monthly

Iran Petroleum Issue No. 85 JULY 2019

West Karoun Output Hike Plans under Way Iran Petroleum Ministry Focuses on Startups Unilateralism andKasra Nouri Moral Obligations Director General of Public Relations

s the proverb goes, What Satan in the oil sector was the establishment means for evil, God will use of “Council Supporting Knowledge- Afor good. That applies to US oil Based Companies” in the Petroleum sanctions against Iran. Industry with a view to planning to Iran’s petroleum industry has activate startups. experienced toughest ever US sanctions That can certainly accelerate access to over the past four decades and managed modern technology, boost competitive to transform threats into an opportunity power and serve as an effective for domestic manufacturing. Iran has instrument in countering challenges thwarted the plots hatched by sanctions caused by sanctions imposers. imposers, and opened doors to self- Iran’s Minister of Petroleum Bijan sufficiency and self-reliance. Zangeneh has said time and again that The policy pursued by the Islamic politically motivated meddling would Republic of Iran and its oil industry have no place in Iran’s economic and over recent years has been based on industrial trends. global interaction and cooperation, and Iranian officials believe that global enhancing regional and international economic growth and boom depends on ties based on mutual respect and free and economic interaction between interests. Iran has, however, not backed all countries. Unilateral acts adopted down from its principles in the face by the US target each and every single of unilateral, irrational and unjust US person in the world. sanctions. Furthermore, it has shown Iran is resisting the US’s unlawful that it can nullify sanctions by relying sanctions; however, countering such upon its own capacities and own forces’ selfish unilateralism would be a moral experience. One of the major steps obligation upon every free thinker in the taken towards using Iranian knowledge world. Ministry of Petroleum 20 Islamic 12 Republic of Iran

Managing Editor: Kasra Nouri Director General of Public Relations Iran Manufacturers Editor in chief: Serving Petroleum Industry Parastoo Younchi

Executive Editor: Hamid-Reza Shakeri-Rad

Graphic Designer: Saman Goodarzi

Photo Section, PR Office, MOP: Hassan Hosseini 14

Reporter: Negar Sadeqi Javad Asghari

Translator: Kianoush Amiri

Coordinator: Abbas Lotfi

Tel/Fax: (+98 21) 61626113 www.iranpetroleum.ir [email protected] Dragan Skočić: Zanjan, Persian Gulf Global SP14 Third Iran, Croatia Historical City Tensions Rivalry over Platform to Enjoy Cultural Where Are Come On- COVER with Popular Energy Markets Shale Oil/ stream in Affinities Handicraft Headed? Gas September

54 58 40 36 8 News July 2019 Issue No. 85 monthly Newsnews

Iran’s Minister of Petroleum Bijan [void], but they have their own Zangeneh said the oil tanker the non-dollar European trade for Engineering, Research and No Country Zangeneh has said no country production.” incidents in the Persian Gulf had mechanism Instex. He said: Technology so that successful could supplant Iran in the oil In response to a question if not yet affected Iran’s oil exports. “I’m not aware of the latest bidders would be chosen market as US sanctions target decline in Iran’s oil exports would “But we have to monitor all developments, but Instex will not rightfully. He said vaguely- Can Fill Iran’s oil exports. Asked if Saudi harm oil wells, he said: “The these conditions. We are faced be effective without oil money worded contracts would cause Arabia, the United Arab Emirates wells will not be damaged, but if with tanker restrictions. The US deposited in.” The minister said problems. “We have to resolve Iran Oil production halt lingers on, time and its allies are making us face the Committee of Contracts had issues before they emerge; void due to US sanctions, Zangeneh and money would need to be spent restrictions,” he added. to undergo necessary training otherwise, any problem has to be Void and Iraq would be able to fill Iran’s for their reactivation.” Zangeneh was also asked about resolved soon.”

said: “No country can fill our oil by the Office of Deputy Minister Exploration Starts in Drilling Costs Gas Supply to Industries South Pars Platforms KopehDagh Halved to End in March 2021 Overhaul Nearing Completion The Exploration Directorate of National Iranian CEO of National Iranian South Oil Company CEO of National Iranian Gas Company (NIGC) CEO of Pars Oil and Gas Company (POGC) Oil Company (NIOC) has in partnership with (NISOC) Ahmad Mohammadi has said Hassan Montazer Torbati has said that gas Mohammad Meshkinfam has said that the an Iranian-European consortium embarked on drilling costs have been cut by 50% through supply to industries will be over in Iran by gravimetric and magnetometric data gathering in composing management. March 2021. He also said that 97.2% of Iran’s platforms would be over before autumn. He said Eastern KopehDagh in Khorasan Razavi Province. He also expressed hope that this biological urban population had access to natural gas. overhaul of the giant South Pars gas field Ali Moallemi, deputy CEO of NIOC for exploration, method of waste management would expand “Currently, 1,148 cities across the country Qatar, was supplying about 75% of Iran’s gas said: “These operations were undertaken following in the drilling industry. are connected to the natural gas network. needs.the offshore “Under gas such field, circumstances, which Iran shares we will with try instructions from the Minister of Petroleum and the Mohammadi said seven drilling rigs owned Meantime, the number of villages connected our best for supporting this strategic sector,” he Supreme Council of Exploration regarding decision- by National Iranian Drilling Company (NIDC) to gas would reach 3,062 by” the end of the added. Recalling the accident on platform 9 of making about sedimentary pools. Such issues as had been equipped with zero discharge current calendar year, he said. South Pars, he reiterated the need for the precise acquiring basic information, completing exploration system. He added in the environmentally Torbati said the gas supply penetration rate monitoring of all South Pars platforms. He said: preferred zones, zero discharge equipment in Iran’s rural areas was about 79%, adding: “In light of reports we have received, we hope that energy supply to northeast Iran underline the was used to allow the drilling of 100 wells “In addition to urban and rural gas supply, gas necessary arrangements would be made at South data and the significance of gas exploration for without causing any pollution in urban and supply to industries and power plants is of high Pars platforms before winter in order to guarantee distance from the main gas production centers.” protected drilling areas. “The composting sustainable supply in winter.” Regarding SP14, Referringstrategic significance to the details of ofthis the project project, in he light said: of “The industrial customers. Therefore, most major Meshkinfam said: “SP14 is the last and the most contract for this project was awarded to an Iranian in Iran. It will eliminate drilling pollutants industriessignificance. in Wethe havecountry currently have access over 102,000 to natural prioritized South Pars project. It is currently andproject accelerate is being cleaning operated of for contaminated the first time gas. The remaining industries are those with producing 28.2 mcm/d from two of its platforms. modern methods and new systems, this company soil. Compared with zero discharge, it is less gas consumption below 5,000 cubic meters per Two more platforms would be installed and hascompany taken followinga European a tender. partner.” In a bid to benefit from expensive,” he said. hour.” become operational ahead of winter.”

Jahangiri said delegates from side has always attached great ‘Friendly’ Nations Asked to Iran’s Ministry of Economy and Central Bank of Iran of ties with the Islamic Buy Iran Oil would travel to China to Republicsignificance of Iran”. to the He development said China Iran’s First Vice President He said China remained hold talks about establishing held a strategic view of its ties Es’haq Jahangiri has called Iran’s main trading partner with Iran for the long term, on “friendly” countries to buy and oil buyer, adding: “The transactions between the adding: “Despite regional and oil from the Islamic Republic US’s imagination is that it can twoa mechanism countries. for He financial said the international development, despite US sanctions. reduce our oil sales to zero by US was threatening security Beijing’s willpower for “Well mindful of friendly pressuring buyers of Iran’s oil in the Middle East and the preserving friendly ties with countries like China are in a bid to cause the Iranian Persian Gulf region. He Tehran will not change.” Song facing some restrictions, we economy to collapse.” added: “Iran’s foreign policy said the US was bullying both expected friendly countries Jahangiri added: “But is to support multilateralism Iran and China. “Tehran and to be more active in buying fortunately although one energy for the future. Iran sits and counter US hegemony. Beijing should exchange views Iran’s oil,” Jahangiri said in a year has passed since the US atop the world’s largest gas transactions have to be We are ready to cooperate and coordinate their moves in meeting with Song Tao, head imposed its oil embargo, Iran’s reserves and we are ready to removedahead of Iran-Chinaas soon as possible,financial with China on regional and of the International Liaison economy enjoys acceptable export gas to China via the Iran- international issues.” Song said approaches for resolving their Department of the Communist stability.” He said: “Gas is the Pakistan pipeline.” needs to be established Iran and China had ancient problemsa bid to find and new safeguarding methods and Party of China, in Tehran. He said that the obstacles betweenand a financing the two mechanism countries. civilizations “and the Chinese common interests,” he added. 4 most significant source of 5 News July 2019 Issue No. 85 monthly News Iran Oil Tanker Seizure Equipment Supply Violating JCPOA Self-Sufficiency at 97% Iran’s Foreign Affairs Ministry The head of Instrument Self-Sufficiency Propylene Production spokesman has said the British Marines’ Committee of Shahid Hasheminejad Gas Siemens Turbines Capacity Up seizure of an Iranian oil tanker in Refining Company, Hessamoddin Alaei, Repaired in Iran Gibraltar was in violation of the Joint has announced 97% self-sufficiency CEO of National Petrochemical Company (NPC) Comprehensive Plan of Action (JCPOA). in the supply of equipment and CEO of Iran Gas Transmission Company (IGTC) Behzad Mohammadi has said that Iran would Abbas Mousavi said the issue had instruments at this gas facility. Saeed Tavakoli has said the company’s engineers increase its propylene production capacity by been discussed during the JCPOA Joint He said: “This success was achieved have mastered the knowhow for repairing the 3 million tonnes with the startup of seven new Commission in Vienna. “One of the to support domestically manufactured vibration section of Siemens gas turbines. projects. issues discussed in the JCPOA Joint commodities and in favor of He referred to preventive and basic gas turbine He said: “In the event of propylene output Commission meeting was the seizure manufacturing prosperity.” reparations by Iranian contractors, saying the hike, attention must be shifted onto of the tanker carrying Iranian oil. We He said the 97% self-reliance in rotors of SGT600 gas turbines would be repaired diversification in the chain of propylene and believe that it constituted a violation equipment manufacturing had been by Iranian engineers. He added that doing such its derivatives to result in higher resilience of the JCPOA. They present their own achieved through reliance on the reparation in Iran would save the country € for production units.” arguments, but Iran views this move as commitment and expertise of domestic 350,000. “Some of these turbines were out of “Currently more than 900,000 tonnes of illegal and an act of piracy,” he said. manufacturers. use for years due to thermal vibrations. But with Mousavi said Iran had about 1,500 “Some of this equipment like extensive reparations done by Iranian experts, they are and six petrochemical plants. miles of coasts in the Persian Gulf, control system, fire alarm and video being used anew,” said Tavakoli. He said that propylene Almost all is this being propylene produced is consumedby two refineries in the adding the Strait of Hormuz waterway surveillance that are high-tech and preventive maintenance optimization (PMO) and country,” said Mohammadi. was mainly adjacent to Iran. “Therefore, highly significant for the oil and gas condition-based monitoring (CBM) of turbines He said the Salman Farsi, Hirsa Polymer and we are in charge of security there.” “We industry were manufactured for had helped increase the life of rotary equipment. Kourosh projects were located in the Mahshahr believe that if other countries want to the first time in partnership with “This achievement in different turbines has Special Economic Petrochemical Zone while the guarantee the security of the region and knowledge-based companies and cut reparation costs in the predetermined time Entekhab, Mehr Petro Kimia, Sazeh Sanati Azaran the Persian Gulf, they have no option but installed at the Shahid Hasheminejad intervals,” he added. and Naft-o-Gaz Razavi are located in Kangan and to cooperate together. All insecurity and gas refinery,” he added. Tavakoli said local knowhow could be transferred Assaluyeh. problems are rooted in the interference Alaei said: “The objectives set in to other gas transmission areas, adding: “Under Mohammadi highlighted the attractiveness and of extraterritorial forces who are economic resilience and domestic the present circumstances, nearly 300 turbines meddling with our region while they are manufacturing will have advantages for are operating in the gas transmission network. By would largely help the economy and create jobs thousands of miles away from their own the oil and gas industry and all other applying modern methods, we can increase the insignificance the downstream of the propylene industry. industry, saying it land,” he added. Referring to Europe’s industrial sectors.” “That is a result functionality of turbines while reducing costs.” He said the second phase of the Mahshahr non-dollar mechanism for trading with of the refinery’s support for domestic “Furthermore, we have seen big events in the petrochemical zone had to be developed Iran, Mousavi said: “The Europeans potentialities and reliance on the logistics systems. For instance, after reforming in harmony with the region’s spatial claim that Instex was launched for knowledge of Iranian oil and gas planning. Iran to sell oil. experts,” he said. billion,” he said. the financial procedures we saved IRR 1,780

Gasoline Output to adding:we share “In those this fields.”regard, Rouhani we gradually said that stopped Cross 100 ml/d producingenvironmental gasoline concerns from arepetrochemical highly significant, plants due to high pollution. We are currently President Hassan Rouhani and Minister of producing gasoline and gasoil at various quality Petroleum Bijan Zangeneh attended a ceremony grades.” For his part, Zangeneh said Iran’s gasoline production had reached 107 million Azarbaijan Province. liters a day, more than double the 52 ml/d to The inaugurate projects, three worth refining IRR 54,150 projects billion, in East were produced in 2012. He added that the gasoline about Euro-5 gasoline and gasoil, as well as output would hit 110 ml/d soon. lubricant production. Other projects included “In terms of quality, the Euro-grade quality rural household and industrial gas supply. gasoline production was zero in 2012, which Addressing the ceremony, Rouhani said: is now hitting 74 ml/d,” he said. Zangeneh now we are self-reliant in winters.” is that all these developments occurred within said that Iran’s gasoil production was 94 companies did a great job under [my] He said Iran’s oil production and exports months,” said Rouhani. ml/d, which has recently risen to 115 ml/d. administration,“The Ministry of the Petroleum most important and all affiliated of which The president also touched on the Ministry of “In terms of quality, the Euro-grade gasoil signature of Iran’s nuclear deal with six world Petroleum’s performance in developing jointly production was zero in 2012, which hit 50 powers,experienced known a significant as the Joint jump comprehensive following the ml/d recently and will reach 60 ml/d by next summer,is self-sufficiency but we need in gasoline imports and in winter,gasoil.” but Plan of Action (JCPOA). “The important thing produce more than the countries with which March,” he said. He added: “In gas, we were self-sufficient in owned fields, saying: “We have managed to 6 7 SP14 July 2019 Issue No. 85 monthly SP14

help from foreign companies. Notice to Contractors to make good on its pledges. The Iranian contractors’ Tavasolipour said: “In Tavasolipour expressed hope SP14 Third Platform to capabilities in the offshore sector the contract, all necessary that the contractor of this phase has reduced costs in platform arrangements have been made to would honor its commitments. Come On-stream in September construction and saved money in deal with any fault on the part of “Of course, as far as this plan The third production platform at Phase 14 of the giant South Pars gas field this sector. Tavasolipour said: “The contractors. The necessary notice produces no loss and does is set to become operational in September. The hookup operation for this construction of all four platforms has been given to contractors. not hinder production we will of SP14 has cost $570 million, far Should any contractor fail to continue supporting domestic platform that had been recently installed by HL-5000 vessel is now over. The less than that of similar projects. deliver on its pledges on schedule, contractors,” he said. platform is set to produce 14.1 mcm/d of gas. That has saved Iran $150 million.” we will take legal actions.” He said that project management Order Placed for Goods ith the completion production, 20,000 b/d of gas of administration of Rouhani, Multiple Contractors Delay consultation (MC) services Asked about the impact of of offshore pipeline condensate, 100 tonnes per SP12, SP15&16, SP17&18, SP19, Project are among issues enshrined in sanctions on the onshore sector Wconstruction, gas day of sulfur, as well as 250,000 SP20&21 came online. SP13 and The offshore sector of SP14 is to the project. He added that the of SP14, Tavasolipour said: “The production at Platform 14B tonnes a year of LPG and 250,000 SP22-24 also became operational be completed by winter to feed 56 Industrial Development and petroleum industry has been would start in December. SP14 tonnes a year of ethane would last March. Tavasolipour said mcm/d of gas into national grid. Renovation Organization (IDRO), under sanctions for 40 years now. is currently producing 28 be processed.” He added that the due to the completion of the But the onshore sector has been as consortium leader, had been Therefore, for the implementation mcm/d of gas. The contract for gas production capacity at SP14 offshore phase of SP14, the warned to make major changes of the onshore sector of SP14 SP14 development was signed offshore facility would reach 42 onshore phase of this phase into its management section necessary measures had been between National Iranian Oil mcm/d or 1.5 bcf/d. Platform comedelayed. online The nextfirst March.sweetening train “or we would hire experienced considered and orders were Company (NIOC) and eight 14B incorporates 80 kilometers of ofThe the offshore refinery sector of this having phase beenwould MC companies.”“However, we placed for commodities.” contractors in June 2010. The cable and 11 wells.Tavasolipour current(refinery calendar construction) year. would be completed, arrangements have have not seen any expected He added that the obligations design of this phase is similar to also touched on Platform 14D, prioritized for financing in the been made for using surplus changes in this company,” said announced for implementation that of other South Pars phases. saying: “This platform is the $150mn Saved in SP processed gas in SP12 and Tavasolipour.He said that the were based on realities, and The accumulated recovery of last platform in SP14, which is Platforms SP13 until SP14 is completed. contractor had apparently the contractor would honor its 56 mcm/d of sour gas requires now 93% complete in the Iran The Petroleum Ministry has Tavasolipour said one reason for envisaged changing commitments to the Petroleum the drilling of 44 wells. Gas Marine Industrial Company in recent years implemented the delay in the onshore sector management in the Ministry. Regarding the allocation would be extracted from four Yard in Bushehr.” He added that cohesive plans in order to boost was the multiplicity of contractors commercial division, platforms, including two main Platform 14D would be installed domestic manufacturing and and lack of coordination among which supplies and two satellite platforms. The on its predetermined location by transfer technology into the them. Asked if managerial equipment, projectof financial would resources, be allocated he said: from offshore gas carried to onshore October. He said that the drilling country. The outcome of such changes at Industrial Project in order the“The National financial Development resources for Fund this of gas treatment facilities and is of 11 wells was over, while plans has been the establishment Management of Iran (IPMI) had Iran (NDFI).” Platform 14B weighs processed there prior to being corrosion resistant alloy (CRA) any impact on the onshore sector, 2,450 tonnes. SP14 has four dispatched to consumers. This pipes were being installed. implementation of offshore he said: “As the project client, we platforms, each having a capacity phase was initially set to be As President Hassan Rouhani projectsof companies in the qualified Persian Gulf.in the are following up on this issue of 500 mcf/d of gas. Before 14B, completed in 35 months, but due Iranian contractors are now because IPMI has had delays in gas recovery from 14A and 14C to the multiplicity of contractors, Ministry gave priority to the able to build, install and launch the offshore sector.”He said that had started at the rate of the project did not come online on operationtook office of in remaining 2013, the Petroleumphases platforms without any foreign any delay in the implementation 1 bcf/d of rich gas (28 schedule and it has been delayed of South Pars which Iran shares help. Iranian companies have of project by one contractor mcm/d). by six years now. ,The offshore with neighboring Qatar. Due to would affect the task of fellow sector of this phase is currently in capabilities in recent years in contractors. “This issue has with a higher degree of physical installingsignificantly platforms increased in thetheir Persian caused problems for us in the plan, SP14 gas production would progressfinancial restrictions,were prioritized the phases for Gulf. If until seven years ago onshore sector. Of course, reachits final 5 stages.mcm/d According by next winter. to NIOC Iranian companies could Mohammad-Mehdi Tavasolipour, install and launch platforms practical approaches to SP14 project manager, said: “With financing and completion. within three months they resolvewe have this asked problem IPMI to and find the commissioning of Platform Under the first round are now able to do so in 26 bring agility back to the 14B, in addition to sweet gas days and without getting project,” he added.

8 9 West Karoun July 2019 Issue No. 85 monthly West Karoun

CEO of Petroleum Engineering and method of production and also close to operation, adding: while infrastructure and site Development Company (PEDEC) Touraj enhanced recovery from the “Sustained oil production in preparation operations are Dehqani has said plans are under way to Sarvak reservoirs of West West Karoun depends on a under way. West sustainable power supply. He said pipe-laying and storage boost production from a group of oil fields Iran shares For this reason, it would be construction had also started. with neighboring Iraq. He said the joint oil fields inauguratedKaroun fields. in TheNovember North Yaran2016 located in West Karoun were currently producing withoil field a production development capacity plan was launch the West Karoun power Sour Service Pipes Karoun specifically important to over 300,000 b/d of oil. station. According to plans, the The delivery of 1 mb/d of experienced output fall-off Yadavaran and West Karoun light and heavy crude oil from afterof 30,000 some b/d. time. But Therefore, the field pumping station projects are Output ehqani said (light crude) is 14%. Yadavaran downhole pumps were again to be supplied with electricity Iran to coasts in southeast, PEDEC was is estimated to hold 34 billion soon.” storageoil fields and in southwestern exports via Ddetermined barrels of oil in-place. Phase 1 According to Dehqani, despite Jask terminal, guaranteeing to increase was inaugurated in November lastconsidered year, but for nothing the field. happened The a slight decline in oil production crude oil exports stability, Hike production from the 2016. Dehqani also touched infirst practice. pump wasNow installed a second in ESP June decentralization from export on the agreement for the has been installed and everyone over 300,000 b/d of oil was in coming months. technological development is waiting to see how it would recoveredfollowing recent from West floods, Karoun’s terminals, supplying feedstock Plans “InYadavaran order to oil increase field function. terminal and diversification of cooperation with the University coasts, facilitating investment, recovery, measures of Tehran,the Azadegan saying: field “The in biggest South Azadegan oil fields. implementingto refineries in downstream the Makran maximumwill be taken efficient for achievement of reservoir Development projects and ensuring under further use of technological study projects South Azadegan is the largest sustainable development in oil recovery is transforming shadow value underprivileged provinces potential (hydrocarbon reserves) into neighboring states. After the of southeast Iran are among Way in order to real value. That can materialize contractoil field Iran for itsshares development with objectives of the Gowreh-Jask safeguard legal through optimal management with China’s CNPCI was crude oil pipeline project. and contractual of installations, reservoirs and cancelled, PEDEC has been Dehqani touched on the frameworks, while accelerating its output. According to PEDEC, this advantage of engaging domestic securing national time we used the results of Dehqani said PEDEC pump has been installed manufacturers in this project, interests,” he added. researchassets. Last and year, studies for the conducted first administers development at a depth of 2,300 meters saying: “Due to sanctions, we hit The buyback by the University of Tehran in affairs in West Karoun, within the casing. The snags in importing pipes. But contract for the Azadegan and we are hopeful of while Arvandan Oil and Gas pump, which measures fortunately, there is a possibility development of the future achievements and results Production Company (AOGPC) about 17 meters long, has for manufacturing sour service of this research.” is in charge of operation. He an outer diameter of 4 pipes in the country and was signed with inches. manufacturing this type of YadavaranChina’s Sinopec field 2nd Downhole Pump in would be delivered to AOGPC pipe has started since several in three phases. Yaran aftersaid that development West Karoun under fields Gowreh-Jask Oil Pipeline months ago.” Phase 1 required Dehqani said an electrical PEDEC authority. Dehqani also touched on He gave a positive assessment 85,000 b/d output, submersible pump (ESP) had He said: “During a period when a pipeline project to carry of cooperation on the part Phase 2 180,000 been installed in Well No. 4 of the issue of new oil contracts oil from Gowreh to Jask, of other organizations in b/d and Phase 3 North Yaran for maintaining and awarding developed cutting through the three the Gowreh-Jask oil project, 300,000 b/d. production from this joint and production together to provinces of Bushehr, Fars expressing hope that the project Feasibility contractors was on the cards, and Hormuzgan. would become operational by studies conducted wait for information on the it was discussed that before He said the strategic project March 2021. on Yadavaran performancefield. “Naturally, of this we pump,”need to he new contracts have been signed would cost about $2 billion, West Karoun is comprised indicate that the said. According to PEDEC, this involving 1,000 kilometers of two oil centers: Azadegan primary recovery pump has been installed at a would be temporarily in charge of pipeline, export terminal, (North Azadegan, South rate from depth of 2,300 meters within offor production. West Karoun But fields, that targetPEDEC pumping stations, gauging Azadegan, North Yaran and the Sarvak the casing. The pump, which was not met; therefore, the equipment, and storage layer (heavy measures about 17 meters procedures are back to their facilities. He added that tender Yadavaran (Koushk and crude) is 6% long, has an outer diameter normal track.” Dehqani said bids for various sections of the Hosseinieh).South Yaran fields) and and from the of 4 inches. The functionality awarding South Azadegan project have been held and Fahlyan of this pump would provide project to AOGPC has already most of them have reached the hold over 67 billion barrels of layer effective guideline in choosing started and each section would phase of contract. oilThese in place. fields Iran are wasestimated extracting to be delivered stage by stage. Dehqani said contracts for nearly 50,000 b/d of oil from pumping stations had also West Karoun power plant was been awarded to contractors, has now reached 300,000 b/d. He said the first phase of the these fields until 2013, which 10 11 Startups July 2019 Issue No. 85 monthly Startups

Minister Directive on Startups Demand and Consumption Main Iran’s Ministry of Petroleum has decided to provide special support Energy Factors to startups and knowledge-based oil companies. Minister of Sirous Vatankhah, secretary of energy technology development Petroleum Bijan Zangeneh has said that 17 ha of land in southern um le that demand and consumption are the main drivers in the energy Tehran would be allotted to these companies. He said the Ministry tro M e i at the Office of Vice President for Science and Technology, believes of Petroleum had a detailed plan for startups, which would become P ni operational in the second half of the current Iranian calendar year. n st Noting that innovative businesses have profoundly changed Using technology and innovation in the petroleum industry is the a ry energysector. sectorThat has activities, no significant he said: place “Today, in Iran’s many executive things have organs. been main factor effective in reducing costs, increasing competitive power Ir on S done in the startup sector. In the energy sector, with e-sale of and countering future problems of the petroleum industry. That is es tar why technology and innovation have turned into major actors in s t of using modern technologies in the petroleum industry, the u gasoline, a new project would emerge.” Given the significance u Ministry of Petroleum’s insistence on the use of technologies and the oil sector. Over the past decade, oil startups have been focused c p upon more than ever in light of their high-risk ideas which mainly o s creating new business environments, startup activities in Iran are rely on technology. Zangeneh has called for the formation of startups in Iran’s petroleum industry, saying the petroleum sector would see F industry. Therefore, NIOC is determined to use the experience major changes, should this objective materialize. He said: “Therefore, significant due to their innovative contribution to the petroleum

this purpose.” of the Office of Vice President for Science and Technology and there is firm will on our side and we have allocated investment for specifically focus on the startup issues.

New Experience in Oil Sector RIPI Role in Startups Over the past decade, Iranian startups have emerged in Industry (RIPI), touched on planning for the establishment various sectors, but they are yet to make themselves known ofJafar an innovationTofiqi, president center of to Research complete Institute the production of Petroleum chain in the energy sector, particularly the petroleum industry. The and commercialize technology, saying: “Since we are Ministry of Petroleum had not taken any concrete actions prior moving into the phase of technology development while to Zangeneh’s directive. Mohammad Saheb Kar Khorasani, commercialization must be pursued along with accelerators and knowledge-based companies, we plan to set up an of Vice President for Science and Technology, has said that of innovation center at RIPI in order to expand the cooperation 4,350head knowledge-basedof the Knowledge-Based companies Companies recognized center in ofIran, the 500 Office are network and complete the production chain, proceed with more or less related to the oil and gas sector. Upon Zangeneh’s commercialization and supply technology on the market.” instructions, the Ministry of Petroleum has set up a committee He said that RIPI relies on the cooperation with universities, to support knowledge-based oil companies. Established to research centers as well as domestic and foreign companies develop and upgrade the ecosystem of petroleum industry technology and innovation, this committee is determined to industry with new technology and knowhow in a bid to make long-term plans, create active relationship between for fulfillingcreate its higher obligations, value-added i.e. equipping for the country. the petroleum stakeholders, use existing capacities in inner and outer bodies and lead entrepreneurship groups to recognize oil startups and knowledge-based companies with a view to preparing the ground for the development of technology and commercialization.

Startups Defy Sanctions Parviz Sangin, general director of Ministry of Petroleum Technology Commerce and High-Risk Ideas Commercialization and Supply Regime, referred to Iran oil sanctions, saying: “We Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), has said the idea have made our utmost efforts to establish cooperation between ourselves and behind the establishment of startups was to decide on commercialization and high-risk startups, because under the present circumstances in the country, startups and ideas, so that they would transform their ideas into product without any concerns for the their solutions would be effective in overcoming challenges.” Investment in startups initial capital. Therefore, there must be concentration on possible ideas which may turn into started in 2005. North America has the highest share in this ecosystem, followed by a process so that the projects would come online shorter than envisaged. National Iranian China and India. In Iran, oil and gas industry complications have hindered diversity Oil Company (NIOC) has expressed its readiness to make maximum use of the potential of startups. It should be also taken into consideration that when startups get of knowledge-based companies and startups. However, it is said these companies should engaged in the petroleum industry, new businesses would take shape and this issue provide practical and not idealistic proposals for overcoming challenges. Therefore, in order to make use of potentialities, challenges must become known and plans be made for have issued appeals in support of startups. Even at an offshore technology overcoming them. The main issue with startups is commercialization and demand. willconference definitely in faceHouston, resistance. 10 out Currently of 60 startups many were renowned selected international as model companies. companies 12 13 Startups July 2019 Issue No. 85 monthly Startups

No Huge Finance Needed Negotiations with Universities Mehdi Mirmoezzi, CEO of Pasargad Energy Development Company Mohammad Mostafavi, a startup (PEDC) told “Iran Petroleum” that in the light of sanctions, the ground is chairman, said: “We are still at Startups, New Energy prepared for new businesses, particularly startups. “Modern businesses the beginning of the way. But are technological and creative in nature. Therefore, they need new since the downstream sector idea and thoughts with small capital,” he said. Mirmoezzi, a former needs less investment and is less CEO of National Iranian Oil Company (NIOC), added: “Sanctions will controlled by state, I think that Business Sector harden conditions for high-tech and big capital activities because the there are more opportunities for Negar Sadeghi Ahmadinejad, many foreign companies left Iran. necessary ground is not prepared for them. But the time is now ripe for the activity of startups. We are However, Iranian contractors developed some us to get involved in startups, because it is related directly to creativity looking to provide the necessary A new business sector is emerging in phases of the giant South Pars gas field and set ecosystem for innovation in the Iran’s petroleum industry. Several years records for project startup in this massive offshore events about the activities of startups. That indicates state and private petroleum industry. Cooperation after the formation of knowledge-based gas reserve shared with neighboring Qatar. Now organs’and innovation special supportwithout forhaving new to businesses. provide big However, finance.” the Iran engagement holds with universities on using innovation companies in this vital sector, it is now the conditions have become tough for the activity of startups in high-risk oil and gas sectors is totally new. Add to this oil startups’ turn. The startups are expected to of international companies. Therefore, a new But CEO of Dana Energy Mohammad develop creative ideas with a view to reducing business is taking shape in the petroleum industry. Iravani,could be also the thefirst Board step.” member of production costs and boosting productivity in Relying on technology and creativity, this new forthe whichconfidentiality there is not of significant much experience. parts of However, these technologies the companies for at that least the same startup, said: “Decrepit the petroleum industry. Iranian energy players business can address some petroleum industry managea specific to period step into of time. the phase Iranian of startupscommercialization are stepping by intodeveloping a sector new petroleum industry equipment say sanctions provide the best opportunity for challenges without having to spend enormous ideals will be holding the bargaining chip in the competitive atmosphere has increased production costs in startups to show off. Iran’s petroleum industry has money. Oil startups have just started their activity of Iran’s petroleum industry. Iran’s petroleum industry currently needs this industry, while productivity been into ups and downs particularly following and the Ministry of Petroleum has offered its investment and modern technologies to enhance productivity. The new remains low. Startups can help cut the US’s 2018 unilateral withdrawal from the 2015 full support for these companies. The Office of model of oil contracts – Iran Petroleum Contract (IPC) – was developed to these costs.” He said: “We have to Iran nuclear deal and the ensuing reimposition Deputy Minister of Petroleum for Research and attract investment and transfer technology into this industry. Now as the make efforts for the startups to of sanctions. The United States has left no stones Technology is tasked with facilitating the activity sanctions get tougher, new restrictions are created for foreign investors. become active in the energy sector, unturned to zero Iran’s oil exports and slow down of these companies in the petroleum industry. Oil The question here is to know if startups can get involved in the upstream in which case we would hope for the pace of projects in this industry. However, industry experts are optimistic about the activity sector. Mirmoezzi said: “In the upstream sector, particularly surface the formation of more startups and the experience of sanctions shows that Iran’s of these companies currently active in Iran. equipment and installations, there is good accelerators in this sector.” petroleum industry knows how to transform ground for the activity of startups. Of He added: “We are currently in threats into opportunities. During the first round course, we are studying options to talks with the University of of sanctions imposed on Iran under Mahmoud see where we can step in so that we Tehran, Sharif University would develop our strategies in such of Technology and Amir direction.” Kabir University of Technology to start work in the energy startup sector.”

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High-Risk but Profitable serious activity has been done. Owing to Ambitious Plans with Startups MOU to Support Startups Sanctions will not remain on the petroleum our potentialities in Iran we can create new Iravani touched on Silicon Valley Last December, Dana Energy, Oil industry for good. There are numerous ideas to reduce production costs.” startups, saying they are ambitious Industry Investment Co. (OIIC) and opportunities for investment in Iran’s oil He said there is potential in the downstream projects. “The main feature of startups PEDC signed an MOU to develop the sector in light of great potential in this sector where due to the high risk of license, is their ambitiousness. I believe startup ecosystem, support new industry. Given the Ministry of Petroleum’s no company has so far entered. He added that we have to be ambitious in this businesses and set up a venture insistence on the use of modern technologies that startups can step into this sector, regard, but move reasonably and capital fund in the energy sector. The and methods that would help reduce costs develop their own brands and work for rationally.” Asked if Iranian startups MOU first led to the establishment of or overcome some challenges and problems, commercialization. Iravani said: “Currently would be able to operate outside Iran, Apadana Ventures as a startup. startup companies take advantage of this startups are a high-risk business. They fail he said: “Startups will be successful The Board of Directors of Apadana chance and supply commercial commodities in 80% of cases, but if 20% accomplish when they have their markets. If we Ventures recently held a meeting. by engaging creativity and idea. Iravani their energy projects, they will be definitely want to create new business we have Mostafavi, Board chairman, said: “There are many opportunities influential.” He touched on the achievements to engage experienced people and highlighted the neglected role of in Iran’s petroleum industry, where no of Iran’s petroleum industry during years create value. Big companies have their technology in Iran and stressed of sanctions, saying: “Although due to own model in this sector and we can the need for paying attention to sanctions, we are lagging behind in the definitely compete with those outside innovation in the petroleum industry. transfer of technology, the fact is that Iranian Iran, too.” Mostafavi said: “Startups He said: “The issue of startup contractors built South Pars. Taking benefit are not costly. Although we are facing innovation and ecosystem is new from startups we can reduce our costs and financing and capital attraction in the petroleum industry and its boost productivity.” problems in the petroleum industry stability requires empathy and time due to sanctions, the technology by all actors in the state and private sector would need changes in the sectors.” attitudes towards the petroleum Mehdi Gholamloo, CEO of Apadana industry rather than costs.” Ventures, said plans had been made He said: “The Ministry of for launching energy innovation Petroleum is influenced by global centers in cooperation with reputable conditions. Until 10 years ago, universities. there was no talk of petroleum “This company is determined to fulfil industry. But now the Ministry its role as a private sector developer of Petroleum is determined to of startup ecosystem in the petroleum benefit from new and creative industry and welcomes all actors in ideas for overcoming petroleum this sector,” he added. industry challenges. Startups Mir-Moezzi touched on new must be able to create ideas which chances for innovative activities would be commercialized.” “In the in the petroleum industry, saying: new business environment, we “What’s clear is that all petroleum welcome every new idea in the industry sectors including upstream, petroleum industry. We think downstream and midstream energy that these ideas would be more sectors have great potential. The successful in the downstream presence of startups can be helpful for sector. However, we face no all of them to step into these sectors.” obstacle for activity in the upstream Iravani pointed to productivity and sector,” he added. cost reduction, saying innovative activities and startups would be a good solution for cost reduction.

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oil companies, but after one year and following BBL LAB in Houston are instances of the oil and oil shocks, new actors including oil service Oil Startups, Key to companies, universities and independent oil and gas startup ecosystem, which became research centers have been engaged. Oil operationalgas industry in solution 2019. for filling this void in the service companies are now the main source of Petroleum Industry Changes innovation and technology in the upstream oil The country’s oil and gas industry has since costs while raising production capacity to 5.8 industry. However, development of technology beenIn Iran, improving, the first butoil well access was to drilled technology in 1908. has Mehdi Gholamloo and innovation are faced with new challenges always constituted a challenging issue. This he new Iranian calendar year has seen new technologies in the petroleum industry and problem of adaptability. events on startups, and signature of inmb/d coming and yearsprolong are the expected life of oil to fields.increase The the Moving towards formation and development re-imposition of unilateral and unlawful US Tmemorandums and adoption of bylaws volume of recoverable crude oil to 10.2 trillion of oil startups is a global campaign. Leading sanctionsissue has takenover recent up added years. significance with the that support startup ecosystem. This issue has barrels, not to mention raise the recovery rate companies in the world are now trying to Undoubtedly,oil and gas industry is an artery now become a major cause of concern for senior for a longer time. For instance, internet and address such challenges. Between 2008 and of Iran’s development. Now that Iran is under Iranian managers, particularly the Iranian mobile technology would create over $100 2017, over 80% of venture capitals belonged to tough sanctions, we need to think about president. It would not be strange if we call the billion a year in revenue for mining, metal and oil giants like BP, Shell and Total. endogenous development of technology and current year the year of foundation of modern oil industry by 2025. Oil startups are emerging teams or companies domestic capabilities. wave of Iranian startups. This development is capable of presenting new technological The issue of domestic potential and innovation for the upstream oil and gas industry solutions to help overcome challenges of big oil development of technology is nothing new. It ministries. Minister of Petroleum Bijan isThe undeniable significance in the of usingworld; technology however, their and companies. These startups would introduce new has long been on the cards in the oil and gas Zangenehlikely to emerge established in one the of the“Council most tosignificant Support increased use has given rise to some challenges business models and develop new technologies. industry and the result has been nothing but Knowledge-Based Companies in Petroleum due to being time-consuming, high costs and Their business models would be very similar to further dependence on foreign technology. One Industry” and is now drawing up bylaws for the startup risks, tests and assessments. customer business models and help customers reason may be lack of paying attention to the development of knowledge-based companies Until the 1980s, development of technology use technologies at much lower costs and much changes in the ecosystem of global innovation in and oil startups in partnership with and innovation in the upstream petroleum more easily. the oil and gas industry. the private sector. But the point is industry was under monopoly ofmajor The oil and gas industry is not often welcomed that in case of misunderstanding by private capitalists due to its heavy the second phase of their recovery, and the necessity of development of dependence on economic conditions, long sale mostCurrently, equipment most oilused fields in the in Iranupstream are nearing and startups for the oil and gas industry cycle and slow procedures. downstream oil and gas sector are decrepit. In among oil and energy experts The startups currently operating in the the meantime, the impossibility of purchase and actors, the envisaged plan development of technology of technologies from other countries and the is likely to decline to the level of a in the oil and gas industry presence of talented university graduates in propaganda show and would cause are facing major problems in the oil and gas industry, as well as formation many problems. Therefore, I will attracting capital and credit of knowledge-based and technology-based try to explain some reasons for the due to the absence of capital companies in the oil and gas industry as well as necessity of development of startup venture funds specializing the beginning of formation of other elements of ecosystem in the petroleum industry. in this sector and also the startup ecosystem in the oil and gas industry, Oil and gas industry is among the lack of communications including accelerators and venture capital most complicated industries and between startups and companies, have provided this vital industry is technologically very challenging. oil and gas companies. with new opportunities. A series of factors has That along with growing pressure Establishment of specialized now facilitated interaction between startups for reducing costs, developing oil oil and gas accelerators like and creative minds with big exploration and production companies, as well as other impacts has led to the development offields technology and reducing to cut environmental spending, bring The persistence of this trend, like every influentialother measure, players. would need policymaking competition among leading oil and government support. Of course, in companiesabout distinction in the world.and finally Technology create light of lessons learned by Iran with regard and innovation have always been to knowledge-based companies, the the main game-changers in the government had better offer its support upstream oil and gas industry, for the formation of oil and gas industry particularly when global startup ecosystem, including support for oil prices change. For energy innovation centers development, instance, in early 2010, accelerators, common work space, parks ExxonMobil introduced a of technology, zones of innovation and sophisticated technology specialized venture capital funds that could reduce with the private sector playing the central role. 18 19 R&D July 2019 Issue No. 85 monthly R&D Iran Manufacturers Serving Petroleum Industry Iranian manufacturers of petroleum industry equipment have been doing their job for more than four decades now despite the sanctions imposed by the United States. Many representatives of foreign companies operating in Iran have expressed their willingness for establishing joint venture with Iranian companies. Until several decades ago, foreign companies had to bring all necessary equipment to Iran due to substandard and low-quality products manufactured by Iranian firms. The situation has now drastically changed and Iranian manufacturers are now able to supply commodities conforming with international standards. Iran’s petroleum industry has left behind ups and downs and struggled with tough and complicated conditions particularly in the past one decade to guarantee its development. Domestic manufacturing and mastering modern technology have always been among the major concerns of Iran’s petroleum industry. This issue has taken up added significance over recent years. However, the advantages of commercialization and revenue generation should not be forgotten. Over recent years, exploring solutions and obstacles to commercialization, finding solutions against investment risks in different sectors have been among the major activities of Iranian petroleum industry managers. In the meantime, due to planning made by Ministry of Petroleum for boosting Iran’s oil production capacity, several hundred billion dollars would be invested in the petroleum industry over coming decades, 50 to 70% of which would be spent on purchasing equipment.

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manufacturing in Iran for the manufacturing of some still in effect.” Twenty-three 10 Groups of Commodities through collaboration agreements, the value of may be seen in the words strategic commodities like packages for enhancing oil Manufactured with a foreign company. each contract, modalities of Abol-Qasem Zamani, casings and tubing needed in production capacity, valued Industrialization started in Now, some wellhead and of payment, terms and product manager at the the development of oil and gas at $6.2 billion, were defined Iran following the discovery downhole equipment is being conditions of contract Iran Oil Pipelines and fields. by NIOC for the purpose of of oil, but Iran’s petroleum manufactured domestically. as well as preferences Telecommunications Company Recently the Oil Industries job creation, creating space industry had improved only Over the past five years, and guarantees need the (IOPTC). He said 40 demands Engineering and Construction for Iranian contractors and in operation before the as US companies have approval of this working for the manufacturing of 203 Company (OIEC) and Luleh manufacturers and preserving 1979 Islamic Revolution stopped cooperation in group. The volume of items were under way by Gostar of Esfarayen (LGE) the production of about due to US and UK-dependent completing gas wells, commodities mentioned in this company. Twenty-eight signed an agreement to 280,000 b/d of oil. Meantime, policymaking, as well as Iran has in collaboration each contract and the quality demands are in the phase pf order tubing and casings contracts were signed with shortage of specialized with a European company of commodities are finalized manufacturing, while twelves for the development of domestic companies, in which manpower. moved to replace necessary based on the request of major others are in the phase of Ramshir and Mansour fields. domestic manufacturing is Over the first years following equipment in gas wells and companies and in exchange tender bid. These demands Addressing the ceremony, highlighted. Import bans were the revolution, the country decided to produce such of views with them in the are approximately valued Reza Dehqan, deputy CEO slapped on 84 items of foreign was involved in imposed war equipment in Kish Island. working group. at IRR 234 billion. With the of National Iranian Oil commodities that would be and the Iranian government To that end, a domestic Envisaging necessary plant domestic manufacturing of Company for development manufactured domestically. had to focus on basic needs. company established a joint and field tests (establishing 203 items at IOPTC, about $18 and engineering, said: “This NIOC also identified 15 Paying attention to the venture with a European commodity standards) million will be saved. IOPTC agreement indicates domestic items of widely consumed petroleum industry was manufacturer to set up a to have assurances about manufactured 2,070 items capabilities under the present commodities. NIOC officials limited to preserving the plan for producing well the quality of products from 2003 to 2018, saving the circumstances, and shows said about 40% of the $6.2 production capacity in order completion equipment in and assessing and country $37 million. that the wheel of industry is billion would be earmarked to gain enough dollars to Kish. Minister making decisions for the still spinning and we can go for domestic supply of meet urgent needs. Zangeneh recently signature of contract and 10 Contracts Signed ahead under any conditions.” commodities. Dehqan said 10 When the imposed war ordered the bringing into operation Domestic manufacturing He touched on the projects agreements had been signed, ended, Iran had to rebuild the establishment of technology upgrade projects and commercialization which were to come online while 10 more would be war-ravaged country. Until a working group and knowledge-based of research are so under the Iran Petroleum signed in coming months. the end of the 1990s, the to follow up on manufacturing of such important that the Contract (IPC), saying: “From “OIEC runs two important manufacturing of equipment the signature equipment lie within the number of advisory a stage onward we concluded fields subject to these did not get attention. of necessary authority of this working services centers that we should no longer agreements and I hope it Until early 2010s, foreign contracts for group. in petrostates is wait for agreements. That is would increase output by companies supplied Iran manufacturing Competitiveness of prices increasing. Domestic why we started projects in 70,000 b/d as envisaged,” with necessary equipment. equipment and the quality of products manufacturing and parallel based on the new he said. Oil production But the imposition of tough widely are highly significant. commercialization oil contract model. Now that preservation and international sanctions used in the Contracts are also required to have become a major we are faced with sanctions, enhancement in Iranian against Iran’s petroleum petroleum be from future pillar of technological the parallel agreements are oil fields is envisaged in 23 industry caused difficulties industry. demands and innovation. In packages with $6 billion for the import of such The text of orders without Iran, by relying investment over three years. products. The sanctions have causing any on academic This national project, whose been re-imposed now. disturbance and scientific objective is to engage Iranian Based on the instruction in ongoing research related companies and to create of Minister of Petroleum activities. to the petroleum jobs, includes 23 projects, Bijan Zangeneh, 10 groups A symbol industry, contracts including 29 onshore and of basic petroleum industry of domestic have been signed 4 offshore ones. With an commodities were identified with domestic investment of about $220 to be mass-produced companies million, these projects in collaboration with will be implemented in knowledge-based companies seven oil-rich provinces and the private sector. (Khuzestan, Bushehr, Recently, the production line Fars, Hormuzgan, was launched for three items Kermanshah, Ilam of this strategic equipment in and Kohguiluyeh Kish Island. Boyer Ahmad). With Iranian experts have their implementation, managed to develop state- the country’s crude oil of-the-art technology production capacity will increase by 300,000 b/d, earning the country $14 22 million in revenue. 23 Gas July 2019 Issue No. 85 monthly Gas

The Iran Gas Trunkline 9 (IGAT-9) is a strategic pipeline in Iran’s gas grid. Due to its significance in providing necessary infrastructure for exports and enhancing gas supply to the western and northwestern provinces as well as IGAT-9 Extension under Way feeding industries, this trunkline has taken up added significance.

last winter when the temperature was projects are coming online even ahead of unprecedented in 20 years. schedule. The second section of the Dehgolan- Miandoab pipe became operational several In addition to mountains, what other months ahead of schedule, despite the pipe As this project natural obstacles were you faced with? supply problem. Land acquisition is not limited Four projects, There were many of them. We had 45 instances to the Kurdestan area. In the existing and totally 400 is completed, gas supply future projects in Khuzestan, Kermanshah kilometers becomes more stable in the cutting through permanent rivers. For instance, and Lorestan, we will be faced with similar long, extending cities of Baneh, Saqez, Sardasht of cutting through paved road and five cases of obstacles. We will keep crossing obstacles to from Ahvaz and Boukan. Although western Iran which is 320 meters wide. future projects by cutting through Maroun and it was very difficult to cross the Qezel Uzan River, is mostly mountainous and there are Karoun rivers. For all of them, we have made to Kuhdasht How about land obstacles? necessary planning and arrangements. This pipeline are envisaged. numerous rivers and obstacles, this In Kurdestan and West Azarbaijan will supply They are in fact pipeline is progressing. Mehdi Bazargani, Provinces, we crossed highly valued pieces of Anything else you want to add in gas to the the next phase IGAT-9 project manager, speaks with “Iran land. Settlement of related issues for the land conclusion? Behbahan of IGAT-9 to Petroleum” about the project. acquisition group was difficult and time-taking. One of the major problems to IGAT-9 is shortage It was our first experience in full assignment of human resources required in the construction, power plant, complete the of land acquisition affairs to contractor, which installation and engineering sectors. Due to the Behbahan Bidboland- Would you please tell us about IGAT-9 What advantages do the 20-inch and grew into a successful model to be extended seriousness of this issue, we hope that relevant cement factory, Kuhdasht projects? 30-inch Bidboland-Gachsaran pipes to other projects. Another problem with land authorities would cooperate with us to overcome as well as the section IGAT-9 projects are among the prioritized and create? acquisition was our challenge between natural this problem and we would be able to pursue Gachsaran important projects operated by National Iranian This pipeline will supply gas to the Behbahan resources and obstacles about the land being the activities of this project particularly in the Gas Company (NIGC). This trunkline stretches power plant, Behbahan cement factory, as well national or not. All these obstacles caused regulatory section with more precision and petrochemical from Bidboland to the Bazargan border. as the Gachsaran petrochemical plant. Supplying hardship to us, but none of them could harm motivation and the company would experience a plant. Construction of Dehgolan-Miandoab section, gas to the Gachsaran petrochemical plant is of our colleagues’ firm determination and the good jump in this strategic pipeline. Supplying which is 230km long, is over. Gas was fed into gas to the Gachsaran also ready for gas injection. The Bidboland- schedulevital significance by next March.for the plant managers. We are Ahvazthe final part 55km which section is 98 inkilometers January. The long rest is still is making efforts to finish the project according to petrochemical under construction. What conditions does the Bidboland- plant is of vital Ahvaz pipeline lie in? significance Would you please tell us about future About 30 km of this pipeline extending as far as for the plant projects? Mahshahr is prioritized. It is expected to receive managers. We Four projects, totally 400 kilometers long, gas by November. Construction of the rest of the extending from Ahvaz to Kuhdasht are pipeline, 68 kilometers long, would be over by are making envisaged. They are in fact the next phase of next July. efforts to finish IGAT-9 to complete the Bidboland-Kuhdasht the project section. Would you please explain about the according to steps and toughness of job? schedule by In addition to IGAT-9, what other IGAT-9 in western Iran and Khuzestan Province projects do you have under way? is faced with many impediments. In the West next March A 56-inch project connecting sites 1 and 2 of Corridor, from Dehgolan to Miandoab, we were Assaluyeh has been fed with gas and is in its faced with steep mountains and hard land

the installation of launcher and receiver. A 40- to work. However, we made every effort to inchfinal ethanestages. Itproject will become has been fully also operational inaugurated. after increasewhich made resource, it difficult machinery, and time-consuming equipment and It earned the country high value-added. The working shifts in order to overcome these pace and quality of work there constitute the obstacles. When the projects were under way outstanding features of the project. in Kurdestan, we had tough time, particularly 24 25 Gas July 2019 Issue No. 85 monthly Gas Iran Gas Transmission Matures Iran’s gas treatment capacity is set to exceed 1 bcm/d by the end of the current year. According to plans, gas supply to cities and villages is planned to hit 100% in three years. Every year, over 3,000 villages are connected to the natural gas network, a breakthrough experienced in no other country. Along with the development of its domestic network, Iran has been seriously working on gas export projects like the Iran Gas Trunkline 9 (IGAT9) and IGAT6. The country has a long-term plan to win an 18% share in global gas trading. Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC) says: “Gas transmission through pipeline remains attractive in the world and Iran’s neighboring countries still have good capacity to receive natural gas via pipeline.” He added: “But LNG exports are envisaged for farther spots. Many international issues and sanctions have impacts on gas exports, but in the long-term we will have good conditions because the Europeans are now assured about Iran’s gas exports stability.” Montazer Torbati said Iran had been sustainably exporting gas to Turkey despite pressures.

Gas Grid Can Handle Any Volume Minister of Petroleum Bijan Zangeneh Iran’s gas transmission network is currently who had already served as Minister of ready to handle any volume of gas treated at Petroleum for eight years from 1997 to gas treatment facilities. Of course, increasing 2005. Iran’s gas transmission industry the amount of refined natural gas requires with more than half a century of history expansion of gas transmission lines and in the energy sector is currently the most gas compressor stations. Therefore, based significant supplier of energy in the country. on plans envisaged for the gas industry, the This position was hardly imaginable when length of high-pressure gas pipelines will NIGC was established five decades ago. exceed 64,000 kilometers from the current But strategic and macro planning by the 37,000 kilometers. Based on forecasts, the Petroleum Ministry and NIGC senior officials number of gas compressor stations will on one hand and daily growing demand for increase from 80 to 140. That would place gas to supply national energy needs, earn Iran in the rank of countries with the most the country revenue from gas exports for expanded gas transmission networks in investment and operating infrastructure the world. Iran with more than 37,000 industries on the other, paved the ground km of high-pressure pipeline intends to for the fast and structural development of operate new projects in order to maintain the gas industry. According to BP’s annual its fourth position in the world in terms of statistics review of 2017, Iran sits atop 33.2 the extent of gas distribution. At the time tcm of gas, coming second behind Russia. Iran of 1979 Islamic Revolution victory, the gas holds 17.2% of the world’s total gas reserves. industry was 13 years old. By that time, Iran Qatar and Turkmenistan trail behind. Iran had only one pipeline for exporting gas. It is producing 223.9 bcm/y of gas, standing was IGAT1 which carried gas to the Union of third behind the United States and Russia. Soviet Socialist Republics. Iran’s gas supply Therefore, Iran holds a 6.1% share in global owes eighty percent of its volume to Iran’s gas production. 26 27 July 2019 Issue No. 85 Gas monthly Gas

Iran Unrivalled in Mideast in INGROSOLL-RAND air compressors of technology. The issue of self-sufficiency is and reduced bureaucracy, provided them with Transmission of natural gas from reservoirs IGTC at industrial scale, signature of MOU very important in drawn up strategies for necessary information, established close contacts and refineries to consumers is of high between IGTC and the “Iranian Spatial Iran’s gas transmission. The establishment between manufacturers and researchers in the significance. Iran’s gas transmission network Agency” for communication services and of specialized working groups at the Self- gas industry and encouraged investors to support is handled by IGAT1-IGAT10. IGAT11 has meeting industrial communications’ needs Sufficiency Committee of IGTC in recent knowledge-based companies. Designing gas been built and is about to come on-stream. of Iran. In January, Iran transmitted 761 years bears proof to this fact. Ever since the turbines, smart pig, domestic manufacturing Gas compressors are installed throughout mcm/d of gas, which was a new record for 1979 Islamic Revolution, Iran’s gas industry has of turbine control systems, DCS control system the trunklines. Iran’s 38,000-km pipeline, Iran’s gas industry. Chief among the major been seeking to free itself from dependence in of refineries, turboexpander control system, fitted with 81 gas compressors, is able to plans pursued by Iran’s gas transmission infrastructure industries, save hard currency, turboexpander designing and manufacturing, carry more than 800 mcm/d of gas. Until the industry in the current calendar year reach self-reliance, develop sector-wise, and compressor gearbox, flame and gas detection 1979 Islamic Revolution, Iran had only 2,900 are: removing blowdown valve leaks, pursue designs based on needs. To that end, it sensors, covering nanofluid, and quake-sensitive km of pipeline. But under Iran’s 20-year studying new methods of pigging pipes has taken big strides to reach self-sufficiency in valves are just examples of NIGC achievements Vision Plan, the country should have 70,000 after manufacturing, examining the recent the manufacturing of commodities and items in supporting domestically manufactured km. Before the Revolution, Iran had only 14 flooding problems and finding solutions, needed in the gas industry. Upgrading quality to equipment. gas compressors, which is now 81 and would studying international standards and meet national and international standards, using go to 140 under the Vision Plan. experience with regard to access to pipes, domestic potentialities to maximum level, timely 4,000km Gas Pipeline in 6 Years Saeed Tavakoli, CEO of the “Iranian Gas gas quantity management, upgrading energy delivery and finally proper price, have topped the Based on the current instructions for Iran’s Transmission Company” (IGTC), said there and carbon management, upgrading project agenda of Iran’s gas industry. At present, many gas transmission industry, 580km of gas is currently over 36,829km of high-pressure management and engineering, improving items needed in the gas industry are designed transmission lines is to become operational gas pipeline in the country. He added that risk management, carrying out renovation and manufactured by domestic manufacturers. in the current calendar year while 4,100km is by using 82 gas compressors, 240 bcm of projects and development of strategic In the gas supply sector which involves the planned up to 2025. In the gas transmission gas was transmitted across Iran in the last companies. urban network and pressure decompressors, line, 850km of pipes is being built; 2,000km will calendar year to March. Also in the last more than 400 items of commodities are used. be outsourced while 200km of pipes would be calendar year, 5,740km of cleaning pigging Techno-Engineering Service Exports More than 98% of these items including pipes, produced in the current year. Implementing as well as 7,457 km of smart pig-running Iran is currently exporting technical steel and polyethylene joints, valves, gas meters 41,00km of gas transmission line, 300,000 was done. Other measures undertaken in gas and engineering services to neighboring and regulators are manufactured domestically. square meters of administrative complexes, transmission in the last calendar year were: countries thanks to its domestic experts’ In the gas transmission sector, more than 500 more than 20 pressure facilities, five main reducing gas waste in Iran’s gas grid by 6%, potentiality. This achievement was made items of products are used. More than 90% of refining units and 100,000 square meters formulating the package of outsourcing the through the Iranian gas industry’s planning these items are domestically manufactured. In of production centers are among the major Safa Shahr 4 gas compressor installations, and all-out support for the private sector the refinery equipment sector, most metallic plans for “Gas Engineering and Development successful overhaul of ZORYA DJ 59 turbine during years of tough sanctions. The Self- equipment and pressurized tanks equipment Company” up to 2025. Gas transmission safety for the first time, relying on IGTC manpower Sufficiency Committee of IGTC was recently like scrubber and separator, as well as tower index reached 100% last January, when Iran and saving IRR 46 billion, carrying out established, while a self-sufficiency code equipment and chemicals, humidity absorbents was transmitting 761 mcm/d of gas. research project to improve technology for of conduct was drawn up to outline the and catalysts of some refineries have been Iran has 294 turbocompressors producing injection current anodes with a procedure of self-sufficiency through using domestically manufactured. Regarding support in its gas transmission network, view to upgrading resistance to corrosion, domestically manufactured products in the for domestic manufacturers, IGTC has moved to which are all being maintained level of corrosion, mechanical properties, gas transmission industry through domestic identify such companies and/or individuals and without assistance of any foreign joint failure and current density with a companies, as well as parks of science and adopted incentives, offered intellectual thinking company. The turbocompressors view to increasing the lifetime of pipelines are operating without any problem. at IGTC, producing compressor to be used Every category of oil used by IGTC has been domestically manufactured thanks to confidence in the private sector.

28 29 Investment July 2019 Issue No. 85 monthly Investment Halegan, Golden Chance for Foreign Investment Halegan which measures 50 kilometers long and 11 kilometers wide and holds 12.4 tcf or 355 bcm of gas in place is one of dozens of Iranian gas fields whose development was offered to foreign investors a couple of years ago at an international conference in Tehran. The field is located in Fars Province, more precisely 73 kilometers north of Assaluyeh and 25 kilometers south of the Sefid Baghoun gas field and north of the Sefid Zakhour and Dey gas fields.

ran is implementing its gas is excellent. Halegan also consumption optimization contains 249 million barrels Iprojects in the household, of gas condensate in place, 98 business and industrial million barrels of which being sectors while enhancing its gas recoverable. production capacity in a bid to account for a 15% share of Halegan Valued at $83bn global gas trading. The gas and condensate held

access and need for not much estimated to be valued at about investment,Onshore fields, are favoreddue to ease by of $83in the billion. Halegan That gas is fieldwhile is only investors across the globe. $36 million has been spent for National Iranian Oil Company (NIOC) plans to establish a over two and a half years. With gas hub in the south of Fars the developmentdiscovery of this of this gas gasfield Province. By developing the produce 50 mcm/d of gas over Dey, Halegan and several 20field, years. it would Due tobe the possible toughness to Sefid Zakhour, Sefid Baghoun, of land caused by the high- produce and treat gas. otherHalegan gas wasfields, discovered NIOC hopes in to exploration drilling operations 2005 following a 2D seismic pressure layers of this field, testing project conducted Therefore, a 4,999-meter-deep reservoir and petroleum Iran’s oil and gas industry installations would need huge on 1,000 square kilometers wellwere was very planned slow at tothis be field. drilled. engineering studies, as well Province. Compared with as a golden opportunity for investment because of their in 2004 and 2005 in Fars Then, several reservoir layers as reservoir layer tests were is the latest gas field in Fars international oil companies. decrepit conditions and the Province. Halegan was among – including Kangan, Upper conducted by the Exploration larger dimensions. The extension of Iran’s oil maturity of oil wells. Dalan, Naar and Lower Dalan Directorate of NIOC. neighboringIran would have fields, to Halegan invest has and gas facilities across the Among Iranian oil and gas then in Fars. Fars Province is one of gas largely in its gas sector, should country requires widespread severalWith a gas70% fields recovery discovered rate, was estimated to hold 12,400 hubs in the Middle East. Some it be willing to possess the development activities. estimated at $200 billion, 8.938 tcf of gas may be bcfwere of tested.gas. The Finally, important the field point exploration studies in this status it deserves among gas It needs new investment fields, whose investment is recovered from Halegan. about gas discovery in this province are indicative of exporting countries. An oil in addition to exploration most accessible to foreign Such recovery rate in Iran huge gas reserves. Halegan market analyst has described activities. The current investment.the Halegan field is the 30 field is that all geophysical, 31 Investment July 2019 Issue No. 85 monthly Investment

The Aghar gas production for processing through two capacity stands at 95.22 rate is set at 34.7% with pipelines.the Farashband Each pipeline gas refinery is 90 mcm/d of natural gas. It also arestrictions, production the ceiling final of recovery 22 Aghar Field 2nd Phase kilometers long. supplied 4,300 b/d of gas mcm/d by 2023, when the The second phase of the condensate. installation of a compressor would bring the recovery rate development to double implemented with a view to to 71.5%. Open to Investment productionAghar gas field to 40 is mcm/d.to undergo updatingStudying previouslythe Aghar gasconducted field Chief among studies The Aghar gas field is among large onshore gas Planning has been done for the studies, incorporating new conducted are: drilling fields in Iran. It is currently producing 20 mcm/d second phase development of operations to enhance of gas. The Iran Central Oil Fields Company previous studies through recovery and preserve the (ICOFC), which supplies more than 40% of Iran’s interpretingfindings and andcompleting assessing production ceiling, carrying total gas, is in charge of development of the Aghar field. Agharthe Aghar Gas gas Output field. Up petrophysical diagram, out periodical static tests, In parallel with the plan to and modelling of fractures. appraisal wells drilling, PGF double the Aghar gas output, The studies, which lasted output phase increase to ghar was introduced for gas exports to Turkey, installations would be built four years, were led by the 30 mcm/d and the optimal Iraq and other neighboring near the Farashband gas Department of Reservoirs scenario after installing Ato foreign investors countries has always led the compressor and spudding to undergoalong development with other fields Iran’s Petroleum Ministry to The gas produced at the Aghar six new wells for reaching under the newly-coined Iran envisage gas production hike refinery for processing. in-placeStudies. gasThe deposits main finding are up of the production ceiling of 30 Petroleum Contract (IOC) as a priority. 40%.these studies is that the field’s mcm/d model. The second phase of includingfield is planned Maroun. to beThis injected gas 110 kilometers southeast into southern oil fields, 71% of in-place reserves of rate of 71.5%, is an attractive ofThe Shiraz Aghar and gas 35 field kilometers is located four gas gathering centers, The final recovery of over investmentthe Aghar field, project. with a recovery southeast of Firouzabad in pipelinefield has towellhead carry gas facilities, from natural depletion scenario, in The annual growth in Fars Province. wells to central facilities and lightthis field of wellhead has been done. In the domestic consumption, as well Discovered in 1972, the Aghar pressure as international obligations a gathering and separating which are producing gas. center,finally thecontrolling Farashband room, refinery, fieldGas productionhas now 16 from wells, Aghar 13 of pumping station, and began in 1999. Natural gas pigging systems. and condensate are separated after production to be delivered to

32 33 July 2019 Issue No. 85 Interview monthly Interview

of these terminals had been become an oil exporter. Iran and Venezuela are completed. The US was about to Although the US is not yet a net under sanctions. Libya and become one of the largest LNG oil exporter, it can disturb the Nigeria are facing challenges Interaction with Iran importers in the world. But markets. in production. Even Saudi with the development of shale Arabia has cut its output. In technology, the trend changed. Does it mean that the case all member states were Benefits Foreign Firms In 2017, the US gas production OPEC+ deal would not be producing normally oil prices Iran sits atop the world’s largest hydrocarbon reserves and is located on the stood at about 735 bcm with a game-changer in the oil would be much lower. Now energy corridor route. However, in the aftermath of the 1979 Islamic Revolution, gas consumption at 740 bcm. market at least for now? certain issues have transpired the United States has been using every tool at its disposal to keep Iran from This gap was eliminated in In the next decade, hybrid and the Persian Gulf. The situation becoming a key energy player. Morteza Behrouzifar, researcher at the Institute 2019. The US is now an LNG has become somewhat tense, for International Energy Studies (IIES), says due to Iran’s geopolitics, young and educated exporter and will soon become grow in number. That would but it would not let oil prices population; foreign companies would be beneficiary to any interaction with Iran."Iran beelectrified a game-changer cars are expectedin the oil to Petroleum" has conducted an interview with Behrouzifar on the impact of shale oil in players in the world. market. Europe is currently oil prices have not grown global oil markets and the impact of technological development on oil and gas production, one of the influential LNG fall significantly. Meantime, as well as foreign companies’ interaction with Iran. Is it the same with oil? in renewables. However, we when shale oil production Can we expect the US to knowmaking that significant about one investment billion issignificantly. even economical Under atconditions $30 a For nearly a decade now, China holds the most oil and gas demand. become a large oil exporter people in the world have access barrel in some zones, I think if unconventional reserves have unconventional oil and I remember in 2004, we to affect global oil prices? to renewable energies. In case OPEC and non-OPEC producers turned into a serious rival gas reserves in the world, drafted a report at IIES about No, that’s not so when it comes this technology is developed in agree on cutting 4 mb/d from The to conventional oil producer particularly shale gas. But its global gas markets. We had to oil. At least estimates show all countries, we can expect a their production we can then In the next in the market, significantly production stands very low. predicted that the US would that the US will continue to decline in energy consumption expect that the downward technology affecting oil prices. Even The technology required for become the largest LNG import crude oil. The US is level in the transportation sector. trend of prices be overturned. decade, required for the Charter of Cooperation shale oil and gas production importer in the world in 2014 consuming nearly 20 mb/d Iran sits atop the world’s hybrid and shale oil recently signed by OPEC is so sophisticated that and US LNG production would of oil, while it is producing 16 Oil prices have not largest conventional oil and gas electrified and non-OPEC partners was the countries with such increase so much that even mb/d oil and condensate. But changed significantly in the reserves. It would be important and gas an instrument to prevent a reserves can rarely engage in Canada would not be able to the US is in the oil market and past one month despite the for us to be a major player in cars are production serious oil price fall as shale production and rival the US meet its needs completely is trading oil. It is noteworthy Strait of Hormuz and Strait of the market. That would be expected to production is becoming in shale production. However, and that the US would have that until several years ago, Gibraltar oil tanker incidents, possible only if our production is so economical. Is that true? the expectation is that shale no option but to import LNG. US oil companies were not and US sanctions against grow in sophisticated I would like to start with development technology might In the year when we were authorized to export oil, but Iran and Venezuela. In case impossible under the present number. That that one decade ago when shale spread in other countries preparing this report lots they are now engaged in the market conditions were sanctions.increases significantly, I would like towhich is would production became economical like China or South America, of licenses had been issued oil trading thanks to shale. normal and OPEC producers reiterate here that after the the countries and started impacting global in which case we will see oil for the construction of LNG Current estimates show were not sanctioned would 1979 Islamic Revolution, the US be a game- with such oil prices. In fact, following and gas production increase. terminals to import this that US shale oil production prices be on the decline never allowed Iran to become changer in the the 1973 oil shock, the US Naturally it can affect global product into the US and some would not exceed 20 mb/d. again? the energy hub of the region. It reserves can embarked on policymaking oil and gas prices and Therefore, there is no mid-term Look at the oil market. used every tool at its disposal oil rarely engage with a view to reducing its even change current expectation for the US to so that Iran could not become market. in own dependence on the projections a key energy player. If you may Europe is Persian Gulf oil. To that end, about global recall, after the JCPOA (Iran’s production the US enhanced its oil and nuclear deal with six world currently and rival the gas production capacity and powers) was signed, Iran was making used various tools like granting said to be the largest market US tax exemption to oil and gas to have opened its doors to significant in shale production companies. That the world after the collapse investment production was exactly when the US of the USSR. The Iran market in renewables started studies on shale oil was projected to attract $1 and gas production. Even at trillion in investment over that time shale production was under way, but not enough to conditions. Iran is among the alter the result of the game. In mostfive years populated thanks countries to favorable in the other words, shale oil and gas region. Its population is young were no game changers in the and educated. The country is 1970s and 1980s. located at the intersection of the region. Therefore, foreign How long can shale companies interacting with owners continue to supply? 34 Iran will be beneficiary. 35 Analysis July 2019 Issue No. 85 monthly Analysis

Gulf of Mexico with 100 tcf (3 plays would be inevitable. unconventional gas deposits, tcm) and Southwest with 76 tcf Inclination for shale particularly shale gas. (2.2 tcm) are the second and production over recent years Hydraulic fracturing dates third biggest ones. has led to the development back to the 19th century, but it Global Rivalry over of new technologies for became widespread since the Development in Shale 1950s. Production the wellbores. Furthermore, As indicated earlier, natural / North America is currently horizontalcausing artificial drilling fractures to increase in gas production in shale Shale Oil Gas the world’s largest shale gas the friction between the plays is not important due Shale oil and gas market has been gathering steam across the globe over the producer. It owes this status reservoir and the wellbore is to their geological structure. past decade. Many countries, particularly the United States, have developed to the hydraulic fracturing widely used. In some cases, Production from shales is new technologies to produce and process shale oil and gas. The shale oil and technology for extraction horizontal drilling continues gas industry has reached the stage that US President Donald Trump hopes to make the as far as 3,000 meters for years. According to EIA, most to studies, the wells drilled the production targets to shaledone mainlyrecovery in hasthe beenfirst two country energy-independent before his term ends. He plans new laws and instructions infrom the shale US shale fields. plays According can materialize. Such technological from Haynesville, Eagle Ford for facilitating and accelerating extraction from hydrocarbon reservoirs. produce between 2 mcf/d and advancements would increase and Barnett-Woodford. The 5 mcf/d (56,000 to 140,000 production at lower costs, minimum shale gas recovery hina is home to 1,275 which was instrumental in cubic meters) of natural gas. was from Cincinnati Arch with tcf (35 tcm) of shale gas, extracting natural gas from Within two to three years, a drilling rigs are operating in 120 mcf/d (3.4 mcm/d). Cthe largest in the world. shale gas. Large-scale natural well’s production falls to 1 shalewhile zones.a significant number of It is followed by the United gas production from shale mcf/d (28,000 Developing the horizontal Russia States, Argentina, South Africa, gas reserves started after cubic meters). drilling technology alongside Russia is currently the largest Canada and Australia. Among the 1980s and the 1990s Under such hydraulic fracturing has supplier of gas to Europe. them, the US has been working when Mitchel Energy and circumstances, facilitated extraction of to increase shale oil and gas Development started shale regular drilling production over recent years. gas production in the Barnett in shale gas This country is the biggest Shale in Texas. After this energy consumer in the world. successful gas recovery, other The daily increasing shale gas companies joined the game. activities in the US brought Natural gas production from production from 390 bcf (11 the Barnett Shale reached bcm) in 2000 to 11.41 tcf (320 1.4 bcf (40 mcm) by 2005. bcm) in 2013. The US shale gas output is forecast to exceed 20 gas production was proven tcf (560 bcm) by 2040. Then inAfter Barnett the profitability and Fayetteville, of shale the world’s largest economy operations were started for would be able to largely supply extracting from Marcellus, its domestic gas needs. The US Haynesville, Woodford would become a net natural and Eagle Ford. Shale gas gas exporter in 2020. In 2013, development is a determining the US was producing higher factor in the US natural volumes of shale gas compared gas market. The US Energy with offshore and onshore Information Administration natural gas. In mid-1970s, the estimates the country’s US Department of Energy, in recoverable shale gas at 750 cooperation with Gas Research tcf (21 tcm). The US shale gas Institute (GRI), undertook is mainly located in Northeast, widespread efforts for the particularly Marcellus. commercial production of gas Northeast holds 472 tcf from the Huron Shale in the (13.5 tcm), of which 410 tcf east. This cooperation led to (11.5 tcm) is concentrated in the development of technology Marcellus. Then the play in the

36 37 Analysis July 2019 Issue No. 85 monthly Analysis

According to BP, Russia was Asia become another US. North America the largest shale gas production by is the existence of 1,225 tcf known to hold about 17% of Asia is following Europe’s China’s shale gas deposits producer of natural gas in 2040. After that, it would of shale gas compared with the world’s proven natural gas model with regard to shale are 48% higher than that of the world. become a major exporter of 239.2 tcf (7 tcm) of natural reserves in 2013. That means gas production in a bid to the US’s. natural gas and GTL-based gas. future 1,168 tcf (33 bcm) plus put an end to its imports. Africa petroleum products and play current 339 tcf (9.5 bcm). China sits atop 1,275 tcf (36 North America Among African nations, a major role in global energy Iran tcm) of shale gas, becoming The US, Canada and Mexico South Africa awaits a markets. No detailed study has so far Europe the world’s largest holder of hold a total of 1,931 tcf (54 promising future thanks been conducted on shale gas Unlike the US, Europe has shale gas. India and Pakistan tcm) of shale gas. That makes to its 485 tcf (13.5 tcm) of South America reserves in Iran. In 2011, not been very active in shale hold 63 tcf (2 tcm) and 51 North America the richest shale reserves. Meantime, South America is home to the Exploration Directorate gas production mainly due tcf (1.5 tcm) of shale gas, region in the world in terms South Africa is a hub of the about 1,225 tcf (35 tcm) of National Iranian Oil to high population, existence respectively. of shale gas reserves. The gas-to-liquid (GTL) industry. of shale gas. In this region, Company made preliminary of numerous obstacles China’s shale gas is 12 times ratio of shale to natural gas South Africa is expected Argentina holds 774 tcf (22 arrangements for shale gas to land accessibility and higher than its conventional reserves in North America to master technology for tcm) and Brazil holds 226 tcf recovery in the sedimentary environmental concerns. gas. Therefore, should China is 5.6. That along with (6.5 tcm) of shale gas. The areas of Zagros, Kopeh Dagh It has to be acknowledged manage to develop a plan necessary technology and important point and central Iran. Experts that the volume of the US for shale gas production, it capital makes The Research Institute of Among believe that unconventional gas reserve would supply its domestic Petroleum Industry (RIPI) African is seven times higher than needs in the long- has said studies were to be shale gas that of Europe. term and carried out in collaboration nations, development Europe would end its with the Exploration South Africa would bring dependence on Directorate of NIOC in the awaits a Russian gas Lorestan province. about a as well as LNG Experts believe that promising major change imports, should it shale gas development future thanks develop its shale would bring about a in the oil gas in the future. major change in the oil to its 485 tcf and gas Europe is investing and gas sector, unseen in (13.5 tcm) of sector, unseen in shale gas the world in the recent shale while at the same decades. Countries like the in time envisioning US that depend on energy reserves. the world in widespread energy- imports are trying to Meantime, saving activities. benefit from shale gas in the recent Europe is forecast order to end their imports. South Africa decades to hold about 639 Some countries like China is a hub of the tcf (18 tcm) of shale were once major energy gas-to- gas. Poland, France importers, but they now and Norway are the own huge gas reserves. liquid (GTL) largest holders of That is expected to leave industry shale gas in Europe important impacts on the with respectively 187 world energy economy. tcf, 180 tcf and 83 tcf Gas prices have already of shale gas. declined, while Russia and The important point Qatar are not as powerful as is the significant they were in the global gas difference between market. conventional and Technological unconventional complications, higher natural gas reserves production costs compared in Europe. In other with conventional gas words, Europe’s shale and some concerns gas reserves are 3.5 about the environmental times higher than consequences of shale gas its conventional gas in some countries constitute deposits. the major obstacles to shale gas development. 38 39 Analysis July 2019 Issue No. 85 monthly Analysis

growth in oil prices should Persian Gulf tensions was coupled with the Persian Gulf insecurity notch up. Oil price has also warned against the in global markets, prices would experience a consequences of ongoing tensions, saying any Persian Gulf Tensions military confrontation in the Persian Gulf may push oil prices up to $325 a barrel. whosignificant have accused jump. Iran of stoking up tensions in Where Are Energy Markets Headed? Although current tensions in the Persian Gulf aTherefore, bid to push despite up global claims price, by Tehransenior US would officials not Over recent weeks, tensions have escalated in the Persian Gulf, more particularly have not caused any jump in the oil prices, need tensions. But the US failure to zero Iran’s in the Strait of Hormuz, a strategic lane for international oil shipment. they will indirectly affect the future of energy oil exports could provide a better reason for transfer from this region. Washington to be resorting to sabotage in order Four tankers were attacked in the United Arab Emirates’ Fujaira Port, two to utter false accusations against Tehran and commercial vessels were reportedly targeted by mines in the Gulf of Oman, while a Britain- insurance premium of oil tankers crossing push Iran further into isolation. flagged tanker was seized by the Islamic Revolution Guards Corps Navy. The Persian Gulf theFor Persian example, Gulf a significant would increase increase energy in the The adoption of this policy by Washington may region is now experiencing significant developments that would influence the future of transmission prices, while reducing the activity increase the costs of all nations. For instance, global energy markets. of oil companies. Any increase in energy transfer ongoing tensions in the Persian Gulf have once again pushed to bold relief the security Shuaib Bahman when the so-called Tanker War happened. Should it continue, it will affect global economic of energy transfer across the world. Some The future global economic growth rate, US growthcosts will and cut development the profits of in these the future. companies. European countries are now seeking to set up economic growth stability, consequences of a joint taskforce to protect vessels. If Europe following reported attacks on an Emirati US-China trade war, China’s economic growth US, Main Culprit launches its maritime security taskforce, it Tandensions a Norwegian flared up tankerin the Persian in the Gulf Gulf of decline, as well as the oil production and supply Due to the failure of the US policy aimed at would not guarantee energy security and Oman. Then, Japanese Prime Minister Shinzo by top oil producers including the United States, attempting to zero Iran’s oil exports, oil prices would even boost the possibility of tensions. Abe’s landmark state visit to Tehran coincided Russia and Saudi Arabia have prevented a In such case, one can no longer be optimistic with attacks on two oil tankers headed to Japan. unprecedented tensions in the Persian Gulf. about keeping energy prices in check in global One week after that, the IRGC announced However, so far the global oil market dynamics didIran not has jump managed significantly to blunt following the impact the of recent US markets. the downing of a US drone for violating Iran’s havesignificant been movingincrease towards in global lower oil prices. impact by sanctions and prevented any void in global Therefore, insecurity in the transportation of airspace. Two weeks later, a supertanker political and security tension on the prices. markets. That is while in case Iran’s oil vacuum energy through the Persian Gulf stems from the carrying Iranian crude oil was seized in Even the impact of these shocks on prices US policy rather than that of Iran or regional has been short-lived. But recurrence of tense countries. The US’s pullout from the 2015 Iran tanker was seized in Iranian waters. events in the Persian Gulf in the future could nuclear deal and the re-imposition of unilateral GibraltarThe Persian and Gulf finally last a sawBritish-flagged such drive oil prices up. The International Energy sanctions on Iran and efforts to reduce Iran’s tensions during the Iraq-Iran War Agency (IEA) has warned against a sudden oil exports to zero are among such destructive actions that stir up insecurity in the Persian Gulf. Therefore, should energy consumers want to know who to blame for ongoing tensions in

US. Before Washington embarked on its anti- Iranthe region, moves theyby imposing should point sanctions, their fingersthe Persian at the Gulf did not witness such tensions.

40 41 Chinese Groups to Conduct Joint Studies Production CNOOC China Ltd. has signed a out joint studies in the Yellow River IPF three-year cooperation framework Mouth Sag, the Qingdong Sag and agreement with China Petroleum the eastern part of Bodong Sag in the & Chemical Corp. (Sinopec Corp.) Bohai basin, as well as southwestern Petrobras Offering regarding the sea areas of Bohai, Beibu Weizhou and Xuwen areas of the Beibu Three Gas Fields Gulf, and South Yellow Sea, and the Gulf basin, the North Jiangsu basin, and Petrobras has initiated the disclosure North Jiangsu basin. blocks in the eastern South Yellow stage for the sale of its entire working Both parties will share data and carry Sea basin. interest in the producing Peroá and Cangoá fields, and 88.9% of the BM-ES-21 concession. All are in the Espírito Santo basin offshore Brazil. Peroá and Cangoá are shallow-water fields in turbidite sandstones 50 km (31 mi) offshore Linhares which came onstream in respectively 2006 and 2009. They currently produce around 900,000 cu m/d of non-associated gas. UK Offshore The production system is based on up Operations Becoming to six wells connected to the unmanned Cleaner platform PPER-1, in 67 m (220 ft) water Britain’s offshore oil and gas industry has achieved a stable depth, and a further well tied directly UK Qatar Petroleum to the pipeline that transports gas from environmental performance while at the same time increasing production, set tojoin Eni, Total in the platform to the onshore Cacimbas Kenya Blocks Gas Treatment Unit for processing. according to Oil & Gas UK’s a 2019 Environment Report. Louise O’Hara Qatar Petroleum (QP) has signed an Murray, OGUK’s environment manager, agreement with Eni to acquire a 13.75% said: “Operators are making changes share in three exploration blocks offshore to processes and equipment Kenya. offshore to continually improve The agreement is subject to customary efficiency and emissions regulatory approvals by the government of performance. Kenya. Blocks L11A, L11B, and L12 are in the China Lamu basin in water depths ranging between 1,000 and 2,700 m (3,280 and 8,858 ft), cover about 15,000 sq km (5,792 sq VIEW mi), and are said to hold high exploration potential. Ivory Ivory Coast Brazil

Australia Award Exploration Block to INPEX INPEX has secured a new exploration permit in the offshore Bonaparte basin under Australia’s VIEW VIEW 2018 Offshore Petroleum Exploration Acreage Release. Australia The AC/P66 block on the North West Shelf covers an area of 3,460 sq km (1,336 sq mi), in water depths of 60-500 m (187-1,640 ft). It is close to various developed oil fields including Laminaria, in an area thought to be prospective for further discoveries. INPEX will hold a 100% interest in the block. News July 2019 Issue No. 85 monthly News Algeria to Seek Foreign Loans for Power Projects UK, Denmark Building Subsea Power Cable Algeria’s state power Italy’s Prysmian, Germany’s utility Sonelgaz will seek Siemens and Sweden’s NKT have secured contracts worth development plan, its chief a total 1.1 billion euros ($1.2 executiveforeign loans said, to becoming finance its the billion) to build the world’s longest subsea power cable, African country to look for the Viking Link between fundsfirst company abroad in in decades. the North Britain and Denmark. OPEC member Algeria relies Britain’s National Grid and heavily on oil and gas, which Denmark’s Energinet awarded account for 94% of total the contract for the project’s exports and 60% of the state 1.4 gigawatt (GW) parallel budget. high voltage current cables to The government has been Prysmian and NKT HV Cables trying to cut spending to cope AB, while Siemens will supply two converter stations. since crude oil prices fell The link between the two sharplywith budget in mid-2014. and trade deficits nations will help them Subsidised electricity prices diversify supplies and integrate are very low in Algeria renewable power sources, compared with neighboring 1 National Grid said. The link countries, and Energy Minister demanding the removal of the becomes a necessity. will offer producers, such as billion euros. Scotland. 2 Mohamed Arkab earlier this ruling elite. We need funding for those adding wind capacity, The bulk of the work, worth National Grid operates week said there was no plan to “External debt is an option, our development plans”. more opportunities to sell 700 million euros, was won by the Western Link submarine raise prices. which is being examined He said the plans were aimed surplus power. Milan-based Prysmian, which connection, which has Algeria subsidises almost at meeting consumption levels “Viking Link will play a vital will build Viking’s 1,250 km suffered repeated technical everything, from basic comfortable and least in the future amid increasing role in helping to decarbonise (780 mile) submarine section problems since operations foodstuffs to fuel and medicine, restrictivein order to conditions,”find the most domestic demand in the the UK’s power supply,” and the 135 km (85 mile) began in December 2017. As with the aim of avoiding Sonelgaz CEO Chahar country of 43 million people. said Jon Butterworth, chief section on British soil, a sign a result, Prysmian restated social unrest in the country Boulakhras told a news The money sought by Sonelgaz it has recovered from glitches core earnings for 2018 which has been shaken by conference. will go mainly to renewable Grid Ventures, putting the total that plagued its Western Link after booking additional protests since early this year “Foreign indebtedness projects. valueoperating of the officer contracts for National at 1.1 project between England and writedowns.

NEWS NEWS NEWS NEWS Kuwait, Saudi May TechnipFMC Awarded Abu Dhabi, , China Sign Petrobras to Privatize Resume Neutral Zone Oil $7.6bn Contract for $12bn Deal Brazil’s Top Gas Seller The Abu Dhabi National Oil Company (ADNOC) Brazil’s state-run oil company Petroleo Brasileiro Production Arctic LNG-2 has signed a partnership framework deal worth SA is set to relinquish control of the country’s OPEC members Saudi Arabia and Kuwait have up to $12 billion with China’s Wanhua Chemical biggest fuel distributor in a share offering, discussed resuming oil production in jointly awarded a major engineering, procurement Group for collaboration in the downstream pushing ahead with a privatization drive under andOil servicesconstruction firm TechnipFMCcontract by Russia’s said it had Novatek been sector, ADNOC said. Downstream operations new Chief Executive Roberto Castello Branco. Zone, Kuwaiti state news agency KUNA said. Petrobras, as the company is widely known, will operatedSaudi Arabia’s fields ministerin the Saudi–Kuwaiti of state for energy Neutral natural gas project in western Siberia.It said shipping. The agreement was signed during effectively privatize its listed subsidiary Petrobras affairs visited Kuwait to “continue to discuss theand consolidated its partners for contract the Arctic value 2 toliquefied TechnipFMC ain three-day the oil industry state visit include to China refining, by Abu sales Dhabi and Distribuidora SA in the secondary share offering and cooperate on the resumption of oil for Arctic LNG-2 was $7.6 billion and consists Crown Prince Sheikh Mohammed bin Zayed. set to price after markets close. The parent production in the southern [Neutral Zone] of three LNG trains, each with a capacity of 6.6 ADNOC and Wanhua Chemical also signed company plans to auction off 25% of Petrobras after settling all required technical issues from million tons per annum (Mtpa).The Arctic LNG a shipping joint venture agreement building Distribuidora shares. That percentage could both sides,” KUNA said, quoting a Kuwaiti 2 project aims to develop more than 7 billion on a 10-year LPG supply contract signed in increase to 33.75% via overallotment provisions. government spokesman. The Saudi–Kuwaiti barrels of oil equivalent (boe) of resources. November 2018, according to the statement. Supplementary and additional allotments will Neutral Zone, or Divided Zone, is an area Novatek holds a 60% stake in the “The potential total value of the be allocated by Aug. 28, according to the of 5,770 square km between the two project, while French oil and gas major collaboration between ADNOC and prospectus. As Petrobras now holds 71.25% Total, China’s CNPC, CNOOC, and Japan Wanhua is estimated to be up to $12 5 of the fuel distributor’s shares, the unit will when the border was established in 1922. 3 Arctic LNG consortium each hold 10%. 4 billion,” the statement said. cease to be a state-run company. 6 countries’ borders that was left undefined 44 45 News July 2019 Issue No. 85 monthly News India Reliance Stake Sale Talks with Aramco Stall IEA Ready to Act Quickly to Keep Oil Market Supplied

India’s Reliance Industries The International Energy talks to grant a minority Agency (IEA) is closely monitoring developments in to Saudi Aramco have hit a the Strait of Hormuz and ready roadblockstake in its over refining the valuationassets to take swift action if needed and structure of the deal, two to keep the global oil market people familiar with the matter supplied, it said. said. State-owned Aramco, the The Paris-based agency said world’s biggest oil producer, the right of free energy transit plans to boost investment in through the strait was critical to the global economy and to secure new markets for must be maintained. itsrefining crude and and petrochemicals sees growth in The Strait of Hormuz is a chemicals as central to its vital maritime transit route downstream strategy to reduce for world energy trade. About risk as oil demand slows. 20 million barrels of oil, or Reliance had held talks on about 20% of global supply, are offering Aramco at least transported through the strait 20% in a special purpose each day, the IEA said. “The IEA is ready to act 8 petrochemicals and marketing, 7 quickly and decisively in andvehicle with covering a focus refining,on expansion. Ambani, operates the world’s outstanding debt the event of a disruption to “Consumers can be reassured stocks. In addition, 650 million “Talks have stalled as Reliance of 2,882.43 billion rupees ensure that global markets that the oil market is currently barrels are held by industry is asking for a higher valuation capacity to process 1.4 million ($41.8 billion) compared with remain adequately supplied,” well supplied, with oil under government obligations and wants to transfer debt of barrelsbiggest perrefining day (bpd)complex of oil with at 2,875.05 billion rupees as it said, adding that executive production exceeding demand and can be released as needed, the holding company to the Jamnagar in western India. of March 31, while cash and director Fatih Birol has been it said. new SPV (special purpose It plans to expand capacity cash equivalents as of June in talks with IEA member pushing up global stocks by The stocks are enough to vehicle),” said one of the to 2 million bpd by 2030, 30 were at 1,317.10 billion and associate governments 900,000in the first barrels half of per 2019, day,” the cover any supply disruptions sources. according to plans shared with rupees versus 1,330.27 billion as well as other nations that IEA said in a statement. from the strait for an extended Reliance, controlled by the Indian government. rupees as of March 31, the are major oil consumers or IEA countries hold 1.55 billion period, it added without saying Asia’s richest man, Mukesh As of June 30, Reliance had company said. producers. barrels of public emergency oil how long that might be.

NEWS NEWS US Split on Renewing Chevron’s Venezuela License Market Braces for Mexico Annual Oil Hedge The Trump administration is imposed sanctions on Venezuela’s Kudlow also favors renewing the Trading in crude oil options factor. Traders and brokers for 2020 contracts has risen split over whether to renew a state oil company PDVSA in license, the sources said. John and futures surged last steadily over the past week, license this week for energy January as part of an effort Bolton, Trump’s national security week as market participants told Reuters that activity in dealers said. Prices for 2020 company Chevron Corp’s adviser, opposes renewal as part prepared for Mexico’s annual crudewho monitor oil options money and flows futures options started to surge after operations in Venezuela, with President Nicolas Maduro and of keeping maximum pressure oil hedging program, in which suggests that Wall Street has Secretary of State Mike Pompeo pressureto slash cash him flow to step to socialistdown. on Maduro, the sources said. the country buys as much as $1 started to position itself for told Reuters that Mexico supporting a renewal and others Venezuela’s economy is on If Chevron is forced to leave, it billion in contracts to protect the trade, attempting to secure a top Finance Ministry official opposing it, three sources with the brink of collapse. Pompeo, its oil revenues. The global protection against further formula used as a basis for the knowledge of the matter said. At who was once the president of to Maduro’s government, as oil oil derivatives market braces price volatility. It was not clear program,had finished market calibrating sources the said. issue is a six-month U.S. Treasury productioncould further could crimp dip. cash “Those flow itself every year in late spring whether Mexico has started “Within minutes of that Department license that expires International, understands that in the administration who have and summer for the hedge, executing the hedge. The announcement, we saw a big on July 27 that has allowed havingoilfield anservices American company beachhead Sentry looked at the enormous task of the market’s largest and most Mexican Finance Ministry did pop in implied volatility,” one Chevron to keep operating its in Venezuela would help bringing Venezuela back from the not immediately respond to a source at a bank said. “It rallied four joint ventures speed an economic recovery abyss realize that the revival of year, Mexico has faced Reuters request for comment. in the December 2019-June in Venezuela despite if Maduro’s government falls, the oil industry, the main source secretiveseveral financial challenges oil deal. This Traders have also had to react 2020 range, which is typically U.S. sanctions on the said the sources, who spoke on in executing the to weakening sentiment in oil where the hedges lie. That 9 OPEC nation’s oil condition of anonymity. White multiyear process,” one of the 10 hedge and timing markets. Implied volatility, volatility has been well-bid the sector. Washington House economic adviser Larry sourcesof foreign said earnings, of Pompeo’s is a difficult view. has become a crucial a gauge of options demand, entire week,” the source added. 46 47 Market July 2019 Issue No. 85 monthly Market

sour crude being delivered into China. The forecast for continued non-OPEC oil supply side, it is expected to see a sizeable uptick of September Brent/Dubai EFS – the exchange growth, particularly led by soaring US crude oil 975,000 b/d y-o-y for the H2-2019. This comes of futures for swaps spread that tracks Brent’s production which mainly comes from its shale on the back of large-scale capacity additions and Global Oil premium over Dubai – narrowed to $2.51 which basins. This will be the fourth time that the relatively low product supply on the back of run makes it economical to arbitrage the Atlantic producers’ alliance has extended production Basin barrels( Brent based crudes) to the Asian cuts to rebalance oversupplied markets since led to forward demand cover in products falling market (West Africa, North sea,…) as EFS the joint deceleration of co-operation was belowshortfalls the and5 year refinery average. outages over H1, which and Asian narrows. In fact, oil demand declined due to the trade The International Energy Agency (IEA) forecast OECD commercial stock levels reached a record war between the United States and China while surging US oil output will outpace sluggish highagreed overhang in late 2016. of over The 400mn five-year bl in average July 2016. for In market faces rising US shale oil production. global demand and lead to a large inventory May 2019, the overhang in OECD commercial According to market sources, Mideast Gulf Product build-up around the world in the next nine oil stocks has been reduced to 25mn bl. OPEC months. Goldman Sachs recently revised down forecasts global oil demand growth at 1.14mn by 1.46 mb/d to 16.7mb/d followed by US its forecast of growth in oil demand for 2019 to b/d this year, against a non-OPEC supply sanctionsliftings during and alsothe firstOPEC half cut of strategy. this year In fell the Market, 1.275 million bpd, citing disappointing global increase of 2.14mn b/d. Based on Goldman meantime, the IEA is revising its 2019 global oil economic activity. Sachs, growth in US shale production is likely to demand growth forecast to 1.1 mb/d and may The Organization of the Petroleum Exporting outpace that of global demand at least through cut it in case of further weakness. 2020 and limit gains in oil prices despite July in a monthly report, stating the world would output curbs led by the OPEC. However, the EIA The Brent forward price needCountries 29.27 (OPEC) mb/d ofgave crude its firstfrom 2020 its 14 forecasts members raised its outlook for U.S. crude oil production, marketAsian refining structure margins for fuel jumped oil, but recently to the contrary for structure remained in next year, down 1.34 mb/d from this year. The projecting an all-time high of 12.36 mb/d in itsimple was not and very medium good refineriesfor complex as setupsa result as of tight backwardation in June 2019, forecast points to the return of a surplus despite 2019, versus its forecast last month of 12.32 the cost of the heavy crude basket utilized by as prompt prices remained higher than an OPEC-led deal to restrain supplies, and was mb/d. seen as a drag on prices. The OPEC+ cuts are set to effectively shorten light crude basket did. Looking ahead, a return forwards, underpinned by concerns crude and condensate supply by 550,000 b/d on tothese seasonally refineries average increased maintenance much more levels than and the about oil supply disruptions. Lower oil agreement to extend their production cuts average over H2-2019 vs. H2-2018. At the same supply and loading crude programmes forOPEC another / non-OPEC nine months partners until ratified the end an of the time, on the crude demand lower once the cushioning effect of earlier in Northwest Europe, due to outages in new refining capacity should drive margins North Sea oilfields also supported prompt Joint Ministerial Monitoring Committee environment suggests that risks to crude (JMMC)first quarter held ofon 2020 1-2 of followed July 2019, by theas the group’s OPEC demandmaintenance are skewed is removed. to the The downside refining for margin the prices. members overcame their differences in order coming months rather than the upside. Latest developments of global crude oil prices to prop up the price of crude amid a weakening Naphtha crack’s values against regional crude during the month of July 2019, was mainly on global economy along with the signs benchmarks declined in northwest Europe, the back of OPEC cut extension, geopolitical of deceleration in global oil Singapore and the US Gulf coast. Northwest risks/international tensions, fears about weaker demand growth and Europe naphtha’s weakness is as a result of global demand as a result of a US-China trade a robust weak demand from petrochemical producers spat, rising US crude oil production, more amid a combination of planned cracker than expected decline of US crude inventories, shutdowns and competition from alternative halting more than 73% of Gulf of Mexico’s output (more than 1.38 mbd) as a result of decreased runs because of recent weak light tropical storm in this region(14th of July, 2019) , feedstocks. Also some Asian refiners have lower expectation on call on OPEC crude during meet some of their demands with rival Russian the year of 2020 (based on OPEC) , concerns Uralsdistillate crude margins, which whileis returning European to normal refiners quality can over a global crude surplus (IEA forecast) and supplies through the Druzhba pipeline. In the consecutive weekly declines of US rig counts meantime the slower demand outlook has made according to Baker Hughes reports along with other Mideast Gulf producers cut their August mixed china’s economic data (slowing Q2 GDP growth). Gasoline crack increased slightly in Benchmark Dubai crude futures’ discount to pricescomparison to Europe with and last Asia-Pacific. month as a result of ICE Brent (EFS) continued to narrow in higher cracks in the Atlantic Basin followed Asia on 19th July 2019, as unexpectedly by destruction of alkylation unit of 330 kb/d higher premiums for Russian grades (particularly ESPO Blend) priced off PESgasoline refinery from which Europe is the to USUS EastAtlantic Coast’s coast complex. Some market players attributed largestincreased refinery to its by highest fire. Also in last export three of years theDubai pickup provided in Dubai a floor derivatives for the sour to a crudeparallel as a result of shutdown of the mentioned rise in premiums of Dubai based Russian 48 refinery. 49 July 2019 Issue No. 85 R&D monthly R&D Modern FOCUS What measures have been taken with regard to the transfer of technology, Technologies, smart reservoirs and upstream sector development? Regarding smart reservoirs and development of Oil Industry upstream sector, it has to be noted that certain measures have been carried out. A smart well pilot has been designed and developed. In cooperation Development with the Iran Central Oil Fields Company (ICOFC),

screened for the application of this technology. Pulse Then,some oilin collaborationfields located within central the Arvandan Iran were Oil and Foad Nabavi Gas Production Company, a new MDP plan was he Reservoir Management and Field presented with intelligent attitude for the Jofair Development Division of the Research TInstitute of Petroleum Industry (RIPI) is a the recovery rate was calculated in collaboration withfield. theIn the Iranian Tousan Offshore field studies, Oil Company a 3% increase (IOOC). in to bring about new changes in the upstream We hope to be able to make the intelligent well petroleumdynamic specialized industry based and scientific on modern center technologies seeking operational under the aegis of future support.

reservoir management which involves decision- Studying makingand latest for scientific the administration achievements. of oil The and process gas of reservoirs, Another enhanced significant is about formulating strategies and policies. It is inreservoirs compliance comprises with the four 20-Year steps. Vision The first Plan step and recovery achievement is methods, presentation stage is about comprehensive studies on reservoirs improved of master andnational development five-year plans.development This Division plans. isThe the second main advisory arm in reservoir management, as well production and development as formulation of development plans for oil and optimal use National Iranian South Oil Company (NISOC) plan (MDP) of reservoirs as which which are still under way. Putting into practice presentation of master development plan (MDP) and Exploration Directorate of National Iranian supervisiongas fields. The on third production. phase involves Therefore, implementing the main recent activities involve studies in the Homa field, whichto value-added.Another targets the highest significant rate of productivity. achievement MDP is Oil Company. RIPI’s Reservoir s Management well as oil and development plans and the final stage is about targets the mission assigned to the Division would be to in collaboration with the Exploration Directorate would contribute to optimal use of hydrocarbon and Fields Development Division is also open gas fields with a highest rate of conduct studies for the management of reservoirs ofthe NIOC assessment is under of way the and Gordan technical and Sepehr studies fields are reservoirs. Under this method, an MDP is formulated to international cooperation. In case we receive progressing well. Meantime, other activities of this requests for cooperation and studies from view to productivity. the diversity of technical challenges for decision- division include participation in the horizon study into consideration technical and economic issues. neighboring countries, we would be ready for enhancing makingand development in reservoirs of fields. management Given industrial and playing needs, projects for Abadan Plain and gas shales. Expectations,for various fields technical located and in aeconomic specific zone restrictions by taking cooperation and interaction. We are conducting MDP productivity would a more effective role in following up on RIPI objectives and missions, the Division is set to adopt NIOC has, over recent years, focused on outstanding achievements of the Division include achievements and all our colleagues are using have been are considered simultaneously for the fields. Other studies and activities by benefiting from scientific contribute to a new approach within the framework of its current reservoirs studies as well as development mastering design knowhow and enhanced recovery advanced technologies in their expertise. Transfer handled optimal use of status. Touraj Behrouz, director of RIPI’s Reservoirs and assessment. What has this Division done pilot for hydrocarbon reservoirs. It is being done for of knowhow and technology is done by using Management and Field Development Division, has in this regard? specialized videoconferences, participation in by this Division hydrocarbon spoken with Iran Petroleum about the important Studying reservoirs, enhanced recovery methods, international seminars on different sectors, by using reservoirs activities and achievements of this division. improved production and optimal use of reservoirs the firstHow time is cooperation in Iran. with clients and the formation of specialized teams in collaboration mode of activities? with domestic and foreign experts and researchers, the existing What are the most important projects productivity have been handled by this Division by RIPI’s Reservoir s Management and Fields exchange of technical knowhow and the presence capacities in reservoir management and field as well as oil and gas fields with a view to enhancing renowned international specialists. Meanwhile, in development? technical methods are being used at the highest arm of the petroleum industry. It has desirable collaboration with universities, research centers We have a technology value cycle in the petroleum qualitativeusing the existing and quantitative capacities. level Modern possible. scientific I may and communicationsDevelopment Division with variousis the research sectors andof the scientific industry and so far the Reservoir Management and refer to the Integrated Assets Management (IAM) upstream industry and our cooperation with ICOFC companies, we are pushing ahead with some of our Field Development Division have concluded 35 method for oil assets. In such activities, the modeling is on the rise. We are also cooperating with IOOC, and scientific centers as well as knowledge-based comprehensive studies. Fortunately, these studies of wells, reservoirs and installations must be Petroleum Engineering and Development Company have produced satisfactory results. Our most (PEDEC), Pars Oil and Gas Company (POGC), studystudies is andgrowing projects. rapidly. The scientific level of Iranian researchers in reservoirs management and fields’ 50 optimized simultaneously, which would finally lead 51 RIPI July 2019 Issue No. 85 monthly RIPI

pumps and wellhead equipment,” he said. Shahrabadi said at RIPI’s Petroleum Engineering RIPI Involved Division, which is run by himself, the Drilling Research Group had taken some steps to design drilling mud additives. in Ahvaz Field “In light of the high lost circulation in both reservoirs, our colleagues in this group have mastered technical Development savvy for producing additives Four years ago, research agreements were containing lost circulation. Using these materials would in signed with universities and research certain cases cut lost circulation institutes on the technological development up to 80%,” he said. Shahrabadi of oil fields. These projects, which are going ahead on said: “In the Reservoir schedule, were envisaged under the country’s Five-Year Production Group of the Economic Development Plan thanks to Mr. Zangeneh’s Petroleum Engineering Division, a specialized team is working on foresight. preventing asphaltine sediments projects.” Shahrabadi also said said: “One of major problems and wax. During this time, he main philosophy “The project is planned to be there was good interaction under pertains to sediments which are they have made good forecasts behind these projects was the agreements had been signed accomplished in two and a way with National Iranian South in the well column. They need to about sediments in the Ahvaz Tto transfer and develop forthese ten fields.” years Shahrabadiso that these said half years.” He said this phase Oil Company (NISOC). be examined.” technology for the upstream universities and research centers would be over in September, “We have already carried out Shahrabadi said lost circulation given the advanced systems for sector, work on enhanced oil would get familiar with the while at the same time plans projects at NISOC’s request and in was a major challenge in this labfield’s studies reservoir. on water Furthermore, and gas- recovery (EOR) and improved for the second phase, which this project our communications reservoir, which has imposed based EOR methods, it would oil recovery (IOR) methods and mainly involves updates, were have got better and closer,” he huge costs. In addition to be possible to conduct such also clear the way for the growth technologicalchallenges related solutions to the to fields address up being submitted to the steering said. He added that a specialized tests.” Regarding the recovery of fundamental knowhow for thesefor development challenges. and would find committee of the project for committee comprising NISOC and was problem of formation technologies. The Research “Meantime, there is issue of RIPI representatives had been damagefluid costs, and he low added, permeability there project, the studies would not Institute of Petroleum Industry interaction and communications Regarding the third phase, formed to supervise the project of reservoir rock. He said due berate limited of the tofield, EOR he methods said: “In and this (RIPI) is one of the entities with domestic and foreign Shahrabadifinal approval. said it was about and share experience and provide to the juxtaposition of layers new technologies like fracking involved in the agreements. It is research centers so as to help plans for introducing solutions advice. with low permeability and will be used. This technology tasked with conducting studies set up a research network to reservoir challenges and Regarding the Bangestan layers of high permeability, the has already been used in some and enhance communications conducting lab studies so that reservoir, Shahrabadi said: “This oil trapped in the sand layers far achieved good results through between universities,” he said. precise tests would be done on reservoir is vast and therefore would be depleted while in the successful. It has not been on the Ahvaz oil field. RIPI has so Shahrabadi touched on the the proposed EOR methods. exposed to deep changes in carbonated layers oil remains successfulfields, but itin has the not world been either. always Abbas Shahrabadi, director of the He added: “In phase 4, the properties. These changes trapped. Therefore, extracting However, most production Ahvazits studies Field on Enhanced the Ahvaz Recovery field. simulation model will be toughen our work.” oil is a major challenge in these companies have moved in such project, said development of the sharemassive in AhvazIran’s totalfield, national saying: oil reformed to match phase 3 He said that the rate of recovery layers. Furthermore, since the direction.” Shahrabadi said RIPI upstream sector of a number of production.“The Ahvaz fieldThe reasonhas a big why it in Bangestan was “very low” Asmari reservoir is connected had picked its foreign partner was awarded [to RIPI] is the we will have the pilot plan on the due to the recovery mechanism to a strong water drive, the for the project and cooperation of EOR and IOR, has been background of RIPI studies agenda.”results. And finally in phase 5, water challenge is seen. It had been going on well. He assignedfields, including to nine implementationuniversities on the Asmari reservoir in Shahrabadi said: “At the He added the reservoir rock’s brings about corrosion, reduces added: “The foreign partner in and research centers in line with partnership with Statoil in beginning of signature of the permeabilityof rock and fluid was expansion. very low and the well production potential this project would help RIPI Iran’s economic resilience plans. previous years.” agreement, an IRR 40 billion due to the varying features, it and damages the environment. in four sections. Two sections He told “Iran Petroleum”: He added: “This agreement has budget was earmarked. It would not be possible to apply Furthermore, it increases have been already done. We “The agreement for enhanced was decided that each phase a single EOR method for the production costs. are pursuing two objectives recovery from the Asmari and phases. Phase 1 pertains to be submitted to the steering whole reservoir. Shahrabadi “In addition to lost circulation in in this cooperation. First, we Bangestan reservoirs of the Ahvaz been designed in five distinct committee for approval.” said due to the diversity of rock this reservoir, we are faced with want them to get involved in the challenges and problems, as well He said: “More than 20 persons the sand production problem. screening of EOR methods and general objective behind these asknowledge screening of EOR the fieldmethods.” and its are directly and indirectly active introduce new technologies. Our agreementsfield was signed was witha knowledge- RIPI. The in this project at various levels. eachand fluid, zone eight EOR methodsseparate zoneshad second objective is to use the based and technological view phase of the project was of beenhad been screened. identified Referring while toat andThis it field has hascaused been major faced problems, with this homegrown software developed of problems and challenges of Shahrabadi said the first students are working on these challenges of this reservoir, he leadingproblem to since the corrosion the very first of pipes, year, by this company.” Moreover, five PhD and Master’s 52 high significance, adding: 53 July 2019 Issue No. 85 Sports monthly Sports

Do you see any difference between Iranian and Croatian fans?

everything is totally good or totally bad. But the fact is that we have to walk betweenA very difficult the lines. question! Fans in both nations love football. In Iran’s football,

Abadan’s soccer and Naft Abadan enjoy think of him? great themselves with the coach’s ideas. Dragan Skočić: Branco had a great performance in Persepolis. potential. You Are you happy with Naft Abadan? Paulo have to display winning the championship title for three I feel very happy when I work with this team. My how to work consecutiveYou may finish times champion indicates once comprehensive a year, but footballers have sought to implement my objectives Sérgio with Iran, and good planning. Of course, Persepolis has on the ground. However, I expect it to be much it. There is advantages like recruiting players much easier better. I would like to hire more foreign players in enough talent and attracting so many fans. That is why you will order to work better. I love myself and I do tough Croatia achieve the desired result. jobs. I am also motivated to do great jobs. I think that here, but you our cultures should It may be premature to ask this Dragan Skočić is a Begovic, Bonacic and Francis have are very close train them to achieved brilliant results in Iran. Will you do as question. What results do you think Skočić be on the right Enjoy Croatian head coach with long will bring for Naft Abadan by the end of the to each other. good as them? path years of experience in Iran’s football. season? Furthermore, In the new season of Iran’s Premier faith in myself. My team still needs more players, while league Iranians Cultural League, he is leading the Naft Abadan Why not! I can win championship because I put matches are yet to begin. I have to get more are very team. In an interview with Iran Petroleum, Croat coaches communicate very easily information about other teams. However, Naft hospitable and with Iranians and become friends. Why? Abadan has great potential and I hope I would be he highlights cultural affinities between Iran that is why we I think that our cultures are very close to each able to meet their expectations. come friendly Affinities and Croatia, saying he adores football. other. Furthermore, Iranians are very hospitable Arash Jafari very soon. Here is the full text of the interview: and that is why we come friendly very soon. This Do you favor offensive football or do is not just my own words; everyone else coming you prefer prudent football like many Croat back from Iran shares the same view. coaches? You’re back to Iran. How come you accepted it. One reason for choosing Naft Abadan was the lovely spectators of this team. I cannot say that we are prudent. We play based on made this decision? I think that exporting football coaches is what we have. If I want to explain further, I should I have to say that Croatian coaches have had How do you see the Naft Abadan a lucrative business in your country. say that for instance you are in the boxing ring, good communications with Iran’s football. football potential now? If you look at the population of Croatia and you do not defend all the time. You also attack. Meantime, Iranians are very hospitable. That Abadan’s soccer and Naft Abadan enjoy great compare football and people, you will see Therefore, I both strike and defend. Of course, is why I chose Iran once more and I decided to potential. You have to display how to work with that everything is excellent and we can export if you compare football with chess I would return and lead the Naft Abadan team. it. There is enough talent here, but you should point that you should have offensive tools, Compared with the first time that you train them to be on the right path. I think that qualifiedYour coaches.president is a football fan and I whichbe making are players. the first You move. are I requiredhave to add to have this came to Iran, how much has Iran’s football with Abadan’s youth, Naft Abadan will await observed this during the last World Cup creative, intelligent and offensive players. changed? good days. However, it depends on good training. final. What do you think of that? Otherwise, you have to play with what you have Football has neither progressed nor gone in Iran. To what extent have Croatian head Politics would like to remain shoulder-to-shoulder at your disposal. When I was in Malavan, we Your football has remained quite unchanged and coaches been instrumental in Iran’s with football. Football can help people remain in scored more goals than Esteqlal and Persepolis that is not good. In my view, you had to make football progress? their political posts. There are many self-reliant and when I was with Foolad, the number Croatian head coaches have been very active. clubs without having to do with political issues. of goals scored against us was the lowest. potential to prepare the ground for progress Therefore, politicians would have to come towards Therefore, my team can play both defensively throughprogress investing given your in facilities.youth. But You that have has sufficient not behavior of a player and that makes everything football in a bid to preserve their posts. and offensively. been the case. However, I have to note that your Sometimes it is very difficult to change the What is your favorite Iranian food? Croatian coaches are trying their best to do this What do you think of Iranian is why they refuse to engage youth and veterans. toughmore difficultjob. Sometimes, for you. Inour fact, problem I think stems that from I have to say that I love everything, but nothing spectators? Wecoaches can make mainly necessary look at the changes. final result That andis a chancethat cultural issues in the society. New methods Wherever in Iran I worked I saw very good for Iran’s football. emerge, and players need to adapt by learning rice and kebab. spectators. They desperately love football. That beats Iranian kebab. I specifically love Iranian is a very good feeling to enjoy such support. Why did you choose Naft Abadan? new things. Croatian coaches have updated What do you think of Iran’s new coach Even under tough conditions when you are under I was offered the head coach job for Naft Abadan modern football for Iran. Wilmots? pressure fans will motivate you. This is what and I accepted. Of course, when I was not working His background is very good. It can lead Iran’s Branco Ivancovic, also a Croat, had I think about the fans of Naft Abadan and due to my little child I received the proposal and I national team. I think that the only major brilliant performance in Iran. What do you spectators of matches. problem is that the footballers can adapt 54 55 Tourism July 2019 Issue No. 85 monthly Tourism

Soltanieh Dome

Soltanieh Dome is located in the city of Soltanieh in Zanjan Province. It is a masterpiece dating from the Ilkhanid dynasty. The dome was built between 704 and 712 AH at the order Zanjan, of Mongol king Öljaitü, also known as Sultan Muhammad Khodabandeh. Soltanieh comes third behind Santa Maria of Italy and Sainte-Sophie of Turkey in terms of height. It is also Historical City with known as the largest brick dome in Iran. Popular Handicraft anjan covers areas in central and northwestern Iran. It is a historical city located in a mountainous area with mild weather Zconditions. In addition to a beautiful nature which should not be missed during a trip to Zanjan, historical places, handicraft and the Zanjan market are among wonders. Some of these tourist attractions are as follows:

Photo:Hamidreza Shakeri Rad

56 57 Tourism July 2019 Issue No. 85 monthly Tourism

Old Bazaar

Zanjan’s bazaar is the longest roofed bazaar in Iran. Its construction lasted from 1205 to 1213 AH, covering the reign of Agha Muhammad Khan Qajar to Fath Ali Shah Qajar. Caravanserais, bathrooms and mosques have been built around this bazaar. During the reign of Muhammad Ali Shah Qajar, it turned into a big complex. Hassan Hosseini Hassan Photo: 58 59 Tourism July 2019 Issue No. 85 monthly Tourism

Jame’ Mosque

Zanjan’s Jam’e Mosque, known as Seyed Mosque, was built in 1863 when a son of Fath Ali Shah Qajar, known as Abdullah Mirza Dara Qajar ruled in Iran. The mosque was built to become a place for teaching, prayers and meetings with Abdullah Mirza who was a senior cleric. Built in the heart of the older pat of the city, it is accessible.

60 61 news July 2019 Issue No. 85 monthly Tourism

Zanjan, IOPTC Northwest Branch he northwestern area of the pipeline in Zanjan is the of crude oil and petroleum the Iranian Oil Pipelines longest in Iran. It carries products. T& Telecommunication fuel through 2,000 km of Telecommunications stations Co. (IOPTC) is located in pipe to the provinces of are also located in Eshtehard, Zanjan. IOPTC is a subsidiary Alborz, Qazvin, Zanjan, East Qazvin, Abhar, Saein Qale, Azarbaijan, West Azarbaijan Zajan Kuh, Microwave Zanjan, and Distribution Company and Ardebil. Idelou, Mianeh Kuh and Qare (NIORDC).of National Iranian Oil Refining Throughout this 2,000-km Chaman. These stations ensure IOPTC uses more than 14,000 route starting from Mahdasht the safe delivery of crude oil kilometers of pipeline, as in Alborz Province, pumping and petroleum products. well as facilities like pumping stations are located in Transmitting and delivery stations to receive crude oil Eshtehard, Abhar, Idelou, of the required feed of Tabriz and petroleum products for Qareh Chaman and Miandoab delivery to power plants, for pumping crude oil and petrochemical plant, as well petroleum products. asoil supplyingrefinery and oil theproducts Tabriz spots. Zanjan, Mianeh, Tabriz, and jet fuel to the provinces refineriesIOPTC has and 12 othersubsidiaries consumer Maragheh, Miandoab, Urmia, of Zanjan, East Azarbaijan, charged with fuel supply to Sarab and Ardebil are among West Azarbaijan and Ardebil western Iran. facilities located throughout are among missions of IOPTC The northwestern part of the same route for the delivery northwest branch in Zanjan. 62 63 Zanjan Soltanieh Dome