Mohsen Paknejad, New Minister of Petroleum

Mohsen Paknejad, nominated by President Masoud Pezeshkian to serve as minister of petroleum, obtained 222 votes in favor out of 288 to win the vote of confidence from the parliament. During deliberations ahead of the vote of confidence, Paknejad highlighted the necessity to enhance oil and gas production capacity. He said he would try his best to benefit from international diplomacy and proper cooperation with neighbors, aligned and even Western countries to enhance oil and condensate exports, diversify export markets, and transfer oil industry technology and equipment.
Paknejad is taking office as minister of petroleum. At the same time, Iran’s July oil production reached 3.4 mb/d, unprocessed gas production 975 mcm/d, crude oil and gas condensate refinery 2.37 mb/d, crude oil and gas condensate exports 1.547 mb/d, light gas production 720 mcm/d and nominal petrochemical production capacity 98 mt/yr.

Oil Recovery

“Iran holds about 9% of conventional crude oil reserves in the world, ranking the third; however, it accounts for 3.5% of global crude oil output, coming eighth among producers,” read the master plan presented by the new minister. “Therefore, there is a significant difference between Iran and other countries in terms of recovery from oil reservoirs and their depletion. A strategic and necessary measure in this regard is to accelerate and increase oil and gas recovery and produce hydrocarbon products to invest the generated wealth in infrastructure projects and value chain completion and development of renewables,” it added.  To that effect, accelerating the development of the upstream oil and gas industry would top the NIOC agenda.

Gas Imbalance

Eliminating gas production and consumption imbalance is one of the key programs of the new minister of petroleum. Currently, rich gas production from offshore and onshore fields averages at 1 bcm/d, which is not enough to meet demand by households, businesses, industries, power plants, petrochemical complexes, and oil fields for injection. During months with peak consumption, there is an average shortage of 250 mcm/d. That is why one of the priorities of the Ministry of Petroleum is to enhance production capacity and make up for gas imbalance under short-term and long-term plans like gas field maintenance projects. The Ministry of Petroleum under the 14th administration is committed to bringing national rich gas production capacity to 1.25 bcm/d by the end of its term in four years.

400 tb/d Output Hike

As far as oil production is concerned, Iran’s crude oil output stood at 3.826 mb/d after sanctions were lifted under the 2015 nuclear deal with six world powers. Currently, barriers to oil exports have been removed and there is potential for maximum recovery from oil fields to 3.4 mb/d. Paknejad has said by implementing a one-year plan, it would be possible to raise oil field capacity to 3.85 mb/d from the current 3.4 mb/d. Under a four-year plan, the Ministry of Petroleum targets adding 400 tb/d by finalizing IPC agreements reached for 12 oil fields, 250 tb/d by operating eight oil fields, and another 600 tb/d by striking new deals for 14 oil deals.

$124bn Investment Needed

According to plans announced by Minister Paknejad, the National Iranian Oil Company (NIOC) would need $124 billion in investment in eight years. According to plans, $80 billion is expected to be invested in this sector by the end of the term in office of the 14th administration. Increasing oil exports through boosting cooperation with target countries including neighbors is another priority of the Ministry of Petroleum, based on which NIOC would follow up on increasing crude oil and petroleum product exports. To that end, it is necessary to hold talks with countries endowed with refineries and present diverse packages to them, reimbursing costs made in field development in the form of products and benefiting from the capacity of private firms.

Energy Diplomacy

Energy diplomacy is another sector the Ministry of Petroleum would focus on. As international sanctions are biting the petroleum industry, particularly targeting crude oil and gas condensate exports, money transfer, investment, and commodity and equipment imports, the 14th administration is widely expected to spend huge efforts on having sanctions eased so that foreign investment would flow in light of sweeter contract terms.

Complexities

Addressing the MPs, Paknejad gave an update on his three-decade track record in the oil industry. He said he was well aware of the complexities, hidden angles, and sensitivities of the industry, adding that he would hold a technical and specialized look at this industry.  Paknejad said he would open a new chapter in cooperation in the oil industry to benefit from the existing potential in this sector for achieving as many achievements as possible. Farhad Shahraki, a member of the Parliament Energy Committee, came out in support of Paknejad, saying he would be able to steer the oil industry towards development and progress thanks to his good knowledge of the challenges and opportunities of this industry. Regarding the necessity of attracting foreign investment and interacting with the world, he said: “By holding a positive view of cooperation with international bodies and companies, Paknejad can be instrumental in attracting foreign investment and developing international cooperation.” Paknejad, 58, holds a bachelor’s degree in electrical engineering from the University of Tehran and a master’s in industrial engineering from the Amir Kabir University of Technology. He has already served as deputy minister of petroleum for supervision of hydrocarbon reserves, member of the High Council of Supervision on Oil Resources, chairman of the High Council of Oil and Gas Reservoirs Engineering, deputy CEO of NIOC for production, NIOC Board member, CEO and deputy chairman of Naftiran Intertrade Company (NICO), deputy director of NIOC corporate planning, planning director of Iranian Central Oil Fields Company (ICOFC), Board member of Iranian Offshore Oil Company (IOOC), director-general of supervision on petroleum products exports and director of oil and gas field development projects.
 

Potential  Investment in Upstream Oil Sector

Iran plans to bring its oil and gas production to 5 mb/d and 1.1 bcm/d respectively, within a 10-year horizon. To that end, the country would need to invest $200 billion in the upstream and downstream oil sectors. Upstream projects account for $160 billion, divided into $90 billion in oil and $70 billion in gas. Such investment is expected to be attracted within ten years. Iran is currently supplying 4 mb/d, but whereas most oil fields in Iran are in the second half of their life, investment is a must in this sector to help increase oil and gas production.
Iran holds more than 160.12 billion barrels of oil in place, making it the third largest owner of crude oil reserves among OPEC fellow members. According to BP data, Iran also sits atop the fourth largest oil reserves in the world behind Venezuela, Saudi Arabia, and Canada. The CEO of National Iranian Oil Company (NIOC) said last March that 2.5 billion barrels of oil equivalent had been added to Iran’s crude oil and natural gas reserves, not to mention newly discovered oil fields. Despite all restrictions caused by sanctions, the Iranian petroleum industry continues to remain attractive to investors due to its great potential for investment and a high rate of return on investment. The Iranian Ministry of Petroleum has tried its best to introduce opportunities for investment in this industry to local and foreign investors. For instance, according to NIOC’s planning, a new oil civilization is to be created in the West Karoun area. Once the West Karoun cluster of oil fields has been developed, oil production in that area will reach 1 mb/d. The Azadegan, Yaran, and Yadavaran are the main fields in West Karoun that are estimated to hold 67 billion barrels of oil in place.

Investment Incentive

One of the fields highly attractive to investors is Azadegan. According to an $11 billion agreement NIOC signed in 2023 with two Iranian E&P and six banks, this field would undergo integrated development by Iranian contractors. However, Iranian companies may engage foreign partners to develop this field. Azadegan has already been split into northern and southern sections and has undergone development. The first phase of North Azadegan was developed by a Chinese company in 2016, while South Azadegan, currently supplying 140 t/d, was developed by the Petroleum Engineering and Development Company (PEDEC). The rate of return on investment in these fields is high.
The Yadavaran field is also attractive to investors. Its first phase was inaugurated in 2016, while its second phase of development is being discussed by NIOC and Chinese and Iranian investors. In parallel with talks for the second phase of development, NIOC is focusing on the incremental development of this field until investors step in to accelerate the work. The Ministry of Petroleum has said time and again that it would welcome any domestic or foreign investment to preserve and even boost output.

Technological Need

Potential investors in this profitable industry should keep in mind that due to its young and specialized manpower, access to a big consumer market, and proximity to international intersections, Iran enjoys high investment potential. In the meantime, there is big capacity for the petroleum industry development in Iran. For instance, the National Iranian South Oil Company (NISOC) is supplying more than 75% of Iran’s oil output. There is big potential for investment as most fields are now in the second half of their life and require technology to boost their rate of recovery. Most oil fields with the capacity to produce at least 300 tb/d in Iran are now in the second half of their life. They have extracted less than 30% of their oil and the rest would need state-of-the-art technology that may raise the recovery rate to more than 80%.

 

A highly attractive field for investment is the Bangestan reservoir of the Mansouri field. It would be possible to enhance its recovery by natural depletion, gas, and water injection to study various parameters including the flow rate, and finally lift its downhole pressure for better recovery. This field has good potential for development in the future. NISOC has developed the Mansouri field in recent years to increase crude oil production and boost the processing capacity from 60 tb/d to 100 tb/d. The only remaining part of the first phase of development of the Mansouri field is to complete the production and desalting facility with the capacity to process 75 tb/d. Conducting studies to enhance oil recovery from this field to 150 tb/d is another goal sought in the development plan. The high recovery rate of the Mansouri field has added to the significance of this field.
While the latest studies put the average rate of recovery from oil fields in Iran at 28%, the Mansouri field’s recovery at the Asmari reservoir is estimated at 47%, which indicates the high potential of
this field.

Investment Return in Reshadat

The Persian Gulf offers many more opportunities for investment. For instance, in the Reshadat field which, geologically speaking, comprises three oil layers, crude oil is extracted with a high percentage of water and a low gas percentage. Light oil production began in this field in 1968. The high-quality oil with an API gravity of 36 has many international customers, thereby making it an attractive field to foreign companies.

Gas Fields

Alongside oil fields, gas fields are also attractive to investors. For instance, Fars Province is the second richest gas owner after Bushehr Province. The gas production capacity in Fars stands at 114 mcm/d, supplied mainly by Aghar and Dalan, Tabnak and Shanol, and Varavi and Homa. There are 13 gas fields in Fars Province, only 6 of which have already been developed. If the remaining seven fields are developed, the province will see its gas production capacity grow to 110 mcm/d.Among gas fields with significant attractiveness for investment is the Aghar field. Iranian Central Oil Fields Company (ICOFC), which is responsible for developing oil and gas fields in Fars Province, has said it would bring Aghar’s output after second-phase development by 20 mcm/d to 42 mcm/d. That would require drilling new wells, developing the separation center in the Aghar field, building a pipeline, and expanding the Farashband refinery. The studies conducted to that effect indicate a 40% increase in the gas deposits of this field with the rate of recovery estimated to reach 71%.

Compression Platforms

In addition to investing in oil and gas fields for higher recovery, NIOC has said it would need at least $20 billion in investment to maintain production level at the South Pars gas field. The South Pars recovery has reached 707 mcm/d. All phases of this massive gas field have been developed and NIOC is currently planning to build compression platforms there to preserve production at this giant offshore field which Iran shares with Qatar.
Iran first decided to boost pressure at South Pars in 2017 when it signed a deal for the SP11 development with a consortium comprising France’s Total (the forerunner to TotalEnergies), China’s CNPCI, and Iran’s Petropars. But after the US reimposed its sanctions on Iran, the $4.8 billion deal failed as foreign parties pulled out. However, studies were conducted on building compression platforms without foreign companies by only relying on Iranian manufacturers. While welcoming foreign investors and cutting-edge technology in compression platforms, NIOC last March signed a $20 billion agreement with four Iranian contractors to build 14 compression and 14 support platforms. The agreement marked the beginning of the construction of offshore compression platforms in Iran. By implementing this project, in addition to a 90 tcf increase in gas recovery and 2-billion-barrel condensate recovery, Iran would see $900 billion in revenue. South Pars supplies 70% of Iran’s gas and 45% of feedstock for Iranian refineries. Launching the planned compression platforms would keep the field running for seven decades.

7 SP Zones

Seven zones are located in South Pars for the compression project. Instead of using a 20,000-tonne platform, two platforms would be used to facilitate construction by local contractors. As the 14th administration is taking office with the policy of working to have sanctions lifted under the aegis of further interaction with the world, the policies underway in Iran’s petroleum industry for attracting more investment and developing oil and gas fields would pick up speed. It has to be added that owing to its young and specialized manpower, the Iranian petroleum industry has managed to manufacture the necessary equipment for the petroleum industry despite all restrictions. It can now become a reliable partner for foreign investors and realize a win-win game.

Opportunities for Investment in Iran Gas Sector

Oil and gas reserves have always constituted a strength for Iran. Despite so many challenges, they have created valuable investment opportunities. These opportunities increased in 2015 after sanctions were lifted on Iran. Nonetheless, hardships emerged as the sanctions were reimposed in 2018. With 21% of the world’s total natural gas reserves and sharing the massive South Pars gas field with Qatar, Iran comes second after Russia in terms of natural gas reserves in the world. Iran is also the world’s third-largest gas producer. Despite restrictions, there is still potential in the country. This valuable opportunity could be ignored by domestic and foreign investors.
Ali Fekri, head of the Organization for Investment, Economic and Technical Assistance of Iran (OIETAI), said recently that $11 billion had been attracted by the 13th administration.
He said Iran attracted $4.2 billion in investment in the calendar year to March 2023, which was up 170% last calendar year to March 2024.
“Foreign investment in Iran has been made in various sectors, the bulk of which going to the oil and gas sector. In this sector, five packages of investment valued at $4.8 billion have been made,” he added. Fekri said China was the biggest foreign investor in Iran last calendar year. Applicants for investment in underground natural gas storage projects and megaprojects for efficient gas use at compressor stations came together with representatives from steel manufacturing companies last May. The event was hosted by Iran Gas Engineering and Development Company (IGEDC). Gas industry megaprojects were introduced to potential investors. Alireza Bayat, National Iranian Gas Company (NIGC) head of investment and business, said: “Investment in all sectors is a major principle of investment in every industry and in our country, the gas industry is a blood in the artery of the economy. Development of this industry will undoubtedly result in development in other manufacturing sectors like steel and petrochemicals, as well as industrial sectors.”   Reza Noshadi, CEO of IGEDC, said major achievements were made during years of sanctions.
“The CBI, NIOC, and NIGC were sanctioned in 2009. The gas production, refining, transmission, and distribution capacity stood at 400 mcm/d, but today, following 15 years of sanctions, our gas production capacity has reached 875 mcm/d,” he said. Noshadi said extensive synergy would be needed in response to growing demand in the household and business sectors. “Under NIGC’s new strategy, to manage the consumption peak, we have decided to attract investment,” he added.

Key Gas Player

Energy experts say Iran has bolstered its role as a key player in the regional gas market under the aegis of active regional diplomacy in gas interactions, extending gas export deals with Iraq and signing gas swap agreements with Turkmenistan and Russia. In parallel with these achievements, Iran Invest Expo 2024 is due to be held at the Tehran International Permanent Fairgrounds to introduce opportunities for investment in the oil, gas, petrochemical, energy, industry, mining, health, agriculture, and tourism sectors. Iran’s oil and gas industry, with vast reserves and a geographically strategic position, offers a wide spectrum of investment opportunities in the upstream, midstream, and downstream sectors. As the global energy perspective is changing, Iran’s oil and gas industry has the potential to shape future energy markets and remain a key player. The upstream sector – exploration and production – offers significant investment opportunities. Iran’s untapped massive oil and gas reserves require modern exploration technology and investment. Foreign companies can get involved in joint venture deals. The midstream sector is focused on transport and storage. Iran needs big investment in its pipeline infrastructure for an effective transmission of oil and gas. Furthermore, the renovation of storage facilities is necessary as an assurance of flexibility and effectiveness.  In the downstream sector, refining and petrochemical industries are open to investment. Iran’s refining capacity cannot respond to domestic demand, therefore there are significant opportunities for the construction and renovation of refineries. Given the petrochemical industry’s gas self-supply under the 13th administration, sustainable energy supply has been guaranteed and energy security has been boosted.

Maximum Use of Potential

Saeed Mir-Torabi Hosseini, an energy expert, told Iran Petroleum: “Iran enjoys a significant standing in the world thanks to its oil and gas reserves combined. That is big potential. But, to study the potential for presence in the global market and foreign investment attraction, we should take into consideration the supply, transit, and transmission capacities too.”“We’re rich in reserves, but we should be able to convert this potential into usable capabilities. We should say that currently despite our ranking in the world in terms of potential reserves, we are just a middle player in the energy sector when it comes to science,” he said.
Mir-Torabi also touched on the impact of sanctions on Iran’s international interactions, saying: “Today, the nature of sanctions has changed to become smart in the oil and gas sector. Until recently, the implementation of sanctions was subject to no specific regulation, but today, they are being regulated. In other words, ever since smart sanctions have been slapped on Iran, costs of foreign countries’ cooperation in the energy sector have increased.” He added: “In the meantime, financial transaction and insurance costs have shot up. Another issue is that, since five years ago, the sanctions have been extended, thereby targeting downstream, midstream, and insurance. These factors altogether have reduced the potential attractiveness of this country.” Referring to foreign investment agreements that have so far been implemented, he said: “Among agreements that have been implemented in attracting foreign investment, I can refer to China and Russia. Cooperation agreements with China have not been fully implemented, but with regards to Russia, we have pushed ahead significantly with cooperation.”
Despite all these restrictions and challenges, he said, investment in Iran’s energy sector is so attractive that foreign investors have shown a strong willingness to invest in Iran’s energy industry. “We should take into consideration that the frameworks of our cooperation with NIOC and NIGC have specific conditions, which may sometimes pose obstacles to foreign investment. We must follow global models of cooperation to remove the barriers in the way of foreign investors and make maximum use of Iran’s oil and gas potential,” he said.
Iran’s oil and gas industry is the cornerstone of the economy. It has a significant share in GDP and export revenues.
Iran is reported to hold 157 billion barrels of proven oil reserves, mainly in the southwest and near the Persian Gulf. Iran’s natural gas reserves are in the southern and central sectors, estimated total of 33.1 tcm. Iran’s oil and gas industry is facing numerous challenges including international sanctions and decrepit infrastructure, causing obstacles to foreign investment attraction. However, significant development of this industry in Iran has made the gas sector attractive to foreign investors. Regardless of international sanctions, they see Iran’s oil and gas sector as a viable option for investment.
 

Potential Investment in Petchem Sector

Iran’s petrochemical industry has, for six decades, been contributing to national revenue mainly from sales of petrochemical products on the global markets. Iran’s petrochemical industry dates from 1963 when a chemical fertilizer production facility was launched at the Shiraz Petrochemical Plant. One year later, the National Petrochemical Company (NPC) was established to become an inseparable segment of the non-oil export market today.
Mohammad Rezvanifar, director of Customs Administration, said petrochemicals exports, making up 44% of non-oil exports over two months, had grown 4.5% in terms of weight, and 8% in terms of value. He explained that 20 petrochemical products had been exported during the first two months of the current calendar year. During the first quarter of the current calendar year, nearly 20.41 million tonnes of petrochemicals were exported. During the first two months of the year, 8.3 million tonnes of petrochemicals worth $3.5 billion had been exported, up 35% in terms of weight, and 44% in terms of value year-on-year. As far as developing the petrochemical industry is concerned, there have always been pieces of advice. This industry is key to ending crude sales and converting oil and gas into a variety of products.

92mt Capacity

Currently, 70 petrochemical plants in Iran are producing nearly 92 million tonnes of petrochemicals. It means 1 more is being converted to petrochemical products.  Under the 7th National Five-Year Development Plan (March 2024-March 2029), 67 petrochemical projects valued at $33 billion would be implemented to add 48 million tonnes to Iran’s petrochemical production capacity. NPC has already drawn up its roadmap for the 8th National Five-Year Development Plan to implement 37 projects for $37 billion to add 51 million tonnes to national petrochemical production capacity.Given the advantages of investment in Iran’s petrochemical industry and the lucrativeness of this sector, NPC has reconsidered some development projects to focus further on value chain completion in a bid to welcome more investors. To implement this policy, the development of petrochemical projects in coming years would be based on the logic of maximum use of primary feedstock available in Iran’s oil and gas industry and the attractiveness of local and foreign markets.

$85bn Investment

The investment made in petrochemical projects and plants now totals $85 billion. The key point for investors in this industry is that the projects introduced for investment may attract $70 billion in investment. In the calendar year to March 2022, petrochemical plants exported $14.8 billion worth of petrochemicals, which reached $16.02 billion a year later. A study conducted by NPC to identify opportunities for investment pertained to value chain projects. Twenty packages in five chains – propylene, methanol, ethylene, aromatics, and butylene – were presented with a rated capacity of 3.8 mt/y with an investment of $4.2 billion and a projected revenue of $4.4 billion.
 

The price difference between products and feedstock in these projects is estimated at $2.4 billion. These projects would employ 32,000 persons during construction. Most petrochemical projects in the value chain pertain to the propylene chain. Two methionine projects are in the process of receiving permits as they have already found investors. One of these projects is to be implemented near the Abadan refinery, where it would receive its feedstock. An acrylonitrile project has also been introduced to a potential investor. In the methanol chain, except for a silicon project, the rest have already found investors. Advantage of investment in Iran’s petrochemical industry are: having the largest gas reserves, enjoying a unique geographical position for linking the Middle East with Asia and Europe, offering sustainable and accessible feedstock at affordable prices specifically in underdeveloped areas, offering tax exemption in free zones, special economic zones, and underdeveloped areas from the time of operation, having access to high seas, having import and export facilities, being rich in developed infrastructure (airport, railway, port, jetty, …) at petrochemical hubs, having young, specialized, capable and professional manpower, having a growing domestic market with an 80-million-strong population, and offering quick access to markets in neighboring countries. 

Acceptable Development

Meysam Fathi-Moheb, a petrochemical expert, has told “Iran Petroleum”: “As far as the petrochemical issue is concerned, there are several main approaches. One approach is that we produce petrochemicals exclusively for export, thereby ignoring our local market. Another approach is industrial policy. For instance, in leading petrochemical nations like China, Germany, the US, and South Korea, all links in the petrochemical chain have been gone through and all products are manufactured. But the key point is that the main consumers of these products are the same countries.” He added: “Regarding Iran, I should say that we have a strong petrochemical industry and given the period of its emergence in the country, it has had an acceptable development and has been spearheading manufacturing of some products. But the bulk of our products have been for export. Instead of supplying products of higher value for local consumption, we have resorted to their exports, targeting mainly methanol, polyethylene, urea, and monoethylene glycol.” “In the meantime, in supplying some basic products we have a higher production capacity that we should specifically take into consideration. Apart from exports, when we look at our own needs in the downstream sector we find out that we need basic products more than thought. As far as sanctions are in effect, we should think of strategic products whose import is impossible or difficult.” Referring to petrochemical exports in recent years, he said: “We have fared well in petrochemical exports. According to our statistical data, we exported about $16 billion worth of exports last calendar year, which was up $2 billion year-on-year. This growth was the result of better feedstock supply and global price fluctuations.” Depending on their feedstock and products, petrochemical plants may be divided into three groups: 1. Upstream plants producing basic products like methanol, urea, and aromatics from gas, naphtha, and oil condensate; 2. Midstream plants supplying midstream products to be supplied on the market; and 3. End plants that constitute the final link in the chemical process and their products would not undergo any chemical change.

Midstream Feedstock a Must

Fathi-Moheb stressed that the petrochemical industry lies in a good position while having more capacity for growth and upgrade.
“We cannot offer a general prescription for all petrochemical products. First, we should do prioritization to see our necessities. For me, three issues need to be studied. One of them is to increase the production of some basic products to finally bring us to the value chain’s increased supply and diversity in the products. Another issue is to supply products whose domestic demand is high. The third issue is our midstream feedstock which we should be able to supply further. Reaching that objective would require new projects and attracting powerful investors. However, in recent years, agile and highly efficient projects have been defined and therefore they should be followed up on seriously.” “These projects can significantly upgrade the petrochemical industry because we don’t have any problems with exporting upstream products. Now if feedstock is supplied sufficiently for midstream products, downstream products would find their way to be supplied further.”
Back in May, Morteza Shah-Mirzaei, CEO of NPC, had said that the 13th administration was firmly determined to work in favor of a “jump in production” by completing the value chain of petrochemicals and throwing its weight behind production units. He had said that all potential available in the petrochemical industry had to be used for this purpose.
“The petrochemical industry is the pioneering sector for various industries and developing this value-generating industry would result in the growth and upgrade of other industries. In the meantime, domestic manufacturing of necessary catalysts would be a big stride for sustainable production by petrochemical plants. Through a joint effort made by Petrochemical Research and Technology Company (PRTC) and knowledge-based companies, it can end the Iranian petrochemical industry’s dependence on catalyst imports.” He had predicted that by overcoming challenges and barriers to production, there is a proper ground for making maximum use of available capacities. He said Iran’s petrochemicals production would exceed 100 million tonnes a year soon.
Shah-Mirzaei said 12 new petrochemical projects would come online in the current calendar year, adding that their implementation would require precise supervision to overcome challenges lying ahead and facilitate sustainable production.

Sales on Credit

Another achievement of the petrochemical industry has been its sale on credit in the current calendar year with a significant rise year-on-year.
Abbas Gholami, director of downstream development at NPC, said: “The biggest problem in the downstream industry is to provide working capital for which normally banking facilities are used. To that effect, sales on credit has been of great help. Last calendar year, about IRR 780,000 billion worth of petrochemicals was sold on credit. The credit sales of petrochemical products during the first two months of the current calendar year were about 60% higher year-on-year.”
He said the credit sales enabled the petrochemical industry to show that it firmly believed in the Supreme Leader’s policy of preventing crude sales, noting that this industry would remain the flag-bearer of preventing crude sales. As a main industrial sector, the petrochemical industry has been the leading sector in value generation from oil and gas resources. This industry holds the top ranking in non-oil exports for an economic boom, sustainable development, local development of technologies, development of downstream industry, and job creation among other objectives. The main advantages of this industry in Iran include the diversity of feedstock, access to high seas, and specialized manpower. However, we should not ignore the expansion of the petrochemical sector in the Middle East and tight competition in the global market. Therefore, it would be necessary to understand the status of this burgeoning and powerful industry and facilitate its progress among rivals with new projects. Given numerous rounds of sanctions slapped on Iran to restrict feedstock supply, upgrading and developing this industry would depend on value chain completion. It would be a must for Iran’s petrochemical industry to reach its genuine status. This sector has already drawn up such a plan and therefore projects associated with the value chain completion would enjoy more support.

Opportunities for Investment in Iran Refining Sector

Iran’s crude oil and gas condensate refining capacity currently stands at 2.25 mb/d, which is planned to reach .5 mb/d by March 2035. However, the National Iranian Oil Refining and Distribution Company (NIORDC) has drawn up 13 refining projects to boost refining capacity. These projects would require $50 billion in domestic and foreign investment. Currently 9 oil refineries – Abadan, Isfahan, Bandar Abbas, Tabriz, Tehran, Shazand, Shiraz, Kermanshah, and Lavan – are treating crude oil in Iran, but given Iran’s policy of value chain completion and ending crude sales while boosting crude oil production capacity, oil refining capacity is expected to keep growing in coming years.
A review of Iranian oil refining industry developments indicates that over the past decades, insufficient investment has been made to improve the processing units of existing refineries or to build new refineries and carry out petrochemical refinery projects. Furthermore, developing the oil refining industry requires science and technology together with necessary financing. Before international sanctions were toughened against Iran, these elements were more easily accessible. The upward trend in the consumption of petroleum products, adoption of international rules and standards about refined petroleum products like IMO 2020 governing shipping fleet fuel, the key role of low-quality petroleum products in big cities’ pollution, a shift in demand for petroleum and non-petroleum products have caused senior refining sector managers to consider improving and upgrading the processing units of existing refineries and implementing petrochemical refineries to enhance both quantity and quality of various high-valued products. Therefore, the issue of financing is perceived as a key requirement for implementing development projects in the oil refining industry. Since using traditional and corporate financing tools is not easily possible due to tough international sanctions and financial restrictions, modern financing tools may pay off by absorbing necessary financing and facilitating financial transactions in the refining sector. Three petrochemical refineries and five refinery projects would add 1.88 mb/d to Iran’s refining capacity.

$21bn Investment for 3 Projects

One of the main targets set by the Ministry of Petroleum for petrochemical refinery projects has been to prevent crude oil sales, and therefore it has moved towards value chain completion in this sector. Petrochemical refineries are expected to earmark 30% of their capacity for petrochemical products. Iran is bringing its petrochemical output to 83 million tonnes in the current calendar year. As sanctions remain in effect against the oil sector, the bulk of Iran’s hard currency revenue comes from the petrochemical sector. Therefore, petrochemical projects are largely supported by the petroleum industry. The Shahid Soleimani petrochemical refinery is one of the largest petrochemical refinery projects in Iran. Estimated to cost $9 billion, it would be processing 300,000 b/d of crude oil. Construction of this project is to begin in the current calendar year. Gasoil would constitute 35% of the products of this facility, to be followed by gasoline (15%), propylene (11%), jet fuel (10%), ethylene (9%), fuel oil (8%), paraxylene (5%) and benzene (2%). Another project is the Negin Lavan petrochemical refinery project, estimated to cost $7.1 billion. With an estimated capacity of 150,000 b/d of crude oil, it is forecast to have a 21% rate of return on investment. It comprises the following subprojects: construction of refining, petrochemical, and polymer units, utilities and associated services, construction of storage tanks for feedstock and products, construction of a jetty, construction of a residential park for staff, and construction of gas pipelines. Tax exemption for 13 years and a 10% discount in feedstock prices for 10 years are some of the legal incentives to woo local and foreign investors.  The lack of any obligation to deliver products to the government is another legal advantage of this project. It would be also possible to sell products in advance to provide 50% of financing for the project. Access to high seas and proximity to target markets are also other incentives. Another project under way is the Negin Makran Petrochemical Refinery with an estimated investment of $5.6 billion and processing capacity of 300,000 b/d of crude oil. Once operational, it would be producing 14 products. Its annual production capacity would be 14 million tonnes. Due to its location offshore, it will be possible to export its products.

$28bn Investment for 5 Projects

By commissioning the Anahita oil refinery, 150,000 b/d would be added to Iran’s crude oil refining capacity. The investment for this project is estimated at $4.7 billion. It is expected to replace the 70-year-old Kermanshah refinery as the region needs higher-quality products. Construction of the Entekhab Jask refinery for a 200,000 b/d capacity is estimated to cost $7.1 billion. Its feedstock would comprise 150,000 b/d of light and 50,000 b/d of heavy crude oil. Petrochemicals would constitute 30% of its products with the remaining petroleum products expected to be Euro-5 products. The Ghadir Jask oil refinery, with an estimated investment of $5.6 billion, would be refining 300,000 b/d of crude oil. Its feedstock would be heavy and extra-heavy crude oil. The Morvarid Makran oil refinery, with a 300,000 b/d capacity, is estimated to cost €6.6 billion. Fed on heavy and extra-heavy crude oil, it would be producing gasoline, gasoil, and LPG as well as petrochemical products with a 30% share. Direct access to high seas, easy access to China, India, Persian Gulf and Gulf of Oman states and Far Asia, thereby facilitating exporting products, offering guarantees for feedstock supply up to 25 years by the Ministry of Petroleum, IGAT-7 running close to the project, proximity to the Goreh-Jask crude oil storage facility with 10-million-barrel capacity and the possibility of delivering feedstock from this facility and the feasibility of producing 180,000 b/d of high-quality diesel are among advantages of this giant project. Another refining project underway is the Khuzestan oil refinery with a €4.9 billion investment and 180,000 b/d capacity.

$2.2bn Investment in 4 Projects

Increased gas supply by the South Pars gas field has empowered the Ministry of Petroleum to invest in building highly profitable gas condensate refineries for producing high-valued products and preventing crude sales. To that effect, lucrative projects in this sector are the Pishgaman Siraf refinery ($410 million, 60,000 b/d), Setareh Sabz Siraf refinery ($750 million, 120,000 b/d), Javid Energy Partov ($638 million, 60,000 b/d) and Mehr Khaleej Fars ($446 million, 120,000 b/d).

Product Quality Upgrade

In addition to planning to increase the refining capacity of the country, NIORDC is investing in quality upgrade projects. Currently, 112 ml/d of gasoline, 111 ml/d of gasoil, 65 ml/d of fuel oil, 6,500 tonnes a day of LPG, and 8-9 ml/d of kerosene and jet fuel are on average being produced in the country. As implementing quality projects is on the agenda at all refineries, fuel oil quality upgrade projects are to be constructed in the current calendar year. Relevant projects include fuel oil reduction at the Isfahan refinery ($843 million, 81,000 b/d), fuel oil reduction at the Bandar Abbas refinery (€2.2 billion, 55,000 b/d), fuel oil reduction at the Tabriz refinery (€1.7 billion, 308,000 b/d), fuel oil reduction at the Tehran refinery’s RCD and RFCC units ($1.5 billion, 64,000 b/d), fuel oil reduction at Phase 4 of the Abadan refinery ($3 billion, 67,000  b//d), fuel oil reduction at the Shiraz refinery ($644 million, 20,000 b/d), fuel oil and needle coke production at the Imam Khomeini refinery (€450 million, 41,200 b/d) and the vacuum distillation unit of the Lavan refinery ($39 million, 12,000 b/d). 
 

Local Engineers Revive Iran LNG Project

The International Gas Union (IGU) has said in its 2024 report that global LNG trade grew 7.8% in 2023 year-on-year, rising from 372 million tonnes (mt) in 2022 to 401 mt in 2023. Given climate changes and more inclination for LNG as a clean energy, demand for LNG will grow to 700 mt in 2040. Iran has been trying hard to enter this market for two decades.

 The Iran LNG project got underway in 2007, but it has seen fundamental changes in the past three years to be 52% completed. Since three years ago, multibillion-dollar investment in this project, application of new management and revising the economic viability of the project, resolving strategic issues like financing, liquefaction technology, equipment supply, feedstock, and reorganizing suspended and stagnant contracts, shareholders’ full support for the assets of petroleum industry retirees, revival of existing agreements, 14% progress in the project completion, operation of five gas units of the power plant following 300% margins from electricity sales a year ago and facility of transferring in liquefaction equipment from Germany and acceptable financial statements for two successive years after 15 years are among achievements.

The equipment used at the Iran LNG project was nearly unusable, but new management and hiring of highly motivated youth helped revive the project which is now in the hands of the Oil Industry Pension Fund (OIPF).

Oil Revenue Settlement Up 274%

Iran received more than $28 billion of its oil revenue last calendar year to March despite tough oil sanctions.

According to Central Bank data, the figure amounted to $7.5 billion in 2020. Therefore, under the 13th administration, the oil income settlement has grown 274%.

The main advantage of Iran’s economy over the past 100 years has been its oil and gas industry. This industry overshadowed other sectors of the economy.

Development of the oil industry has been the main driver of Iran’s economic development.

Given the significance of oil in Iran’s economy, sanctions have been focused upon this industry, which has been imposed under various pretexts to reduce oil exports and increase oil revenue. The key point is that anytime these sanctions have been toughened, oil production and exportshave dropped.

However, under the 13th administration, despite previous sanctions remaining in effect and new sanctions being slapped, Iran saw its oil production, and exports grow significantly. Thanks to such an increase, oil revenue trebled from the 12th administration.

Khangiran Gas Flaring Down 131 mcm/d

  The head of the ShahidHasheminejad gas refinery has said gas flaring had fallen by 131 mcm/d under the 13th administration.

“Ever since the 13th administration took office, 38.5 bcm of gas has been processed and distributed to households, businesses, industries, and power plants in northeastern Iran,” Yahya Feyzi said.

“Over this time, 1.34 million tonnes of sulfur was produced by the refinery and delivered to local and foreign markets,” he said.

Feyzi said one of the byproducts of the treatment facility was gas condensate, adding that nearly 1.8 million barrels of condensate had been produced since August 2021.

“On the other hand, to reduce waste and protect national assets and the environment, operational processes have been improved and flare gas emissions have been reduced to allow for the capture and recovery of more than 131 mcm/d of flare gas,” he added.

Russia-Iran Gas Deal ‘Win-Win’

Iran’s ambassador to Russia has said that Russia’s agreement to transmit gas to Iran would be a win-win game.

“The project for Russian gas transmission to our country is a win-win equation guaranteeing mutual interests for both nations,” Kazem Jalali said.

He said Iran and Russia were considered energy rivals who could not have stable ties in this sector, adding: “Specific conditions in the world have pushed Iran and Russia towards cooperation in the energy sector.”

“Parts of cooperation between the two nations pertain to pricing and policymaking in the energy sector. For instance, the two countries cooperate within the framework of OPEC+. Furthermore, part of Tehran-Moscow energy cooperation pertains to investment in oil fields,” said Jalali. “The third aspect of energy cooperation between the two countries pertains to the gas industry. Apart from that, Russians are also to invest in some gas fields in Iran,” he said. Jalali said Tehran and Moscow held intensive talks to finalize the gas deal, which he described as a megaproject in ties between Iran and Moscow.

Abuzar Oil Supply to Rise 9,600 b/d

CEO of Iran Offshore Oil Company (IOOC) AlirezaMehdizadeh has announced that the installation and operation of platforms A20 and A21 of the Abuzar field would result in an additional 9,600 b/d oil production by December. Ali Reza Mehdizadeh said the platforms were 85% completed, adding that 99% of the commodities needed for this project were awaiting customs clearance. “Four wells of A21 were drilled last calendar year while four more wells are being completed in A20,” he said.

He said that the jackets of these platforms were prefabricated and moved for installation. “Pre-commissioning and commissioning will start soon. A company has been selected to install these platforms and the process of transfer, installation, and launch is set to last one month,” he said. Mehdi Heydari, CEO of Iranian Central Oil Fields Company (ICOFC), highlighted the significance of the Toos gas field in energy supply stability, saying: “Development and operation of this gas field has started in phase 1 with an output of 3 mcm/d, which would bring about economic prosperity and stable energy supply in north and northeast.”

Bandar Abbas Feedstock Lineto Save €80mn

Ahmad Hashemi, CEO of Bandar Abbas oil refinery, has said that a 40 km pipeline carrying feedstock to the facility would cut costs by €80 million a year.He said the pipeline would come online in three months, adding: “The Bandar Abbas oil refinery’s feedstock pipeline, which is a connection from the Goreh-Jask pipeline, would prevent the sailing of 145 90-tonne vessels and save about €80 million in costs.” “Risk reduction and product supply security following possible seizure of oil tankers and reducing maritime transport costs are among the key advantages of launching this pipeline,” he said.

Hashemi also touched on the increased share of domestic manufacturing in supplying necessary equipment to this refinery, adding that from 2014 to 2023, domestic manufacturing had saved €57 million in costs. He said the oil refinery was planning to switch to a petrochemical refinery, adding that enhancing the quality of heavy products, producing grade-2 and grade-3 oil as well as coke production were among the main development projects at the refinery. He said that the environmental permit had been obtained for the heavy products quality project.

“By shifting from delayed coke-making unit processing pattern to RDCC and an additional €60 million investment, the refinery is coming closer to becoming a petrochemical refinery, which in addition to coke production, another 2 ml/d of gasoline and up to 400,000 tonnes a year of propylene would be produced,” said Hashemi.

“The Bandar Abbas oil refinery is a green industry plant and it does not impose any pollution on the environment,” he said. Hashemi said the government owed IRR 300,000 billion to the refinery in the calendar year to March 2023. He expressed hope that more development projects would become operational at the refinery to allow for the supply of more light products.

He also said the refinery was supplying 12 ml/d of gasoline, half of which was Euro-grade.

NISOC inPlaceOil Reserves Up

CEO of National Iranian South Oil Company (NISOC) Ali Reza Daneshi has announced that oil reserves in place of the company have increased.“NISOC is the most important subsidiary of NIOC with key tasks and responsibilities. This company owns 45 various hydrocarbon fields and 60 reservoirs,” he said.“After the 13th administration took office, NISOC embarked on numerous plannings for the dynamism, growth, and excellence of the petroleum industry, which had various aspects. I can refer to production stability and enhancement and removal of problems related to installations, reservoirs, and wells,” he added. Daneshi touched on the activities of the petroleum engineering division of NISOC as the scientific center of the company, adding: “According to planning at this division, the latest data and maps of oil fields were analyzed and new analyses were made more precisely. As a result of these analyses, the volume of oil in place increased significantly.”

“The oil in place and recoverable reserves of the Ahvaz Asmari, Ahvaz Bangestan, AbTeimourBangestan, MansouriBangestan, BalaroudAsmari and Shahbazan, Bibi Hakimieh (Asmari and Bangestan) and GachsaranKhami have experienced significant growth in the past two years. The oil in place, as well as the primary recoverable reserves of these fields, have increased 14.89 and 1.6 billion barrels respectively. In other words, NISOC’s oil in place and primary recoverable reserves have increased 4.1% and 7.4% respectively,” he said.

Tehran Refinery Gasoline Project 86% Complete

The head of the Tehran oil refinery, Mohsen Iranzad, has said that the gasoline production project at the facility would come online next year. He said the project was 86% completed, adding the refinery had stepped into branding.

Iranzad said that with the launch of the CCR unit of the refinery, the quality of gasoline would be entirely up to Euro-4 standards. “By buying the Shazand Petrochemical Plant we have practically become a petrochemical refinery. By launching the RHU unit and connecting it to the Arak Petrochemical Plant, our Nelson Complexity Index (NCI) will increase 2 points,” he said. “We intend to increase the Tehran refinery’s NCI to 12 by 2031. We are supplying 15% of national energy demand, but since this refinery is aging, we face technological challenges,” he added. Iranzad said that electricity is expected to supplant gasoline in two decades, adding that explained why petrochemical refinery was an option. “A 500 MW solar power plant has been designed for this purpose and we are seeking to buy shares for a solar panel production line,” he added.

“We’re monitoring the market for the production of batteries and other equipment for electric vehicles. Given the existence of lithium in Namak Lake, we are conducting a feasibility study to that effect,” said Iranzad.

He said that the Tehran refinery would be handling 40 LGP tankers a day, adding: “LPG production and sales have reached a stable point and we’ve got a permit for receiving heavy naphtha.”

Iranzad added that an option was being studied for increasing feedstock supply to the Shazand petrochemical plant from the products of the Tehran oil refinery.

NIORDC’s New CEO Appointed

Petroleum Minister Mohsen Paknejad appointed Mohammad Sadegh Azimifar as the CEO of the National Iranian Oil Refining and Distribution Company (NIORDC).

In his decree, the Minster of Petroleum has requested the NIORDC’s newly-appointed managing director to fulfill the following tasks and take steps to overcome the challenges the company faces including:

Realizing the 7th National Development plan as far as it is related to the duties of the company; taking necessary steps to meet the country’s needs to sustainable fuel; implementation and completion of the oil refining projects especially those related to improving the quality and quantity of the oil products; development of the value-chain through creating new petro-refining capacities; optimization and diversification of the country’s fuel basket; development of fuel distribution infrastructures, especially oil products conveyance pipes and fuel transportation fleet; following up reforming the structure of the company and its relations with the government and the oil refineries; boosting energy trade and diplomacy and taking benefit of trans-refineries capabilities; promoting and upgrading the country’s smart fuel system; supporting domestic manufacturing, digital transformation and development of new technologies; combating oil-products smuggling in cooperation with other related parties; strengthening expertise and managerial capabilities as well as skills and professional ethics to develop human capital and employing faithful, efficient and revolutionary workforce.  The new CEO of the NIORDC replaces Jalil Salari who served in this position during the 13th administration.

Optimizing Consumption, Only Solution for Gas Imbalance

The CEO of National Iranian Gas Company (NIGC) says that optimizing energy consumption is the only solution to the problem of gas imbalance.

Majid Chegeni made the remarks during the official commissioning ceremony of the “Dorahi- Dashtak-Nehbandan” gas pipeline, noting that many records were set in the country’s gas industry in the last three years of the 13th administration in office.

He said that the construction of more than 1,800 kilometers of high-pressure transmission pipelines, the implementation of about 53,000 kilometers of rural and urban gas networks, the installation of more than 990,000 gas meters, and the supply of gas to more than 24 power plants and 21,000 industrial units are some of these important measures, which have increased employment and production in the past three years.

Referring to the gas supply to 50 cities during the three years of the 13th administration in office, he said: “45 years after the victory of the Islamic Revolution, finally, in the 13th administration, gas supply to more than 6,800 villages in difficult-to-reach and low-income areas was completed.”

The NIGC’s CEO added that supporting knowledge-based companies and building seven pressure boosting stations, including 24 compressors, are measures that originated from the jihadist spirit of the martyred president

Ebrahim Raeesi.

South Pars Gas Recovery Set to Grow 36 mcm/d

The manager of drilling in the massive South Pars gas field has said that the offshore reservoir would see its output increase 36 mcm/d in three years.

Hamid Reza ShafieiMakvand said: “For this output hike to happen, 35 wells would be drilled in the field.”

Noting that South Pars is the largest joint gas field in the world, he said: “All oil and gas fields in the world face pressure fall-off and output fall after years of production and operation. Therefore, a variety of methods are used in oil and gas fields to prevent production fall.” The Directorate of Engineering at Pars Oil and Gas Company (POGC) has conducted studies on the manner of preventing gas output fall in South Pars. In the first phase, it plans to drill 35 wells throughout this field.

“In coming years, South Pars would experience output fall, and drilling in various spots with high potential for gas recovery can prevent this decline,” ShafieiMakvand said.

Noting that 35 wells would be drilled on 17 platforms, he said: “This project has been assigned to four Iranian drilling companies in the form of four packages.” To that end, he added, four drilling rigs have been chosen to avoid any delay given the restricted drilling rig count in Iran. “We hope that the trend of output fall would be so that enhanced recovery would compensate for it and we wouldn’t face any significant production fall,” he said.

Makvand said each well would produce approximately 1 mcm/d of gas, adding that the new wells would be no different from the wells already drilled in South Pars.

He said that more drilling may be needed after this round, adding: “However, more drilling may not be needed in this project as pressure compression is to be implemented and output hike from this joint gas field be pursued that way.”

He noted that production should be halted when drilling rigs are displaced. “Arrangements have been made so that transfer of rigs would not coincide with gas consumption peak and four rigs would be installed before the start of cold months so that drilling would have been done by the end of winter,” said Makvand.

Drilling would concern SP 1, 2, 3, 4, 5&6, 7&8, 9, 12. 15&16, 19, and 20&21, he said, adding: “According to our schedule it should be done over three years. Each well should be connected to the platform, one month after drilling so that we can start production.”

Energy Diplomacy Revived Untapped Capacities

In June, Minister of Petroleum Javad Owji said a memorandum signed for Russia to pump gas to Iran would be a key step in energy diplomacy, bringing about an economic revolution and helping supply the energy demands of regional nations via Iran. 

Owji said that constructing a transit gas pipeline stretching from north to south while cutting through Iran would be a groundbreaking event, unprecedented in Iran’s history, yielding $10-12 billion in annual transactions.

Regarding the details of the memorandum, the minister said: “A total of 23 refineries in the country have a combined output of 850 mcm/d of sweet gas. We plan to import 300 mcm/d of Russian gas. Russia has agreed to finance the construction of the pipeline, and this country owns the technology to build a subsea pipeline. Once the pipeline is launched, in addition to domestic gas supply stability, the capacity and stability of Iran’s gas exports will also increase. Besides overcoming domestic imbalance, it can turn Iran into a regional gas hub, let alone bring about significant growth in commercial exchanges and political and economic security.”

Energy experts also say that energy diplomacy has been associated with some development, the most important of which is regional and transregional interactions of Iran is visible as it has been translated into increased interaction with neighboring countries, as well as nations sharing interest with Iran at the global level.

Ties With Neighbors

The most important energy diplomacy event in recent years has been the revival of gas swap deals with Turkmenistan, as they have cleared the way for resuming gas imports from Turkmenistan at 5 bcm.

Iran’s gas transit policy dates from the 5th and 6th administrations of the Islamic Republic. Landlocked Turkmenistan, under Saparmurat Niyazov, was looking for a way to export its gas, as it could deliver gas to Russia only. Talks were held and agreement was reached for establishing a route for the delivery of Turkmen gas to export markets via Iran’s land.

To that effect, in 1995, an agreement was signed for the construction of the Korpeje-Kordkuy gas pipeline, in which Iran invested $200 million. Iran then started receiving gas from Turkmenistan to be delivered to the Neka power plant. Meanwhile, most Iran-Turkmenistan border areas were supplied with gas. Under the 7th and 8th administrations, new energy diplomacy was defined, resulting in gas-for-gas, oil-for-gas, and gas-for-electricity deals. Iran had agreed to import Turkmen gas to be consumed domestically before sending as much gas to Turkey. That would have ended the need for Iran to transmit gas from south to north and northeast at high costs. In return for the volumes of gas Iran received from Turkmenistan, gas was given to buyers of Turkmen gas. After some time, gas transit was halted and Turkmenistan suggested a gas transit project passing through Iran. This project was agreed upon in the late 1990s and early 2000s. Given the gas shortage in some areas of Iran and the high costs of gas transmission from south to north, it would be economical for Iran to receive Turkmenistan’s gas which would be finally pumped to Iraq. As for transit fees, Iran would have consumed a portion of the imported gas.

Regional Gas Hub

 Russian gas supply to Iran would help supply gas demand in Iran’s northern areas while surplus gas in southern Iran would be exported to neighboring nations. As far as gas industry infrastructure is concerned, Iran has 40,000 km of pipelines, more than 400,000 km of urban and rural distribution network, and 92 compressor stations. Given Iran’s geography, we can witness Iranian gas transit, in which case, in addition to Russia, neighboring countries would be beneficiaries. 

On the other hand, gas supply to northern areas is carried out by a pipeline stretching from the south. In light of Iran’s area, the distance is long for such gas delivery. In cold months, for a variety of reasons including pressure fall-off, a gas shortage is likely to happen. Russian gas supply to Iran would resolve this problem while cutting the high costs of transmission.

 Geographically speaking, Iran lies in an area where most neighboring nations do not have significant gas reserves and are mostly importers, examples of which are Turkey, Pakistan, Iraq, and the United Arab Emirates (UAE). Proximity to these gas importers has created a good opportunity for Iran to export its gas. Therefore, it can export its surplus gas to these countries, which would give it political and security advantages in addition to economic interests. Therefore, by playing its prominent role in regional energy exchanges, Iran is taking a key step towards becoming a regional gas hub. On the other hand, Russia’s gas supply to Europe dropped significantly following Moscow’s war on Ukraine. The outbreak of the Ukraine war caused the Russians to lose the 130 cm/yr European gas market, as a result of which Gazprom produced $7 billion in losses in 2023. That is why Russia is looking for new markets to export its surplus 100 bcm gas. That has created a new opportunity for Iran’s gas trading. The memorandum signed with Russia is an effective step in using this chance.

 Revived Gas Cooperation

 As part of activities about energy diplomacy, oil and gas cooperation with Tajikistan and Uzbekistan is a prime example. Indonesia was also another country with which Iran resumed its energy cooperation. Since a decade ago Indonesia has been willing to broaden its energy-based ties with Iran. Under the 13th administration, oil and gas cooperation between Iran and Indonesia was considered. Finally, the two nations struck agreements to cooperate in the oil and gas sector, setting the scene for developing bilateral cooperation.

Expanding ties with Africa was also a priority of Iran’s foreign diplomacy, which resulted in downstream oil cooperation in South Africa, upstream cooperation with Kenya, Angola, and Zimbabwe, and exporting technical and engineering services to Algeria. In the meantime, presence in Latin America has been a key policy of the Islamic Republic. In addition to economic interests, political, social, and international aspects are considered in this policy where the petroleum and energy industry has been the harbinger of foreign policy development.

 Valuable Gas Talks

 Another point pertains to gas delivery to Iraq and Turkey. Iran’s agreements with these two countries were close to expiring, but they topped the agenda in political and technical talks between Iran and foreign parties. Despite obstructionism by the United States in the way of extension, valuable results have so far been achieved.

As far as the development of joint oil and gas fields is concerned, technical and proprietary frameworks were set to allow for demarcating fields shared with Iraq and Oman. The Iran-Pakistan gas pipeline, whose agreement was signed in 2009, had remained undecided due to the absence of any action on the part of Pakistan. However, after meetings between Iranian and Pakistani officials on the sidelines of international forums, they agreed to push ahead with the project. After years of feet-dragging, the Pakistani side has started construction work on the pipeline.

 Defeating Sanctions

 Another important issue indicating Iran’s progress in the energy sector is the volume of its oil sales, which experts believe has been achieved in the light of energy diplomacy. Iran’s constructive interaction with internationally and transnationally aligned nations has finally yielded acceptable results, particularly in crude oil exports. In addition to making efforts to deepen regional energy ties, Iran has been pursuing a multifaceted strategy of interaction with countries sharing interests therewith all across the globe. Some experts say a key aspect of Iran’s energy diplomacy has been broader cooperation with small-sized oil refineries. Focusing on the renovation and upgrading of decrepit refineries, Iran has managed to find new markets for its crude oil. That empowered Iran to overcome challenges caused by sanctions and bring its crude oil sales back to pre-sanctions levels. Increased LPG exports represent another achievement of active diplomacy at the regional and transregional levels. Amir Houshang Karami, acting director of international affairs of National Iranian Gas Company (NIGC), said during a visit to the 28th Oil and Gas Show that last calendar year Iran’s natural gas exports to Iraq increased 15% year-on-year. He added that the agreement has been extended for another five years. Therefore, besides its commercial value, this agreement would be instrumental in Iran’s energy diplomacy and strengthening ties with neighboring and regional states. What was highlighted in this report is part of Iran’s efforts to broaden its foreign diplomacy in the energy sector. As Iran is located in the heart of the most important region for energy production and sits atop the world’s largest hydrocarbon reserves, it continues to play an influential role in the global energy market despite international pressure. Therefore, energy diplomacy is always focused on by policymakers and decision-makers and has been a priority for all administrations.

15th IPF HeldDiverse Packages for Petchem Investment

The 15th edition of the Iran Petrochemical Forum (IPF) was held on 4-5 August in Tehran, bringing together petrochemical investors. Morteza Shah-Mirzaei, CEO of National Petrochemical Company (NPC), said in the meeting that the world had yet to learn about the potential of Iran’s petrochemical industry. “According to our planning, the number of petrochemical plants in the country would increase from the current 80 to 200 over 10 years, excluding small-scale units to be established in various cities,” he said, adding that NPC had prepared a variety of packages for investment in the petrochemical sector. With 160.2 billion barrels of crude oil in place, Iran holds the fourth rank in the world regarding proven oil reserves. Regarding natural gas, Iran comes second in the world with 33 tcm of gas in place. Therefore, Iran holds the world’s largest oil and gas reserves together. This advantage empowers Iran to focus on developing its petrochemical industry, which is highly profitable due to its high value-added.

Iran’s petrochemical production currently stands at 83 million tonnes (mt) a year, 48 mt of which is sold – 34 mt exported and 14 mt supplied on local markets. Petrochemical products include 10 mt of methanol, 5 mt of ammonia, 7 mt of ethylene, and 8 mt of urea. NPC officials say the operation of new petrochemical projects by next March would bring Iran’s total output to 103 million tonnes (mT0 a year.

 Saudi Rivalry

 NPC’s main rival in the region is Saudi Arabia. Iran and Saudi Arabia can each produce about 7 mt of ammonia, but in methanol production, Iran is well outdoing Saudi Arabia thanks to its gas reserves. Iran’s methanol production stands at 16 mt, twice Saudi’s. Saudi Arabia also produces 18 mt of ethylene, higher than Iran’s current 8 mt output. Saudi Arabia produces 7 mt of propylene, while Iran’s output is 1 mt because of using ethane in ethylene production. Iran has over recent years started investing in value chain completion in the petrochemical industry and reconsidered petrochemical projects. As one reason for the non-completion of the value chain in Iran is the low propylene production, NPC is determined to move towards higher propylene production by benefiting from the current 16 mt methanol production capacity.

 186 mt Capacity

 Under the 7th National Economic Development Plan (March 2024-March 2029), 61 petrochemical projects would come online to add 35 mt to the petrochemical output capacity. Hassan Abbaszadeh, director of planning and development at NPC, said these projects, currently incomplete, would need $24 billion in investment.  By implementing the petrochemical projects envisaged under the 8th Plan, 48 mt of capacity would be created. Therefore, the petrochemical production capacity is set to increase from the current 96 mt to 132 mt by the end of the 7th Plan and to 186 mt by the end of the 8th Plan. Potential investors should keep in mind that petrochemical production over the coming 10 years would be as follows: 34 mt methanol production, up from the current 16 mt, to be used partly in GTP projects; 10 mt ammonia production, up from the current 7 mt; higher ethylene production from MTO projects; implementation of several olefin projects from ethane; higher urea production; 30 mt polymer production, up from the current 9 mt.  Iran’s petrochemical sector can currently receive 100 mcm/d of gas feedstock, up from the average of 70 mcm/d recorded last calendar year.

 80 mt Capacity

 Shah-Mirzaei said at the IPF that Iran exported 30 mt of petrochemicals last calendar year to March. He estimated the petrochemical production capacity to reach 80 mt by the end of the current calendar year. About 15 petrochemical projects are planned to come online by that time. Highlighting Iran’s top position in terms of oil and gas reserves together as well as its research and scientific ranking, Shah-Mirzaei said: “As the world is headed towards renewables to scale back on fossil energies in coming years, we should not lag, and I call on all officials to facilitate development of this industry and remove barriers in its way. The petrochemical industry should receive more attention.”

Investment in the Upstream Sector

 The NPC chief said $6.5 billion worth of MOUs had been signed with petrochemical holdings for investment in the upstream oil sector for feedstock supply.

“It’s not a priority for the petrochemical industry, but this industry would not hesitate to take any measures in favor of national development and completing the value chain,” he said. Noting that 130 petrochemical projects were underway with a $100 billion investment, Shah-Mirzaei said: “We didn’t have any significant discount on liquid feedstock for petrochemical plants in the past, but now they can invest at least 40% of their annual margins in development projects in exchange for 17% discount in liquid feedstock and 30% discount in gas feedstock.” Referring to the development of the petrochemical industry in Assaluyeh, Kangan, Dayer, Siraf, and Parsian, he said the existing infrastructure in the country should be used in the best possible manner.  He said that the petrochemical industry ranks first in Sistan and Baluchestan Province, adding that the power plant of the Makran Petrochemical Park would come online in the current calendar year.

15 HOAs

 Shah-Mirzaei said local development of petroleum industry catalysts would pick up speed in three years. “Some catalysts have been developed on lab scale, but about 98% in terms of weight is produced domestically.”

He added that Petrochemical Research and Technology Co. (PRTC) adopted a national catalyst document that helped build the existing capacities. “We need about 300 cases of technical know-how in the petrochemical industry. Based on planning, all commodities and equipment of this industry would have been manufactured domestically thanks to your cooperation as petrochemical actors,” he said.

Facilities for China

As Iran’s petrochemical industry production capacity is set to grow significantly in the coming years it would be natural for Iranian ambassadors across the globe to start marketing Iranian-made petrochemicals and attracting potential investors. To that effect, a panel discussion on international cooperation in the petrochemical sector was held on the sidelines of the forum. Presided over by Ali Chegeni, director-general of economic affairs of the Iranian Foreign Ministry, and Hossein Alimorad, international affairs director of NPC, the event was held remotely to host Iranian ambassadors stationed abroad. Mohsen Bakhtiar, Iran’s ambassador to China, said attracting foreign investment, particularly into the petrochemical industry was a top priority of the Iranian Embassy in Beijing.

West Karoun Oil Output to Hit 1 mb/d

West Karoun is expected to form a new oil civilization in Iran. To that end, Iran is planning to bring recovery from the 11 oil fields in the area to 1 mb/d in four years. The most important part of this plan is the existence of three jointly-owned oil fields – Azadegan, Yaran, and Yadavaran – altogether holding 64 billion barrels of oil in place. West Karoun covers a vast area from the Karoun River to the Iran-Iraq border. Abuzar Sharifi, CEO of Petroleum Engineering and Development Company (PEDEC), tells “Iran Petroleum” that all fields in West Karoun have been decided upon for future production.

  Sharifi,  also said that PEDEC had attracted $2 billion in direct investment in the past three years. The following is the full text of the interview Sharifi gave to “Iran Petroleum”:

What key measures have been taken by the PEDEC over recent years?

Development of all fields administered by PEDEC has been decided upon. We have entered into talks with local companies in the past two years for developing the Band Karkheh field, for which an agreement was finally signed with MAPNA. An agreement has been also signed with Sina Energy Development Company for the second phase of development of the Masjed Soleiman field which would see its output grow 10 tb/d. Talks are also underway for the third phase of development of the Darquain, but an agreement is yet to be signed. Developing the West Karoun and Omidiyeh pumping stations and building 400 km of 42-inch-diameter pipeline stretching from West Karoun to Kharg Island, startup of the national metering project, the start of development of the Changuleh field and second-phase development of the Azar field are among other measures taken by PEDEC in the past three years. Construction of concrete tanks in Genaveh (Goreh) which had started in 2002 but halted from 2017 to 2023, resumed with the collaboration of the National Iranian Oil Company (NIOC) to be ready with a capacity of 4 million barrels of oil. Furthermore, storage tanks at the Jask terminal came online with a 4-million-barrel capacity, which is expected to reach 10 million barrels in one year. From Goreh to the Jask terminal, five pumping stations have been completed with the number of pumps having reached 50 from an earlier 3 recorded in 2021. Over the same period, 14 electric substations 300 km of power lines, and 1,000 km of fiberoptic line from Goreh to Jask became operational while oil supply operations were carried out and the offshore section of the Goreh-Jask project was completed. How much investment have you attracted over the past three years?

Roughly $1 billion and IRR 110 trillion have been directly attracted, while $500 million has been attracted in the form of the new type of oil contracts. With financing and future development of West Karoun oil fields, we will reach 1 mb/d output.

How much has South Azadegan seen its output rise?

Over the past three years, 67 wells have become operational in the South Azadegan field. As this number of wells becomes operational, the production capacity of this field has reached 70 tb/d. Despite the natural decline in production, due to the reservoir’s certain conditions, this field is now supplying 140 tb/d. In addition, 13 km of gas pipeline has been stretched from the Central Treatment Export Plant (CTEP) of the South Azadegan field to the NGL 3200 facility over this time. Meantime, seven manifolds have been completed in South Azadegan. On the other hand, for launching downhole installations and pumps, we needed a power supply to wells across the field. That was done and arrangements were made for installing downhole pumps in the field. Manufacturing 50 downhole pumps has been assigned to local manufacturers. Other measures taken for the South Azadegan field include launching two gas-oil separation plants each with 160 tb/d capacity. Thanks to these measures, oil sales have thus far yielded $23.5 billion in revenue in this field.

How many rigs are operational in South Azadegan?

There were five drilling rigs in this field in 2021, only two of which were operational. However, given the significance of South Azadegan field development and the necessity of drilling these wells as soon as possible, the number of rigs has increased to 12. I would like to add that 28 new wells were drilled in this field in 2022.

How many wells are operational in South Azadegan?

Of a total of 203 wells in this field, only one has not been drilled, three are being drilled while seven others are being completed. Once these activities are over, the drilling would have been done in this field.

Do you have to apply an artificial lift to preserve output at South Azadegan?

Given the nature of reservoir rock and fluid, we are experiencing natural decline, which requires us to use artificial lift. For South Azadegan wells, we plan to use downhole pumps. Of course, in the North Azadegan field, Chinese companies have used gas lifts for oil extraction from the Sarvak reservoir.

Where does South Azadegan’s CTEP stand now?

Regular changes at the administration level and price fluctuations had delayed the operation of South Azadegan’s CTEP facility. However, thanks to PEDEC’s staff and carrying out alternative measures we did not let the oil supply stop. The entire facility is about 70% complete, which will reach its full capacity of 320 tb/d by September. Manufacturing and installing the compressor of the gas unit of this project has been assigned to the “Oil Turbocompressor Company” (OTC), which will come online by 2025.

The agreement for the integrated development of the South Azadegan field was signed for $11.5 billion with a consortium comprising two E&P firms, six banks, and the National Development Fund of Iran (NDFI). Where does it stand now?

It has been sent to Planning and Budgeting Organization (PBO) for final approval by the Economic Council. While welcoming foreign investment and technology, we may develop this field by relying on local companies and banks as well as NDFI.

How about the Yadavaran field? The agreement was recently reached for drilling 24 wells in this field for increased production. How much would it add to the field’s output?

Three drilling rigs are currently operational in this field. For the second phase of development of this field, NIOC did not wait for foreign companies and it went ahead with demining, building access routes, and locating 24 wells to be drilled (12 in the Fahlyan and 12 in the Sarvak layers). Two drilling agreements have been signed with the National Iranian Drilling Company (NIDC) and Oil and Energy Industries Development Co. (OEID) while drilling 12 Sarvak wells were assigned to the Khatam al-Anbia Construction Headquarters. The idea behind new wells has been to increase recovery at 42 tb/d. As you know, the first phase of the Yadavaran field came online in 2016. It was initially forecast to give 85 tb/d, which finally reached 110 tb/d. A Chinese firm is in charge of this field.

Will the second phase of development of the Yadavaran field be awarded to the Chinese company, too?

We’ve expressed our interest in the foreign investor’s presence in the second phase to bring production to 210 tb/d, but no assignment has been done yet. I should also note that as far as development of the Yadavaran field is concerned, finding a local investor, development by PEDEC, and development by the Chinese company are the three options being pursued. The pace of development is not satisfactory, but the trend has not stopped and development has been underway. The development of Yadavaran is highly significant for us because the NGL 3200 facility’s activity depends on Yadavaran’s output. Meantime, no flaring has been fully implemented in this field and the entire associated gas has been captured. Currently, about 115 mcf/d of gas is being delivered to the NGL 3022 facility.

Where does the Yaran field’s development stand now?

Yaran had been split into North Yaran and South Yaran. Development of South Yaran was done by PEDEC and financed by NIOC. North Yaran was in the hands of Persia Oil and Gas Industry Development Co. There are currently 22 wells in North Yaran and 18 wells in South Yaran. Following NIOC policymaking, it was decided that this field be developed in an integrated form. A drilling rig is in this field while 8 downhole pumps have been installed. The field’s initial production has materialized, up 4,800 b/d.

 How much oil are Sepehr and Jofair supplying?

Over the past three years, there were only two drilling rigs at Sepehr and Jofair. But now, there are seven rigs with output from these fields having reached 41 tb/d, which is still expected to rise to 60 tb/d by the end of the current calendar year.

 Could you update us on the Sohrab development field?

There are two wells in the Sohrab field now. One of these wells is already operational, while the second one has recently become operational. Twenty more wells have to be drilled at this field to bring production from this field from 2.5 tb/d to 30 tb/d.

 Apart from West Karoun, PEDEC is also in charge of developing oil fields in western Iran. What has been done to that effect?

Development of the Azar field was carried out in the first phase by NDFI, OIPF, and Sarvak Azar Co. The second phase has been assigned to Sarvak Azar with a $1 billion investment. As there was no investment to develop the Changuleh field in the past, NIOC authorized early production from two exploration wells in this field. Future development of this field was assigned to OIPF under the new type of oil contracts. At Cheshmeh Khosh, production has increased to 70 tb/d since 2023. Currently, a power transmission line is under construction, stretching from the West Karoun Power Plant to Cheshmeh Khosh, to promise sustainable power supply.

 How about Aban and West Paydar, both being joint fields?

So far, 12 wells have been drilled in the Aban field and 22 in West Paydar. All are fitted with electrical submersible pumps (ESP). In 2022, 9 drilling rigs were operational in the Aban and West Paydar fields for installing pumps and multidirectional drilling. Shortly, a 10,000-barrel mobile processing unit would become operational in West Paydar.

Equinor Wins Offshore Wind Lease

Equinor has won a ~2 GW lease in the US Bureau of Ocean Energy Management’s (BOEM) offshore wind energy lease auction in the US Central Atlantic region.

With a bid of $75 million for 101,443 acres in the Atlantic Ocean, Equinor secured one of two fixed-bottom lease areas in the auction located 26 nautical miles from the mouth of the Delaware Bay.

The company says the lease will have the capacity to produce enough energy to power about 900,000 homes. Equinor will work with BOEM to certify the lease, and after regulatory approvals, the Central Atlantic site would be added to Equinor’s existing US offshore wind portfolio.

Production Shortfall in Ghana Offshore Well

Gross oil production from the Jubilee Field offshore Ghana has been impacted by performance issues with a new producer well, operator Tullow Oil said in an update.

The J69 well, which came onstream, is producing at rates substantially lower than expected due to a lack of pressure communication from water injection in this part of the field. No other parts of the field are experiencing this problem. Across Jubilee, water injection has been averaging about 225,000 bbl/d, a new record.

McDermott to Build Trinidad Manatee Platform

Shell has awarded McDermott an EPCI contract for the Manatee gas field development, 60 miles (100 km) offshore the southeast coast of Trinidad and Tobago. Previously, McDermott had completed the FEED, detailed engineering and long lead procurement service scope for the project’s initial design and execution planning. Under the new award, the company will design, procure, fabricate, hook up and commission a platform and jacket. It will also perform design, installation and commissioning services for a 32-inch gas pipeline that will connect the platform to a Shell-operated gas processing plant as well as perform design, procurement, installation and testing services for a fiber-optic cable.

Valeura Delivers First Oil Offshore Thailand

Valeura Energy has achieved first oil from the Nong Yao C development in license G11/48 in the Gulf of Thailand. The first of seven planned development wells came online today, to be followed by further successive well start-ups. Over the next few weeks, Valeura expects production to ramp up and then level off at about  11,000 bbl/d for the remainder of the year.

“We have executed an efficient drilling program, which came in below budget and has achieved all of our geologic objectives…,” President and CEO Dr. Sean Guest said.

New Zealand to Receive Offshore Wind Expertise

Xodus has prepared a report on how the UK could work with New Zealand to develop the latter’s offshore wind industry. The country, which has 15,000 km of coastline, could potentially host one of the world’s optimum wind resources, supported by New Zealand’s in-place regulatory framework. Britain is the world’s second most developed offshore wind sector, with 13.9 GW commissioned by the end of last year, potentially more than tripling by 2030.

World Economy and Oil Markets

The international oil market entered 2024 with a bullish sentiment and great expectations. It was only back in September 2023 that Brent prices comfortably passed the threshold of $90 per barrel. Most market participants and analysts predicted even higher prices and some weren’t shy to predict three-digit numbers for 2024. During the 1H 2024, signs of disappointment began to surface among different players in the market. However, there were still signs of optimism that prices would rise during the traditionally high 3Q demand season. On a disappointing note, we’re now in the middle of 3Q

and Brent is struggling to keep up at $80 per barrel andwith limited success.

Several factors attributed to diverse price forecasts for 2024. Let’s take a look at the OPEC Secretariat Monthly Oil Report which estimated an oil demand growth of 2.2 mb/d for 2024. On the other hand, International Energy Agency (IEA), saw the demand growth at 1.1 mb/d. A difference of 1 mb/d plus for the same period. Credible organizations send important price signals to the market and certain segments of stakeholders in the industry. As such one reason that led to price softening in July, is the sentiment that global demand is not going to be as powerful as believed earlier. China as the biggest driver of demand growth remained slow to ask for more oil. Moreover, it is noteworthy that China’s oil production has now increased to 4.2 mb/d. A figure last registered almost several decades ago. On the supply side again more barrels reached the market from the US, Mexico, Brazil, and Guyana. Please note that the third quarter is when demand is high and prices are supposed to be robust.

Declining price movements, though modestly will support the struggle to curb inflationary trends by the United States and Eurozone countries. Lower oil prices also help oil-importing countries in Asia namely; China and India to spend less on oil imports. Lower oil prices also help emerging economies and the Less Developed economies to get comfort. Pakistan and Bangladesh have been struggling to get back on their feet and certainly feel better when paying less for fuel imports.

Political Dynamics

I would like to mention that lower oil prices are a gift for any sitting presidential candidate in the United States. Lower prices at gas stations are an indicator that the government has done well in America. The current Presidential candidate can boost a fine performance when the citizens pay affordable gas prices, particularly during the driving season. Biden entered the White House with the pledge that he would discontinue more oil drilling and fracking operations in the country. He adhered to his pledge for the first year and through mid-2022. He began to slow down on his objections to more drilling and fracking when oil prices began to shoot up. As such the United States vigorously drilled more oil. In the meantime, big oil companies began a series of Mergers and Acquisitions, M&A of shale oil and gas producers. Shale oil and gas producers were mostly small to medium and some family-based companies relied on bank loans for operations. They had limited access to high-cost technologies and sufficient investment. Major oil giants entered shale fracking in a big way and production increased rapidly. American Petroleum Institute (API) reported that by the end of the 2Q of 2024, America produced 7.4 mb/d of shale oil. This volume of shale oil is roughly 74 percent of the total American crude oil production. I mentioned that to move to the US election cycle. In his election campaign in Texas in July, Trump told the Texans that if he were elected president he would ignore all the environmental regulations and greenhouse advocates and would go ahead with the slogan of Drill, Drill, and Drill still more so that America will be great again and be an energy superpower as it was many decades ago.  Nevertheless, President Biden has already been doing just that and at the same time pretending to support the environmental agenda and international commitments to the net zero agenda. American oil production is at the historically highest level. However, according to the US Department of Energy, the country’s shale production is showing signs of exhaustion and will lose some 730 tb/d by the end of the third quarter of 2024. Biden ignored anti-fracking laws and drilled shale which is extremely polluting to keep production high when OPEC and Saudi Arabia ignored President Biden’s call for more oil to keep global oil prices in check. Nevertheless, there will be some sharp differences between the Democrats and the Republicans in their official commitments towards the international environmental agendas. This may pose a source of severe dispute between the US and Europe. Most EU members are committed to the net zero and legally binding United Nations environmental goals. Green parties and environmental activists in Europe are actively pushing for less emissions and reducing dependence on fossil fuels. Europe has suffered from dependence on imported energy after the war in Ukraine and limited access to cheap energy from Russia and elsewhere. Today, Europe is spending almost four times more to import LNG from the United States.

2024 Oil Market

Supply and demand figures are not the only source of friction among the analysts as mentioned above. Market fundamentals are not behaving in a pattern that most energy analysts have done their forecasting for years. OPEC has traditionally reported and published its data based on production and not supply. However, a lot has happened during the last couple of years.

OPEC has expanded its refining capacity in recent years. As of 2023, OPEC members refined some 14.4 mb/d of their crude. The volume of refining capacity differs among members. Some like Saudi Arabia and the Islamic Republic of Iran have a higher refining capacity. As such when we refer to OPEC output in different forecasting models, analysts pause at the actual volume of production that is delivered to the global markets. This same forecast factor applies to the crude production of non-OPEC members of the alliance. Refining patterns impact actual exports and supply to the world markets. Seasonality factors influence the refined products markets, too.

In the meantime, Russia traditionally releases its output figures based on exports. Russia does not consider its crude domestic use in the refineries. Russia does not consider its LPG as crude, while all other countries in OPEC do not consider LPG as crude and some member countries including Iran include LPG exports as non-oil exports. As such for the OPEC Secretariat and energy analysts, it is increasingly difficult to make supply estimates based on new realities of the world market.

Similar forecast complications are for all other members of the alliance known as OPEC Plus.

OPEC Burden

As earlier discussed, the OPEC alliance has faced growing difficulties but keeps on doing well in a complicated market environment. OPEC Plus has kept away 5.6 mb/d of its output potential out of the market during the last two years and has therefore relatively succeeded in its responsibility and commitment in a complex energy market.

To keep further into the international market complexity we now turn to the demand side. On the demand side, we have the China factor. China has been the sole engine of crude oil demand for two and a half decades. Chinese economy kept growing at unprecedented levels and sometimes even double digits. This rate of GDP growth supported a high rate of demand growth for oil. This scenario seems to have changed since early 2020 after the COVID-19 pandemic. China is still the most important growing center of oil demand but at a slower pace and together with uncertainty. Demand volatility is a relatively new phenomenon for the world oil market. Demand figures for China keep updating frequently in every quarter and sometimes within the given quarter. This perplexity in the Chinese market exacerbated by other parameters has led to confusion. That is one reason that OPEC plans have turned to monthly ministerial meetings to watch the market more accurately.

Chinsa Demand

Chinese GDP growth and resulting oil demand keep fluctuating. There are a couple of factors that make Chinese oil demand growth estimation complex:

China has turned into a big refining hub in recent years. China imported 11.7 mb/d of crude oil during the first half of 2024. China also exported around 5 mb/d of refined petroleum products during the same period. As such China is a big crude oil importer but also an important rival for crude oil exporters in the endgame.

The second phenomenon is that China’s crude oil production has picked up in a big way. The country produced some 4.3 mb/d of crude oil during the 1H of 2024. A figure last seen in the early 1980s.

In the meantime, China’s electricity production has risen to the highest levels, thanks to increased coal consumption in power stations. China is an important coal producer and the share of coal consumption has surpassed that of oil and gas in 1H of this year. However, the increased use of electric vehicles has outpaced the internal combustion engines. As such despite the growth in coal consumption, pollution has decreased in Beijing and other populated cities.On the demand side, an emerging and significant factor is the rise of petroleum products exports by OPEC and mainly the Persian Gulf states. The five countries of the Persian Gulf Cooperation Council (GCC) exported 4.7 mb/d of refined products. These figures are included in their production quotas but impact the global oil markets differently. In my opinion, what oil and energy market analysts have to keep in mind is that China’s demand no longer drives world oil market growth. China accounted for fifty percent of the world oil demand growth since 1999. It will still play a pivotal role but not at the powerful rate experienced during the past decades. China is on the path of an economic growth model that has run its course. This indicates that the oil-producing countries are also close to the end of an oil export-based development cycle.

World Economic Outlook

The US Federal Reserve and the ECB continue their current course of inflation reduction policies, which would mean the dollar would be cheaper. This indicates that oil exporters earn less from the barrels of oil that they sell. As such, the producer’s inducement to raise the price of oil is higher. Interest rate cuts are a tool that major economies adhere to stimulate growth. As such, GDP growth in major economies leads to higher oil consumption. Oil-producing economies need to adopt a compromise between short-term gains and long-term demand growth. Most oil producers are currently under pressure to earn more to support their budgetary requirements and development plans. Therefore, they aren’t happy with the Central Bank’s rate cuts by the Western capitals. The issue of de-dollarization that has been addressed and discussed in recent years stems from the declining value of the US dollar among other factors. According to the World Bank, the average global rate of inflation will be at 5.8 percent in 2024. It is estimated that every 10 percent increase in the price of oil, will add nearly 1 percent to the inflation. Although some economies such as Japan and South Korea are more resilient toward the increase in oil prices, less developed economies are more exposed to higher fuel prices.

On the other hand, OPEC Plus has undertaken the courageous decision of curbing production to provide energy security at a just price to the world. However, the bitter irony is that OPEC and the alliance of the willing partners scarify and cut production but the US companies swallow OPEC shares of the market. According to the BP Annual Report, to add one million barrels of additional capacity, an investment of $50 billion is required. This figure is for the Middle Eastern region where oil reservoirs are rich. It is also expensive to maintain production capacity. OPEC and aligned ministers have to navigate cost-benefit analysis in how much and how long they will have to let their excess capacity remain idle. In case oil price volatility persists and members of the alliance keep losing market share, then the market may have to be alarmed about a Fair Market Share war in 2025. If OPEC Plus decides to open tabs and flood the markets, oil prices will then collapse and several oil projects jeopardized. OPEC is the last man standing in the oil and energy markets.

This will surely jeopardize renewable energy sources and projects, too. Most new energy sources are only profitable if oil prices remain high enough to make them profitable. The current state of the world economy is characterized by a mix of challenges and limited opportunities. Unprecedented government interventions worldwide are carried out by a series of fiscal and monetary stimulus packages. United States has undertaken massive expenditures both domestic and foreign. Supporting big wars in Ukraine and the Middle East plus massive economic stimulus inside have been translated into $1 trillion every three months. No US government in the history of America has printed so much cash. The country currently owes $32 trillion. This is so huge that the government has to still print more dollars to pay the interest on debts.

Trading Partner

The country has engaged in a tariff war with China which is its biggest trade partner. High tariff walls have raised the prices of imported consumer goods that are dependent on imports from China. On the other hand, China has reciprocated the US tariff policies that led to lower imports and increased consumer goods prices. The US government has put pressure on Eurozone countries to follow suit and raise tariffs on Chinese imports, which is again reciprocated by China.

All in all, the world has witnessed pressure on globalization which was the engine of world trade and economy since 2000. Limited trade amongst the nations has led to less demand for energy. This is a warning sign for oil-producing countries. The kind of reaction global oil markets show towards major unprecedented geopolitical events in the Middle East is one indication that markets feel comfort as excessive idle capacity and slow growth in demand are going to prevail for a long time.

As this article is being written, Brent is marking at $75.40 per barrel. The market might have to get used to the mid-$ $70 per barrel for a while.

Indonesia, Torn Between Fossil and Renewable Energies

Indonesia is the fourth most populated country in the world and enjoys a highly dynamic economy. According to forecasts by the World Bank (WB) and the International Monetary Fund (IMF), it is set to become a top economy shortly.  Indonesia sits atop oil and gas reserves, but its petroleum industry has not seen any significant progress in recent years. Consequently, it has become an energy importer and dependent on investment. Therefore, despite its growing economy, Indonesia is struggling with the energy supply challenge.

Indonesia’s strategy in drawing up energy policies is maximizing all the existing resources. In the meantime, its energy policy is aimed at using domestic resources to make it cost-effective for all its citizens at low cost and high stability.

Indonesia’s National Energy Policy, adopted in 2014, requires it to generate at least 23% of its energy from renewables by 2025. The policy required natural gas to have a 22% share. In addition to that, the consumption of coal, the mostly used and most polluting fuel, would be minimized under the same plan. In the meantime, biodiesel would be required to meet about 25% of the country’s fuel needs.

Energy Mix

However, assessments in the run-up to 2025 show that coal continues to see growing consumption as a source of energy in Indonesia. Its share has increased from 27.9% in 2015 to 38.7% now, maintaining a high share in Indonesia’s energy mix. Coal is followed by oil in terms of share of Indonesia’s energy mix. Despite enjoying abundant oil resources, Indonesia continues to depend on oil imports.

Of course, in recent years, Indonesia’s approach has been focused on using renewable energy as much as possible as this country enjoys big potential for generating renewable energies. Abundant water, shining sun, geothermal energy, tidal energy, and constant wind are among the capacities of this country for using clean energy. According to statistics, the share of green energy in Indonesia’s energy mix has relatively increased in recent years. As the use of renewable energy in 2015 constituted 4.4% of the country’s energy mix, this figure has now exceeded 11.5%. Currently, Indonesia’s oil demand stands at 1.4 mb/d, and achieving the goal of 23% share of renewable energy in the country’s energy mix in 2025 and reaching the state of zero carbon production by 2050 or 2060 is more of a dream because only 11% has thus far been realized.

Underinvestment

Oil and gas currently account for about 10% of the Indonesian government’s total tax and non-tax revenues, and the government is still looking to increase the role of natural gas in electricity generation from the current 20% to 25% in 2030.

The Indonesian government has set a target of 1 mb/d and 12 bcf/d of gas in 2030, which requires an annual investment of $25 billion over the next eight years. Accordingly, Indonesia still has many fields with huge oil reserves that require big investments in exploration to turn them into proven resources. However, most domestic companies in this country do not have sufficient financial resources or technological power to make big discoveries. At the same time, because discoveries are risky, there are only a few companies in the world to assume such risk. Therefore, currently, the main challenge of the Indonesian oil and gas industry is the reduction of necessary and available capital. Also, companies active in this field have faced a decline in profitability for two reasons: First, the companies operating in this country must spend part of their resources on renewable energies; and second, oil companies are now required to apply carbon capture and storage (CCS) technologies and carbon capture, utilization, and storage (CCUS) technologies to mitigate GHG emissions during production. As a result, these companies would face increased production costs. The increase in domestic consumption, the long life of oil wells, and underinvestment in exploration have caused this country not only to face a sharp drop in oil production but also to become one of the importers of this fuel, as well as natural gas. Indonesia cannot currently meet its oil and gas demand and therefore it keeps importing such resources, thereby imposing a financial burden on the government. That is why Indonesia is looking for a way out of this impasse. Indonesia has fared well in production sharing agreements (PSA) and LNG commercialization.

Although Indonesia can overcome some of its problems in the field of energy supply in the coming years by reducing the import of fossil fuels and focusing on the use of renewable energy as much as possible, there are significant problems in this direction, as well. Building renewable energy production plants such as solar or geothermal is very costly and requires large investments. For this reason, under the present circumstances, the government has focused on fast and large-scale energy supply, such as coal-fired power plants rather than renewable sources.

Oil Find and New Opportunity for Kuwait

Kuwait Petroleum Corporation (KPC) said recently it had made a “giant” oil discovery in the Al-Nokhatha field east of the Kuwaiti island of Failaka, with oil reserves estimated at 3.2 billion barrels.

KPC’s CEO Sheikh Nawaf Saud Nasir Al-Sabah said the discovery’s reserves were equivalent to the country’s entire production in three years.  The initial estimated area of the newly discovered oil well is around 96 square km, KPC said in its statement.  It added that the preliminary estimates of the hydrocarbon reserves at the well were estimated at approximately 2.1 billion barrels of light oil, and 5.1 trillion standard cubic feet of gas, which is 3.2 billion barrels of oil equivalent. This discovery has once more put Kuwait in the spotlight in energy markets.  Kuwait is one of the most important oil producers and exporters in the world and is one of the founding members of the Organization of the Petroleum Exporting Countries (OPEC). The oil industry in Kuwait is the largest industrial sector in the country and covers nearly half of the GDP and most of its exports. This country has the fifth largest oil reserves in the world and in terms of per capita income, it is the fourth richest country in the Arab League. Currently, Kuwait is the fifth largest producer of OPEC with a production of about 2.48 mb/d, and it plans to enhance the production capacity to 4 mb/d by 2035.

Energy Investment

Over recent years, the Kuwaiti government has largely focused on investment in the energy sector. One of its big projects is the Al-Zour Refinery, which is at the forefront of strategic projects related to the country’s oil industry and is considered part of the Kuwait Vision 2035 perspective. This refinery is supposed to produce different types of environmentally friendly fuel.

KPC plans to invest about $42.2 billion in its oil projects by 2027 or 2028. Kuwait had already said it would invest more than $100 billion in its oil and gas industry between 2018 and 2023 to boost its output. Such investment would not be limited to enhancing crude oil production capacity; rather it would also concern natural gas production which is the fastest-growing market in Kuwait’s energy sector now. The Kuwaiti government intends to replace natural gas with oil for power generation, which would preserve oil revenue for saving and would empower domestic investment. Therefore, Kuwait’s natural gas production is expected to increase from the current 17.4 bcm to 27.3 bcm in 2035.

Given new investment in this country and the discovery of new oil and gas fields, the Kuwaiti government is insisting on a higher OPEC production quota. Kuwait’s oil minister has clearly stated that the country will enhance its oil production at the same time as mitigating GHG emissions to ensure energy security. A noteworthy point in Kuwait’s energy policies is the country’s goal of thorough decarburization of oil and gas production by 2050. On the sidelines of COP27 in Egypt, Kuwait said it planned to bring carbon emissions down to zero by 2050 in its oil and gas sector; and by 2060 all across the country. That would require investment in clean and renewable energies.

New Opportunities

The discovery of a new oil field east of Failaka marks a turning point in Kuwait’s efforts for offshore hydrocarbon exploration. It can increase Kuwait’s offshore oil operations. It is important to note that Kuwait is pushing ahead with its plan to operate a gas field it shares with Iran. The field, known as Arash in Iran and al-Durra in Kuwait, has been a bone of contention between the two nations. Anyway, now Kuwait emphasizes the importance of this exploratory project in the sea as a national project to increase the country’s oil reserves and improve its status among the main producers of oil and gas at the global level. Therefore, Kuwait plans to formulate the necessary development plans so that production from the field can start as soon as possible. Considering that the new field is characterized by low sulfur and carbon dioxide content, it will not need to be refined. Therefore, production from this field would not be so difficult.

On the other hand, given that the offshore area constitutes almost a third of the total area of ​​Kuwait with an area of ​​more than 6000 sq km, the advancement of this project would place this country among the leading producers in the region. Therefore, Kuwait hopes to develop new technical skills in offshore drilling and production to create larger horizons for new and diverse job opportunities.

Oil Agreements Review 1933 Oil Concession

To establish a new Concession to replace that which was granted in 1901 to William Knox D’Arcy, the present Concession is granted by the Persian Government and accepted by the Anglo-Persian Oil Company Limited. This Concession shall regulate in the future the relations between the two parties abovementioned.

ARTICLE 1  The Government grants to the Company, on the terms of this Concession, the exclusive right, within the territory of the Concession, to search for and extract petroleum, as well as to refine or treat in any other manner and render suitable for commerce the petroleum obtained by it. The Government also grants to the Company, throughout Persia, the non-exclusive right to transport petroleum, to refine or treat it in any other manner, and to render it suitable for commerce, as well as to sell it in Persia and to export it.

ARTICLE 2  The territory of the Concession, until the 31st December 1938, shall be the territory to the south of the violet line drawn on the map signed by both parties and annexed to the present Agreement.

ARTICLE 3  The Company shall have the non-exclusive right to construct and own pipelines. The Company may determine the position of its pipelines and operate them.

ARTICLE 4  Any unutilized lands belonging to the Government, which the Company shall deem necessary for its operations in Persia and which the Government shall not require for purposes of public utility, shall be handed over gratuitously to the Company. 

ARTICLE 5  The operations of the Company in Persia shall be restricted in the following manner: The construction of any new railway line and any new port shall be subject to a previous agreement between the Government and the Company.  If the Company wishes to increase its existing service of telephones, telegraphs, wireless, and aviation in Persia, it shall only be able so to do with the previous consent of the Government. 

ARTICLE 6  The Company is authorized to effect, without special license, all imports necessary for the exclusive needs of its employees on payment of the Customs duties and other duties and taxes in force at the time of importation. The Company shall take the necessary measures to prevent the sale or the handing over of products imported to persons not employed by the Company. 

ARTICLE 7  The Company and its employees shall enjoy the legal protection of the Government.  The Government shall give, within the limits of the laws and regulations of the country, all possible facilities for the operations of the Company in Persia.  If the Government grants concessions to third parties to exploit other mines within the territory of the concession, it must take the necessary precautions to be taken so that these exploitations do not cause any damage to the installations and works of the Company. The Company shall be responsible for the determination of dangerous zones for the construction of habitations, shops, and other buildings, so that the Government may prevent the inhabitants from settling there.

ARTICLE 8  The Company shall not be bound to convert into Persian currency any part whatsoever of its funds, in particular any proceeds of the sale of its exports from Persia.

ARTICLE 9  The Company shall immediately make arrangements to proceed with its operations in the province of Kermanshah through a subsidiary company to produce and refine petroleum there.

ARTICLE 10  The sums to be paid to the Government by the Company under this Agreement (besides those provided in other articles) are fixed as follows: An annual royalty, beginning on the 1 January 1933, of four shillings per ton of Petroleum sold for consumption in Persia or exported from Persia. The total amount to be paid by the Company for each calendar (Christian) year shall never be less than seven hundred and fifty thousand pounds sterling (£750,000).

ARTICLE 11  The Company shall be completely exempt, for its operation in Persia, for the first thirty years, from any taxation present or future of the State and local authorities.

ARTICLE 12  The Company, for its operations in Persia under the present Agreement, shall employ all means customary and proper, to ensure economy and good returns from its operations, to preserve the deposits of petroleum, and to exploit its Concession by methods per the latest scientific progress.

ARTICLE 13  The Company undertakes to send, at its own expense and within a reasonable time, to the Ministry of Finance, whenever the representative of the Government shall request it, accurate copies of all plans, maps, sections, and any other data whether topographical, geological or of drilling, relating to the territory of the Concession, which is in its possession.

ARTICLE 14  The Government shall have the right to cause to be inspected at its wish, at any reasonable time, the technical activity of the Company in Persia, and to nominate for this purpose technical specialist experts.

ARTICLE 15 – The Government shall have the right to appoint a Representative who shall be designated “Delegate of the Imperial Government.”

ARTICLE 16  Both parties recognize and accept as the principle governing the performance of this Agreement the supreme necessity, in their mutual interest, of maintaining the highest degree of efficiency and economy in the administration and the operations of the Company in Persia. 

ARTICLE 17  The Company shall be responsible for organizing and shall pay the cost of the provision, control, and upkeep of, sanitary and public health services, according to the requirements of the most modern hygiene practiced in Persia, on all the lands of the Company and in all buildings and dwellings, destined by the Company for the use of its employees, including the workmen employed within the territory of the Concession.

ARTICLE 18  Whenever the Company shall make issues of shares to the public, the subscription lists shall be opened in Tehran at the same time as elsewhere.

ARTICLE 19  The Company shall sell for internal consumption in Persia, including the needs of the Government, motor spirit, kerosene, and fuel oil, produced from Persian petroleum.

ARTICLE 20  During the last ten years of the concession or the two years from the notice preceding the surrender of the Concession provided in Article 25, the company shall not sell or otherwise alienate, except to subordinate companies, any of its immovable properties in Persia. During the same period, the company hall does not alienate or export any of its movable property except such as has become unutilizable.

ARTICLE 21  The contracting parties declare that they base the performance of the present Agreement on principles of mutual goodwill and good faith as well as on a reasonable interpretation of this agreement.

ARTICLE 22  Any differences between the parties of any nature whatever and in particular any differences arising out of the interpretation of this Agreement and of the rights and obligations therein contained as well as any differences of opinion which may arise relative to questions for the settlement of which, by the terms of this Agreement, the agreement of both parties is necessary, shall be settled by arbitration. 

ARTICLE 23  In full settlement of all the claims of the Government of any nature in respect of the past until the date of coming into force of this Agreement (except regarding Persian taxation), the Company shall undertake certain arrangements.

ARTICLE 24  If, because of the annulment of the D’Arcy concession, litigation should arise between the company and private persons on the subject of the duration of leases made in Persia before the 1st December 1932 within the limits allowed by the D’Arcy concession, the litigation shall be decided according to the rules of interpretation following: If the lease is to determine, according to its terms, at the end of the D’Arcy Concession, it shall retain its validity until 28th May 1961, notwithstanding the annulment of the said concession.

ARTICLE 25  The Company shall have the right to surrender this Concession at the end of any Christian calendar year, on giving to the Government notice in writing two years previously.

ARTICLE 26  This Concession is granted to the Company for the period beginning on the date of its coming into force and ending on 31st December 1993. Before the date of the 31st December 1993, this Concession can only come to an end in the case that the Company should surrender the Concession (Article 25) or in the case that the Arbitration Court should declare the Concession annulled as a consequence of the default of the Company in the performance of the present Agreement.

ARTICLE 27  This agreement shall come into force after ratification by the Majlis and promulgation by Decree of His Imperial Majesty the Shah. [This Agreement came into force on the 29th May 1933, following its ratification by the Majlis on the 28th May 1933, and the Royal Assent given on the 29th May 1933.]

Iran Petro-Cities; Shiraz

Shiraz is Iran’s fifth largest city and also the most populated city in southern Iran. Some of the old names of the city of Shiraz include the city of lovers, the city of orange blossoms, the land of lovers, the city of love, the city of gardens, flowers, and nightingales, the kingdom of Solomon, Solomon’s estate, Dar al-Mulk, Dar al-Elm, and Dar al-Fazl. What we learn from history is that about 2000 BC, the name of Shiraz was mentioned on Elamite clay tablets. Permanent settlement in Shiraz dates from the Sassanid period or even before that, but the first mentions of this city date back to the early years of revelation of Islam. This beautiful city lies in southwestern Iran. According to the census conducted for the calendar year to March 2022, the city has a population of 1.955 million.

Tourist Attractions

Shiraz is brimming with captivating and unparalleled tourist attractions and recreational activities. Saadi’s Tomb, Hafez’s Tomb, Karim Khan Citadel, Eram Garden, Quran Gate, Vakil Mosque, Nasir al-Mulk Mosque, and Afif Abad Garden are just a few of Shiraz’s enthralling tourist destinations. Moreover, other notable sites include the Qajar Edifice, Abunasr Palace, Kakha Citadel, Agha Babakhan School, Pars Museum, Haft Tanan Museum, Qavam Naranjestan Garden, Jahan Nama Garden, Takht Garden, Chehel Ten Garden, Salehi House, Mortaza Ali Well, Bagh-e Neshāt Bathhouse, and dozens of other stunning and historical tourist attractions.Shiraz’s natural wonders include the Kohmare Sorkhi Waterfall, Qaleh Bandar Park, Bamou National Park, Shiraz Birds Garden, Joushak Spring, Dasht Arzhan Lake, Maharlu Lake, Qareh Aghaj River, Atashkadeh Recreation Area, Cheshmeh Salmani Recreation Area, Haft Berm Recreation Area, and many other spectacular and unique attractions. Religious sites abound in Shiraz, chief among them Shah Cheragh, a revered shrine with a long history, attracting visitors from across Iran to admire its beauty and historical significance.

Saa’di Global Status

The sweet-spoken poet of Shiraz, whose fame has spread beyond the borders of Iran and has inspired others to praise him. Saa’di has been translated and published in various languages, including English, German, Spanish, Latin, Japanese, Chinese, Russian, Polish, Dutch, Turkish, Arabic, Malian, Italian, etc., from all over the world since 1636 AD when the first excerpt of Gulistan was translated into French by André Doria and published in French.

Praise for Saa’di and the extensiveness and diversity of Saa’di’s works have made him a skilled orator and a renowned thinker, attracting a wide range of tastes. Saa’di’s persistent presence among the people and his interaction with different social groups have made his words and expressions popular with everyone so he is considered the spokesman of the people. This continuous presence has not remained confined to the geographical boundaries of the Persian language, but it has crossed many borders. That is why the American poet, writer, and thinker Emerson believes that: “Saa’di speaks the language of all nations and peoples of the world, and his words, like those of Homer, Shakespeare, Cervantes, and Montaigne, are always fresh.”

Achaemenids, Sassanids and Persepolis

Fars, in southern Iran, on the shores of the open sea, has produced two great dynasties: the Achaemenids and the Sassanids, which have ruled over Iran and the world for more than six hundred years. The ruins of Persepolis are located in Fars, and its history is intertwined with that of its neighboring province, Khorasan. Blessed with both tropical and temperate zones, no natural blessing has been withheld from this land. At Persepolis, everything is turned towards life, power, and creativity. Art becomes a showcase of human capability. Lions, falcons, bulls, and the lotus flower are respectively symbols of power, domination, fertility, and splendor. The struggle between man and Ahriman conveys will and effort. Persepolis, in the minds of its builders, was to be the showcase of a world government, the first world empire created by the Persians, embodied in this monument. The unknown world of the era, from the Mediterranean to the mouth of China was under their command. The twenty-four countries whose representatives’ figures are carved in stone bear witness to this authority, as does the number of nations that participated in the construction of this magnificent palace. Just as there was no similar kingdom to the Achaemenid in history, Persepolis also remained unique on the planet. This palace was built in an era when royal buildings were dedicated to religious sanctuaries or tombs, of the type of the Egyptian pyramids and linked by a thread to the other world. Persepolis, on the contrary, is the palace of this world, the monument of human greatness and the celebration of life. In the image where the Lord bestows divine grace upon the ruler, heaven and earth put on display their harmony. God is called the “bringer of joy” in Darius’s inscription, not the sender of death.

Oil/Gas Potential

The high volume of gas and oil reserves in Fars province, the operation of numerous refineries and petrochemical plants, its proximity to the South Pars gas reservoir, and the possibility of utilizing the Persian Gulf’s potential, pave the way for Fars province to become a hub for oil and gas. In addition, the scientific capacity of Shiraz University, the active Oil and Gas Growth Center in Fars Science and Technology Park, and the availability of experts and experienced personnel are other factors in achieving this important goal.

Shiraz Petchem Plant

The first petrochemical plant in Iran, with over six decades of operation, remains one of the country’s most important industries in the production of chemical fertilizers and other petrochemical products. The company was established in 1963 to produce chemical fertilizers; and in the following years, with the development and expansion of its production capacities, it became one of the largest petrochemical plants in Iran. Shiraz Petrochemical Complex currently produces a variety of products including urea, ammonia, nitric acid, ammonium nitrate, methanol, argon, and UAN (liquid nitrogen fertilizer). The company has also been a pioneer in mitigating greenhousegases (GHG) and has become the first petrochemical company in the country to receive a carbon mitigation certificate from the United Nations.

South Zagros 3.4% Share
South Zagros Oil and Gas Exploration and Production Company is the largest subsidiary of the Iranian Central OilFields Company (ICOFC), which was established in Shiraz in 1999. The company is responsible for the production of oil and gas and the supply of feedstock to the Farshaband, Fajr-e-jam, Sarkhoun, and Parsian gas refineries and Shiraz Oil Refinery, as well as supplying part of the gas from the Maroun oil field for injection into this reservoir. 17% of the world’s gas is in Iran and 20% of Iran’s gas is in the South Zagros region, in other words, 3.4% of the world’s gas reserves are in the reservoirs located in the South Zagros region. The company currently operates five operational regions: Nar/Kangan, Aghar/Dalan, Parsian, Sarkhoun and Gashouye Jonubi and Sarvestan/SaadatAbad in the provinces of Fars, Bushehr and Hormozgan. In the future, with the operation of new exploration fields, the provinces of Kohgiluyeh and Boyer Ahmad,and Chaharmahal and Bakhtiari will also be added to the company’s operational area. The company has set a target of producing 280 mcm/d of gas by (2027) based on the plan communicated by the Iranian Central Oil Fields Company, which has been taken into account based on development and maintenance plans for production capacity from its various fields.

Shiraz Refinery

Established in 1973, around 22 kilometers from the city of Shiraz and near the city of Zarqan. Shiraz Refinery is one of the 10 refineries in the country that has a 3% share in the production of petroleum products in the country. The plan to establish Shiraz Oil Refining Company started in 1963 and was established as a private joint stock company in 1973, but in 2009 it became a public joint stock company. The nominal capacity of Shiraz Refinery is 40,000 b/d and its operational capacity is 60,000 b/d.