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Iran Petroleum Issue No. 67 January 2018

Iran’s minister of petroleum: Iran to Raise Output If OPEC Ceiling Scrapped Offshore Platform Installed South Pars Output Up 14 mcm/d Top story Iran Petroleum

Interaction for Energy Security and Stability Kasra Nouri Director General of Public Relations ran’s landmark 2015 nuclear deal and interaction, the Iran’s Petroleum with six world powers, dubbed the Ministry has shown that compliance with IJoint Comprehensive Plan of Action agreements, and cooperation based on monthly (JCPOA), was one of the most significant mutual interests would be the only solution international agreements in recent to maintaining stability and balance. years, which positively impacted Iran’s International desire for partnership in politics and economy. The most important Iran’s major oil, gas and petrochemical achievement of this agreement was the projects is indicative of Iran’s successful proof of the fact that negotiations and oil diplomacy; a path whose continuation dialogue were the best solution for settling would be important alike for both any discrepancies. Besides extensive producers and consumers of energy political and economic advantages, the carriers. The only dark spot in this bright JCPOA remarkably affected the petroleum future is US imbalanced policies and the industry and oil market. Market stability American government’s non-compliance and balance were just the most visible with international agreements. The US results of the implementation of the politicians have shown that, in recent agreement in January 2016. years, they have not been paying attention Iran’s return to oil market, expansion to economic realities of energy markets of cooperation in the development of and sought in vain to impose their illogical If you have any comments Iranian oil fields, the contribution of major views on the world. The most important proprietors of capital and technology common obligation of both energy regarding the articles in this magazine, in the implementation of policies of producers and consumers is to prevent development of oil, gas and petrochemical uncertainty and undesirable volatility in please feel free to contact us through e-mail. sectors in a country extremely rich in the energy markets. oil and gas and a country of high energy The brightness of future peace and weight opened a new window to stability security in all political and economic Your views are appreciated. and security of energy future. Over the sectors, particularly energy market Petroleum Ministry - Public Relations past one year, despite fabrication of stability, is highly tied to interaction, pretexts by US politicians to hinder the cooperation and empathy. It is a collective JCPOA implementation and stonewalling duty upon everyone to contribute to efforts for international cooperation safeguarding this important achievement. Thank you for reading Iran Petroleum E-mail:[email protected]

Reshadat Oil Platform . Photo:AMIRHOSSEIN HASHEMI JAVID January 2018 1 Ministry of Petroleum 18 Islamic 27 Republic of Iran Europeans Eager to Invest Managing Editor: in Iran Gas Storage Kasra Nouri Director General of Public Relations

Editor in chief: Parastoo Younchi

Executive Editor: Hamid-Reza Shakeri-Rad

Graphic Designer: Saman Goodarzi

Photo Section, PR Office, MOP: 55 Hassan Hosseini

Reporter: Negar Sadeqi Javad Asghari

Translator: Kianoush Amiri

Coordinator: Abbas Lotfi

Tel/Fax: (+98 21) 61626113 www.iranpetroleum.ir [email protected] A Review of Tough JCPOA Zabol, Global Oil Iran Oil Blowout Capping and Asian Revenue Turns 2; COVER Land of Epic Rag Sefid Fire Combat Product Grew in 2017 Advantages Market, Containment; for Iran Oil January a Record 50 30

Photo: Hassan Hosseini 58 12 6 We are regularly increasing our oil foreign companies outnumber 20, some production from the West Karoun fields of which are prioritized. I hope that the and we are currently exercising results would be announced as soon as the self-restraint due to OPEC’s decisions negotiations have concluded

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are negotiating with Indians in this regard,” he investment would be needed to Russia. “We have a normal said. Zangeneh said that in oil and gas contracts, for continuing to boost pressure agreement with Russia, whereby payment of fees must be legally done partly via in the South Pars phases. “This we export oil to this country. I production from the field. “It would not be such that technology would cost more than don’t know how many cargoes the opposite party to contract says ‘I am producing $1 billion for each phase. The they have taken so far, but they the gas but you must decide about it’.” “Production first thing that we need to do is are supposed to import 3 million from a field must be monetized (currency) so that acquiring such technology for barrels per month,” he said. we can pay for the contract fees,” he added. “Our building, designing and making “This process has already begun issue with the Indians is that we say India should calculations of reservoirs in and we are paid in euros for the either consume this gas in Iran or export it,” said coming years,” he said. Zangeneh Highexported Oil cargoes.”Prices Threaten TalksZangeneh. with Firms said he was convinced that Total OPEC was serious in developing SP11. “I hope that Total would fulfil its The minister said negotiations were under way obligations with regard to the Zangeneh said: “As I have with foreign and Iranian firms for the signature Phase 11 agreement. I think that already said OPEC does not of agreements to develop oil and gas fields. in a short period of time it will favor oil prices above $60. The “These companies outnumber 20, some of which assign subcontractors with many more prices go up the more are prioritized. I hope that the results would tasks of the contract.” he added. unconventional oil like shale be announced as soon as the negotiations have oil will increase in the US.”

Mohammad Ghadamali Mohammad concluded.” Asked about new oil contracts and the “And when shale oil production impact of US President Donald Trump’s threats on increases, global oil prices will

Photo: Photo: new oil agreements, Zangeneh said: “Our colleagues fall anew. Therefore, OPEC in the petroleum industry are seriously working will once more lose its market on oil contracts. I have minimized the number of share,” he added. “In order to negotiators in order to guarantee the clearness Negotiations are under way guarantee sustainable and long of the job and I have said that the minutes of all with this company for the term revenues with minimum Iran to Raise Output negotiations have to be drafted.” “The negotiators development of Yadavaran fluctuations, everyone agreed are very serious and qualified teams are following field. We have accepted to on the oil price at $60; however, up on this issue. We have pushed the talks and there negotiate the second phase the oil price has for whatsoever If OPEC Ceiling Scrapped SP11is no disappointment Going Ahead and despair,” he said. of this field with them under reason exceeded $60 a barrel Iran’s minister of petroleum, Bijan Zangeneh, has said the country is able to lift its oil a new framework and shale oil production will production if it faces no OPEC output ceiling. “If the OPEC ceiling is scrapped we will be able naturally go up. That would be to add at least 100,000 b/d to our oil production,” Zangeneh told a press conference on 4 Zangeneh touched on the last year signature of a $5 Talks with Sinopec for a new threat to OPEC because February 2017 in Tehran. billion agreement with a French energy major Total- Yadavaran Development prices will experience heavy led consortium, which also comprises China’s CNPCI fluctuations and sharp decline and Iran’s Petropars, for the development of Phase anew,” said the minister. He 11 of South Pars gas field, saying the “contract is In response to a question ruled out the possibility of OPEC angeneh said that Iran’s possible increase scrapped in June, we will be able when we take into account the being implemented on schedule.” Asked about with China’s Sinopec about deciding to increase its supply in oil production would not cause any to raise our production by at least issue of sweetening within the the Ministry of Petroleum’s plan to fix pressure the development of Yadavaran on market. “I think that in 2018, conflict with OPEC-led deal for production 100,000 b/d in five to six days,” framework of the new model of falloff in South Pars in 2023 and financing for the oil field, Zangeneh said: it will mainly go ahead with its cuts. “The OPEC deal is for six months to one Farzadsaid the minister.Output Costs oil contract,” he added. Zangeneh purchase of necessary equipment, the minister said: “Negotiations are under way current production ceiling. But year and is considered short-term. Issues related said: “The gas of Farzad field is “Every field experiences pressure falloff at a certain with this company for the when prices go up output quotas to increased capacity and production pertain to very sour and does not contain period of time and one of issues in the agreement development of Yadavaran are practically not respected, i.e. long-term policymaking in the country,” Zangeneh Zangeneh said onshore oil too much condensate. Therefore, with Total was for us to acquire such a capability field. We have accepted to the member states will gradually said. Zangeneh said the 14-member Organization production cost much lower recoupment for its development by applying the technology possessed by an negotiate the second phase of produce more than their quota.” of the Petroleum Exporting Countries would have than offshore oil extraction in has to be from gas production.” advanced company,” said Zangeneh. He added that this field with them under a new Asked if Iran had the capacity to toZ meet again in June to decide about extension of Iran. “Costs of production from The minister said there were Total would establish a pressure booster system, Oilframework.” Exports to Russia increase its production levels in its quota cuts deal. “We are regularly increasing our Farzad gas field are higher than a variety of methods for the compressors and 20,000-tonne platforms in the case OPEC decided to enhance oil production from the West Karoun fields and we that of oil fields. That is why the development of Farzad gas field, second stage of development of Phase 11. “This will production, Zangeneh said: “Yes, are currently exercising self-restraint due to OPEC’s costs of development of this field saying the most optimal one had be done in other phases through mastering such The minister also said that Iran we can increase our own oil decisions,” he said. “In case the production ceiling is would increase 12 to 13 cents to be chosen. “Iranian officials technology, too.” he said. Zangeneh said $40 billion had an agreement for oil exports production capacity.” 4 January 2018 January 2018 5 Since the agreement was signed and Chief among the achievements of the implemented, Iran’s oil barrels have found JCPOA are: two-fold growth in Iran’s oil their way into Asian and European markets exports

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extend Iran sanctions waivers. projects in coming months. “Negotiations with foreign Iran has cleared 29 companies companies for their presence in from 12 countries to bid for Iran’s petroleum industry have oil projects in Iran under the picked up speed. Basically, the new model of contracts – Iran JCPOA overtures in the petroleum Petroleum Contract (IPC). They industry have allowed us use all include Shell, Total, Eni, Petronas, our capacities for development, Gazprom, Lukoil and companies production and export and there from China, Japan, Austria and is no specific obstacle in this 1stother Deal countries. with Total way,” he said. Iran’s crude oil and gas condensate exports, which had fallen below 1 mb/d before Total was the first oil giant to the JCPOA was signed, grew to strike an oil deal with Iran. The 2.559 mb/d in the first quarter French energy major sealed a of the current calendar year $5 billion agreement to develop which started on 21 March 2017. Phase 11 of the supergiant South Therefore, despite the views of Pars gas field, which Iran shares some Iranian and foreign critics, with Qatar. Shell also signed a the JCPOA was advantageous heads of agreement in 2016 to for Iran. Iran’s crude oil and develop South Azadegan and gas condensate exports stood Yadavaran oil fields and Kish gas at 2.487 mb/d in the calendar field. The first bidding round for year to March 2012, 1.361 mb/d the development of Azadegan oil in the calendar year to March field, which is the biggest oil field 2013, 1.284 mb/d in the calendar in Iran, is expected to be held this year to March 2014 and 1.389 year. Russia’s Zarubezhneft has mb/d in the calendar year to also agreed to conduct feasibility March 2016. The JCPOA was studies on two oil fields which implemented in January 2016, Iran shares with Iraq. Norway’s into Asian and European markets. Furthermore, showing its positive effects in less Aker has agreed to modernize JCPOA Turns 2; Iranian petroleum ministry officials plan to sign than three months. Chief among Iran’s petroleum industry while nearly $130 billion worth of new contracts to the achievements of the JCPOA OMV of Austria inked a protocol raise the country’s crude oil production capacity are: two-fold growth in Iran’s oil last May for projects in western Advantages for Iran Oil to more than 4.7 mb/d under the country’s 6th exports, increased hard currency and southern Iran. South Korea’s Five-Year Economic Development Plan. To that end, revenues for the country, engineering company Daewoo With the implementation of Iran’s nuclear agreement with world powers in January memorandums of understanding have thus far been facility in attracting financial has signed a memorandum of 2016, sanctions were lifted on Iran’s oil, gas and petrochemical industry and Iran made signed with international giants like Royal Dutch resources, the start of renovation understanding to build an oil a strong return to global oil market. That was the main achievement of the nuclear Shell, France’s Total, Russia’s Gazprom Neft, Lukoil, of refineries, foreign investors’ refinery in Jask Port in southern accord, dubbed the Joint Comprehensive Plan of Action (JCPOA), for Iran’s economy. Tatneft and Zarubezhneft, Malaysia’s Petronas, readiness to invest $80 billion Iran. Italy’s Saipem signed an Indonesia’s Pertamina, Thailand’s national oil in Iran and the elimination of MOU for cooperation in pipeline company, Germany’s Wintershall, Austria’s OMV, intermediaries. The JCPOA caused projects, upgrading refineries and Japan’s Inpex, Norway’s DNV plus other European rivalry among foreign companies development of Tous gas field in n order to know how the JCOPA been average when the country was was selling 2.3 mb/d of oil before and Asian companies. Over the past two years, Iran bidding for Iran’s projects. In this Khorasan Razavi Province. instrumental in Iran’s economy, it would be under sanctions from 2012 to tough sanctions were imposed. has managed to lift its oil exports by more than way Iran could select the most After Total, Norway’s DNO was enough to review the economic growth data 2015. Some experts believe that After European governments 850,000 b/d, the biggest increase among fellow qualified companies at minimum the second Western energy for the Iranian calendar year to March 2017. In had no agreement been reached tightened sanctions on Iran’s oil OPEC member states. Iran’s deputy minister of costs and give maximum share company to announce its that calendar year, the JCPOA implementation between Iran and the world sector, the exports fell to 1 mb/d. petroleum for international affairs and commerce, possible in joint ventures to their readiness to study development helped remove oil restrictions and Iran’s economy powers the sanctions would have Since the agreement was signed Amir-Hossein Zamani-Nia, has said the JCPOA’s Iranian partners. Therefore, Iran of Changuleh oil field in grew 12.5% thanks to increased oil production reduced Iran’s oil exports to nil. and implemented, Iran’s oil intrinsic strength and equal interests were plans to put out to tender major western Iran. Lukoil of Russia and export. Iran’s economy had shrunk 1.8% on According to official data, Iran barrels have found their way behind US President Donald Trump’s decision to upstream and downstream hopes to make a decision for I6 January 2018 January 2018 7 South Korea’s engineering company Daewoo Lukoil, Zarubezhneft, Tatneft and Gazprom Neft has signed a memorandum of understanding have agreed to study respectively Ab Teymour to build an oil refinery in Jask Port in & Mansouri, Abadan & PaydarGharb, Dehloran & southern Iran Shadegan, and Cheshmeh-Khosh &Changuleh

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the development of a second oil field in Iran. It would make sense if we oil projects including refining Wintershall’s subsidiary BASF signed an MOU with describe the JCPOA as fresh blood facilities is indicative of the the National Iranian Oil Company (NIOC) in April in the vessels of Iran’s petroleum standing of Iran’s petroleum 2016. BASF said last February that it was in talks industry. During the years of industry on the planet. The with Iran for investment in oil and gas projects sanctions, non-implementation National Iranian Oil Refining and 33before Post-JCPOA deciding to Oil finalize MOUs its presence in Iran. of many projects had halted this Distribution Company (NIORDC), industry, but it has been revived one of the four main subsidiaries thanks to the JCPOA. Add to this of Iran’s Ministry of Petroleum, After the removal of sanctions under the JCPOA, the the Iranian creativity achieved is targeting materialization NIOC embarked on negotiations with Iranian and during years of international of negotiations on refining foreign companies for the development of oil and sanctions. Iran’s bargaining chip agreements. The signature of gas fields. The state-run company managed to seal in talks with foreign companies MOU with South Korea’s Hyundai 33 oil MOUs by June 2017. The most remarkable and its possibility to choose to study a project for reducing agreement was the one signed with a Total-led investors are new conditions fuel oil production at Tehran’s oil consortium which includes China’s CNPCI and Iran’s faced by leading international refinery, MOU with Brazil’s STR, Petropars. Many experts viewed the Total-NIOC companies. Top refining Spain’s Magtel, Ghana’s Quantum deal as a starting point for a renewed presence of companies have rushed to win a Limited and Sierra Leone’s oil foreign companies in Iran’s petroleum industry. toehold in Iran’s oil sector. The company during the February Now after the signature of deal with Total, CNPCI show of inclination by European, 2014-2016 period for building and Petropars for Phase 11 of South Pars, the top American and Asian companies refineries in those countries priority project is the development of Azadegan oil for renewed relations with Iran are among the achievements of field. For that purpose, negotiations have started and presence in the country’s these years. Six months after the with Rosneft of Russia, CNPC and Sinopec of China, Zoom Eni of Italy, Maersk of Denmark, OMV of Austria, JCPOA Advantages ONGC of India, Pertamina of Indonesia, Petronas of Malaysia, Shell, Wintershall, Total and a Thai firm. The Russian firm has demanded big gas field whose development to study Balal, and with OMV to study Dalpari. The planned bidding round for Azadegan will more time from Iran to submit will be done in several phases. Lukoil and Pertamina have submitted their findings The minimum advantage take time. Within six months, it will come out the findings of its studies, and Changuleh, a jointly owned field, about development of the Bangestan reservoir of the JCPOA for Iran was which company would lead the development of Iran has agreed with that. Last is very similar to Azar field. So of Mansouri oil field. The NIOC and Singapore’s that the country managed Azadegan. An MOU has also been signed between September, Zarubezhneft’s far, three MOUs have been signed Berlanga also signed an MOU and a non-disclosure to regain its position in the NIOC and Shell to study Yadavaran. After representatives outlined between the NIOC, Gazprom Neft, agreement to study, evaluate and develop the global oil markets, which Azadegan, Yadavaran will be the second field to solutions for enhancing recovery Thailand’s PTTEP and Norway’s Dalpari oil field. Furthermore, an MOU was signed in turn help the country be put out to tender for development under the from the Aban and PaydarGharb DNO on studying Changuleh. between the NIOC and Norway’s ORG to study the grow its economy and IPC model. Last July, the NIOC also signed an MOU oil fields in Tehran. The Darquain OMV has also signed an MOU Sardar-e Jangal oil field as well as three exploration overcome economic with Petropars and Japan’s Toyo for the renovation field, which has so far been with the NIOC to study the Band blocks in the Caspian Sea. MOUs were close to challenges. Of course of installations at Salman field and increased gas developed in two phases, is set to Karkheh field, and has presented being signed with Maersk for the development many opportunities for production from it. Among foreign countries, Russia start its third phase development the findings of its studies. The of the South Pars oil layer and Farzad-B gas field; enhancing international transactions have been lost; however, has signed the highest number of MOUs with Iran. under the IPC model. To that PTTEP representatives have however, Total’s acquisition of Maersk at a time Iran has got minimum advantages. Therefore, as long as it is Lukoil, Zarubezhneft, Tatneft and Gazprom Neft end, MOUs have been signed outlined the conclusion of the Total is present in the Qatari section of South Pars possible to use it we have to resist political games like the US have agreed to study respectively Ab Teymour between the NIOC and Eni and Thai company’s studies on Balal, and financial disputes between Iran and India over hostile policies. Thanks to the JCPOA, Iran managed to at least & Mansouri, Abadan & PaydarGharb, Dehloran between the Philippines’ national Changuleh and Dalpari fields Farzad-B delayed the signing of MOUs. An MOU increase its oil revenue by 90% from the post-JCPOA period. & Shadegan, and Cheshmeh-Khosh &Changuleh. oil company and Iran’s Ghadir in a meeting with the NIOC for the renovation of installations and increased However, it does not mean that Iran should not seek foreign More MOUs are expected to be finalized before Investment Company. officials. The Thai state-run oil production from the Salman gas field between the investment in its petroleum industry because the presence the end of Iran’s calendar year in March. The Kish is also in the line to firm also signed MOUs with the NIOC and Toyo, an MOU for studying Pazanan and of foreign investors is not in conflict with economic, political Resilient Economy Committee requires the NIOC to undergo development under NIOC to study the same three Phase 3 of Darquain with PTTEP, MOU for studying and development indices. Under the present circumstances, conclude 10 agreements for the development of oil the IPC model. So far, Shell, Eni fields and presented its findings the Golshan and Ferdowsi gas fields with Malaysia the presence of foreigners is a must because the experience and gas fields in Iran. Required arrangements are as well as Iranian Ghadir and six months later in July 2017. In are among protocols inked in the past two years of foreigners’ presence in Iran’s petroleum industry, their being made within the framework of tender, and Sane’ investment companies addition to signing MOU with Post-JCPOAbetween the NIOC Renovation and foreign in firms.Refining and investment and transfer of technology a decade ago showed negotiations held in parallel. Recently, the NIOC and have expressed interest for its the Thai company, the NIOC had Distribution acceleration in Iran’s move forward. Iran’s petroleum industry Gazprom launched talks for the development of development and have signed earlier signed MOUs with South needs $200 billion in investment, which domestic resources the Kish, Farzad A, Farzad B and North Pars fields. MOUs to study the field. Kish is a Korea’s Gas Company (KOGAS) cannot provide. 8 January 2018 January 2018 9 An agreement has been sealed with The removal of sanctions created the best Albemarle for purchasing catalyst for the conditions for Iran’s petrochemical industry Isomax unit to restart its development

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signature of MOUs, negotiations begin for a final propane to propylene and investment to develop the agreement. Final talks between Abadan Oil Refining polypropylene), and with Linde petrochemical industry, the Company and Japan’s JGC and Marubeni, between for air separation units within the improvement in petrochemical Tehran Oil Refining Company and Japan’s JGC and framework of BOO and BOT deals exports post-JCPOA could Mitsui, between Isfahan Oil Refining Company and and transfer of technological not be ignored. During years South Korea’s Dailem, between Tabriz Oil Refining savvy and taking facilities from of sanctions, exporting Company and South Korea’s SK, and between German banks. petrochemical cargoes was Bandar Abbas Oil Refining Company and Chiyoda Signature of deals with Itochu difficult. But thanks to the 11th and Marubeni are nearing conclusion for economic and Marubeni corporations for administration’s efforts and the and technical feasibility studies on boosting the 320-million-euro usance (which implementation of the JCPOA, quality of refined products and reducing fuel oil could be raised to 640 million problems of insurance, transport production. Some other achievements of the JCPOA Euros if need be), signature and banking transactions have are as follows: Signature of contract between of agreement for studying a been relaxed; therefore, exports Abadan Oil Refining Company and Japan’s Hitachi, petrochemical utility project in have increased. Activities related examining technical and financial proposals of the second phase of Assaluyeh, to petrochemical industry are Italy’s Remosa for the supply of products, the show signature of agreement with mainly process-based. Therefore, of inclination by catalyst manufacturing companies Mitsui on the Japanese bank due to the increased diversity Grace UOP and Albemarle for bidding for catalyst JBIC’s granting of financing of petrochemical products supply to gasoline production unit, France’s facilities, signature of agreement and tough rivalry between Dalman’s agreement to operate some facilities, with Franco-German Air petrochemical manufacturing British Simon Carves’ agreement to remove Liquide for the development of companies in global markets, the problems of the sulfuric acid recovery unit. technical knowledge and MTP- industry needs to apply modern Alongside these achievements, the main outcome based engineering documents, technologies to have sustainable of the JCPOA in the refining industry was the signature of MOU with BASF growth. Application of cutting finalization of agreement for Phase 1 development for studying joint investment edge technologies is a winning and capacity stability of the Abadan refinery Furthermore, economic and being produced in Phase 1 of instrumental in keeping the Iranian economy in a petrochemical plant and card for development in every through a credit line offered by China. A letter of technical feasibility studies are this refinery and officials have afloat. However, growth and development are key signature of MOU with Indorama country. Therefore, improving credit is being opened by Bank Mellat. under way for the upgrading of said that other phases of this to sustainability. For the petrochemical industry, on the feasibility study of joint and renovation petrochemical Furthermore, signature of a trade contract the refinery by South Korea’s SK. refinery would come online in access to global markets requires expansion of projects in Iran are among industry processes and between Iran and China for Phase 2 development An agreement has been sealed coming months. Iran’s refining international relations. The removal of sanctions other MOUs signed post-JCPOA. upgrading the quality of products and negotiations with China’s Sinopec for with Albemarle for purchasing industry is set to turn into one created the best conditions for Iran’s petrochemical Negotiations held with foreign must be taken into consideration financing represent another JCPOA achievement catalyst for the Isomax unit. of the most powerful sectors industry to restart its development. banks and agreements made Gasmuch Rivalry further. for the Abadan refinery. An agreement was Clearance and transport of of oil industry in Iran by next Abundant oil and gas reserves in Iran constitute with Denmark, Japan, Germany signed with France’s Axens for the purchase of compressors and furnaces March as more refining projects a strategic advantage for the country. The and Britain for the financing catalyst for the hydrocracking unit of Isfahan oil of gasoline production and are becoming operational. Chief international companies’ awareness of advantages of petrochemical projects The MOUs signed in Iran’s gas refinery. It is in the stage of registration of order. hydrogen purification of gasoline among these projects are foreign of investment in Iran’s petrochemical industry are among other post-JCPOA industry since the JCPOA took Suppliers of commodity and equipment have manufactured by Siemens, investment and use of domestic encouraged these companies to seek opportunities achievements in this industry. effect have been less numerous expressed willingness to continue cooperation startup of the distillation unit potential for self-sufficiency in for investment in this sector. These advantages It would be a lengthy process than in other sectors. The main while negotiations have been held with South of Phase 1 and related sections gasoline production, minimizing include abundant and low-cost feedstock, access to to convert the MOUs into reason is Iran’s self-reliance Korean banks to finance new development and like steam and power supply supply of fuel oil to refineries and high seas, sufficient land, necessary infrastructure agreements. Therefore, the in the gas industry. However, optimization projects. A heads of agreement including power plants, power sustainable export of gasoline, and manpower. Total of France, Linde of Germany, road must be paved for foreign the MOU signed between Iran was signed between the Isfahan refinery and distribution posts, water sections gasoil, fuel oil, kerosene and BASF, Shell and Mitsui are among companies that investors. It is noteworthy that and Russia for cooperation in South Korea’s Dailem. At Bandar Abbas refinery, including water pools, refinery Post-JCPOAliquefied petroleum Petchem gas. have expressed interest in Iran’s petrochemical expansion of relations with gas industry is a special one permission has been issued for importing pools, water desalination plants, Industry industry after the implementation of the JCPOA. the world and reduction of as these two countries have commodities made in European countries and firefighting water network, air Talks have been held with these companies, investment risks in the country always been considered as gas whose purchase was impossible during years unit, nitrogen, storage facilities, resulting in the signature of a memorandum could sustain investment and rivals. Recently, a 30-member of sanctions. Catalyst purchased for the Isomax flare, controlling system and fuel The standing of petrochemical of understanding with Total for studying a guarantee a stronger presence delegation of Gazprom led by unit is being loaded for delivery. Talks have unit have already been done. industry is no secret to anyone. petrochemical project, with Shell for assessing of Iran’s petrochemical industry the company’s deputy CEO been held with Japan’s Mitsui and Gyuda about Naphtha and diesel have been During years of imposing investment and transferring technological in world markets and national visited Iran and held talks upgrading the refinery. Economic and technical produced. Moreover, thanks to unfair sanctions on Iran, the knowhow particularly for GTL, with South Korea’s economic growth. In addition with the National Iranian Gas feasibility studies have been held for that purpose. the JCPOA, Euro-5 gasoline is petrochemical industry was Hyosung for a PDH/PP (converting LPG and to the necessity of attracting Company (NIGC). 10 January 2018 January 2018 11 Iran Petroleum Petrodollars Petrodollars Iran Petroleum

il analysts have described Thailand’s national oil company, Iran’s oil output in 2016 earned the it as the “quickest return” Germany’s Wintershall, Austria’s country roughly $29 million a day. Iran Oil Revenue to market. Iran’s oil exports OMV, Japan’s Inpex, Norway’s DNV Iran’s oil prices are growing thanks soared past 2 mb/d in June 2016; and several other Asian and European to a rally in global oil price. In 2016, just months after the JCPOA took companies. Alongside widespread Iran increased its oil production by effect in January that year. Last June, plans formulated for enhancing crude 20% y-o- y. In 2016, Iran increased Grew in 2017 Iran’s total oil and gas condensate oil and condensate production, Iran its oil products exports (including production reached 3.8 mb/d. has turned out to be successful in gas condensate, LNG) by 74.6% Thanks to Iran’s oil diplomacy, the raising its oil production and exports to 897,900 b/d. In total, Iran’s oil country’sO 2017 oil and condensate rate. Over the past two years, Iran’s exports reached 2.819 mb/d in 2017, The most important output surpassed 777 million barrels. oil exports have increased more up from 1.595 mb/d in 2015. The outcome of Iran’s nuclear The return of Iran’s crude oil cargoes than 850,000 b/d, the highest export country’s oil revenues also grew from agreement with six to global markets and recovery of its growth among fellow OPEC members. $27.308 trillion in 2015 to $41.123 world powers, officially share would have not been possible Iran exported 2.13 mb/d of oil in 40%trillion of in Iran 2015. Oil Sold to Europe known as the Joint without the foresight of Iranian 2017, 62% of which was destined Comprehensive Plan of Petroleum Ministry officials. Iranian to Asia and 38% to Europe. China Action (JCPOA), in the oil officials knew quite well that oil and India are top buyers of Iran’s oil European companies resumed petroleum industry was production and export capacity has in Asia. South Korea and Japan are their oil purchase from Iran some the recovery of Iran’s the final way in oil market. Relying also among Asian buyers of Iran’s oil, two years ago. The Europeans, share of oil market. on Iranian oil wells and companies, joined by European customers like who had reduced to nil their crude they tried their best in enhancing the Turkey, Italy, Britain, Hungary and oil purchase from Iran, are now country’s production and exports the Netherlands.Last year Iran also receiving approximately 40% rate in order to have a bargaining of Iran’s oil cargoes. Europeans chip in their talks with rivals. In their consume 15 mb/d of oil, 11 mb/d of talks with delegates from Britain, which is supplied through imports. France, China, South Korea, Japan and Half the 11 mb/d Europe imports is Italy, Iranian officials insisted on the delivered via pipeline and the rest return of Iran’s oil barrels to world is transported on oil tankers. Iran markets. One of the main points Production from oil reservoirs is vying to win a share of more than of negotiations between Iranian in Iran has been done at 4 mb/d of Europe’s oil imports via oil officials and dozens of foreign their natural pressure over high seas. Shell, Total, Italy’s Eni and delegates in the wake of the signature the past four decades, and Saras, Greece’s Hellenic Petroleum, of the landmark deal was the return today production depends on Spain’s Repsol and Hungary’s MOL of Iran’s oil to Europe’s market and downhole pumps. are among buyers of Iran’s crude increased purchase of crude oil by the oil. These companies purchased pre-sanctions traditional buyers of on average 720,000 b/d of crude Iran’s oil. oil through January-August 2017. More than two years have passed managed to export 180 mb/y of gas Iran now needs investment in its since the JCPOA was signed. Over condensate, i.e. 490 tb/d. Iran’s gas ageing oil industry in order to these years, Iranian oil barrels have condensate exports have declined stabilize its position in the world found their way into Asian and in recent months due to feeding a markets and within the Organization European markets. Furthermore, major condensate refinery in Bandar of the Petroleum Exporting Iranian officials at the Petroleum Abbas, southern Iran. Iran traded Countries. There is growing hope Ministry plan to sign nearly $130 oil and condensate for around $52 a for foreign investment to flow into billion worth of new contracts in a bid barrel in 2017. The National Iranian Iran’s petroleum industry so that to bring Iran’s crude oil production Oil Company (NIOC) also exported 17 Iran would continue to remain capacity to more than 4.7 mb/d million tonnes of fuel oil and 2 million instrumental in the global oil market. under the 6th Five-Year Economic tonnes of gasoil to neighboring Iran, which sits atop 10% of oil Development Plan. To that effect, countries in the same year. Iran’s reserves in the world, is the fourth memorandums of understanding 2016 oil and condensate revenue largest holder of crude oil in the have so far been signed with leading reached $41 billion. Throughout world. However, due to a variety of international companies like Royal 2016, Iran managed to raise its crude reasons including lack of cutting Dutch Shell, France’s Total, Russia’s oil production by 726,000 b/d to 3.72 edge technology, less than 20% of Gazprom Neft, Lukoil, Tatneft, mb/d. Meanwhile, the price of Iran’s these resources have been tapped Zarubezhneft and Rosneft, Malaysia’s crude oil for 2016 was set at $39.57 and the main part remains untapped Petronas, Indonesia’s Pertamina, a barrel. Therefore, the increase in underground. 12 January 2018 January 2018 13 Iran Petroleum NEWS NEWS Iran Petroleum

Basra Ready to Receive Iran Gas Belarus Ready to Gas Exports New Deals Signed with Purchase Iran Oil 2 Guarantee Iran Europe Firms 4 Iran’s natural gas export to the city of Basra in southern Security Iraq can take place in March, the CEO of state-run National Iran’s Minister of Petroleum Bijan CEO of Iranian Oil Pipeline and Iranian Gas Company said. “Iraq has expressed readiness Zangeneh said Belarus was interested in Telecommunication Company (IOTC) Abbas-Ali to receive Iranian gas in Basra in two months.Shalamcheh buying more oil from Iran. CEO of National Iranian Gas Company Jafarinasabsaid new agreements have been signed with border [in the southwestern province of Khuzestan] has “This country has already purchased two Hamid-Reza Araqi has said Iran’s gas exports European companies after the removal of sanctions on been chosen as the gateway for gas export to Basra,” Hamid- crude oil cargoes from Iran,” Zangeneh said guarantee national security. Iran.“The clearance of equipment confiscated in other Reza Araqisaid. Basra, Iraq’s second largest city, needs after meeting Belarusian Industry Minister “In case gas exports agreements are signed countries and signature of new contracts are among Iranian gas to feed its power plant as part of efforts to VitalyVovk in Tehran. between Iran and neighboring countries, the achievements of the JCPOA for this company,” he reduce outages that have turned into a persistent source of He said that Iran had supplied nearly two the security of regional countries will be said, referring to Iran’s 2015 landmark nuclear deal public discontent. Araqi, who is also a deputy oil minister, million barrels of oil to Belarus. “Belarus intertwined and that will be instrumental in with six world powers, dubbed the Joint Comprehensive added that as soon as Iraq signals its readiness, Iran will wants to purchase more oil from Iran. More guaranteeing our national security,” he said. Plan of Action. “During years of sanctions, constructive start gas supply to Basra by up to 25 mcm/d. The official said talks on theissue will be held with the “Iran’s gas exports are cost-effective both for and effective communication with foreign companies the infrastructure for gas export to the western neighbor is Directorate of International Affairs of the us and importers, because they can receive providing technical equipment and services was totally complete on the Iranian side, but Iraq is yet to finish laying National Iranian Oil Company.” gas to run their economy while we can sell cut, but after the implementation of the JCPOA, all these pipelines, because of which the plan has not materialized. Zangeneh said Iran was interested in gas to help develop the country,” Araqi said. companies expressed willingness to cooperate with us “Basra needs to lay pipelines under Arvand River, which broadening energy cooperation with Belarus. Touching on gas exports to Basra, he said: anew,” he said. is a difficult project. However, the country’s officials have “Iran and Belarus did not discuss cooperation “Gas exports to Basra will start with 7 mcm/d “In such cases as the manufacturing and repair of some stressed that Basra, the second Iraqi city after Baghdad to in downstream industry.” to reach 15 mcm/d in the second phase. domestically manufactured turbines, we have received receive gas from Iran, will be ready in two months,” he said. For his part, the Belarusian minister Finally, it will reach 25 mcm/d.” new services from foreign companies,” he added. The Iraqi government approved a deal last month to described his talks with Zangeneh as He said different parts of work in the Iran Jafarinasab said four turbines were cleared by the United import natural gas from Iran to the eastern border constructive for the establishment of a joint Gas Trunkline 6 (IGAT6) had been assigned Arab Emirates and Britain to be delivered to Iran. “During province of Diyala, increasing purchases of the working group. to domestic contractors. “They managed years of sanctions, no negotiations were effective and Iranian fuel, which started in June after several 1 He gave a successful assessment of Iran- to accomplish the project in the due 3 we got nothing, but after the JCPOA all these confiscated years of delays. Belarus trade transactions in 2017. time, despite being a big task.” turbines were delivered and installed. 36 MOUs Signed, 45 Proposals Received 5

deputy head of National approved by the committee of Iranian Oil Company has reservoir engineering at the said that 36 memorandums NIOC, would help define new of understanding had been signed projects “because we have had with Iranian and foreign companies some weaknesses in defining to study oil and gas fields. projects that would be attractive to Gholam-Reza Manouchehri said investors.” that the findings of these studies Manoucheri touched on an EPCF- were instrumental in getting style package of investment for knowledgeA of the hydrocarbon enhanced recovery, saying that capacities of the country. Iranian companies would be He said that more than 100 engaged in the projects. proposals would be submitted to He touched on the MOU signed the NIOC by Iranian and foreign with Petroiran Development companies on how to study oil Company (PEDC), saying: “PEDCO and gas fields. He added that is among companies qualified 45 proposals had already been to work as an E&P company. submitted. It has long been involved in capabilities of this company upstream oil industry.” development would match the good performance would promise He said the results of these the petroleum industry and could guarantee the persistence “There are small and medium- capability of PEDCO. Studying this company a bright future,” said studies, most of which had been optimal use of the potential and of activities of this company in sized fields in Iran, whose these fields perfectly and showing Manouchehri. 14 January 2018 January 2018 15 Iran Petroleum NEWS NEWS Iran Petroleum

Abuzar Output installed by Iranian 6 Up 12,000 b/d Reshadatcompanies Oil Output Up

CEO of Iranian Offshore Oil Oil production from Reshadat oil Company (IOOC) Hamid Bovard has field has increased to 20 tb/d after said that oil production from Abuzar the completion of wellhead power field is set to increase 12,000 supply operations and the start of b/d with the installation of new oil extraction from CR-10 well, a platforms. senior official said. “After successful installation of Mohammad Daneshfar, director jackets for Platforms 20A and 21A in of production affairs at the Iranian Abuzar field and the start of drilling Offshore Oil Company (IOOC), said operations, the total output from CR-10 was completed in 2010. this field will increase 12,000 b/d,” He said that the well experienced he said. pressure fall-off after the end of its Bovard said the load-out, transfer natural production cycle. and installation of the two platforms Daneshfar added that power lasted three months, noting that supply equipment and a downhole that would have been done in a pump were provided to the well in shorter time under better weather order to increase its output. conditions. “Planning has been made to The jackets, each weighing 1,200 complete several other wells of tonnes, had been built over 22 this field, which will increase their months. production in the future,” he said. “Oil will be transferred from 6.2 kilometers farther. Moreover, is 2.6 kilometers from Platform AC,” for subsea pipelines had been added that topdrive construction is Reshadat, located in the Persian Platform 20A to Platform AC at oil from Platform 21A will be Bovard said. purchased and taken to the under way in Khorramshahr Yard. Gulf waters, lies in the Lavan Abuzar Oil Complex located some transferred to Platform AA, which He said that commodities needed Mahshahr plant to be installed. He Bovard said the jackets had been operating area. NIDC Bidding for Iraq Karanj Development Pardis Co., KBR Sign SP11 Subcontractors Projects Study Examined 8 Agreement to Be Named 10

The National Iranian Drilling Company (NIDC) is bidding for projects in neighboring countries of The committee of reservoirs advisors of the Pardis Petrochemical Company has signed a The CEO of Pars Oil and Gas Company (POGC) says short- Iran, CEO of NIDC SepehrSepehri said. “Given the National Iranian Oil Company (NIOC) has memorandum of understanding with KBR, an listed subcontractors bidding for Phase 11 development of NIDC potential, we have made plans to operate reviewed the study projects carried out by the international technology and services provider, to South Pars gas field would be named in one month.“Most projects in neighboring countries and we have had Pergas consortium and Iranian power plants improve its processes and equipment. The preliminary bidder companies are Iranian,” Mohammad Meshkinfam correspondence with Iraq to that effect,” he said. management company MAPNA with regard to agreement was signed in Tehran between PPC Managing said. He said that financial envelopes for Phase 11 of Sepehri said that chiefamong advantages of working development of Karanj field. Various companies Director Hossein Shahriari and Jan EgilBraendeland, South Pars, except for drilling, have all been opened. “The in IraqwereIran-Iraq shared borders, their access have so far submitted their study projects for the KBR’s president of the Oil and Gas Division. The short-listed companies for Phase 11, which are mainly to Arvand Free Zone, good oil production capacity development of the Asmari reservoir of Karanj field, agreement is aimed at improving safety protocols, raising Iranian, will be named by (France’s energy major) Total in Basra and favorable relations between the two which is planned to undergo development under a energy efficiency, reducing corrosion and reconditioning for signature of contract,” said Meshkinfam. He added countries. He said that a joint meeting is to be held model designed by the National Iranian South Oil the facilities of PPC, a producer of ammonia and urea in that tender bids had already been held for jacket, topside, with Iraqi drilling officials in the coming month. Company (NISOC). NISOC has chosen Pergas and the southern port city of Asalouyeh, Bushehr Province. offshore pipeline, platform and its installation. Meshkinfam “The NIDC will run for three bids to be held by Italy’s MAPNA for this purpose. The scheme proposed PCC describes itself as the operator of the Middle East’s said SP11 would enter the construction phase as soon as a Eni for drilling wells in Iraq,” said Sepehri. He said by NISOC, Pergas and MAPNA was reviewed in largest ammonia and urea complex and one of the contractor has been chosen. He added that the operation the second market targeted by the NIDC was Oman, a meeting attended by the director of corporate world’s top producers of the two compounds that form would start later this year.He said that nearly $50 million adding: “We have voiced our readiness to provide planning at NIOC, deputy head of NIOC for studying the building block of many products, including had been spent in Phase 11 for studying and management. drilling services in Oman and we will examine hydrocarbon resources, members of reservoir plastics, explosives, textiles, pesticides, fertilizers A nearly $5 billion deal for the development of Phase 11 cooperation with them in this regard during a 7 advisors committee, some members of the and resin products. The signature of this 9 of South Pars was signed last year between a Total-led visit planned by Omani delegates to Tehran in negotiating working group of this project and agreement is of high significance after years of consortium which also includes China’s CNPCI and Ira’s the near future.” relevant experts. tough sanctions on Iran. Petropars.

16 January 2018 January 2018 17 Iran Petroleum Interview Interview Iran Petroleum

Negar Sadeqi to turn Iran into an energy hub in gas sector? What are the driven us to develop our gas responsibilities of the network to be able to conduct Iran Gas Engineering and gas transactions in the region, A: As far as gas exports Development Company including receiving, importing, is concerned we are faced (IGEDC)? exporting and swapping gas. On with two issues; one is the this basis, we are currently able development of infrastructure to export gas to Pakistan. In and the other is gas production- A: IGEDC is responsible for the Iraq, we export gas to the two consumption balance. Although National Iranian Gas Company cities of Baghdad and Basra. we have laid out a widespread (NIGC) projects related to We have also been exporting Iran’s gas network of gas pipelines development of pipelines, gas to Turkey for years now. in the country in recent transmission pressure booster stations Based on the infrastructure years, our consumption had capacity and refinery modifications. available for the extension overtaken our gas production; currently The projects operated by this of gas network, we plan to therefore, our focus was on company are valued at $1.5 facilitate gas exports to Kuwait, stands at increasing gas production. But billion to $2 billion annually. the United Arab Emirates between 750 following measures taken in In the calendar year to March and Oman with minimum mcm/d and President [Hassan] Rouhani’s 2017, 600 kilometers of development. Therefore, we 800 mcm/d, administration under Minister pipeline was laid down while can say that development of which would [Bijan] Zangeneh, our gas in the current calendar year gas transmission network has reach 1 production from South Pars to March 2018, around 1,000 been done for two purposes; bcm/d to 1.1 gas field increased and our kilometers would have been first, to be able to transfer all bcm/d by the balance become positive and laid out. By 2025, on average our gas produced in different end of the 6th production will even overtake 1,000 kilometers a year of spots particularly Assaluyeh to Development consumption in the near pipeline, measuring 56 inches different parts of the country Plan future. That would help us in diameter, would be laid out. and second, turn Iran into a enter gas trading sector. From We have so far built 36,000 hub Willfor all you gas construct transactions. new now on, we will mainly focus kilometers of gas pipeline, infrastructure for turning on enhancing gas production, which will reach 45,000 Iran into a regional gas hub? gas exports and Iran’s active kilometers by the end of the 6th presence As in youglobal said gas 9,000 trading. Economic Development Plan in kilometers of pipeline 2025. What is the reason for the A: Iran’s gas supply network is expected to be built extension of gas pipelines in has extended as far away as in Iran by 2025. Is Europeans Eager Iran? the closest spot to the border domestic potential of neighboring countries. sufficient for such a Every time we decide to sign project? A: We look at the construction agreements for gas export to to Invest in Iran of pipelines and development this country we can create a of gas infrastructure from two new connection and we will A: Yes, we viewpoints; one is to enhance no longer need to develop currently the gas transmission capacity special infrastructure. Gas Storage in the country. Iran’s gas That has enabled Iran has capacity to transmit 800 mcm/d of gas through 36,000 kilometers of gas pipeline. Under transmission capacity currently Iran to become an the 2025 Development Plan, Iran’s gas transmission capacity is required to reach 1.1 bcm/d stands at between 750 mcm/d energy hub or a through 45,000 kilometers of pipeline. Before Iran’s gas production and consumption reached and 800 mcm/d, which would manager in gas a positive balance, the National Iranian Gas Company (NIGC) had focused its attention on reach 1 bcm/d to 1.1 bcm/d by trading. When developing domestic gas supply network. But after the development of South Pars gas field, gas the end of the 6th Development did you production overtook gas consumption. After that, the NIGC focused on making Iran an energy Plan. The second is the decide hub in the region and building more gas storage sites. Hassan Montazer-Torbati, CEO of Iran Gas development of infrastructure Engineering and Development Company and acting head of Natural Gas Storage Company, tells for gas transmission pipelines “Iran Petroleum” Iran’s gas would be piped to regional countries every time Iran’s gas export is Iran’s presence in global MOUs turn into agreements. The following is the full text of his interview with Iran Petroleum: gas trading. The geopolitical location of Iran has

18 January 2018 January 2018 19 Iran Petroleum Interview Interview Iran Petroleum

have three pipe manufacturing increasing How will refined Iran- products. plants working in compliance Turkmenistan gas relations with the latest global standards change after the inauguration with a capacity of 2 to 2.5 of the Damghan-Kiasar-Sari- million tonnes a year and we do Neka pipeline? not need to import pipes. Of course, in recent years two more good events occurred in A: With the inauguration this sector. Turbines are among of this pipeline, Iran- the most important tools for the Turkmenistan relations have development of gas pipelines. practically become fully We have manufactured two commercial. We currently 25-MW turbocompressor, one swap gas with this country. in partnership with Siemens Let me explain the cause of and one under a German- development of this pipeline Russian brand. The second from another aspect. For event is that most equipment a country like Iran which needed for the development of sits atop world’s biggest gas transmission, like valves, gas reserves, the issue of have been manufactured gas imports must mean domestically. In fact, we differently. It means that gas have good contractors in the imports are not supposed to construction of pipes of 56 supply domestic needs. What inches in diameter. Therefore, happened in recent years to gas we have peace of mind with imports from Turkmenistan regard to the development of was that the Turkmens used to gas Haveinfrastructure. you ever exported demand higher prices exactly technical services in these when Iran needed to increase sectors? gas imports in winter and they finally suspended gas delivery to Iran. That is not common in A: As far as I know Iranian gas export contracts. For us, it contractors won projects developed by top companies booster station must be course, we are currently value- came online this year was the was not a professional move in Iraq and operated them. for laying out pipelines. installed so that this pipeline engineering 70 gas pressure Damghan-Kiasar-Sari-Neka in trade relations between the In Turkmenistan, they Currently we plan to apply would reach its maximum booster stations in order to pipeline with a capacity of 40 two countries. Naturally Iran bade for several projects. We have modern methods in this sector, capacity. Since in Iran we develop optimal methods mcm/d, which ended northern was looking for a solution to All this shows that Iranian almost for which we may enter into have a network of pipelines, of implementation. We plan Iran’s dependence on gas With the end its need for importing contractors are technically reached self- partnership with some foreign our focus was initially upon to install 40 more pressure imports How from have Turkmenistan. these projects inauguration Turkmen gas and make Iranian able to develop infrastructure sufficiency in companies. But that will be developing pipelines and booster stations by the end been financed? of this cities immune to this issue. for gas transmission network manufacturing handled by the private sector we have now an extended of the 6th Plan and raise the pipeline, Iran- Therefore, we built this pipeline extension. Do we need the pipes and which will partner foreign network of pipes. For boosting number of pressure booster Turkmenistan in order to immune ourselves to partnership of leading turbo companies. Alongside the extension production capacity installing stations What to are 140. the most A: The NIGC is among relations have possible gas supply cut and we international companies compressors. of gas supply network, pressure booster stations important projects to be companies with no problems in practically no longer depend on importing in the development of gas However, a future challenge is the would be more economical. inaugurated by the end of the hiring contractors. Our financial become fully gas from Turkmenistan. From a infrastructure? it does not possibility of pressure fall- For this reason, we will shift current calendar year? resources are the NIGC commercial. wider standpoint, our country mean that we off in gas production. We our focus into completing gas revenues and private sector’s We currently has extended an appropriate pressure stations from building investment. Domestic banks gas supply infrastructure and do not need will need to establish gas swap gas with A: No country can say it does pipelines. We have set up 70 A: The Iran Gas Trunkline 6 have been actively present in we are in a good geographical to use the pressure booster stations this country not need technical knowhow. pressure booster stations in (IGAT6), a highly important this process. The private sector position in terms of gas trading. new methods in order to sustain gas Exchange of experience is Iran. Rarely has a country pipeline, was inaugurated this invested around 42.2 billion in Regardless of our relations in developed by production in Iran. What has natural. We have almost been done in this regard? built this number of pressure year. IGAT6 transmits gas from these projects. Investment is recent years with Turkmenistan reached self-sufficiency in top companies booster stations. That has Assaluyeh to western Iran (the currently made through buy- in gas imports, we have an manufacturing pipes and for laying out brought us good experience Kermanshah route). Of course, back and since gas pipelines international view of trading turbocompressors. However, it pipelines A: Normally when a pipeline and we have also acquired we plan to extend this route complete the development of ties with this country. We need does not mean that we do not is being laid out every 100 to good knowledge in terms of as far as the Bazargan border refineries part of our financial to prepare ourselves for gas need to use the new methods 150 kilometers, a gas pressure application of methods. Of in Iran. Another pipeline that resources is provided through trading with this country, which 20 January 2018 January 2018 21 Iran Petroleum Interview Interview Iran Petroleum

Zoom was made possible through the construction of this pipeline. Has any foreign company referred to you for this purpose? As a gas production hub, Turkmenistan can proceed with gas exports, transit or swap via A: Yes, we have had talks with companies from the Netherlands, the Iran route now. Therefore, Switzerland and Germany. Many foreign investors have expressed construction of this pipeline willingness to be involved in natural gas storage projects, will in the long-term help and negotiations have been mainly focused on the return of develop Iran’s relations with investment and its duration. Both sides are negotiating on this Turkmenistan and enhance issue. I think that development of and investment in gas storage the level of gas transactions facilities would be a lucrative market for foreign investors. between If Iran the is twofaced countries. with Furthermore, we can have partnership with foreign companies in cold snap, will we remain the supply of some commodities of this sector that have not been still independent of manufactured domestically. Turkmenistan’s gas?

A: I have now 10 years of experience in gas dispatching and I can tell you with certainty that in the face of every cold spell Iran’s gas supply network has sufficient structure and pipelines to meet the needs of domestic customers and consumers and we will have no of the Natural Gas Storage sites been determined? problems in this regard. I can Company. Iran is the largest tell you in clear terms that due cooperation between the two owner of gas reserves in natural What gas should storage be purposes. done for facilities Are you in three going to to four hold years. a to the extension of gas supply countries. For instance Iranian the world and has one of this purpose? A: We plan to develop the national or international network in Iran, even if a cold contractors built gas pipelines the most extended gas Shourijeh and Sarajeh storage tender bid for these front of air enters Iran we will for the delivery of gas to the two transmission networks, but sites. Apart from them, a reservoirs? not need to import gas from cities of Baghdad and Basra, natural gas storage is new A: We first conduct feasibility storage site in Kashan and three Turkmenistan for domestic which are receiving Iran’s gas in Iran. What has been done studies on the potential storage old storage sites in northern consumption. We will receive now. We were recently asked in this regard? sites in terms of geological Iran; namely, Imam Hassan, A: We are mainly focusing Turkmenistan’s gas merely for to cooperate with them in issues and drill one or two Bankoul and Babaqir and on foreign companies for the Somedevelopment time ago, of gasan Iraqi trading. developing urban gas supply A: In recent appraisal wells in order to Qezel-Tappeh, would be used investment; therefore, the delegation, in meetings with Construction networks. Negotiations are still years, the NIGC’s focus was determine the capability and We are for underground gas storage. tender bid will be international. Iran’s petroleum minister of this under way. Development of gas on developing the gas supply capacity of storage. If results preparing These storage sites are spread However, there are no and CEO of NIGC, demanded pipeline will supply network in Iraq could network. But whereas the prove to be positive we will international across What the stage country. are these restrictions for companies to using Iran’s technical savvy in the long- create a good market for Iranian development of gas distribution task the private sector with tender projects in now? become investor or operator. in developing Iraq’s gas term help contractors. The government network under the 6th repurposing How will the the storage NIGC interact sites. documents We are preparing international supply network. What stage develop Iran’s has a supportive role and the Development Plan has been with the private sector in for the tender documents for the are bilateral negotiations at? relations with private sector handles the done and with any increase natural gas storage? development A: We are in the stage of development of the second Except for Iraq, have you had Turkmenistan main job. I think that Iranian in the gas transmission of the second studying, examining and phase of Shourijeh storage any other proposals from and enhance contractors will have the capacity, gas production and phase of drilling appraisal wells. After facility. How much investment do other countries in the region? the level chance to operate gas supply consumption would increase to A: Whenever consumption Shourijeh that we will prepare the you think will be needed? of gas network extension projects 400 bcm a year, we had better is low, the NIGC will deliver storage investment packages. The transactions in Turkmenistan, Pakistan store between 40 bcm and 50 gas to the private sector and facility investment packages for the A: In terms of manpower and Afghanistan in the future. bcm How a year much of gas. is Iran’s in cold seasons, it will receive development of Shourijeh A: On average, we will need specialty and manufacturing Regarding proposals for Iran’s current gas storage capacity? gas from them. The gas storage site is ready and we around $1 billion investment of equipment for gas supply presence in other countries, the storage costs will be repaid so will soon enter the stage of for each 3 bcm of storage. Since development, Iran is able to private sector contractors are as to make up for investment, choosing investor. For other we plan to bring our storage operate big pipeline projects active in this domain and I do A: It is about 5 bcm a year. operation and return on storage sites like Babaqir and capacity to around 40 bcm, we in the countries in the region not Youknow are whether also acting or not head they We intend to use several old investment Has the numberby the private of storage Imam Hassan, we are in the predict to need $10 billion to and even farther. Meantime, have received any proposals. and/or depleted oil and gas sector. phase of study. We predict $12 billion in investment. there is an atmosphere of reservoirs for underground to have at least five storage 22 January 2018 January 2018 23 Iran Petroleum South Pars South Pars Iran Petroleum

Offshore Platform Installed and both its onshore and offshore sectors under way at SADRA Yard in completing the project, he The first platform of Phase 14 of South Pars have been developed in parallel. However, the Bushehr. “After the conclusion said: “We predict that $700 to gas field was installed at its location in the offshore sector is well ahead of the onshore of drilling operations in $800 million would be added Persian Gulf in late January. The manager 77%sector. Progress in SP14 locations B and D of SP14, the to the preliminary value of the South Pars Output of SP14 development project has said that platform of these phases will contract and this phase would the installation of the 2,500-tonne platform be installed in their locations come online with $6 billion,” would enhance gas recovery from the giant Hamid-Reza Masoudi, manager of SP14, said: Massivein the Persian Presence Gulf.” of Homegrownhe said. CRA Pipes offshore field by 14 mcm/d. “The pace of work in the onshore sector and Iranian Contractors refinery of Phase 14 of South Pars has picked Up 14 mcm/d up speed since the second half of the last The Iranian Ministry of calendar year [to March 2017]. All equipment Petroleum plans to indigenize was brought into the refinery and more than Phase 14 development of the manufacturing of widely 90% of it was installed.” He said that all units South Pars is being operated consumed commodities of the refinery of Phase 14 have been assigned by a consortium of the of petroleum industry and The contract for the development of to subcontractors and there is no unit without Industrial Development and transfer their manufacturing SP14 was struck between Iranian subcontractor at the treatment facility. “The Renovation Organization technology into the country. companies in 2010 for $ 5.25 billion. progress of work in Phase 14 of South Pars (IDRO), the Industrial Corrosion-resistant alloy The project was initially set to come online is 77.5% and progress in drilling, pipeline, Projects Management of Iran (CRA) pipes which are within 35 months, but international sanctions platforms, refinery and onshore sector stands (IPMI), the Iranian Offshore instrumental in the South slapped on Iran’s petroleum industry delayed respectively at 74%, 88%, 91%, and 75%,” he Engineering and Construction Pars projects are largely used the project. However, due to the significance Loadingsaid. and Installation in 21 Days Company (IOEC), the National in the oil industry. Last May, of quick recovery from South Pars, the Iranian Drilling Company Iran signed a contract worth Ministry of Petroleum started prioritizing the (NIDC), ISCOICO, MAPNA more than 550 million euros development projects. As a result, 11 projects Operations for loading Platform A of Phase Power Plant Construction ($615 million) with Spain’s including Phase 12 (equivalent to three 14 was done in Bandar Abbas by the Iran and Development Company, Tubacex to buy CRA pipes for phases), 15, 16, 17, 18 and 19 (equivalent Shipbuilding & Offshore Industries Complex Payandan Company its oil industry. The contract to two phases) as well as Phases 20 and 21 Co (ISOICO) on January 2. It was finally and Arak Machine was signed with Iran’s became operational, bringing gas recovery installed in its location in the Persian Gulf on Manufacturing Company. Esfahan Steel Company which from South Pars to 570 mcm/d. After the January 24. This operation was fully handled The consortium is led by will take over production of inauguration of these phases, the Ministry by Iranian specialists and in compliance IDRO. Masoudi highlighted the pipes completely within of Petroleum announced that the remaining with necessary standards. “In recent years, the massive presence of three years. The deal will South Pars phases were prioritized for Iranian contractors have upgraded their domestic contractors in the lead to the production of 600 development. In the next calendar capabilities in implementing the South Pars development of Phase 14, kilometers of pipe. Masoudi year which begins in March 2018, phases. No foreign contractor has been saying: “Full implementation said no China-made CRA pipes the remaining phases of South Pars hired in the construction of platforms for of 230 kilometers of offshore had been used in Phase 14 expect for phase 14 would become Phase 14,” said Masoudi, adding that Iranian pipeline, completion of of South Pars, adding: “The operational. Over the past one year, contractors recorded 10 million man-hours drilling of 22 wells and the pipes used for eight wells in SP14 has made good progress of work without any accident. “The installed operation of three drilling rigs locations A and C of this phase platform is the main platform of Phase 14. It are among specifications of were already available, and will recover 500 mcf (14.1 mcm) of rich sour this project.” He referred to their quality is in compliance gas from this jointly owned field,” he added. measures taken in the onshore with the National Iranian Hassan Hosseini Hassan Photo: Sour gas from Platform A of Phase 14 of South refinery of this phase and said Oil Company standards. The Pars is moved to the refinery and onshore the offshore sector was well remaining required CRA pipes installations of Pars 2 zone after startup and ahead of the onshore sector. are to be supplied by domestic hookup operations. “Eight out of 11 wells in “All required equipment for companies.” Phase 14 of South Platform A of Phase 14 of South Pars are now building a refinery has been Pars is under development ready. These wells will start production after installed and the utility unit for an output of 56.6 mcm/d the installation of platform and completion will come online by the end of rich gas, 75,000 b/d of gas of hookup operations,” he said. Noting that of the next calendar year,” he condensate, 400 tons a day this drilling rig was active on Location A of said. of sulfur, 1.05 million tonnes SP14 before being moved to Location C of the Masoudi said rich sour gas a year of liquefied petroleum satellite platform of Platform A, Masoudi said: would be injected into the gas (LPG) which includes “Platform B of SP14 is now 88% complete and onshore refinery of this phase propane and butane, as well will be ready for load-out next May.” Masoudi to be sweetened in 2019. as one million tonnes a year of said the construction of the satellite platform Asked about the amount ethane to feed petrochemical of Platform 14B, known as Platform D, was of investment needed for plants. 24 January 2018 January 2018 25 Iran Petroleum Refinery Refinery Iran Petroleum

Startup of Bandar Abbas Gas Condensate Refinery, which is operated by the Persian Condensate petroleum products are the most water temperature returning it Gulf Star Oil Company, picked up speed important achievements of the into sea,” he added. The condensate after Iran’s nuclear agreement with world refinery which Dadvar said was refinery has been designed in three Refinery’s powers came into effect. The first phase designed based on Euro-4 standards. phases, each with a capacity of of the treatment facility came on-stream “Soon we will be able to produce 120,000 b/d of gas condensate. This Euro-5 gasoil in addition to Euro- refinery contains 30 operating units during the final days in office of the first Gasoline 5 gasoline,” he said. Dadvar said (20 processing and 10 utility units). administration of President Hassan the refinery products have a sulfur Nine processing units are for Phase Output at Rouhani. content of less than 2 ppm and they The refinery has been designed 1, eight for Phase 2 and three for all comply with Euro-5 standards. in 3 phases, each with a capacity €260mnPhase 3. Loan Dadvar said the refinery would of 120,000 b/d of condensate 12ml/d The refinery is now refinery is the most modernized convert gas condensate into valuable producing 12 million refinery in the Middle East. products like gasoline, gasoil and Ali-Reza Sadeq-Abadi, deputy liters a day of Euro-5 It was designed in the form jet fuel to make the country self- minister of petroleum for refining gasoline. From now onwards, it of three trains with a daily sufficient in this regard. He said that each having capacity to pump affairs, recently said that the NDFI will be running at full capacity capacity of treating 360,000 more than 100 million liters of Euro-5 12,500 cubic meters per hour at had agreed to offer €260 million in of first phase. Due to some barrels of gas condensate gasoline produced at this refinery had 90 Bar pressure,” he said. Dadvar loan for the completion of the Bandar restrictions and problems, supplied by the gas refineries of been delivered to the National Iranian said France’s Axens was the main Abbas condensate refinery. He said Phase 1 had not become South Pars gas field to produce Oil Products Distribution Company designer of the refinery, adding that that the refinery was running at one- operational. However, thanks 36 ml/d of gasoline. Dadvar (NIOPDC) in early January. He added an Iranian company was supplying third of its capacity, adding that it is to its managers and specialists’ said the costs needed for that 1.5 liters of Octane-87 gasoline catalyst to the refinery. “In addition expected to become fully operational efforts the project came online. completing remaining phases of had so far been produced at this to self-sufficiency and domestic by March 2019. Sadeq-Abadi said that Mohammad-Ali Dadvar, CEO of this refinery would be covered Catalystfacility. Indigenized manufacturing of foreign products, the Bandar Abbas condensate refinery the refinery, told reporters that by selling products or by it has been cost-effective for us,” he and Bandar Abbas oil refinery were the facility was also producing getting credit from the National said. Dadvar said the refinery had producing a total of 50% of Iran’s 3.4 ml/d of gasoil and 500,000 Development Fund of Iran Dadvar said a pipeline carrying not yet received any warning over gasoline. He added that no budget l/d of liquefied petroleum gas (NDFI). So far, 3.859 million condensate to the refinery had a environmental pollution. “In order to would be allocated for gasoline (LPG). He said that four cargoes Euros has been spent on the capacity of 360,000 b/d, which prevent the refinery’s contaminated imports next calendar year which of sour naphtha produced at project while the remaining two could increase to 500,000 b/d. “One wastes from flowing into sea a five- starts in March 2018. “Therefore, this refinery were exported phases are estimated to need station pumps gas condensate to this hectare-long pool has been arranged we need to become an exporter of in the last calendar year to 240 million Euros. Reduction refinery through four electropumps, to collect wastes and balance the gasoline as soon as possible.” March 2017. He added that two of environmental pollution 35,000-tonne sour naphtha and national would be exported soon. The self-sufficiency Bandar Abbas condensate in the supply of

26 January 2018 January 2018 27 Iran has embarked on widespread plans The ammoniac unit of Phase 3 came on- to build plants for converting gas to olefins stream in November 2017 and the urea unit and its derivatives in December

Iran Petroleum Petchem Petchem Iran Petroleum

have managed to sign long- However, when competition Pardis term agreements with some picks up speed companies leading companies in the world. whose cost prices are high, Petchem Plant We are now exploring new cut their prices in order to markets,” said Shahryari. remain in the competitive He added we are not worried market.” “Nonetheless,” he said, Feeds All about competition with other “continued price reduction will companies and rivalry in drive out companies whose new markets. “With regard power of competition is low.” to domestic producers of “The exit of these companies Continents urea and ammoniac, like will make the production- Razi, Kermanshah, Shiraz production balance positive and Khorasan petrochemical again and prices will go up,” Pardis Petrochemical Plant, which is located plants we can coordinate our said Shahryari. “The urea in Assaluyeh, is one of the largest producers objectives. There is currently trend in different periods of urea and ammoniac in Iran and the Middle such convergence between has shown that after several East. In 2016, it was the second largest these plants. We are different years of price reduction the producer of urea in the Middle East. Hossein companies, but we target global prices increase again.” ShahryariCEO of PardisPetchem plant export markets together and He has predicted that due to says there are no restrictions to exporting we support one another,” he easy access to gas feedstock, products from the plant. added. Shahryari said Pardis proximity to loading jetty and Iran respectively $1.3 billion Economic Energy Zone a total capacity of 60,000 tonnes and four urea had no rivalry with domestic consumer market, Iranian and $650 million, accounting (PSEEZ). It has been developed storage facilities with a total capacity of 210,000 companies. Regarding foreign companies, particularly those for 12% and 7% of Iran’s in three phases and has since tonnes. Phase 1 and Phase 2 become operational companies, he said: “We are located near sea, could not be petrochemical basket. That 2007 managed to win a toehold in 2010, before the European Union imposed watching out for external easily pushed out of rivalry. shows the special position of in international urea and sanctionson Iran’s oil industry. Phase 3 started markets. When there is strong In recent years, Iran has “We are envisaging expanding our export these two strategic products in ammoniac market. The rated when Iran was under tough sanctions. “Phase 3 rivalry, companies whose diversified its petrochemical markets and we are not afraid of competition in Iran’s petrochemical revenue. capacity of Phase 1 and Phase was established by reliance on the company’s products are of high cost price products and subsequently the urea/ammoniac market,” he said. Iran has embarked on 2 of Pardis Petrochemical Plant domestic resources and we received no financing have no option but to go out markets have been diversified. Iran claims the top spot in the world in terms widespread plans to build have a total annual capacity from foreign companies. Despite all restrictions of competition market and As a result, Iran has boosted of natural gas output with proven reserves plants for converting gas to of 2.15 million tonnes of urea we managed to design and launch Phase 3,” said reduce their output.” “But its presence in the global of 34 tcm. Once all phases of South Pars gas olefins and its derivatives. (fertilizer) and 1.36 million Shahryari. The ammoniac unit of Phase 3 came PardisPetchem Plant, due to petrochemical market. China’s field have been developed, Iran’s natural gas Once development projects tonnes of ammoniac. The on-stream in November 2017 and the urea unit such advantages as access urea production capacity is production capacity would exceed 700 mcm/d. have been completed, the startup of Phase 3 has brought in December. Shahryari said PardisPetchem to points of export and gas forecast to be less than the In light of the widespread use of natural gas urea production capacity the annual figures to more Plant is owned by private stakeholders, adding feedstock,has a lower cost growth in demand for it in in petrochemical production, expansion of would reach 10.5 million than 3.225 million tonnes of that Latin American countries like Brazil, price for products of high 2018. That is while the Middle petrochemical industry tops the agenda of Iran’s tonnes and the methanol granular urea and 2.04 million Uruguay, Colombia, Costa Rica, as well as China, quality,” he said. India is the East and Brazil exports would economic development. Over recent years, production output would hit tonnes of ammoniac. In order India, Turkey and African countries are among main destination of urea increase. In 2017, Iran and many petrochemical production plants have 43 million tonnes a year. Until to feed the three phases, more export markets of this country.High volume of produced at Pardis plant. But Russia recorded the highest switched to urea and ammoniac, which are a decade ago, Iran was among than 2 mcm a year of gas is production and high technology, compliance Shahryari says: “We don’t see growth in urea exports in the used in agriculture and fertilizers’ production. importers of urea. The country supplied to PardisPetchem with environmental standards, easy access to ourselves dependent on the world, and would make up for Ammoniac is used in the production of fertilizers, turned into exporter of this Plant from South Pars gas field. natural gas as feedstock, maritime transport Indian market,as our markets China’s urea supply reduction chemical solvents and household detergents. petrochemical product after The ammoniac unit of Pardis lines, storage facilities and urea loading jetty are diverse.” As global urea in global markets. Gowin Joe, Urea is mainly used in chemical, agriculture new urea production projects is operating under the license are among advantages of PardisPetchem Plant output rises, there are growing a senior nitrogen advisor with and car industry. Urea itself is the most widely became operational at Pardis, of Britain’s M. W. Kellogg, for competition in global urea market. Until two concerns over saturation of CRU Group, told a conference used fertilizer in the world. More than 90% of Kermanshah and Marvdasht the urea unit under the years ago, India was the only export destination this market and reluctance for in Iran last year that by 2022 urea produced in the world is used as nitrogen- petrochemical plants under Netherlands’ Stami Carbon of Pardis products. But after operating investment in this sector. Iran would become the largest containing fertilizer. The production capacity of the country’s 5th Five-Year and the urea granulation development projects, the plant’s products are Shahryari said the urea urea exporter in the world, urea and methanol currently stands at more than Economic Development Plan. unit under Belgium’s Hydro exported to countries in Europe, Africa and South market is limited, adding: adding that everyone would be 5 million tonnes. In the Iranian calendar year to Pardis Petrochemical Plant Agri. There are three storage America. “We have equipped our marketing team “Certainly, urea oversupply watching strategies designed by March 2017, methanol and urea exports earned is located in the Pars Special facilities for ammoniac with for petrochemical commercialization and we would worry producers of urea. urea actors all across the globe. 28 January 2018 January 2018 29 Iran Petroleum Rag Sefid Rag Sefid Iran Petroleum

A Review of Tough Blowout Capping What caused the blowout What was your first Top and bottom kill were at Rag Sefid, which took 58 move? both engaged. Why? days to be contained?

A: The first step in managing A: We didn’t want to lose time A: Well No. 147 of Rag Sefid the blowout prevention was to in the operation. According blew out during pipe running make necessary arrangements to reference books, there Rag Sefid Fire operation at the depth of 2,132 in terms of special disciplines are two methods of capping meters in the Asmari reservoir. needed. We needed petroleum The blowout. Top kill was not The location of the field in a engineering, geology, drilling National recommended due to the TheContainment Dey and Sefid Zakhour fields in Iran are; among a Recordnewly discovered gas hilly area had made it difficult engineering and construction Iranian special circumstances of the reservoirs. The close distance between the two fields has led officials to to install rigs and build access engineering sections to South Oil well. Therefore, our main consider their development together. The duo currently needs investment routes. Immediately after this come together to be able Company option was bottom kill. But and state-of-the-art technology. Iran has offered Dey and Sefid Zakhour incident, I went to the site to to coordinate affairs for (NISOC) we had to wait for relief wells for investment. Rag Sefid oil field, which was discovered in 1964, holds manage and monitor affairs for containing How long the did blowout. it take to and the to be drilled. Nonetheless, we the largest gas cap after Pazanan among Iranian oil fields. Rag Sefid is blowout prevention. Of course, mobilize forces? National finally concluded that we had estimated to hold 16.5 billion barrels of crude oil plus 54.16 tcf of natural I would like to point out that Iranian to follow up both bottom and gas in place. Well No. 147 of this field experienced a blowout on October 29. when it comes to oil and gas Drilling top kill simultaneously despite It took Iranians 58 days to put out the blaze which was raging across an well blowout prevention; it A: Mobilization for blowout Company its toughness and difficulties. does not mean putting out the capping was done in the best In bottom kill, the objective area with high gas pressure. Mohsen Paknejad, deputy managing director (NIDC) blaze. Had we extinguished possible manner and in the is to drill one or two wells in of National Iranian Oil Company (NIOC) for production affairs, tells Iran were the Rag Sefid fire, no living shortest possible time. The the proximity of the blowout Petroleum that extinguishing the fire in that period was a significant record directly creature would have survived National Iranian South Oil in order to have access to the in the history of Iran’s petroleum industry. Rag Sefid had experienced involved in fire twice before Iran’s 1979 Islamic Revolution. It had taken American in a large radius due to the Company (NISOC) and the wellbore in the reservoir. In high pollution of gas. National Iranian Drilling the blowout this way, the fluid which is companies 100 days to contain the fire. The following is the full text of the How much does gas prevention pollution stand at in this Company (NIDC) were directly to run into the well to stop interview Paknejad gave to “Iran Petroleum”: operation well? involved in the blowout the blowout is calculated prevention operation. I have with precision. When drilling to reiterate here that the most mud comes out killing has A:The H2S flowing out of qualified blowout prevention practically been done. this well was around 9,000 specialists were present at Rag In top kill, for which the ppm. That is why the blowout Sefid site. We managed to take wellbore has to be acceded, we prevention operation was so advantage of the had to clean up the wellhead. delicate. Minister of Petroleum achievements and As you know after the blowout, [Bijan Zangeneh] insisted, experience of the operating drilling rig from the very beginning, that people who had and related facilities which all safety issues had to be already seen weighed more than 500 tonnes taken into consideration. In such blowouts. had collapsed on the head of fact our objective was not to All activities the well, directly affecting the put out the blaze. We had to had been top kill Howoperation. long did the keep fire burning until the flow coordinated. wellhead cleanup last? of fluid from the well stopped. As soon as this fluid stopped, the fire would be extinguished. A: 28 days. I have Throughout the operation, to say that special some frequently referred circumstances were to the NIOC saying ‘we can reigning. The extinguish the well fire’ but 500-tonne rig and when they arrived on the its equipment scene and were informed had been of the incident they intertwined realized that the objective due to the was not to extinguish the fire heat. fire; rather it was to stop Therefore, the flow of fluid out of the well.

30 January 2018 January 2018 31 Iran Petroleum Top story Rag Sefid Iran Petroleum

in the first step we had to clean we were busy cleaning up the up the area of these junks. That wellhead for 28 days of the was while nearly 470-degree total 58 days. There is special Centigrade temperature was equipment for carrying 450 dominant with an 8-degree tonnes, We havewhich not we seen used. any gradient. It means that the blowout in oil-rich countries temperature falls 8 degrees for in the region in recent years. each meter of distance from Why did it happen in Iran? the well. We managed to take What causes blowout? away some equipment which were around the well, but the main issue was to take away A: Statistically speaking, I the rig and its installations have to tell you that we had which had crashed on the 11 blowouts in Iran between wellhead. After cleanup, 2005 and 2013 while only designing a stinger to match one happened between 2013 the blowout preventer (BOP), and 2017. When you consider driving the stinger and contain the conditions of an oil field it after entering the wellhead like Rag Sefid, you will see was Was examined. it possible It took to 28 clean days. that it houses the largest up the well in less than 28 reservoir rock and the biggest days? volume of reservoir fluid and the most compressed gas cap after Pazanan oil field. A: Well cleanup is not When you work on such fields necessary when there is no the possibility of blowout is drilling installed and other naturally lower than in the wellhead equipment is not fields with low-pressure gas heavy. But Well 14 was not in caps. The significant point operation; therefore, the rig with Well 147 is that this collapsed fully on the head reservoir is very active. It of the well. Naturally the experienced two blowouts wellhead had to be cleaned up second relief well would help blowout. It was one of our engineers and geologists. Fath- and NIDC experts contacted in 1966 and 1975. It took before any move to contain the us no to lose time. We finally achievements How long didin Rag the Sefid. well 95 rig needed 90 days to reach the Canadian company’s 94 days to cap the wells. In blowout. Why did you apply both decided How to many do both times in parallel.did you location last? that Didcondition. you seek any help specialists who finally those years, Iran experienced methods? carry out top kill? from other oil companies for suggested bottom kill which blowouts while petrostates blowout prevention? we wereThe blowout applying. capping in the region had no such A: As I mentioned, the well lasted 58 days. Don’t you accidents. But regarding this A: At the beginning we were A: 14 times. Throughout this is located in an area, access blowout it has to be blamed Well think it was long? faced with a serious decision. operation we developed a to which is difficult. Under A: No, we did not demand In those on equipment and human cleanup According to reference books, new mechanism for blowout normal conditions we need assistance from any company years, Iran error. However, we cannot is not wells whose pressures are prevention. In cooperation five months to set up a rig because Iran’s best companies A: No, not at all! Each well experienced speak about their shares. necessary more than 400 psi are not with the private sector and and prepare for drilling, but in drilling industry and has its own conditions and blowouts This issue is still under when there appropriate for top kill. Well under the aegis of NISOC and due to the sensitivity of work blowout prevention were on behavior. For example, while consideration. is no drilling 147’s wellhead pressure NIDC, we developed a tool we quickly moved equipment hand. Of course, we would consider blowout prevention petrostates I also have to note that we installed was 2,740 psi ;therefore, which we used in two top kill and machinery and did it in have welcomed and reviewed in Kuwait’s oil wells. In the in the have effective instructions for and other our chance was not high operations. This tool is to be 14 days. Furthermore, for any proposal from other late 1990s, a large number of region had drilling operations. If these wellhead for success in capping the modified so that in case such the first time, the process of companies. Some companies oil wells in this country were no such instructions are respected, we blowout. We finally concluded equipment accidents strike the petroleum transfer, establishment of contacted the NIOC, offering to set ablaze, but the Kuwaiti will see a lower number of oil accidents that bottom kill was our main is not heavy industry in the future they rig and spudding was done help cap the blowout. But they wells were low in pressure and Will gas wellthis blowouts.well cease solution. The equipment was could be used in top kill. In in ten days, which normally imagined that we wanted to and they were extinguished production? dispatched to the area very this tool, the piston is inserted needs twice or three times put out the blaze. A Canadian automatically after the flow of quickly and we soon prepared inside a cylinder-shaped area that time. The vertical Well company also announced fluid and blowout. But it could the ground for installing rigs. while there are orifices which C reached the desired status its readiness to assist us not apply to Well 147. We A: No, but two relief wells We had to drill two wells so let fluid drive the piston into in 34 days, which indicated in the blowout prevention. cannot use the same solution that have been drilled could that in case of any obstacle a the wellhead and prevent precise calculations by drilling Mr. Sepeheri, CEO of NIDC, for all blowouts. Furthermore, produce oil. 32 January 2018 January 2018 33 Iran Petroleum Well Kill Well Kill Iran Petroleum

A Review of Tough Blowout Capping Fath-94 were installed during 7 and 10 days respectively before drilling started within a TheTough blowout of Well 147 of Rag Sefid oil fieldWell was brought under control Kill after 58 days. The well two-day interval from each other. In is Iran’s second largest gas dome in the oil field which holds more than 16.5 billion barrels of oil light of geological in place. Iranian specialists managed to apply their knowledge and expertise to cap blowout in location and an area, access to which is very difficult. given the drilling of Well 147 of Mehran Makvandi Rag Sefid, relief Deputy CEO, National Iranian well C was drilled Drilling Company fluid to counteract oil pressure and bent approximately 30 degrees, vertically and relief well and staunch the flow, then filling in fourteen specialized operations with C was drilled directionally. the orifice to the oil reservoir with Athey wagon and stinger failed to After the boreholes were drilled ell 147 blew out on 29 cement sealing the blowout and the bring top kill into fruition. The piston and casing strings were driven into October 2017 when relief wells. In Rag Sefid, the first 28 equipment, which had been developed the depth of 2,310 meters, a cap was directional drilling had days were spent on cleaning the well by the private sector in collaboration installed. Then, drilling continued up reached the depth of 2,610 meters. location of drilling cuttings so that the with National Drilling Company to 2,332 meters. At this depth, entry This incident happened at a time when wellhead would be accessible. After (NIDC) and National Iranian South into the Asmari reservoir was confirmed the drilling string had been taken out cleanup which made the flames direct, Oil Company (NISOC) and installed by geological survey. Controlled drilling to examine the status of drilling bit specialized operations started for on Athey wagon, was used in three in the Asmari reservoir continued and directional drilling equipment capping the blowout. It took 27 days. operations. This equipment could into the depth of 2,342 meters where at the depth of 1,132 meters. At this Fourteen operations were conducted not be installed to bring the blowout swiveling was high. The objective was depth,W oil and gas gushed out and the with different stingers and three under control due to the deviation to reach the drainage radius of the well. blowout happened at 13:00 local time. operations with piston equipment. of blowout preventers and unstable When swiveling was observed, the Due to the blowout, drilling structure Throughout all these operations, the position of wellhead equipment.When drilling pipes and the bit were brought and substructure and every other stingers and piston equipment were the blowout preventers standing right up to shoe 9 5/8. The well became safe related equipment were set ablaze. installed on Athey wagon and were and the wellhead equipment were and the well was filled. The killing lines Within several hours, this structure connected with high-pressure lines. strong enough, the newly developed were connected from three points to the of several hundred tonnes collapsed Due to the high pressure of the Rag equipment would be likely to succeed. wellhead and the drilling string. After on blowout preventers and wellhead Sefid reservoir and subsequently the This equipment was composed of a the 8000 psi lines were tested, the kill equipment. Consequently, the blowout high pressure of the well, necessary structure fitted with a cylinder and operation started by pumping water of preventers and wellhead equipment arrangements had to be made for high-pressure input and output lines 63 Pcf density, the pumping rate of 135 were damaged. Immediately after keeping the stinger on the head of for operation. By applying 1000 to barrels per minute, pumping pressure the accident, a technical group was the well. That was done by using two 1500 psi pressure, the piston was of 2700 psi and wellhead pressure of established quickly to make plans and snub lines, placing weights and using pushed down and the anchor packer 2500 psi with a pumping volume of arrangements for bringing the blowout two bulldozers. Whereas due to the crossed the blowout preventers to 5,000 barrels. The return of water from Topunder Kill control. vs. Bottom Kill destruction of drilling structure and be placed in the tubing head spool. the wellhead was seen. The continuation substructure, blowout preventers and By blocking the flow path, it created of water pumping along with a gradual wellhead equipment were damaged conditions for pumping drilling mud decline in the pumping rate from 135 Internationally there are two methods in order to kill the well under safe barrels per minute to 10 barrels per for containing well blowouts; top conditions. In parallel with blowout minute and simultaneously cleaning up kill and bottom kill. Top kill involves control, the top kill got under way. The the blowout preventers and the well pumping heavyweight drilling mud top kill operations were as follows: pool, tubing head was reached and into the well. This procedure is Locating relief well C blowout preventers were separated from expected to stop the flow of oil and Locating relief well A the wellhead equipment. New blowout gas from the well. A further step could Fourteen operations Building a 70,000-barrel water pool preventers and well cap were installed be sealing the well completely, often were conducted with BuildingLocating drillingaccess camps routes and wellhead equipment was made with cement. Bottom kill involves different stingers and three safe before cement was pumped at a drilling a relief well to the bottom operations with piston sufficient density to block the well. Well of the borehole of the blown-out equipment All engineering and construction safety was completed and the blowout well, and pumping in heavy drilling operations were carried out in 14 days, came under control after 58 days. which was a record. After locating relief wells A and C, Fath-93 and 34 January 2018 January 2018 35 Iran Petroleum Exploration Exploration Iran Petroleum

An contracts. Iran is ranked the 6th in terms of potential oil reserves and 5th for gas in the world. Iranian petroleum industry officials believe that access to cutting edge technologies Overview would be key to successful discovery of hydrocarbon reserves and extraction of deposits in coming years. That is why Iran has of Iran’s 14 introduced 14 exploration blocks, where oil is Tempting 14likely Exploration to exist, to potentialBlocks foreign investors. Over the past century, giant exploration blocks like Ahvaz, Azadegan, Gachsaran, North Pars and Kish have been discovered, showing Blocks Iran’s strong potential for oil and gas. So far, 500 exploration wells have been drilled in Iran in hydrocarbon-rich areas, leading to the discovery of numerous hydrocarbon horizons. A total of 69 exploration wells have been Iranian and foreign analysts unanimously drilled over the past ten years, 50 of which have proved successful. In the past three years, 22 believe that the time is gone for the exploration wells have been spudded with 16 discovery of giant oil and gas fields in Iran. of them having been successful. That shows They say the chance of discovering fields like Iran’s strong potential hydrocarbon reserves. Ahvaz Asmari and South Pars is slim in Iran There is a strong need for more studies on all as most massive hydrocarbon structures sedimentary areas and application of state-of- the-art technologies. in the country have been explored over Between 1998 and 2007, the National Iranian the past quarter-century. This issue was Oil Company (NIOC) held four bidding rounds outlined in the first meeting of the Supreme for exploration and development blocks. Council of Iran Oil and Gas Exploration. In the end, agreements were reached with international companies for exploration in 15 blocks. Among them, the Anaran, Mehr and Fars blocks were declared commercial. The fate of some of these blocks remained suspended due to the imposition of international sanctions on Iran; however, they are to be revived soon. achsaran, Aghajari, Ahvaz, North Pars, The 14 exploration and development blocks Azadegan, South Pars and Kish are discussed in the present report are located in classified under the category of giant 6 sedimentary zones and cover 71,000 square oil and gas reserves in the world with proven kilometers of land. Half of them are located in reserves of more than 10 million barrels of the Zagros and Persian Gulf sedimentary zone. oil and more than 1 tcm of gas. The main oil and Kazakhstan are among recoverable oil and gas in the among Middle East nations, of new hydrocarbon reserves This sedimentary area is highly potential for reserves were discovered in Iran from 1950s top potential holders of world. Iran is followed by just behind Iraq and Saudi by 2025. Moreover, Iran stands oil and gas exploration due to the existence of to 1970s, while the bulk of gas reservoirs were conventional oil while Russia, Venezuela, Saudi Arabia and Arabia. Furthermore, changes first with 34 tcm of natural gas. numerous hydrocarbon reservoirs, as well as uncovered from 1960s to 1970s. With the turn the US, Saudi Arabia, Brazil, Russia. From an economic in the volume of discovered The country is estimated to giant oil and gas fields. ofG time, the discovery of giant conventional oil Iran, Turkmenistan, Nigeria, perspective, Iran is better natural gas indicate that from discover still 6.2 tcm of gas by Of seven exploration blocks located in the and gas fields has been on the decline. Australia, Norway and Iraq are placed than Canada in terms of 2005 to 2014 Iran came third 2025. That may explain why Zagros and Persian Gulf area, four are onshore Petroleum analysts across the world, however, the top ten potential owners of value of liquid hydrocarbon. after Turkmenistan and the so many foreign countries are and located all along the Zagros Mountains. Two believe that despite century-old oil and gas conventional gas up to 2025. Changes in the liquid US in terms of natural gas willing to mine for oil in Iran’s of these exploration blocks are located in the exploration and extraction in Iran, the county Meantime, according to a hydrocarbon reserves exploration. With 157.8 billion exploration blocks. Lorestan sedimentary zone and in the northern remains in the category of top 10 potential oil BP report issued in 2015, discovered in the Middle barrels of liquid hydrocarbon, The newly-developed Iran section of the Zagros belt; one is in the central and gas resources. Iran’s hydrocarbon reserves East countries from 2005 to Iran comes second in the Petroleum Contract (IPC) section of the belt and another in the southern According to the United States Geological total 346 billion barrels of 2014 show that Iran stands Middle East. According to framework rewards companies section. There are three offshore blocks in the Survey (USGS), Brazil, Russia, the US, Saudi equivalent oil (boe), making in the third place in terms of estimates, Iran has potential that explore oil or gas in Iran Persian Gulf area. Kopet Dag sedimentary zone Arabia, Greenland, Iran, Venezuela, Iraq, Nigeria the country a top owner of liquid hydrocarbon reserves to discover 25.7 billion barrels with long-term development in northeast Iran is a sedimentary zone which 36 January 2018 January 2018 37 Iran Petroleum Exploration Exploration Iran Petroleum

the border with Turkmenistan, but its geological and geophysical information is not as much as Offshorethat of the Blockstwo other blocks.

Three offshore blocks have been introduced in the Persian Gulf sedimentary zone. One exploration block is located in the southern section of the Persian Gulf and two others in the northern part. The outstanding features of this block include the existence of the giant Kish gas field. Furthermore, the structures located in this exploration block are of high significance in terms of gas exploration. The other offshore block is Mahan, where an oil formation has been identified and drilling has been conducted. Other formations in this block are indicative of oil and gas deposits. The Parsa block is among blocks located in the north of ZagrosPersian GulfBlock and is up for foreign investment.

The Zagros block is located in the Lorestan area. Timab and Zahab are the two exploration blocks of this area. Zahab shares border with Iraqi Kurdistan. Changouleh and Dehloran oil fields are located in the Timab block. The next exploration block is Abadan which is home to the Ramshir and Shadegan oil fields which are already producing oil. The deeper and undrilled horizons of this block could be exploration targets. In the Fars area, recent explorations have added to the attractiveness of this zone. The Fars Sedimentary Zone in the exploration block is near the Sa’adatabad and East Sarvestan oil fields. lies along the Turkmenistan border. It has been the Moghan area proved the in Iran, an exploration block thickness. That could herald The Exploration Directorate of the NIOC proven to be rich in gas and hosts giant fields existence of oil. That could has been chosen in one of abundant hydrocarbon introduced the Kavir block in central Iran, the in Iran and Turkmenistan. An exploration block be a positive point. Potential the richest sections of the As part of its effort to Kopetreserves. Dag Moghan block in Moghan, the Bamdad, Mahan Moghanhas been identified in this sedimentary zone. investors are required to sedimentary zone and close to introduce potentially rich and Parsa blocks in the Persian Gulf area, the take into consideration the the Qom area. sedimentary areas where less Sarakhs, Dousti and Raz blocks in Kopet Dag, point that most sedimentary Discovery of Sarajeh and exploration has been carried The three exploration blocks: the Sistan and Taibad blocks in eastern Iran, Moghan sedimentary zone is an important zones in Iran are carbonated Alborz fields is a proof that oil out, the NIOC has moved to Sarakhs, Dousti and Raz are the Dezful, Lorestan and Fars areas as well as area in northeast Iran. It is along the while this one is different. and gas exist in the Qom area. introduce two exploration located in Kopet Dag. They are the Abadan, Timab, Zahab and Toudaj blocks as border with the Republic of Azerbaijan. The Due to the low permeability The Central Iran sedimentary blocks in Taibad in the east up for investment. The Dousti exploration and development blocks for foreign sedimentary zone has also an identified of the reservoirs in Urta Dagh zone was discovered in mid- and in Sistan in southeast. The block is located in Sarakhs investment. hydrocarbon system with known oil reserves and Gir Darreh, companies 1950s. The Alborz and Sarajeh Sistan and Taibad blocks are Plain, and neighbors the Iran currently has 184 onshore and offshore in two fields located in this zone. There is with more experience in gas fields which were explored introduced as blocks in eastern Gonbadli and Tous fields. fields, which have 490 reservoirs. Among them, still one block to be explored in this zone. destructive sedimentary and developed later are located Iran for investment. The The Sarakhs block is located 171 reservoirs have already been developed or Moghan sedimentary zone is shared by three zones are expected to bid for in this zone. The important NIOC has already concluded near the Dousti block and under development while the rest are waiting countries: Iran, the Republic of Azerbaijan Centralthis project. Iran point is that the block had preliminary geological studies neighbors the giant Khangiran for development. and Armenia. Given oil exploration in the zone earlier been defined under on the Taibad block, yielding gas field and the Tous field. Iran is also known to have more than 712 and activities conducted proving the existence Central Iran and saw many positive results on reservoir Anticline structures are the billion barrels of oil in place, 101 billion of oil, the chosen exploration block is located In the Central Iran activities. The sedimentary rock. In the Sistan block, the most important exploration barrels of which still remain recoverable with in the eastern section of Moghan Plain. sedimentary zone, which is area covers part of Semnan preliminary studies indicate objectives in this block. The a recovery rate of 24.6% whose 4.4% is due to Drilling wells in Urta Dagh and Gir Darreh in the vastest sedimentary zone Desert. a sequence with proper Raz block is also located along enhanced oil recovery (EOR) methods. 38 January 2018 January 2018 39 Iran Petroleum West Karoun West Karoun Iran Petroleum

Chinese vendors.” Nazarpour said that 85% Yadavaran of manpower engaged in the management of Yadavaran project were Iranian and the Oil Output Talksremaining Go On15% for Chinese. Phase II After the inauguration of Phase 1 of Yadavaran field, the comprehensive plan for the development of Phase II of this project was Set to Soar endorsed by the NIOC. “Given the approval of this study project and the finalization of production of 180 tb/d in this phase, even if Yadavaran oil field is the only joint field in the Phase II production is set to increase to Iran, where Iran is outperforming Iraq with 200 tb/d the required infrastructure is already which it shares the field. More than a year prepared and there is nothing to worry about,” after the first phase of this field came online, said Nazarpour. He said: “Currently negotiations Iran is recovering 110 tb/d of oil from are under way with Sinopec for the second Yadavaran, which is expected to reach 115 phase of Yadavaran field development.” Noting tb/d in March. Hadi Nazarpour, manager that Yadavaran, like other oil fields, required of Yadavaran oil field development at the application of EOR advanced technologies, Petroleum Engineering and Development Nazarpour said: “Negotiations for enhanced Company (PEDEC), said: “Buyback-style recovery are pursued within the framework repayments to Sinopec of China are to of the new model of oil contracts.” He said start soon.” The West Karoun oil area, that Royal Dutch Shell had earlier studied where Yadavaran is situated, is one of Yadavaran, adding: “For enhanced recovery, the oil richest areas in Iran. It is divided Shell had suggested water and gas injection into Azadegan (North Azadegan, South and announced that it could boost the recovery Azadegan, North Yaran and South Yaran) Sinopec Tests Endorsed rate of the field.” “In case the oil recovery rate of and Yadavaran (Kushk and Hosseinieh). Yadavaran is increased by 1%, nearly $20 billion The West Karoun area holds 67 billion oil deposits are heavy crude crude oil) layer was 6% and output was 20 tb/d. In May in revenue would be generated with barrel at barrels of oil in place. oil. Nazarpour said: “The in Fahlyan (light crude) 14%. 2014, the Yadavaran output Sinopec has conducted $60 a barrel,” said Nazarpour. quality of light crude oil of Early production from this reached 55 tb/d. Nazarpour 21/28 tests which have been Zoom Yadavaran is very good and field was initially planned said production from endorsed by the National no lifting is required for to begin in August 2009 and Yadavaran reached 85 tb/d in Iranian Oil Company recovery.” “According to studies Phase 1 was expected to come April. “The early production (NIOC). Now the Chinese conducted on the field, 10 online in July 2013. “In Phase helped us make up for 67% of contractor will be repaid Under the 11th and the 12th administrations, billion barrels of oil in place 1, 55 wells were drilled, 49 of our delay in launching Phase and remunerated. “The these fields have been a top priority for the in Yadavaran is light crude oil which were production wells, Enhanced1,” he added. Output tests conducted by Sinopec Ministry of Petroleum. Recovery from these and 24 billion barrels of heavy three were injection wells and were successful. A punches oil fields increased from 161 tb/d in January 3-Phasecrude oil,” Yadavaran he added. three others were appraisal which directly affect the 2017 to 305 tb/d in January 2018. Yadavaran Development Earlywells,” Productionsaid Nazarpour. Makes Up After taking office in 2013, production standard and oil field is one of the largest fields in the West for Delays the Rouhani administration quality have been carried out Karoun area in terms of reserves in place. It focused its attention on quick and B punches which are less was discovered in 2004 by the then minister of The development project recovery from joint oil and important than the A punches Money Needed for Development petroleum, Bijan Zangeneh, who is also minister of Yadavaran oil field was Nazarpour said development gas fields. Nazarpour gave are under way,” Nazarpour now. The first phase of this field became awarded to Sinopec under a of Yadavaran had faced delays an acceptable assessment said. He also said that Iranian operational in November 2016 by President buyback deal in 2008. It was due to international sanctions. of the Chinese contractor’s companies involved in the Nazarpour said that Iranian contractors would Hassan Rouhani. “In the preliminary studies, the planned to be developed in Touching on early production performance in the project, project were faring well, be able to develop the West Karoun oil fields field is estimated to hold 12 billion barrels of three phases. The field was by PEDEC, he said: “By saying the field’s output adding that Iranian companies in case they have sufficient financial resources oil in place. After the drilling of three appraisal planned to produce 85 tb/d adopting this plan, production currently stood at 110 tb/d were responsible for 51.3% “because oil recovery from West Karoun is not wells in 2014, the findings of studies showed in the first phase, 180 tb/d started without waiting for which would soar to 115 of domestic manufacturing complicated.” “However, when it comes to EOR that the oil field holds 34 billion barrels of oil in in the second phase and Phase 1, and everything tb/d by March. He said that of equipment needed in this Iranians are not experienced enough and we place,” Nazarpour told Iran Petroleum. 300 tb/d in the third phase. was proceeded in parallel.” accumulated production from project. Comparing Iranian need to use new technologies in this sector and Yadavaran comprises Fahlyan layer with an Studies conducted in the field Yadavaran came officially Yadavaran stood at 111 million and Chinese manufacturers, naturally we have to handle it in partnership API gravity of 38 to 40 and Sarvak with an indicated that the primary on-stream in February 2012, barrels, which had earned Iran he said: “Iranian vendors with foreign companies,” he said. API gravity of 22. Two-thirds of Yadavaran’s recovery rate in Sarvak (heavy while five months later its nearly $7 billion. were much stronger than 40 January 2018 January 2018 41 In 2017, Russia outperformed Saudi Arabia Russian oil companies are reluctant to become the biggest supplier of crude oil to cooperate with OPEC in boosting to China. This year, it plans to raise its oil oil prices as they have been driven up exports to China by 200 tb/d year-on-year sufficiently

Iran Petroleum Analysis Analysis Iran Petroleum

and instead, more oil will setting future policy for oil price the future in order to regulate the Russia Oil Firms and Output go to China. That could and global markets. That is while market. Therefore, Russia is unlikely raise the price of crude oil Russian oil companies, like their to stop honoring the deal and quit exports to Europe and create counterparts in other oil producer immediately. a safe margin for companies countries, are worried about the US In the meantime, Russian oil Freeze Perspective supporting the production shale oil production and its impact on companies are reluctant to cooperate Oil price rally over recent weeks has given rise to speculation about a shift by some freeze scheme because they global prices. Therefore, Russian oil with OPEC in boosting oil prices as countries from the OPEC-led scheme to cut oil output in order to control a supply glut. will stick with their support companies may not be willing to go they have been driven up sufficiently. Non-OPEC oil producer Russia, already a party to the deal, is likely to stop honoring for the production freeze on ahead with the production cut scheme That could ratchet up pressure on the terms of the agreement. Leading Russian oil and gas companies Transneft, Rosneft, the grounds that a shift in for fear of oil price jump and increased Moscow to accelerate the termination market from Europe to China investment in shale oil production of the project. Lukoil, Gazprom Neft and Yukas have hinted at their intention to quit the hard-won would drive up prices. Apart because the freeze plan would affect However, the important point there is deal. These Russian companies, however, remain divided about the production cut from political issues that may the oil price rally and encourage shale that most Russian oil companies are agreement. affect Russia’s strategy on Perspectiveoil production. state-run and they have no option but energy exports to Europe, a to obey political rules instructed by Shuaib Bahman reason explaining the change the government. in Moscow’s policy lies in As senior Russian officials, including For instance, Transneft, which trend this year due to the the policy of diversification the Russian companies’ new Minister of Energy Alexander Novak, owns more than 71,000 kilometers US’s oil production hike and of energy supply which has orientation, whose prime have hinted at future talks about of pipeline and over 500 pumping The OPEC and non-OPEC agreement for the dollar value depreciation. been followed up on by the example is cooperation with gradual exit from the oil production stations, is the largest oil pipeline boosting oil prices resulted in what is known Rosneft, which has shot to European Union in recent Chinese firms. For example, freeze agreement reached between company in Russia. But it is owned as oil output cut. The decision helped prices prominence particularly after years has to a large extent China’s CEFC has purchased member states of the Organization of by the government. Rosneft is also edge up lightly. OPEC and non-OPEC producers Vladimir Putin came to power challenged Russia’s objectives. 14.2% of Rosneft’s stocks the Petroleum Exporting Countries controlled by the Russian government. agreed in their last meeting to keep supply in Russia, has been slapped Therefore, it is likely that for $9.1 billion. The Chinese and non-OPEC producers. However, It shows that the Russian oil on markets unchanged up to March 2018 with Western sanctions since China turn into Russia’s top company has turned into Moscow knows quite well that such companies follow instructions decided when they should decide about the extension the outbreak of the Ukraine priority in energy strategy in a major stakeholder in a move has to be carried out on a by the government. The Russian of the deal. Undoubtedly, one reason for the crisis in 2014. Any decline coming years due to China’s Russia’s crude oil. Therefore, gradual basis because any output government continues to remain success of this plan was the involvement of in oil prices could inflict growing thirst for energy and Russian companies will have hike shock would reduce oil prices. instrumental in the continuation of non-OPEC nations and their contribution to oil irreparable damage on this ever-growing ties between to take into consideration The Russians are well aware that they termination of such agreements as the output freeze. Russia was the most influential company. Therefore, the idea Moscow and Beijing. In that views of their partners in will need to cooperate with OPEC in oil output freeze. non-OPEC nation engaged in the deal due of ending the oil output freeze event, European countries to its clout with global markets. In certain scheme seems to be facing would largely lose their circumstances, Russia managed the process of serious opposition inside significance. In 2017, Russia negotiations in the run-up to the agreement. Russia. Rosneft, the largest outperformed Saudi Arabia to Under the plan, Russia cut its production by state-run producer of crude become the biggest supplier roughly 300 tb/d to 10.9 mb/d. When oil oil and gas condensate in the of crude oil to China. This producers agreed on 25 May 2017 to extend world, has opposed ending year, it plans to raise its oil the six-month deal for nine more months up to the deal. Rosneft is the leader exports to China by 200 tb/d next March all Russian oil companies showed of Russia’s oil industry. It year-on-year. their support. However, Russian companies accounts for nearly 40% of What is important in the shift are split on whether or not the deal should Russia’s total oil production in Russia’s export strategy be extended beyond the March deadline. The and 6% of global oil output. is that its total oil exports Russian government has so far spoken about Rosneft remains instrumental would not change year-on- the necessity of commitment to the agreement; Shiftin Moscow’s in Strategy oil policy. year; rather, it would reduce however, some oil companies in this country its exports to Europe and have demanded that Russia quit the deal instead lift its delivery to so that they would produce more oil. For Russia’s energy strategy used China. Russia’s oil exports instance, Lukoil’s chief recently said that with to be based on dominance to Europe via Primorsk oil oil prices at around $70, the oil deal must be on Europe’s markets and terminal off the Baltic Sea annulled. But Igor Sechin, CEO of Rosneft, said blocking serious rivals’ entry and Novorossiysk oil terminal the oil price would experience a downward into this market. Nonetheless, in the Black Sea will decline, 42 January 2018 January 2018 43 Iran Petroleum Top story ShellTop to story Redevelop North Sea Penguins Iran Petroleum ProductionIPF Shell will commission a newly built opportunity with a competitive Sevan 400 FPSO for its re-development break-even price of less than $40/ of the Penguins oil and gas field in bbl.Currently, oil and gas from the the UK northern North Sea.This will Penguins field is processed via four Mexico Energy Reform Faces Test be the company’s first new manned drill centers tied back to the Brent An auction of deepwater oil and gas installation in the area for almost 30 Charlie platform, which is close to fields offshore Mexico this month years. It will have capacity to produce ceasing production. Shell plans to drill may prove to be the last major up to 45,000 boe/d. Shell said the an additional eight wells on Penguins, opportunity for President Enrique project represented an attractive tied back to the new FPSO. Pena Nieto’s government to capitalize on the opening of its energy sector, according to a Reuters report. The Jan. 31 tender of licenses to explore North Sea and drill in 29 blocks in the Gulf of Mexico could represent the largest amount of oil and gas wealth on offer since the completion of a 2013-14 Cameroon to legislative overhaul that opened Mexico’s energy arena to foreign Promote Licensing Round investment. Many of the biggest CGG will help Cameroon’s state global oil firms have registered to oil company Société Nationale des take part, including Exxon Mobil Hydrocarbures (SNH) promote the country’s Corp., Royal Dutch Shell, BP, Total and 2018 licensing round. The company will detail China Offshore Oil Corp. enhanced multi-client E&P data packages Technical Impacts and interpretative products for eight blocks Hit Vietnam Wells on offer, in various offshore and onshore sedimentary basins, at road shows to SOCO International has provided an be staged in London and Houston – update on its development and exploration respectively from Feb. 28 to March programs offshore Vietnam.Following the 2, and from March 7 to 9. government’s approval of the revised TGT full field development plan, drilling operations at the Mexico field in block 16-1 resumed last March. Initially the jackup PetroVietnam Drilling VI drilled and completed the TGT-30P well, targeting Miocene and Oligocene reservoir horizons VIEW Vietnam in the crestal part of the H1.1 fault block; and the TGT–29P infill well from the H5 wellhead platform on the southern part of the field. Cameroon

Woodside Awards Contracts Offshore Australia Woodside has awarded Wood two new contracts to deliver engineering and rig modification VIEW VIEW services offshore Australia and Australia a concept definition study for the Julimar Phase 2 project. The engineering and rig modification services will be executed under a three-year non-exclusive outline agreement, which has two one-year extension options and is effective immediately. The concept definition study is for the subsea flowline and umbilical system for the Julimar Phase 2 project, comprising the Julimar and Brunello fields off Western Australia, and is also effective immediately. 44 January 2018 January 2018 45 Iran Petroleum News News Iran Petroleum

Alaska Oil Producers Focus on Efficiencies Oil Producers Will Cooperate Beyond 2018

The rebound in the price of crude Global oil producers are in agreement oil in recent months that has helped 1 that they should continue cooperating producers will be temporary, and on production after their deal on the industry must prepare for supply cuts expires at the end of this competition from energy sources year, Saudi Arabia’s energy minister elsewhere, the head of the Alaska Khalid al-Falih said. operations of BP Plc said at an It was the first time Saudi Arabia, industry conference. “We might be the world’s top oil exporter, had enjoying prices today that are over publicly stated OPEC and non-OPEC $70 a barrel. But when you look at producers would keep cooperating the fundamentals, at BP anyway, after 2018. The exact mechanism for we still think lower for even longer. cooperation next year has not yet And staying competitive is very been decided, Falih said, but if oil important,” Janet Weiss, president inventories increase in 2018 as some of BP Exploration (Alaska) Inc., said in the market expect, producers might in a speech to the Alaska Support have to consider rolling the supply Industry Alliance. “When you look cut deal into next year. “There is a at the fundamentals – and you take readiness to continue cooperation a look at supply and demand out beyond 2018... The mechanism 4 in time and what is going on with hasn’t been determined yet, but renewables and what is going on there is a consensus to continue,” with electric cars – and yes, there’s prices per barrel. While global oil efficiencies, new technology and Falih said after a meeting of the joint beyond 2018 wouldn’t necessarily this is something that a demand for oil, but there’s a whole demand is growing, she said, “there’s extra efforts to wrest new oil from ministerial committee which oversees mean sticking to countries’ current is here to stay. And we are going to lot more of it out there,” she said. more oil supply than demand,” along the 40-year-old field, she said in her implementation of the cuts. The production targets. The agreement work together.” Kuwait’s oil minister “So it’s the low-cost basins that will with new non-oil energy. Weiss was speech. ConocoPhillips Alaska Inc. committee comprises Saudi Arabia, was launched last January and Saudi Bakheet al-Rashidi said the meeting get to produce. Not all the barrels celebrating BP’s ability to stabilize president, Joe Marushack, avoided Kuwait, Venezuela and Algeria, plus Arabia has accounted for by far the focused on compliance with the in Alaska are going to be produced production at the ageing Prudhoe any price predictions but said his non-OPEC producers Russia and largest share of the output cuts. current agreement on output cuts, if we don’t make them competitive.” Bay field which it operates. Average company is prepared for decreases. Oman. The United Arab Emirates was Falih said a deal on production levels and discussion of the deal’s future was Weiss was not specific in her speech daily production has exceeded “The reason you hear me talk about also present as it holds the presidency after 2018 would be about “assuring expected to occur in June, when OPEC but later told Reuters, “definitely not 280,000 barrels since 2015, costs is we’ve got to survive in any of OPEC. Before the meeting, Falih said stakeholders, investors, consumers and other producers led by Russia are NEWS70s. More the 50s”, referring to oil accomplished through operating NEWSprice environment,” he told Reuters. extendingNEWS the cooperation framework and the global community thatNEWS next scheduled to meet on oil policy. India’s ONGC to Buy Nigeria MPs Seek Norway Gas Production Algeria to Boost Energy Majority Stake in Refiner 2 $21bn Recovery Rising 5 Production

India’s biggest explorer Oil and Natural Gas Corp Nigerian lawmakers ordered an investigation Norwegian offshore fields delivered record Algeria’s state energy company Sonatrach has (ONGC) has agreed to buy the government’s majority stake in state- into whether the government could recover volumes of gas last year, according to a review signed a deal with Spanish firm Cepsa to boost refiner Hindustan Petroleum Corp for 369 billion rupees ($5.78 $21 billion in revenues from international by the Norwegian Petroleum Directorate (NPD). production at the Rhourde el Khrouf oil and billion), ONGC said.It will pay a premium of about 14 percent on oil companies.Oil minister Emmanuel Ibe Production of oil and gas looks set to continue rising until gas field in southeastern Algeria, Sonatrach’s HPCL’s current market price for the 51.1 percent stake, the company Kachikwu said in December the government 2023, perhaps matching the previous overall high of 2004, chief executive said. The deal should raise said in a statement to the stock exchange. It expects to complete the had failed to enforce a legal provision entitling when oil accounted for most of the output. production at the field from 11,000 barrels transaction by end-January. The deal is part of the government’s it to a greater share of crude sales once the In 2023; however, gas should make up around half of the per day of oil to 24,000 bpd of oil after five objective to combine various public sector enterprises “to give price exceeded $20 a barrel.Members of production. Last year’s Norwegian oil production was 2% years, and to 10,000 bpd of liquefied petroleum them the capacity to bear higher risks” and create more value for Nigeria’s lower house of parliament voted to lower, mostly due to an unplanned maintenance shutdown gas after six years, Abdelmoumen Ould shareholders, ONGC said. Purchasing a stake in India’s third biggest set up a committee to look into “the reasons on the Goliat field in the Barents Sea. Oil output will likely Kaddour said. The deal includes a $1.2 billion state-owned refiner would also help ONGC to diversify its cash flow for the loss”, which the minister had estimated fall a further 2% this year and continue on a downward investment and the length of the contract is and reduce its vulnerability to changing global crude prices, it added. at $21 billion.The committee trend until 2020, when volumes from Johan Sverdrup in 25 years, he said. “The field was about to die, India’s finance minister Arun Jaitley said in February that the country would look into “the possibility the North Sea start to kick in. However, there is uncertainty but technology has allowed us to raise plans to form a national oil major by combining other state-owned of recovering the revenue lost,” 3 linked to the drilling of new wells, start‐up of new fields, the output. This is why partnership is key 6 firms. India also wants to expand in global oil markets to meet its according to a statement on ability of the reservoirs to deliver, and the regularity of fields to us,” Ould Kaddour told reporters at a growing domestic demand for fuel. parliament’s Twitter account. in operation. signing event in Algiers. 46 January 2018 January 2018 47 Iran Petroleum Top storyNews TopNews story Iran Petroleum

Schlumberger Sees Stronger Year for Oil Sector Brazilian Ethanol Prices Open Window for U.S. Imports

Schlumberger posted a fourth U.S. ethanol exports to Brazil will quarter loss on charges but beat spike during the coming months as Wall Street forecasts and gave high gasoline prices and low ethanol an upbeat outlook, predicting its supplies drive up demand in the international operations would South American country, according grow in 2018 for the first time in to two traders and two brokers four years. Schlumberger, the largest active in the market. The southward energy company so far to report flow comes as a setback to Brazil’s results, is a bellwether for oilfield efforts to curb foreign shipments. Its services and drilling. Its forecast for government in September slapped broad improvements this year on a 20 percent tariff on U.S. ethanol higher oil prices signals a stronger imports above a quota of 150 million recovery for producers and service liters (40 million gallons) per companies. quarter but is considering reversing “Looking at the oil market, the decision due to supply struggles. the strong growth in demand is Sales of U.S. ethanol to Brazil so far projected to continue in 2018, on in January would already surpass the back of a robust global economy,” that quarterly quota, said a U.S. fuel said Chief Executive Paal Kibsgaard. trader with direct knowledge of the Producers predict between 15 deals. “Even with the 20 percent and 20 percent growth in North tariff, the arbitrage is pretty wide American energy investments, he open into the northeast (of Brazil). said. The world’s largest oilfield They are going to keep pulling 9 services company reported $2.7 focus on selling its seismic data and benefited from the year’s 7 because they need the barrels,” the local ethanol prices tend to fall,” demand for cheaper ethanol billion in fourth quarter charges no longer provide land and marine recovery in crude prices, trader said. Tarcilo Rodrigues, a Rodrigues said. Brazilian brokers as a substitute. But since including a $938 million write- seismic acquisition. The business rising to 48 cents a share, partner at Bioagencia brokerage in quoted U.S. ethanol delivered at Brazil is between cane down of its Venezuelan holdings has suffered as drilling has focused above the average analyst estimate Sao Paulo, said U.S. producers could local ports at around 1.95 reals crops, most local mills will not and unpaid bills due to economic on well-defined U.S. shale fields of 44 cents, according to Thomson ship as much as 450 million liters of per liter ($2.29 per gallon) after produce more ethanol for a few turmoil there. Schlumberger said it rather than new areas. The charges Reuters I/B/E/S. Schlumberger ethanol in the December-January- transportation costs and all taxes months. Martinho Ono, a director at would remain in the South American widened Schlumberger’s fourth said quarterly results included an February quarter - triple the quota and the 20 percent import charge. Sao Paulo-based ethanol brokerage country and continue to seek quarter net loss to $2.26 billion, additional $76 million in taxes due and roughly matching record-large That is cheaper than similar SCA Etanol do Brasil, said some payment for its past work there. from $204 million a year earlier. to U.S. tax reform. volumes seen in the same period a Brazilian product, pegged at around sugar and ethanol makers in Brazil It also took more than $1.1 billion Revenue rose 15 percent to $8.18 The company saw international year ago. “I believe this is a situation 2.15 reals per liter ($2.53 per are converting anhydrous ethanol in restructuring expenses tied to billion. Its shares were roughly flat growth underpinned by recent that will persist at least until April, gallon). Brazilian gasoline prices are - the type primarily produced in its WesternGeco seismic business, at $76.33 in afternoon trade. contract wins in Saudi Arabia, when mills start processing the up more than 20 percent since July the United States - into the hydrous NEWSciting poor returns. That unit will Excluding the writedowns, profit Kuwait, India and elsewhere. NEWSnew center-south cane crop and due to rising oil prices. That boosted variety more common in Brazil. Sverdrup Field to Feature Permanent Reservoir Monitoring 8 Libya As-Sarah Fields Reopen Statoil has contracted Alcatel mi), making this one of the largest over the course of production. Libya’s National Oil Corporation, decided to reopen the fields under production and sale of Libyan oil. Submarine Networks to provide fiber-optic seismic systems of its Sverdrup’s system will employ NOC, announced the reopening of pressure from the NOC and Libya’s Since 2014, Libya has had permanent reservoir monitoring kind anywhere, Statoil claimed. optical fiber technology that allows the eastern As-Sarah oil fields, where public prosecutor. The NOC had competing governments based (PRM) at the Johan Sverdrup field in And for the first time offshore for continuous recording of changes more than 50,000 barrels per day blamed Wintershall, BASF’s oil and in Tripoli and the east. The the Norwegian North Sea. Norway, the seismic spread will be in the subsurface. (bpd) in a Wintershall concession gas subsidiary, for an “unauthorized” eastern government, which is This should help Statoil achieve its in place to optimize production at “We see great potential with PRM had been shut in by a blockade shutdown it said had cost Libya not recognized internationally, goal of a 70% recovery rate from start-up. The seismic cables will be on Johan Sverdrup in terms of since November. Two wells started more than $281 million. unsuccessfully attempted to prize Sverdrup. Alcatel will install 380 installed in 2019. With PRM, seismic improved visualization, modelling, pumping and production was It also called the decision to reopen the NOC and central bank’s powers km (236 mi) of fiber-optic seismic sensors are permanently embedded and eventually also predictive expected to reach around 55,000 the fields a “humiliating setback” away from the capital, as cables on the seafloor and more than into the seabed to achieve more analytics,” said Eli Eikje, head of bpd, according to a source familiar for a parallel NOC based in eastern part of a wider struggle 10 6,500 acoustic sensors covering an frequent and improved seismic Petroleum technology for Johan with the matter. The NOC said the Libya, which for several years between rival political area of more than 120 sq km (393 sq images of changes in the reservoir Sverdrup. municipality of the Ajkhara oasis has tried to gain control over the factions. 48 January 2018 January 2018 49 Iran Petroleum Market Market Iran Petroleum

January, all the petroleum products switch to LPG instead of naphtha. kerosene demand in Northeast Asia Global Oil and Asian Product markets cracks except middle distillates Cold weather could switch LPG from is expected to continue providing declined, confirming their weak Petchem market to being used for supportFuel Oil for a few more weeks. Lightfundamentals. Distillates (gasoline, heating purposes which would support Market, January naphtha) naphtha cracks in the coming months. The CEO of National Iranian Oil Refining and Distribution Company (NIORDC) says the Strong movement of crude price Asian fuel oil market was at its lowest Bandar Abbas Gas Condensate Refinery in southern Iran is currently producing the highest creates negative points for naphtha in the past five consecutive months quality gasoline in Iran. Ali-Reza Sadeq-Abadi said at a press conference that Euro-4 Gasoline followed neutral trend during Middlecracks in Distillates the market. (gasoil, jet fuel) due to weak demand from both bunker gasoline production had reached 12 million liters a day (ml/d) from 3.5 ml/d over four January, but generally speaking we and power plant sectors. The market months. have witnessed plenty of supply in sentiment has been largely influenced Mahdi Moeini the last few months, with February Asian gas oil/diesel cracks are by higher cargoes moving into Asia forecast to return to a 250 tb/d deficit. performing pretty well. Strong from Europe. On the stocks front, touched a 15-month low against a could expect the Brent/Dubai EFS Taking into consideration recent stock demand growth in the region Singapore’s commercial stockpiles of basket of major currencies and lead differential to be narrowed as recovery build-up and scheduled turnaround continues - Indian and Chinese heavy distillates rose exerting more lobal crude oil prices edged to upward movement in commodity in north sea crude production has been in refineries in the regions, a little bit demand play the most important role pressure on the market. higher and surpassed $70 a markets. Despite the bullish signals, started . Given Brent/Dubai spread rebound in gasoline crack is forecast in the gasoil market in the region. So far this year, arbitrage inflows to barrel in January for the first the front -end support from the , WTI/Dubai propose better to occur. Cheaper LPG and stream of Total demand growth in Asia must Asia from West of Suez are reportedly time in three years which is supported prolonged disruption to North Sea arbitrage ooportunity for US considerable volume of naphtha to the be close to 550,000 b/d over January- still high despite a significant by various market fundamentals. volumes will soon fade and the spring Asiancrudes Productinto Asia. region put heavy pressure on naphtha. February, or 7%. Additionally, the weakening in the arbitrage window. Venezuela production decreased refinery maintenance impact on Markets Due to cheaper LPG, many steam arbitrage to Europe remains open European volumes are potentially nearly 300 tb/d since mid 2017 demand will strengthen perceptions crackers in the Asia despite weakening cracks. Jet/kero being pushed over amid a weak through 2018 , due to some main of easing in crude balances. On the cracks also remained fairly strong, market there. There remains key reasons: insufficient investments, other hand, rising crude prices and During starting the year at a wide premium market risks including paymentG delays to suppliers and U.S. seasonal demand weakness have to their 2017 levels. Cold high prices taking their toll on demand sanctions . In December production impacted margins in different areas weather and in the region, as well as the continuing decline was also seen in the North Sea, over recent weeks which could lead to high trend of lower imports into Pakistan which helped cut global oil supply in decline in refinery run . Therefore, where policy is dictating a shift December by around 405 tb/d and in case no unforeseeable events towards cleaner power generation. underpinned the market level. As per occur, a slow price correction We still expect a rebound in fuel oil the latest news, the production cut deal is expected to become cracks in the coming weeks by OPEC and non- OPEC which began observable over the based on fundamental in January 2017 and will run until the upcoming weeks. factors, but remain end of 2018 still plays a positive role in For the initially cautious about price rally . Supportive data from the February, the extent of the demand side with Chinese independent we upside trend. refineries importing 8% more crude oil in December which pushed the market during January is a very positive data on refinery margins that can be extended into the next months. Other factors contributing to bullish market is U.S. dollar depreciation which briefly

50 January 2018 January 2018 51 Iran Petroleum Energy Show Energy Show Iran Petroleum

$100bn Manufacturing Market RIPI’s chief Jafar Tofiqi and CEO of KFZO Ebrahim Reza Khayamian, Chairman of Ansari Lari signed an MOU Society of Iranian Petroleum for cooperation in research Industry Equipment projects and offering Manufacturers, said the consultation services for the Ministry of Petroleum favored development of Kish Free development and transfer of Trade Zone. Cooperation technology into the oil industry with KFZO for the purpose of equipment procurement. offering innovative services in “In new oil contracts, the entrepreneurship development manufacturing and supply of processes and converting equipment are valued at $60 Kish Island to a renewable billion. When we take into energy hub are among other consideration regional markets objectives of the MOU over the like Iraq, we are faced with a coming four years. Iran$100 Bargaining billion market,” Chip he added. The RIPI-Turbotec MOU was signed by Tofiqi and Hiva Khaledi. The MOU is aimed Mohammad-Reza at implementing various Nematzadeh, senior industrial industrial and petrochemical advisor to minister of projects particularly in rotary petroleum, said domestic machinery, including gas renovation of crude oil export turbines, steam turbines, installations had boosted the gas compressors, as well as (NIOC) for development and engineering, said maneuvering power of Iran’s oil and gas industry. Tofiqi tender bids for oil and gas fields were under petroleum industry. highlighted the importance Kish Energy Show Exhibits way. “The bidding round for Azadegan oil field He added that the Iran Oil of turbines, compressors is in process. In Yaran field, we are waiting Terminals Company (IOTC) and rotary equipment in the for the final proposal from Persia Oil and Gas marked history after setting oil and gas industry, saying: Investment Opportunities Company, and in Yadavaran negotiations with a 9 mb/d oil and condensate “Turbotec is a leading designer Sinopec are under way,” he said. Manouchehri export record. “Today we need and manufacturer of this The 14th international energy show was held in Kish Island during 22-25 January. The said some negotiations for signing contracts development of investment equipment and I am confident exhibition provided a venue for participants to learn about the latest opportunities for for the development of oil and gas fields had opportunities and sweetening that both parties [to the MOU] investment in Iran’s energy industry. They also learned about the latest measures with reached a good stage, expressing hope that conditions and terms for the would help us meet the basic regard to energy industry and regional markets. the petroleum industry would see these presence of internationally needs of oil and gas industry negotiations bear fruits next year. recognized companies in the in the country.” On the third He touched on negotiations with Denmark’s upstream and downstream day of the exhibition, RIPI and Maersk for the development of the South Pars oil industry,” he said. “In Pars Petrochemical Company Habibollah Bitaraf, deputy companies was in line with technological development of fields, nine Oil Layer, saying: “Some ambiguities resulting harmony with this important signed an agreement of minister of petroleum for the Ministry of Petroleum’s specialized EOR centers are planned to be from French Total’s acquisition of Maersk have issue we can empower cooperation for lab-scale study engineering, research and planning to implement the established. been instrumental in the slow process of talks.” domestic manufacturers of and basic design of hydrogen technology, said for the first new model of oil contracts, “Transfer of technology to E&P companies, Regarding packages of production stability and equipment and commodities purification of pentane plus time certificate of quality of known as the Iran Petroleum EPC companies, GCs, domestic suppliers and enhancement the NIOC is to offer within the of petroleum industry at cracking. “Due to the high petroleum industry products Contract (IPC). “The IPC-style manufacturers and introducing reservoir framework of EPCF, Manouchehri said: “This $5 1global Contract, level.” 2 MOUs Signed sulfur content of pentane plus, and services had been issued contracts set to be signed for engineering to Iranian universities are among billion package comprises 40 small packages, selling this product faces some for two Iranian manufacturing developing oil and gas fields levels of transfer of technology envisaged by the whose tender documents have been prepared by problems. We expect that after companies. “The issuance would be more than $100 Ministry of Petroleum,” he added. the Iranian Offshore Oil Company, the National On the sidelines of this implementing this agreement, of this certificate is in line billion. Given the issue of Bitaraf referred to the increase in recoverable Iranian South Oil Company and the Iranian exhibition, the Research the sulfur content of the with identifying high-quality procurement of equipment, a oil reserves in Iran, which have reached 157.7 Central Oil Fields Company. Bidding rounds will Institute of Petroleum pentane plus produced by domestically manufactured good market would be created billion barrels, saying Iran’s gas reserves stood be held after assessment and finalization.” Industry (RIPI) signed two Pars Petrochemical Company, services and products,” he said for job creation and activation Azadeganat 34 tcm. Tender Under Way He said the long list of bidders was drawn up MOUs with the Kish Free Zone currently standing at around in an opening speech. of Iranian companies,” he said. by the Office of Deputy Minister of Petroleum Organization (KFZO) and 1,000 ppm, would fall below He said that the issuance Bitaraf said in the research for Engineering, Research and Technology, and Turbotec while RIPI and Pars 10 ppm and a lucrative market of quality certificate for agreements signed with Gholam-Reza Manouchehri, deputy managing submitted to the Office of Deputy CEO of NIOC Petrochemical Company sealed would be created for this two Iranian manufacturing universities for the director of the National Iranian Oil Company for Development and Engineering. an agreement for cooperation. product,” signatories said. 52 January 2018 January 2018 53 Iran Petroleum Investment Investment Iran Petroleum

was attraction of investment, In addition to the new model political risk of presence in Iran, transfer of technology and EOR of contract, the NIOC also offers and we think that we can continue in developing oil and gas fields in packages of investment within with our oil cooperation in Iran.” the country. Therefore, companies EPCF and EPDF framework with He said the only obstacle in the Tatneft Keen to Invest in that referred to the NIOC for the objective of preserving and way of investment in Iran emanated negotiations had to take into enhancing the oil production from foreign currency exchange consideration these parameters. capacity. The return on investment rate fluctuations and transfer of In recent years, Tatneft has also in these projects would be less than money. Iran Oil Field been involved in oil refining. Tatneft three years. Iranian companies will “Our presence in this exhibition Russia’s Tatneft has signed two memorandums of understanding with the National officials told “Iran Petroleum” be invited to bid for these projects means that we are serious about Iranian Oil Company over the past one year to conduct technical studies on the that the Russian firm owns one of and will be authorized to hire presence in Iran and we are not Dehloran and Shadegan oil fields. most sophisticated refiners in the foreign partners. Issuance of bonds, afraid of threats uttered against world. “We have submitted our finance, usance and loan from the Iran,” said Fedorov. he Russian firm has Gholam-Reza Manouchehri, deputy selling its tires in Iran. Over the proposals for the development National Development Fund of Iran “We are assessing Iranian submitted its proposals head of the NIOC for engineering past one year, Tatneft has signed of Shadegan and Dehloran to the are among methods of financing for companies, but at the same time Tfor the development of the affairs, has said that 45 proposals two oil MOUs with the NIOC with NIOC at attractive prices and we these projects. they are assessing us too,” he two fields to the NIOC and is now had been submitted to the company a view to developing Shadegan are waiting for the NIOC to give Iran’s petroleum industry needs added. After signing the MOUs to seeking long-term cooperation while 55 more were to come. and Dehloran. The Russian firm its final view on these proposals. more than $100 billion to enhance study the Dehloran and Shadegan with Iran in developing the fields. Besides the events held by Iranian recently submitted the result of In case of their agreement, we its oil production. Tough sanctions fields, Tatneft and the National Furthermore, Tatneft is ready to Ministry of Petroleum to introduce its studies on Shadegan to the will present our financial and imposed on the petroleum industry Iranian South Oil Company (NISOC) invest up to $400 million in EPCF opportunities for investment, NIOC. Tatneft has also signed an technical proposals,” said Fedorov. forced foreign companies to pull have reciprocated visits. projects in Iran. international exhibitions provide MOU with Ferdowsi University of vShadegan is located in southern out of Iran for years. But since “Every time we come to Iran we Iran’s talks with foreign oil a good chance for Iranian and Mashhad in order to study methods Iran. Discovered in 1968, it came the 2016 implementation of the feel at home. Iranian companies companies got under way seriously foreign companies to display their of enhanced oil recovery in Iran. online in 1988. Dehloran is situated JCPOA, many foreign companies answer our questions,” Fedorov after the implementation of the capabilities and become aware of Alexander Fedorov, Tatneft’s 180 kilometers from Kermanshah. have reviewed opportunities for said. Asked why Tatneft had country’s landmark nuclear the latest achievements by rival director of geology and foreign Jointly owned with Iraq, it was investment in Iran’s petroleum decided to participate in the Kish agreement with six world powers, companies. projects, told “Iran Petroleum”: discovered in 1972. Dehloran was sector and have held talks with the exhibition, he said: “We want to get dubbed the Joint Comprehensive The 14th International Energy “Tatneft is the 5th largest producer targeted and damaged during the Ministry of Petroleum and Iranian familiar with Iranian companies, Plan of Action (JCPOA). Iran has Exhibition in Kish Island provided of oil in Russia with an annual imposed war on Iran (1980-1988) contractors. exchange information with them also developed a new model of Tatneft – Russia’s fifth largest oil output of 210 million barrels and it halted oil supply. Dehloran’s Fedorov said Tatneft had already and share information with them oil contracts – Iran Petroleum producer – a chance to learn about (700,000 b/d). We have not only output was at 24,000 b/d in 2009. expressed its readiness to invest in about Tatneft. Second, our presence Contract (IPC) – to sweeten terms of the activities of Iranian companies operated projects in production, Tatneft hopes to start its talks with Iran, adding: “Based on our analysis in this exhibition means we look for agreements for foreign firms. Last involved in the petroleum industry. but also we have operated IOR and the NIOC for signing contract with and calculations on this issue, long-term cooperation with Iran.” July, an agreement was signed with Tatneft’s booth in the Kish EOR projects.” the NIOC after studying the IOC we concluded that we can start “Iran is a good market for France’s Total for the development exhibition was among the most “We envisage using advanced EOR draft. Fedorov said the MOU signed investing in Iran.” oil investment by Tatneft. of Phase 11 of South Pars gas field. visited ones. Representatives of technologies in developing oil fields with Ferdowsi University was in Asked about US President Donald Furthermore, we want to expand In addition to this agreement, 36 the Russian company answered in Iran. We are seeking to transfer line with Iran’s plans to transfer in Trump’s to re-impose sanctions on our interaction with the Iranians MOUs have been signed between questions about the field of activity this technology to Iran,” he said. technological savvy. Iran, the Russian industrialist said: in other sectors than oil like selling the NIOC and Iranian or foreign of the company and its perspective. After Iran introduced IPC, it said “Tatneft is ready to invest from “No official sanctions have so far tires because we are among the companies for studies on oil and Tatneft hopes to operate oil one of the main objectives in the $30 million to $400 million in EPCF been decided to be imposed on Iran best manufacturers of tires,” said gas fields. projects and find a toehold for newly developed model of contract projects in Iran,” he said. again and we have examined the Fedorov.

54 January 2018 January 2018 55 Iran Petroleum Sports Sports Iran Petroleum Interview with Head Coach Hamad Sameri: We’ll Defend Iran Name players of Palayesh-e Naft-e Abadan are qualified to join the national team. Since in West Asia Games Palayesh-e Naft-e Abadan has Hamad Sameri is a well-known basketball coach to represent Iran in the West and trainer in Iran with long years of experience Asia matches, it has hired both in Khuzestan Province. Sameri, who has been the young and experienced players head coach of Palayesh-e Naft-e Abadan since to record bright days under the Interview Exclusive its formation, believes that his team will have Basicleadership Teams of Hamad Sameri. too much to say in the West Asia matches. The following is an interview with him:

Although there are veteran Since you have been with basketballers with Palayesh-e Palayesh-e Naft-e Abadan since its Naft-e Abadan, this club has establishment, did you ever imagine had good planning in basic seeing such good days? Abadan teams, too. Investment in A: Our club has ascended step youth for national leagues is by step and such success is very one of them. The Academy of pleasant for us. We started from the Basketball Palayesh-e Naft-e Abadan is very low ranks of basketball and we one of the best clubs. Every are today in pro league. That makes year, many basketballers from us happy and I hope that we can this academy are nominated continue with this positive trend. Represents for national team. Of course they may have the chance to Basketball teams sponsored by join Pro League. The Academy Iran’s petroleum industry have shot Iran in West of Palayesh-e Naft-e Abadan to prominence. What do you think has made good plans for next has caused such promotion? year, according to which young A: Although Mahram has been back and talented youths from to basketball pro league and has a You brought up the facilities of Asia Games Palayesh-e Naft-e Abadan will good team, and ShahrdariTabriz is the club. Are you happy? Sport teams sponsored by the Iranian Petroleum Ministry are expanding their play in Pro League. That would experiencing good conditions; it is A: Thanks to God! But I have to activities on a daily basis and yielding much better results. These teams have be a good event for Iran’s good news for us that Palayesh-e tell you something. The Palayesh-e invested heavily in different disciplines and they have always managed to record Iran’sbasketball. Representative in Naft and Petrochimi Bandar Imam, Naft cub has in recent years not success for Iran’s sport. As far as basketball is concerned, we have regularly heard Asia both administered by Ministry of invested sufficiently. Financially about the Petrochimi Bandar Imam Basketball Club; however, in recent years Petroleum, are among the top teams. speaking we are not even among Palayesh-e Naft-e Abadan has emerged as a rival to Petrochimi Bandar Imam This issue shows the strength of the top three or four teams of Basketball Club. They are now representing Iran in the West Asia matches. That It might be incredible for sports team of Iran’s Ministry of league. However, we have managed is a great honor for Iran’s oil industry. The following is a review of the Palayesh-e a team with seven years Petroleum. to develop a good team through Naft-e Abadan basketball team. of experience to take part long-term and organized planning to in international matches; Palayesh-e Naft and Petrochimi bring happiness to people. Through Amir Sadeqi-Panah however, it has happened to Bandar Imam are representing Iran endeavor and effort we have tried Palayesh-e Naft-e Abadan. Last in West Asia. How hopeful are you our best to prove ourselves and we in Pro League, having recorded two term planning and managing costs. year, Palayesh-e Naft-e Abadan for their success? hope that we would see better days runners-up and a third-place title. It Palayesh-e Naft-e Abadan has so far found its way into West Asia’s A: We are largely hopeful to defend soon. Although Palayesh-e Naft-e Abadan is now ending its fourth year in Pro been successful by following a well- games and finished third. Now, Iran’s reputation in West Asia in is not among teams with a long League, which rarely occurs for any Nationalordered plan. Team Players Palayesh-e Naft-e Abadan is the best possible manner. Although Anything else to say? history, it has fared well during Accurateother basketball Planning team in Iran. once more representing Iran we can’t compare ourselves with A: I offer my sincere gratitude seven years of activity now. The in the West Asia matches. It Petrochimi in terms of costs and to managers of Palayesh-e Naft-e team is now enjoying a special status Palayesh-e Naft-e Abadan has will be joined by Petrochimi facilities we are still hopeful. Our Abadan club. Thanks to their efforts, in popular basketball. Palayesh-e Palayesh-e Naft-e Abadan is several famous basketballers in Bandar Imam in the matches team is in very good conditions and we have been in good conditions. Naft-e Abadan started its career a Pro League member in Iran; Iran’s national team; Mohammad which are starting in March. we have changed a lot compared Although we need more support we seven years ago at League 2. But it however, investment in this team Jamshidi, Mohammad Hassanzadeh, These two teams finished with the past. We hope to be able to are happy and we hope to register shot to prominence soon and joined is not enough. Relying on their Arman Zangeneh and Farid Aslai champion and runner-up of promote Iran’s basketball to a high success for Iran’s sport in the Asian League 1 before forcing its way to management skills, the club are the four representatives of last year’s pro league and will position. continent. Premier League. managers have been able to record Palayesh-e Naft-e Abadan in the take part while pursuing big Palayesh-e Naft-e Abadan is now good days for the team through long- national basketball team. Most objectives. 56 January 2018 January 2018 57 Iran Petroleum Tourism Tourism Iran Petroleum

Qal’e Rostam Qal’e Rostam (Rostam’s Castle) is located 70 kilometers southwest of Zabol, dating back to the Safavid and Seljukid dynasties. Qal’e Rostam is home to an ancient city with numerous brickwalled buildings, a watchtower and 15 fortresses. It is the largest castle from the Safavid dynasty in this area. Ferdowsi has attributed it to Rostam in Zabol, his Shahnameh. Land of Epic Combat The city of Zabol in Sistan Balouchestan Province in southeastern Iran was anciently known as Sekestan, Sejestan or Nimroz. What we know today as Zabol was a lot of land covered with green hills and sediments left by the Hirmand River flow. As water levels fell the area of dry land expanded. In 1935, the Iranian government decided to name this area Zabol. Two years later, it was recognized as the capital of Sistan. The bulk of historical and ancient monuments of Sistan Balouchestan are located in Zabol. The northern part of the province, Sistan, is referred in Avesta to as the 11th land created by Ahura Mazda. Zabol is the birthplace of Rostam, the epic combatant of great Persian poet Ferdowsi.

Photo:

Hassan Hosseini

58 January 2018 January 2018 59 Iran Petroleum Tourism Tourism Iran Petroleum

Qal’e No Village

Qal’e No village, a reminder of ancient architecture in Persia, is 1,200 years old. It is the only village in Sistan Balouchestan, where houses are totally made from adobe and have ancient architecture. The ancient construction style has been preserved in this village. The architecture in Sistan follows climate conditions. Most houses are built from water, mud and adobe. Today, only in 40% of Sistan’s villages another architecture style is used. The ceilings are fitted with orifices which serve as windcatcher while walls have E-shaped holes for air flow. Wind enters through roof and exits through these holes

60 January 2018 January 2018 61 Iran Petroleum Tourism Tourism Iran Petroleum

Kiani Castle

Kiani Castle dates from the Pahlavi dynasty. The square-shaped castle has four fortresses on its four corners. Rooms are built next to each other inside the castle, following the style of old caravanserais. The castle was restored in 2013 by Cultural Heritage Organization.

62 January 2018 January 2018 63 Iran Petroleum Tourism

5.5ml/d Oil Products Distribution in Sistan Baluchestan

istan Balouchesan Province lacked gas pipeline and pipe is among few Iranian laying will take several years provinces where gas supply in the province. “Therefore, we became operational under the are supplying kerosene to 500 11th administration. Therefore, households in the Zahedan area. distribution of fuel, particularly Due to lack of gas network, our kerosene, is of high significance factories and agriculture industry there. Kouroush Baladast, CEO of the have no option but to use fuel oil and provincial branch of National Iranian gasoil,” said Baladast. He referred OilS Products Distribution Company to liquefied petroleum gas (LPG) (NIOPDC), told “Iran Petroleum” that distribution as another activity four areas and 11 governor’s offices of the NIOPDC in the province, are managing fuel distribution adding that 13,000 tonnes of LPG is across the vast province. “The being distributed in the province. central Zahedan area, Zabol, Khash 250 flights are conducted from There are 63 gas stations in Sistan and Saravan are the four NIOPDC the Zabol and Zahedan airports Balouchestan, said Baladast, adding local distribution areas,” he said. every month. Our fuel supply for that the figure has to increase due There are three storage sites in this purpose is 2.2 million liters a to the vastness of the province and Zahedan, Zabol and Khash to store month.” Baladast said the main task the long distance between cities. petroleum products. “These storage was to distribute gasoline, gasoil, He said 20 more filling stations are facilities have a total capacity of 150 fuel oil and kerosene. “The total envisaged to be built.He said that million liters including 35 million distribution of the four products in five filling stations were functioning liters of gasoline, 43 million liters this province stands at 5.5 ml/d. We under the branding scheme, adding of kerosene and 73 million liters of receive our daily fuel needs by 700 that more would join the scheme in gasoil,” said Baladast. tanker trucks from Bandar Abbas, the future. Baladast also said that Regarding fuel supply to flights in Kerman and Khorasan provinces.” gasoline distribution in this province the province, he said: “On average, He said that Sistan Balouchestan stood at 1.7 million liters. 64 January 2018 Sistan Baluchestan, Zabol Qal’e Rostam