnerability of Iran’s oil exports under conditions of sanctions.  

Presence in overseas refineries would help raise crude oil sales while empowering Iran to export technical and engineering services. Renovating foreign oil refineries and reviving their treatment capacity, Iran sells them equipment and then oil. Once certain conditions have been met, Iran would be able to have a share from margins.

Venezuela’s El Palito refinery was the first overseas refinery wherein Iran was involved. Venezuela’s refining capacity totals 1.3 mb/d. Iran first moved to renovate 140,000-barrel-per-day El Palito. This project is now 87% completed.

Looking for Refineries Overseas

Earlier, Ali Shahverdi, chief coordinator of the Homs refinery, said: “To set foot in overseas refineries, we examined Venezuela’s refineries including 650,000-barrel-per-day Cardon and Amuay, 220,000-barrel-per-day Puerto la Cruz and 1,350,000-barrel-per-day El Palito.”

“After that, we decided to start with a small refinery to become our pilot. Then we listed its parts and signed an agreement with the Venezuelan side on the quantity and quality of parts,” he added.

“It was decided that we export 2 million items to El Palito and in the first step, we raised the refinery’s capacity from 20 tb/d to 80 tb/d. We have already exported more than 87% of commodities to Venezuela and we would be exporting the rest,” said Shahverdi.

Touching on the willingness of other Venezuelan refineries as well as other countries to cooperate with Iran, he said: “Other refineries like Cardon are also willing to cooperate and we are currently studying their capacity. We have also received requests for cooperation from Nicaragua, and Cuba. Central Asia, South Africa, and Syria. However, our next destination, which has been finalized, is the Homs refinery in Syria. We are sealing a deal with Syria, which would be similar to the one signed with El Palito.

“Syria has two oil refineries: Homs and Banias. The Homs refinery is processing 120 tb/d in the first phase. We have made arrangements like listing necessary equipment and price estimation and we are now ready to reach a deal with the Syrian side,” he said, adding that Syria would be paying €140 million. “But the main point and our main advantage would be sustainable crude oil sales to this country,” he said.

“By completing the El Palito refinery, we would export 120 tb/d of oil to Venezuela while by completing the Homs refinery, we would have 140 tb/d oil ready for export. That means 260 tb/d of oil ready for export. After completing the Homs refinery, we would turn to the Banias refinery.”

He said: “The 13th administration has applied modern oil marketing methods, while increasing oil production and taking into consideration the potential of friendly nations to achieve success in oil sales, and enjoying the potential of knowledge-based companies.”

Iran, a Reliable Gas Supplier to Iraq

Iraq relies on Iran’s gas for one-third of its electricity generation. Iran has piped 52 bcm of gas to Iraq since 2017. Despite the US toughening its sanctions against Iran’s petroleum industry, Tehran has abided by its gas commitments to Iraq. Although some believed that the Iran-Iraq gas agreement would not be renewed due to US sanctions, thanks to Iran’s active energy diplomacy and good ties with Iraq, the gas export agreement was renewed for another five years. To supply sufficient electricity, Iraq has no other alternative than Iran for gas imports.

Iran and Iraq on 27 March 2024 agreed to renew their gas deal. The agreement was signed by Majid Chegeni, the CEO of the National Iranian Gas Company (NIGC), and Iraqi Minister of Electricity Ziyad Ali Fazel. The volume of Iran’s gas delivery to Iraq would vary depending on cold or warm seasons.

Under two agreements, Iran has exported 52 bcm of gas, worth $15 billion, to Iraq since July 2017.

Iran has signed two gas agreements with Iraq. Gas export to Baghdad began in July 2017, while gas delivery to Basra started in June 2018. Iraq needs 35,000 MW a day of electricity but it can produce only 20,000 MW a day. Therefore, it relies on Iran’s gas to meet its electricity demand.

The Iraqi minister said power plants in his country largely depended on Iranian gas for electricity generation.

“The experience of previous years shows that Iran is a reliable economic partner for Iraq and it has assisted Iraq even under the toughest conditions,” he said.

Iran, a Major Supplier

Energy expert Afshin Javan said Iraq has experienced the widest gap between gas production and consumption since 2017. Gas production and consumption in Iran are currently 350 bcf apart.

“We have to take this issue into account that with the expansion of power plants in Iraq since 2017, 33% of the energy consumption mix of this country is reserved for gas. Therefore, it could be argued that Iraq is a reliable consumer in this sector,” he said.

Noting that Iraq desperately needed to import gas from Iran, he said: “Diversity in supply is an Iraqi advantage in gas supply. If it intends to quit importing gas from Iran it would have to find a source to supply its 33% needs, which is very difficult.”

He said that Iran would not be eliminated from Iraq’s gas market, adding: “Iran enjoys good potential for gas exports to Iraq. If it can control domestic consumption, it would become a major player in gas trading.”

Explaining the key role of gas in Iraq’s energy mix, Javan said: “Gas is instrumental in the development of power plants. In light of energy transition, the role of gas, as a clean source of energy and its role in power supply, would take up added significance. It is based on such knowledge that Iraq has renewed its gas agreement with Iran.”

Iran sits atop 33 tcm of gas with a daily output of 1 bcm, which is distributed through 38,000 km of pipeline.

Iran exported 18.42 bcm of gas in 2021, up 59.9% year-on-year. Therefore, Iran’s gas exports have grown 62% over two years. Iran’s 2020 gas exports stood at 11.5 bcm. According to NIGC, Iran’s natural gas exports in 2022 grew 10% in terms of volume and 79% in terms of value year-on-year.

CEO of National Iranian Oil Company (NIOC) Mohsen Khojasteh-Mehr has said that Iran would need $160 billion in investment to increase its oil and gas production capacity by 50%. That would bring Iran’s oil and gas production capacity to 5.7 mb/d and 1.5 bcm/d, respectively. NIOC has already adopted a $3.6 billion package for enhanced recovery from 13 gas fields, which would add 142 mcm/d to national gas output capacity and 100 tb/d to gas condensate output capacity. Meantime, since 50% of Iran’s gas deposits lie in the massive South Pars gas field that supplies more than 70% of national gas, a $20 billion agreement has been reached with Iranian contractors for gas compression at Phase 11.

Owji: Pakistan Favors Iran Gas Pipeline

Minister of Petroleum JavadOwji has said Pakistan is willing to build its section of a pipeline for carrying gas from Iran.

Owji, who was accompanying President EbrahimRaeesi during his state visit to Islamabad, said the Pakistani side is keen on the operation of the Iran-Pakistan (IP) pipeline.

“Pakistan is signing contracts with various companies to accelerate the work,” said the minister. 

“With arrangements planned to be made, we hope to see Iran export gas to Pakistan under the 13th administration as the two nations have signed an international contract,” said Owji.

During his stay in Pakistan, he met with Minister of State for Petroleum Musadik Masood Malik. They exchanged views about how to strengthen energy ties.

Expanding cooperation in the energy sector and exporting technical and engineering services were among the topics of discussion between the Iranian and Pakistani petroleum ministers.

After their talks, the Pakistani minister touched on the significant opportunities the two nations have for deepening trade and economic cooperation. He expressed pleasure with the official visit of the Iranian delegation led by President Raeesi.

“We held the first round of talks on all topics and we will go ahead into the next stages,” he said.

“Iran and Pakistan will proceed with cooperation in favor of regional welfare and interests,” said the Pakistani minister.

The IP project was first designed 15 years ago. Iran has already built its section of the pipeline, but Pakistan is yet to build its section.

2-Megaprojects Lion’s Share in Foreign Investment

The 13th administration so far has attracted $11.6 billion in foreign investment despite international sanctions. Oil and gas megaprojects account for $4.8 billion, or 41% of the total.

In the case of value chain completion, the petroleum industry can earn the country big revenue. However, all across the globe, the petroleum industry requires high investment because, in addition to the costly equipment needed for developing the petroleum industry, access to state-of-the-art technologies would cost too much.

Minister of Economy Ehsan Khandouzi has said that the $11.6 billion foreign investment had been attracted into 643 projects. That is while Iran has been subject to toughest ever sanctions and strain is building upon Iran’s economy and potential investors.

The key point is that despite facing tough sanctions, the petroleum industry has gained a 41% share in foreign investment attraction under the 13th administration. According to official data, the petroleum industry has attracted 4.8 billion in foreign investment for its five megaprojects.

A more precise study of this issue indicates that the petroleum industry has been seeking to finance its megaprojects through foreign investment in a bid to reduce relevant risks while preparing the ground for new technologies.

An important issue that should not be neglected is that Iran’s petroleum industry and return on investment are so attractive that despite sanctions and threats of penalties for oil companies, Iran’s oil and gas sector has attracted $4.8 billion.

Besides the attractiveness of Iran’s petroleum industry to foreign investors, the active diplomacy of the Ministry of Petroleum has been instrumental. From the very beginning, the Ministry of Petroleum in the 13th administration has emphasized upgrading economic cooperation with friendly and neighboring countries. The oil diplomacy of the 13th administration covers a wide area extending from exporting technical and engineering services to Latin America to selling oil to traditional buyers in East Asia.

3-Iran Persian Gulf Oil Output Shots Up

Oil production from Iranian offshore fields of the Persian Gulf has jumped 1 kb/d, a top official said.

A deputy head of the Bahregan production center of Iranian Offshore Oil Company (IOOC), MasoudBeiranvand, said: “Owing to the successful implementation of the Hendijan 9 Well lift project using gas from Hendijan 14 Well, about 1 kb/d has been added to oil production from this area of the Persian Gulf.”

He said Hendijan 9 Well is one of the horizontal wells drilled in the Hendijan field, specifically in the Bahregan production center. “Ever since starting operation in 2011, this well has not had stable production despite acidizing and nitrogen lift. Due to pressure fall-off, it has stopped production on some occasions.”

“Downhole tests showed that the cause of unstable production was the low productivity index of the well caused by low permeability of the reservoir rock,” he said. “After examining various scenarios for wells’ rehabilitation and its simulation by specialized software by the engineering division of the Bahregan production center, the gas lift was proposed for wells’ rehabilitation,” said Beiranvand.

“In this method, the necessary gas for injection into Hendijan 9 is supplied from Hendijan 4 Well. After this method proved successful, a pipeline was laid extending from the kill line of Hendijan 14 Well to Hendijan 9. Then, necessary surface equipment including check valve, gate valve, choke, and tension meter was installed and Hendijan 9 Well started supplying about 1 kb/d of oil,” he added.

“Compared with other artificial methods like downhole and wellhead electric pumps, gas lift is economically viable. Moreover, the existence of a high-pressure gas source from Hendijan 14 Well just five meters from Hendijan 9 Well on the WHP-07 oil platform and no necessity for building a pressure compressor station are among other advantages of applying this method,” he said.

Gas lift is an artificial lift system where gas is injected into a produced well casing to help lift liquids to the surface through the production tubing.A continuous gas lift can be adapted to a large range of production conditions in gas wells such as large incline angle wells, high gas-oil-ratio wells, and wells that have sand, wax, or scale.

For the final stages of production at the end of a well's life, operators can replace other artificial lift systems with intermittent gas lifts until the reservoir pressure becomes too low to lift the target fluid volumes.

When it is not economical to operate a gas lift or bottom-hole pressure is too low, operators typically switch to rod pumps or electrical submersible pump systems.

4-Mokhtar Field Development to Start Soon

The CEO of Iranian Central Oil Fields Company (ICOFC), Mehdi Heydari, has said development of the Mokhtar gas field would start soon.

During a visit to the Mokhtar field, he said storage of gas and removal of gas imbalance topped the agenda of the National Iranian Oil Company (NIOC).

He said: “The Mokhtar project is a fundamental and key project underway by ICOFC”.He added that the first well for the Mokhtar development would be drilled as soon as conditions have been prepared for the implementation of the project.

“Once this well has been drilled, full information would be obtained about the Mokhtar field and reservoir so that we can have a full analysis and draw up a long-term view in this area,” Heydari said.

Noting that the development of this field would offer a bright perspective to this region, he said: “NIOC and the Ministry of Petroleum can never be indifferent to their surroundings in the petroleum industry. Wherever the petroleum industry has started work, development, and employment has been seen.”

“We believe that sustainable production would make sense with environmental stability. Wherever the environment has been damaged we have tried to take necessary action,” he said.

The important point with the development of this field is that after full depletion, the Mokhtar gas field, which is located in the strategic Kohguiluyeh and Boyer Ahmad Province, would continue to serve as the natural gas storage site by ICOFC.

The Mokhtar gas field has not been developed. Due to its proximity to densely populated areas and gas trunklines, it remains an ideal field for storage. Based on initial estimates, after depletion, it would have the capacity to store 1.25 bcm of gas.

NIDC Focuses on AI in Drilling

Mahnaz Mohammadi

Possessing the largest drilling fleet in Iran,the National Iranian Drilling Company (NIDC) is instrumental in the petroleum industry. It is responsible for drilling operations and associated technical services. Mohammad Ali Beigzadeh, NIDC’s director of research, technology, and manufacturing engineering, tells “Iran Petroleum” that the company intends to use artificial intelligence (AI) in its drilling operations.

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

To what extent have research projects been instrumental in supplying NIDC needs?

NIDC is a fully industrial and equipment-based company. Following the establishment of this company, as necessary drilling technology and equipment was fully foreign-made, it focused on research projects and supported domestic manufacturing in a bid to be able to meet its needs with regard to oil production. Therefore, the strategy for using research projects and supporting domestic manufacturing has been already developed at NIDC. The recent policy adopted by the Ministry of Petroleum and NIOC in supporting domestic manufacturing and using the potential of knowledge-based companies has given further impetus to this issue. Over recent years, knowledge-based companies and research institutes helped develop most equipment needed by NIDC, and the challenge of inaccessibility of foreign equipment and parts was overcome to a large extent.

Has there been any instance of first-time manufacturing?

Yes, ever since the issue was brought up and an ACT was passed to that effect, first-time manufacturing at NIDC grew 60-70% while the value of agreements signed for that purpose has been up 40%.

Has there been first-time manufacturing in highly sophisticated equipment?

Yes, a very important project currently underway is the manufacturing of diesel-fueled caterpillar generators which NIDC does not have in possession due to sanctions. We have managed to develop the components of this generator in several phases over the past years. First, we developed and manufactured its parts. Last year, we built its oil and air filters, which are widely used. Then we made its radiator, sensors, and piston. Currently, we are headed in a direction to locally develop the entire equipment “oil field national motor” for drilling rigs. Proper steps have been taken in this regard. Qualified companies were shortlisted and agreements would be signed shortly. Next calendar year, we will see the manufacturing of key drilling equipment. The company which we would strike a deal with is communicating with 150 Iranian manufacturers. Once this generator has been made, its commercialization will be envisaged. Given its wide use in drilling rigs, it is economically viable.

What percentage of a drilling rig is made at home now?

Between 65% and 70% of the structure and various parts of a drilling rig are made in the country. In case its motor is made, the percentage would go higher. In the domestic manufacturing process, its technical know-how is developed under our standards and then it would be monitored step by step. Then various tests are carried out on the equipment, both field tests and lab tests. We have to go through a complicated process to reach standard equipment. When we achieve the prototype we receive assurances that the technical know-how has been developed based on existing tests and pursuant to the receipt of certificates.

Which scientific centers have you struck a deal with for the developmentof innovative ideas?

We have signed MOUs and agreements with scientific and research companies in Khuzestan Province in this regard. There is good and constructive communication with ShahidChamran University, the Petroleum University of Technology, and the Research Institute of Petroleum Industry (RIPI). When research work is needed, our needs are met by universities. In some cases, we do not even have the prototype to reverse-engineer, in which case we introduce projects to universities and research institutes. A major NIDC project is the development of an RSS downhole motor, whose original idea has been raised at NIDC. The project is costly and high-risk. In the drilling industry, the bulk of work pertains to downhole operations and we have to deal with unknown substances. We have serious risks in this sector. Only a few companies have developed their sophisticated know-how. We intend to break the monopoly of foreign companies through engaging knowledge-based companies.

To what extent is state-of-the-art technology used in drilling software?

As far as software development is concerned, NIDC has developed comprehensive drilling software that is similar to those used across the world. It has been the result of our joint work with PUT. This locally-manufactured software is more effective than foreign-made ones. It is entirely Iranian. The last edition of software used in drilling has been considered in the comprehensive software and the comprehensive drilling software system is innovative. We have another project on software development, which is related to a device for downhole data gathering during drilling to be relayed to wellhead operators. NIDC is also developing software for drilling string locations, for which an agreement is close to being signed with research institutes and academic centers. Most software used in drilling work is foreign-developed, but we are developing them from the phase of programming.

NIDC also needs drilling bits. What has been done to that effect?

Whereas NIDC widely uses such equipment,the quality of drilling bits is important for the company. Over recent years, several companies have moved to develop the drilling bits. In Khuzestan, the bits have been developed in two different sizes.

How about the role of AI in NIDC operations?

One of our important projects at NIDC is to use AI. Our main focus is on maintaining the present circumstances. The world is abuzz with AI and smart drilling and NIDC is planning to step into this sector. We have cutting-edge technology projects in this regard, which require cooperation with universities and knowledge-based centers. Recently, a project was defined at NIDC, associated with a drilling rig, in which all aspects including AI have been taken into account. It is in the phase of the project now, of course, a massive project sponsored by NIOC.

AOGPC Deals with Knowledge-Based Companies Up 25-Fold

Arvandan Oil and Gas Production Company (AOGPC) witnessed a 25-fold growth in the number of its contracts with knowledge-based companies in the current calendar year to 20 March 2024, from two years before. That has brought up a jump in science and technology at AOGPC which has been empowered to break the monopoly of some foreign companies on equipment manufacturing. IssaNoveiri, director of research and development, said: “AOGPC is Iran’ssecond-largestoil-producing company, just behind the National Iranian South Oil Company (NISOC).”

He added that AOGPC’s needs and associated bids are based on its oil production. “Based on policies that the Ministry of Petroleum had adopted years ago for this company, most development projects had been done by foreign companies, which were technologically unrivaled,” he said, adding: “In the first years following the pullout of foreign companies, some commodities required for these fields were available, but as sanctions were tightened it became difficult to source them domestically.”

Noveiri noted that  some important measures were undertaken for supplying these commodities, particularly by local manufacturing.

“One of these measures was the local development of high-tech commodities needed in the Azadegan and Darquain fields. Some commodities needed for these fields could not be used in other fields due to technological specifications,” he said.

“Sanctions caused a void in high-tech equipment and commodity supply to these fields. Once challenges were studied, this void turned into an opportunity, after which knowledge-based companies were called to manufacture more commodities.”

He went on to enumerate governing laws in this sector,saying: “Two of these laws are the Iranian Commodity Support Act and the Manufacturing Surge Act, emphasizingdomestic manufacturing. We have applied these laws and benefited from the knowledge-based companies’potential in this regard.”

Asked to what extent can these knowledge-based companiesmeet AOGPC’s needs, he replied: “The figure was about IRR 70 billion in 2021 when the 13th administration just took office.But in May 2023, the figure jumped 25-fold to IRR 5,240 billion.”

A working group was established at AOGPC for first-time manufacturing and AOGPC’s needs were identified, he said, adding: “In our call for projects, emphasis was laid on the potential of local manufacturers, and our tender bids were focused on local manufacturing.”

“It has been instrumental in the implementation of projects and we have managed to identify AOGPC’s needs in cooperation with knowledge-based companies.”

“Some outstanding initiatives were undertaken for the first time in the country. A case in point was the manufacturing of a multiphase flow meter (MPFM), which Eni used exclusively for AOGPC-run fields. MPFM was blacklisted by sanctions due to a specific material used in it. However, a local knowledge-based company manufactured this product for us, which was of higher qualitycompared withimported ones,” he said, adding: “Necessary tests were conducted. The contract for the manufacturing of this commodity was implemented and subsequently, 8 items of equipment were manufactured.”

Noveiri said the associated contracts are among first-time manufacturing ones at the Ministry of Petroleum, used mainly for AOGPC-run fields.

“In this way, in addition to manufacturing a foreign commodity that was exclusively used in AOGPC-administered fields, we defined another utility for it so that this equipment could be used in a mobile manner and be usable in the Darquain, North Azadegan, and South Azadegan fields. The manufacturing of this equipment saved much hard currency, while a new model of it was manufactured. By manufacturing this equipment, its monopoly withan American and an Austro-German company was broken. This equipment has now been commercialized and we have asked the same knowledge-based company, i.e. Science Park of Tehran Polytechnic University, to manufacture two other items for us.”

He added: “As far as this equipment is concerned, we can say that supporting knowledge-based companies paved the ground for the development of new technology in the country.”

Touching on demand for the equipment, he said: “This equipment is very specific, which would help raise output. It can be used in oil fields in the country. This equipment can directly be involved in oil output hikes and be used for production monitoring. It is instrumental in acquiringgood data. By having such data, it would be possible to forecast enhanced recovery methods. Therefore, this equipment is largely used for enhanced recovery in the world. That has enabled us to increase production from AOGPC-run fields.”

20% Growth

Noveiri said there has been a 20% growth in the fields fitted with this equipment.

“By establishing a working group at AOGPC, we moved towards domestic manufacturing rather than supply. We conducted a study in the company to strike all companies that could be manufactured domestically off the process of tender bids for foreign-made commodities.”

He added:“We focused on this capability, which yielded significant results. We developed three potentialities in support of knowledge-based companies. First and foremost, we were the first company to increase the quality assessment score for knowledge-based companies in the tender bids.”

“Today, a knowledge-based company participating in AOGPC tender bids would see its score be multiplied by 1.2 or 1.5. Such support can providethe companywith an outstanding status. I have to note that it is a legal obligation in the country,” he said. “The second point pertains to first-time manufacturing that is done through a waiver of tender bid formalities. That was how MPFM was manufactured because it was subject to first-time manufacturing privileges. The third case is about research projects focusing on preliminary studies or pilot manufacturing. All our projects are based on technological pilot. Therefore, we can say that AOGPC is on the side of research and first-time manufacturing projects in the country.”

As far as research and technology is concerned, he said: “We have three types of interaction with universities and research centers. The first one is about capital agreements for the projects invested by NIOC. We implement them in partnership with universities or research centers. The second one is field-oriented projects.”He said: “AOGPC has started enhanced recovery from the Darquain field in partnership with the Amir Kabir University of Technology. This project had been completed below 30% from 2017 to 2021, but we completed it by 90% by 2023. This project is highly significant for AOGPC in terms of enhanced recovery. And finally, the third model is the technological implementation of the project in partnership with knowledge-based companies.”

Regarding research achievements, he said: “In the implementation of these projects, several measures were taken for the first time in the history of the petroleum industry in the country.”

“One case in point is the injection of a gas detector into the Darquain oil field, which is directly associated with gas injection for enhanced recovery. We jointly conducted this project with the Amir Kabir University of Technology, which produced very favorable results. That predicts the location of future wells and gas injection into reservoirs. The injection and producing wells are marked precisely in this project.”

He said that this is the only experimental method enabling us to identify the reservoir fully.

“Common methods used for reservoir studies are limited to a single well in the reservoir, but this method covers the whole reservoir. All across the world, before gas injection into a reservoir, a gas detector is injected to find the best path for gas injection and oil recovery. It was not done in Iran,” he said.“At the Darquain field, gas injection is done in coincidence with oil production. Implementing this project in the Darquain field showed that some wells were not properly located for production. Implementation of this project in the Darquain field resulted in the optimal injection of gas and oil production. It is very important, but we lack knowledge in the country. Thanks to this agreement, technological savvy was transferred in. Furthermore, it was among the major projects of this company.”

He said that gas detection is a sophisticated technology for the identification of fields. It is being used for the first time in the country, while it has been used for two decades in the world. It was invented by American companies. When the pilot gas detector was being operated at the Darquain field, all parties involved were invited in.

“Currently, NIOC’s research and technology division is seeking to expand the use of gas detectors so that theycan be used by other companies. We have managed to develop a new culture in the petroleum industry in this regard. We are also trying to launch a water detector,” Noveiri said.

Asked about cooperation with research centers, he said: “AOGPC has signed cooperation agreements with 13 universities. The number of research projects has jumped from 3 in 2021 to 18 now. There are also 13 cases of call for research. Currently, 4 first-time manufacturing agreements have been signed at this company, which are underway.”

“There are 13 agreements under review, whose results will be announced soon. Currently, AOGPC has opened an R&D office at the Khuzestan Science Park to have better interaction with knowledge-based companies in Khuzestan Province.”“For interactions outside Khuzestan Province, we have opened an office at the Sharif University of Technology with which we interact. Meantime, we have opened an office at the Iranian Research Organization for Science and Technology (IROST)to have effective interaction with the industrial sector, other than universities, in the province and the country,” he Noveiri said.“A new concept has been developed in the world, known as open innovation. We are using this method that emphasizes the use of scientific capacity wherever it is found. What we have done at this company was not limited to the scientific potential of the country merely in the petroleum industry.”

“Today, if technology is available at other organizations we would detect and apply it to the petroleum industry. For manufacturing MPFM and gas detectors, we benefited from the knowledge and technology of other organizations and we would use any potentiality in this regard,” he said.

Interaction With Foreign Universities

Noveirisaid:“We are interacting with the University of Basra via the ShahidChamran University of Ahvaz and the Ahvaz Petroleum University of Technology. Through PUT, we have good communications with other organs of global biotechnology”, adding: “We have also developed good interaction with the Society of Petroleum Engineering (SPE) through our membership. We have scientific interaction and we are not strangers to state-of-the-art science. We have conducted some levels at AOGPC’s research and technology division that have brought about a jump in this sector.”

“We attach great significance to environmental issues. For this purpose, we have signed an MOU with the University of Agriculture and Natural Resources of Khuzestan Province,” he said.“Another case has been conducting research in favor of protecting the environment. It has been done and generated high value-added for the country. Gas flaring at the Darquain field has been also cut to one-tenth. The flare gas captured in his way is fed into the reservoir, which would enhancerecovery, not to mention boost the maximum efficiency rate and maintain reservoir pressure.”

He said:“At the North Azadegan field, gas is delivered to the Hoveyzeh gas refinery, which has been in favor of the environment. Environmentally speaking, another initiative has been to clean oil-contaminated soils. Under the current method, the soil is moved from one point to another or we use oil-devouring bacteria.”

Noveiri saidA project was presented at the Khuzestan Science Park, which resulted in an agreement with the ShahidChamran University.

“Experts at the Khuzestan Science Park developed a biological product that can clean up the soil by 90%. Lab work has been done and everything is close to field test. The pilot for this project is in Jofair,” he said.“This highly effective method has yielded results. The feasibility study for this project has been carried out with permission from NIOC and can be commercialized.For safety and security, we have unveiled an intelligent order system in the safety and security division. A knowledge-based company is also in charge of a project to make surveillance cameras intelligent. Intelligent surveillance is highly significant, particularly regarding safety issues.”

“Detecting smoke, fire, or gas leaks is important for operators. For this purpose, making surveillance cameras intelligent at operation units of the fields administered by AOGPC is underway, the first being in the North Azadegan field,” he said.

Elsewhere, Noveiri said lightening heavy crude has been a major project by AOGPC. It was done jointly by RIPI and its pilot was launched.

“We’re currently looking for its industrial implementation. In this project, a system would be designed to fraction heavy oil into a light and a heavy part. The light oil would be returned to the system for renewed lightening, where it is converted into a product of high value to be sold,” he said.|The pilot has already been done and it will become a processing system. We’re looking to attract investment. It is a mini-refinery whose heavy crude oil would be much higher than its crude oil output. That is great work that would bring about a revolution in heavy oil sales.”

“We plan to manufacture it for the Azadegan field where we would have a mini-refinery in the future,” he said. “We predict a 40 tb/d capacity which, if materializes, would be a revolution in the heavy crude sales in the country.”

Five Gas Flares Set to Turn Off

The Ministry of Petroleum, under the 13th administration, has focused on associated petroleum gas gathering to capture flare gas while generating revenue. The Dehloran petrochemical refinery, which is capturing associated gas from the Cheshmeh Khosh, West Paydar, Danan, Sarvak, Azar, and Dehloran fields, is now close to operation. The CEO of the Dehloran petrochemical refinery, Javad Kamari, told "Iran Petroleum" that the nine flares in these fields would be fully turned off. He also said $1.1 billion had been invested in the project that would be ready to capture 240 mcf/d of gas. 

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

What is the objective of the Dehloran petrochemical refinery operation?

The Dehloran petrochemical refinery project is situated in the Mousian area of Dasht-e Abbas on around 100 ha of land. The objective is to capture flare gas. It is also known as NGL 3100. Once this project becomes operational, 9 gas flares in the Cheshmeh Khosh, West Paydar, Danan, Sarvak, Azar, and Dehloran fields will be turned off.

When did the project start?

It began in 2011 and was under the authority of the Ministry of Petroleum until 2018 when the project was hardly 10% completed. It has since been delegated to the Oil Industry Pension Fund (OIPF) which has chosen Oil Industries Engineering and Construction (OIEC) as its client under an EPC agreement. The project was 38-40% completed by 2021. Once the 13th administration took office, new managers resumed it at the ministry and OIPF, and therefore the job picked up speed. We have carried out all pre-commissioning work and are ready to launch the NGL 3100 project at full capacity, i.e. 240 mcf/d, by receiving sweet and sour gas as feedstock.

How much is the capacity of this project?

This project has a total capacity of 240 mcf/d of feedstock, including 80 mcf/d of sweet and 160 mcf/d of sour gas, which would be sourced by three compressor stations. The products would be 1.055 million tonnes of C2+ to feed the olefin unit of the Dehloran petrochemical company, 150 mcf/d of natural gas, 850 b/d of condensate, and 400 tonnes a day of sulfur. A key advantage of this project pertains to preventing emissions and of course environmental pollution. Our products would help feed the Dehloran petrochemical plant. Located 45 km from us, the plant accommodates a 650,000-tonne olefin unit, a 300,000-tonne HDPE unit, a 300,000-tonne LLDPE unit, and a 160,000-tonne PP unit. The olefin unit of the Dehloran petrochemical plant is now 50% completed. Due to the impossibility of the non-operation of this unit in the coming three years while we have had to pay for the maintenance of the plant until its operation, OIPF and Ahdaf Investment Company decided to feed Bandar Imam Petrochemical Plant (BIPP) with C2+. We negotiated with them on the construction of a 180 km pipeline stretching from the Dehloran petrochemical refinery to BIPP. We have managed to build this pipeline in eight months. It was built at the rate of 13% a month, which was a record. 

How was the project financed?

BIPP financed the project and the Dehloran petrochemical plant implemented the project. A total of €55 million has been invested in this pipeline. Had we not done so, we would have had to continue gas flaring until the full operation of the olefin unit of the Dehloran petrochemical plant.

How much would the Dehloran petrochemical refinery earn you?

The revenue from this project would be $700-760 million a year. At full capacity, we would produce 1.055 million tonnes a year of C2+ and 400 tonnes a day of sulfur. Based on the initial agreement, condensate and natural gas would be returned to the Ministry of Petroleum.

How much has so far been invested in the Dehloran petrochemical refinery project?

So far, nearly €1.1 billion has been invested, which would also cover gas compressor stations, feedstock pipelines, and a 180 km pipeline.

What has been done in the compressor section?

The Ministry of Petroleum was planning to build a compressor station at a 60 km distance from the Dehloran petrochemical refinery in the Dehloran area where the Sarvak & Azar, Dehloran, and Danan fields are located, to gather flare gas to be delivered to us. Furthermore, it was planned to transfer associated gas to Cheshmeh Khosh in West Paydar and Cheshmeh Khosh. Due to the importance of the project, we decided to complete this section ourselves. This project was carried out in the Ilam and Khuzestan provinces and more specifically in landmine-infested war zones. Therefore, we struck a deal with the Ground Forces of the Iranian Army for demining 180 km in the depths of 30 cm, 50 cm, and 2 meters. About 50 km crossed the Hoveyzeh Marshes and marshlands. Within 45 days, the 50 km pipeline was laid down. It would have been delayed for one year if we had not done it.

How much did it cost you?

We spent more than €350 million on two gas compressor stations and transmission pipelines for Cheshmeh Khosh and Dehloran.

Could you tell us about the specifications of this project?

Our sulfur recovery unit is the largest in the country. The feedstock transmission line project stretching from the Dehloran compressor station to NGL 3100 on 60 km carrying feedstock to NGL 3100 is a 16-inch pipe that is seamless and made of special materials. It has been manufactured for the first time by local firms. It has been tested and is now ready to carry feedstock.

Have sanctions impacted your work?

We implemented the largest projects while being under sanctions. Sanctions have caused delays and increased our project costs by 15-20%, but they have failed to make us stop working. We have imported compressors from the best compressor manufacturers in the world.

US Elections and Middle East Impact

Fereydoun Barkeshli

Energy Market Analyst

Last year this time of the year, most economists and oil market analysts held their breath and wondered if a financial crisis or a recession would be eminent. The aftermath of the pandemic, war in Ukraine, US interest rates dilemma, and on top of all, the falling oil prices and faltering market fundamentals puzzled most companies and think tanks. One year on, the economy looks more resilient than was thought earlier. Global oil prices are stable, thanks to OPEC+ discipline and determination to stabilize the market and firm commitment by major market players in the alliance most notably Saudi Arabia and Russia, prices have firmed up in the vicinity of $80 per barrel. A price that is currently more or less agreeable to producers and consumers. However, the international oil market is dominated by volatility, and it is difficult to figure out what comes next. Based on the fundamentals, expectations are that moving towards the second half of the year, markets should consider coping with relatively higher oil prices.

Saudi Arabia’s voluntary output cut of 1 mb/d followed by Russian 0.5 mb/d has been instrumental in oil market stability. I could comfortably say that without those voluntary cuts and OPEC+ endurance, the price would be below $60 per barrel this time of the year. However, it is perplexing to note that the United States keeps pumping more oil in every quarter, compared with the previous one. America’s output now stands at 13.5 mb/d. That is the highest volume of crude oil produced by any country in history.

On this note, Saudi Arabia and the US are arch-rivals and must fight for every barrel. To make the matter even more complicated, America is producing and exporting a huge quantity of LNG that is directly going to the markets that Saudi Arabia has wept to gain. LNG replaces oil products in different markets and henceforth less Saudi oil would be required. This is a phenomenon that overshadowed Saudi- US equations and bilateral relations since 2020. Saudis and OPEC members invest and buy American technology and create additional capacity, while the US produces every barrel with no hesitation. As such the two countries remain in alliance but are rivals in the oil markets. On the contrary, Russia has been an oil and energy alliance of OPEC+ and supportive of oil market stability.

Changes in the White House will have no substantive impact on the Saudi-US oil differences. Saudi Arabia is losing its market to the United States and at a lower volume to the Russians. Under the current $80 per barrel price which is maintained by OPEC+ coherence, all members are satisfied that their lost barrels are compensated by the stable market. Once they have calculated that they get more revenue by market shares relative to price, they may be tempted to give up and shower the market with more oil for less revenue. I can’t subscribe to the notion that 2024-2025 will be the era of OPEC+ breakup, even though the US is aggressively hitting on Saudi Arabia’s market share.

I would like to embark upon a little bit of history before getting into the core topic.

As I am writing this article, it is coincidental with the 50th anniversary of the Arab oil embargo on major Western oil-consuming countries that supported the Zionist Regime during the 1973-74 war. That was the first major energy crisis that the world experienced. Before that, Iran’s Oil Nationalization movement added 4 Cents per barrel to the price of oil on the London Stock Exchange which lasted for five months.

The 1974 oil embargo tripled oil prices and later added even more. That was the first global encounter with a phenomenon known as energy crisis. The topic of geopolitics of oil and energy was enshrined in the international order.

The event led to the creation of the International Energy Agency (IEA) in 1974 and consequently the Strategic Petroleum Reserves ( SPR), first by the US and then followed by 16 OECD member states(the number of OECD members has reached 23 over time). In the meantime, OPEC was emboldened to add to its solidarity as a united front for the oil-producing countries. Nevertheless, the arrival of a new revolutionary leader Colonel Gaddafi initiated hardline policies by OPEC.

Both measures related to the creation of IEA and SPR were adopted during the presidency of Republicans in the White House. IEA was introduced by Richard Nixon and SPR by his predecessor Gerald Ford. However, this could have been a mere coincidence as the security of energy has always been and remains a major component of US national security. It is also important to note that Congress is also a determining factor in supporting a certain policy in the country.

While the dominant assumption within the oil producers and market players in the world oil markets favor Republicans, there has often been a certain unanimous direction for US energy policies, domestic and international.

However, there is documented evidence of the fact that Republicans versus Democrats do not necessarily follow a universal paradigm of policies towards energy and oil in particular. There is a conceptual variation towards energy and oil in particular. I refer to the following cases that are documented.

President Nixon, a Republican (1969-1974), established the first US Environmental Protection Agency (EPA) but supported offshore drilling and expanded oil production in the country.

Jimmy Carter, a Democrat (1977-1981), promoted energy conservation and alternative energy sources but faced challenges due to the energy crisis and economic recession.

Ronald Reagan, a Republican (1981-1989), downplayed the severity of climate change and focused on economic growth, which led to increased oil production in the United States.

George W. Bush, a Republican (1989-1993), signed the Rio Declaration acknowledging climate change but faced political opposition to stricter regulations.

Bill Clinton, Democrat (1993-2001), promoted international cooperation on climate change but faced resistance from the oil and gas industries.

George W. Bush Junior, a Republican (2001-2009), rejected the Kyoto Protocol and prioritized domestic oil production which led to higher GHG emissions.

Barak Obama, a Democrat (2009-2017), focused on climate change mitigation, implementing regulations, and promoting renewable energy sources. He also withdrew America from the Kyoto Protocol and negotiated the Paris Agreement.

Donald Trump, a Republican (rolled back Obama’s policies on climate regulations, withdrew the US from the Paris Agreement, and promoted the production of oil and gas mostly from shale basins.

Joe Biden, a Democrat (2021-Present), rejoined the Paris Agreement, set ambitious climate goals, and invested heavily in renewable energies.

What I am trying to say is that the American president’s policies towards energy production and consumption have varied significantly throughout history. Political pressures, economic factors, the international political environment, and the influence of the major oil companies and their lobbying within the Senate and the

The 1974 oil embargo tripled oil prices and later added even more. That was the first global encounter with a phenomenon known as energy crisis. The topic of geopolitics of oil and energy was enshrined in the international order.

The event led to the creation of the International Energy Agency (IEA) in 1974 and consequently the Strategic Petroleum Reserves ( SPR), first by the US and then followed by 16 OECD member states(the number of OECD members has reached 23 over time). In the meantime, OPEC was emboldened to add to its solidarity as a united front for the oil-producing countries. Nevertheless, the arrival of a new revolutionary leader Colonel Gaddafi initiated hardline policies by OPEC.

Both measures related to the creation of IEA and SPR were adopted during the presidency of Republicans in the White House. IEA was introduced by Richard Nixon and SPR by his predecessor Gerald Ford. However, this could have been a mere coincidence as the security of energy has always been and remains a major component of US national security. It is also important to note that Congress is also a determining factor in supporting a certain policy in the country.

While the dominant assumption within the oil producers and market players in the world oil markets favor Republicans, there has often been a certain unanimous direction for US energy policies, domestic and international.

However, there is documented evidence of the fact that Republicans versus Democrats do not necessarily follow a universal paradigm of policies towards energy and oil in particular. There is a conceptual variation towards energy and oil in particular. I refer to the following cases that are documented.

President Nixon, a Republican (1969-1974), established the first US Environmental Protection Agency (EPA) but supported offshore drilling and expanded oil production in the country.

Jimmy Carter, a Democrat (1977-1981), promoted energy conservation and alternative energy sources but faced challenges due to the energy crisis and economic recession.

Ronald Reagan, a Republican (1981-1989), downplayed the severity of climate change and focused on economic growth, which led to increased oil production in the United States.

George W. Bush, a Republican (1989-1993), signed the Rio Declaration acknowledging climate change but faced political opposition to stricter regulations.

Bill Clinton, Democrat (1993-2001), promoted international cooperation on climate change but faced resistance from the oil and gas industries.

George W. Bush Junior, a Republican (2001-2009), rejected the Kyoto Protocol and prioritized domestic oil production which led to higher GHG emissions.

Barak Obama, a Democrat (2009-2017), focused on climate change mitigation, implementing regulations, and promoting renewable energy sources. He also withdrew America from the Kyoto Protocol and negotiated the Paris Agreement.

Donald Trump, a Republican (rolled back Obama’s policies on climate regulations, withdrew the US from the Paris Agreement, and promoted the production of oil and gas mostly from shale basins.

Joe Biden, a Democrat (2021-Present), rejoined the Paris Agreement, set ambitious climate goals, and invested heavily in renewable energies.

What I am trying to say is that the American president’s policies towards energy production and consumption have varied significantly throughout history. Political pressures, economic factors, the international political environment, and the influence of the major oil companies and their lobbying within the Senate and the

1------------Sauropod 3D Plan Offshore Western Australia

3D Energi has received approval from Australia’s regulator NOPSEMA for its Sauropod 3D seismic environmental plan.

This covers a 3,447-sq km area in the western half of the WA-527-P petroleum exploration permit in the Bedout sub-basin offshore Western Australia. Water depths range from 100 m to 150 m.

The permit is 195 km west of Broome on the Northwest Shelf, adjacent to the Santos-operated Dorado discovery and along trend from the recent 2022 Pavo oil discovery.

Acquisition and processing of ≥510 sq km of 3D seismic data over the most prospective areas are a minimum commitment for the permit’s primary term.

2--------------TCP Jumpers Offshore Guyana

ExxonMobil Guyana has contracted Strohm to supply a thermoplastic composite pipe (TCP) for the newly approved Whiptail project offshore Guyana.

It is Strohm’s single largest pipe supply order to date and will be used for water and gas injection.

The company will supply the consignment to ExxonMobil in a single, continuous length, with associated pipehandling equipment. The concept will allow the project’s 24 jumpers to be cut to the desired length, terminated and tested on site in Guyana.

The jumpers, made from carbon fiber and PA12 polymer, will be installed in water depths of more than 1,600 m and will operate at about 10,000 psi.

It follows orders from ExxonMobil for the Yellowtail and Uaru developments, also in the Stabroek Block (in total more than 70 jumpers).

3--------------------Tchendo 2 Platform Offshore Congo Nears Startup

PetroNor E&P has issued an update on operations offshore Congo at the PNGF Sud field complex.

Production efficiency was lower during the first quarter due partly to planned shutdowns associated with laying of a new gas line from Tchibeli NE to Tchendo.

Commissioning of the new Tchendo 2 platform should finish around the end of this month, and it should make PNGF Sud independent of power imports.

Early in February, the Axima rig spudded the new Tchibeli NE infill well, which reached TD of 4,248 m, encountering oil-bearing sandstones. The well is now on production and undergoing testing.

4-------------------Equinor Expands Shelf Rig Workscope

Equinor has extended its contract with the Shelf Drilling Barsk (ex-Noble Lloyd Noble) jackup in the Norwegian North Sea.

The firm-term extension covers two wells with an estimated duration of 254 days at the Gudrun Field, with options for three wells.

The Shelf Drilling Barsk rig is due to start operating for Equinor next month at Sleipner Vest (initially two wells, 270 days), with options for two wells.

Equinor has also exercised the first option well at Sleipner Vest with an estimated minimum duration of 83 days. Value of this additional firm period, excluding certain integrated services, is about $81 million.

5---------------------Seohae Wind Project Offshore South Korea

The Ministry of Trade, Industry & Energy of Korea has granted RWE a 495-MW electricity business license (EBL) to develop the Seohae offshore wind project.

The award represents RWE’s first exclusive development rights for offshore wind in South Korea since the company opened an office in Seoul in 2021. An EBL is a mandatory requirement that allows companies to generate and supply electricity in the country.

Seohae is roughly 45 km from Taean County in Chungcheongnam Province.

RWE said it would now work with local suppliers to advance engineering and environmental impact assessment studies as well as collaborate with the local county and Korea Electric Power Corp. (KEPCO) to plan and secure a grid connection agreement.

Kazakhstan Energy Review

Shuaib Bahman

Kazakhstan enjoys an outstanding position among Central Asian nations thanks to its large territory, long shared borders with two regional powers Russia and China, more than 2,320 km of coasts east and north of the Caspian Sea, abundant resources particularly oil and gas, several atomic power plants, housing a spatial base and sitting atop huge uranium deposits. The country is known to be the most important and largest producer and exporter of oil and gas in Central Asia. It has made massive investments in this sector over the past years.

With 172 oil fields, Kazakhstan owns 3% of the total known oil reserves in the world. It is ranked 11th among crude oil holders. With the current production rate, Kazakhstan is forecast to keep exporting oil for another 60 years. According to the US Energy Information Administration, Kazakhstan is the Caspian Sea largest oil reserves holder.

With 31.2 billion barrels of crude oil, this country has the largest share of proven reserves in the Caspian Sea. Moreover, Kazakhstan’s gas reserves in the Caspian Sea are estimated at 104 tcf. Kazakhstan’s oil production stands at 1.387 mb/d and gas production at 1.025 tcf a year.

Oil Pipeline

Currently, Kazakhstan’s crude oil export is mainly handled by the Caspian Pipeline Consortium (CPC). It stretches from northwestern Kazakhstan to the Novorossiysk-2 Marine Terminal. CPC accounts for 80% of Kazakhstan’s crude oil exports. The country is examining options to diversify its energy exports. For instance, the Kazakh Energy Ministry plans to build an oil pipeline from Atyrau to Kurik. Meantime, the feasibility of building a subsea pipeline will be studied.

In addition to oil and gas, Kazakhstan is rich in natural resources such as coal and uranium and has significant capacities in the field of renewable energy such as wind, solar, water, and biomass. The country has about 15% of the world’s uranium resources but is currently dependent on fossil fuels for electricity generation. Coal-fired power plants account for 75% of all electricity generation, which has caused concerns about GHG emissions and their impacts on human health and the environment. For this reason, Kazakhstan plans to enhance the share of renewable energy in its energy mix to 15% by 2030 and to 50% by 2050. Meantime, under Astana’s plans, the use of carbon energy is set to be abandoned by 2060.

Future Outlook

Over the past years, energy has played an important role in Kazakhstan’s economy in such a way that about 58% of Kazakhstan’s exports are crude oil. At the same time, energy has been the main driver of economic growth in Kazakhstan over recent years. Among Central Asian nations, Soviet-era Kazakhstan was the most economically developed. This growth, which is largely related to the geographical location and rich natural resources of this country, continued in the years after independence. Kazakhstan still enjoys the highest economic growth rate owing to energy income.

That has in turn resulted in higher demand for energy services. Therefore, building additional production capacity has been a must to guarantee stable growth in Kazakhstan’s energy sector. Renewable energy resources are turning into an attractive option for filling the supply-demand gap. Of course, despite the significant capacities of wind, sun, water, and biomass, these resources have not been used sustainably due to a wide range of technical, institutional, social, and economic obstacles.

On the other hand, in the international scene, Kazakhstan is very important in the global energy equation. In addition, the issue of energy has had an important place in the foreign policy of Kazakhstan in the past years and has given this country a more prominent role. The Kazakhs hope to be among the ten countries with the largest production and export of oil in the world. In this regard, Astana has opted for diversifying hydrocarbon products, increasing export markets, and enhancing the production of hydrocarbon products. According to the estimates mentioned in the previous years, due to huge oil and gas resources, Kazakhstan has found an important position in the global energy market and is expected to become one of the most important producers and exporters of oil and gas in the world in the next decade.

The presence of oil and gas resources in Kazakhstan has made this country a place for great powers to compete with each other. In the past years, Russia, America, and China have made great efforts to expand their influence in Kazakhstan, particularly in its energy sector. Especially since Kazakhstan, in addition to oil and gas resources, with its industrial facilities and nuclear weapons testing, is considered to a large extent to be a determining factor in the Central Asian region. As Kazakhstan’s energy sector is mostly invested by Russian and Chinese companies, and America and Europe come only next, there has always been competition between these countries to dominate Kazakhstan’s energy resources. Although Kazakhstan government has tried to manage this conflict by maintaining a balance in its relations with Russia and China on the one hand and Western countries on the other hand, its alignment with Moscow and Beijing in the Eurasian Economic Union (EEU) and the Shanghai Cooperation Organization (SCO) as well as cooperation with OPEC in the oil price stabilization plan has not pleased Western governments. It has to be kept in mind that Kazakhstan and Russia together are known as two influential governments cooperating with OPEC, having played an important role in forming OPEC+ and stabilizing energy prices over recent years.