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Iran Petroleum Issue No. 73 July 2018

LNG, Iran Bargaining Chip Demand for natural gas is growing on the global scale. Over 20 years to come, the energy mix is set to tilt towards gas.

Iran Oil ‘Unsanctionable’ In the run-up to November 4, when US President Donald Trump will restore sanctions on Iran’s petroleum sector, speculation is rising about the materialization of this decision. Ministry of Petroleum Islamic 38 Republic of Iran 46

Managing Editor: Kasra Nouri Director General of Public Relations

Editor in chief: Parastoo Younchi

Executive Editor: Hamid-Reza Shakeri-Rad Removing Iran Oil Graphic Designer: Saman Goodarzi from Market Photo Section, PR Office, MOP: Challenges and 48 Hassan Hosseini Consequences Reporter: Negar Sadeqi Javad Asghari

Translator: Kianoush Amiri

Coordinator: Abbas Lotfi

Tel/Fax: (+98 21) 61626113 www.iranpetroleum.ir [email protected] Win-Win Kerman, Land West Karoun LNG, Iran SP Output Policy in of Historic Output Keeps Bargaining To Grow COVER Petchem Wonders Rising Chip 84mcm/d Sector 6

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StopsKasra Nouri Print Edition, Goes Online If you have any comments Director General of Public Relations “Iran Petroleum”, the official English- will continue to be available online. language monthly of Iran’s Ministry of From now onward, “Iran Petroleum” regarding the articles in this magazine, please Petroleum, was launched in 2012 to will try to provide its readers with provide its readers with precise and the latest news on Iran’s oil and gas feel free to contact us through e-mail. authentic reports and information about and fulfill its obligation with regard policies, activities and achievements in to boosting interaction among Iranian Your views are appreciated the oil, gas, petrochemical and refining managers and their counterparts from industries. international companies in energy The monthly also sought to familiarize producing and consuming nations. its readers with the views of petroleum Those interested in reading about oil, industry managers through conducting gas and petrochemical industries of interviews with a view to preparing the Iran and the world may refer to www. ground for interaction and exchange of iranpetroeum.ir or they may receive the views between actors of this industry. digital edition of the monthly via email. In a bid to benefit from new Iran Petroleum still remains open to communications tools and help receiving suggestions and criticisms safeguard the environment, “Iran from its readers with a view to satisfying Petroleum” stops its print edition and its readers.

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1 news July 2018 Issue No. 73 monthly news The first EPC/D non- PGFKC. Addressing the “Supply and installation agreement,” said Alipour. He projects would significantly 1st EPC/D disclosure agreement has signing ceremony, Alipour of downhole and wellhead said that 320,000 b/d of oil contribute to job creation been signed between the said: “This agreement is pumps, drilling and was being produced from in Khuzestan Province. The Non- National Iranian South the first among contracts workover of six wells, Ahvaz production units 2, National Iranian Oil Company Oil Company (NISOC) and for the development of 28 pipelines, necessary 3 and 5. The completion (NIOC) has given green Disclosure Petro Gohar Farasahel reservoirs. overhaul of production units of project would raise oil light for the development Agreement Kish Co. (PGFKC). The ” He added that the project, and desalting, purchase, output by 42,000 b/d and of 28 reservoirs within the agreement was signed by which would start in installation and reparation avoid a decline of 35,000 framework of job-based Signed Bijan Alipour, CEO of NISOC, September and last two years, of turbines constitute b/d. Alipour said that the contracts in oil-rich areas in and his counterpart from would cost $300 million. some provisions in this 28 reservoir development southern Iran.

Turkey to Keep Buying Iran Gas Transmission Oil & Gas Well Drilling SZOGPC Gas Output at Iran Gas Capacity at 260bcm at 69,000m 58bcm CEO of South Zagros Oil and Gas Production

Turkey will continue importing gas from CEO of Iran Gas Transmission Company thatA deputy 60,377 head meters of the of Nationalonshore andIranian offshore Montazeri said the company produced more Iran despite Washington’s intentions to (IGTC) Saeed Tavakoli has announced that oilDrilling and gas Company wells were (NIDC) drilled has duringannounced the Company (SZOGPC) Gholam-Hossein reintroduce sanctions against Tehran, Iran’s gas transmission capacity has reached gas condensate and oil in the calendar year to Turkish President Recep Tayyip Erdogan 260 bcm a year. “The most important task than 58 bcm of gas plus 20.5 million barrels of said. “They imposed sanctions to Iran. What andassigned gas liquids to IGTC from is to domestic transmit andnatural foreign fourfirst fourmonths months of the of current the current [calendar] calendar happened? Did Iran collapse? When [former productiongas, ethane, originsliquefied to petroleumdomestic consumption gas (LPG) year,year (starteddrilling andMarch completion 21). “During of 53 the wells first March 2018. He said the products were worth U.S. President Barack] Obama told us back destinations and export terminals and also concluded and the wells were delivered productionequivalent of at 385 101% million and oil barrels production of oil. at then, I said ‘I am sorry, but we are purchasing He said that the company reached its gas natural gas from Iran. How else will I supply overhauls, Montazeri said more than 245,000 thisnatural attitude gas if they I cannot should buy not it?’” forget President they will theto swap Middle the East aforesaid and the products,” fourth in he the said. world developmentto clients,” Hamid-Reza wells, 3 appraisal Khosh-Ayand wells and persons-hours103% in the same of overhaul year. Touching was carried on SZOGPC out Erdogan stressed. “If the U.S. does not change Tavakoli said IGTC was ranked the first in 25said. workover He added wells, that notingthe wells that included 31 wells 25 on the production and processing facilities terms of pipeline extension, installations lose a sincere and strong partner like Turkey,” after the United States, Russia and Cana in intelligent pigging was conducted on more worldHurriyet is dependentDaily News on cited the him crude, as saying.a Chinese The company owns more than 36,000 kilometers were drilled in areas run by the National as well as pipelines. Furthermore, he added, US sanctions on Iran’s oil will not work as the ofand pipeline, telecommunications 81 compressor infrastructure. stations with The292 Iranian South Oil Company (NISOC), five turbocompressors, 9 gas export and import projectswells in areasof the run Petroleum by the Iran Engineering Offshore andOil andthan effective 150 kilometers acidizing of of pipe. seven wells, the analyst said. “The nations’ trade with each terminals as well as 600 telecommunications Company (IOOC), 10 wells in development “Owning to petroleum engineering initiatives other is based on their bilateral interests,” Wu Chenghui said, “They should not be forced by Development Company (PEDEC) and eight company saw its output grow 2.5 mcm,” he the US to avoid buying oil from Iran.” stations. wells within the framework of agreements. added.

SP Development Picks Up Speed Meshkinfam also touched on CEO of Pars Oil and Gas sweetening trains in SP13 and of drilling operations, Company (POGC) Mohammad one sweetening train in SP22- have been made for choosing installationSP14, saying: of “After Platform completion 14B has Meshkinfam has given a 24 were already operational, contractorsout. “Necessary for load-out, arrangements made acceptable progress in positive assessment of offshore he said that the second train transfer, installation and launch and onshore development of sweetening would become of four new platforms in South operational by the end of the projects in the giant South Pars ISOICO Yard and will become said the platforms for SP13, development projects would SP14operational and SP24 soon. were Meshkinfam more Pars,” he added. Meshkinfam from[calendar] two gas year.” sweetening trains seegas field.acceleration He said in that the the coming SP than 90% ready, adding that said Platform 14A, which had inReferring SP13 and to a trial train production in SP22-24, the South Pars gas production been constructed at ISOICO he said that the second train earlier, recovery from SP13, capacity would increase by theYard operation in Bandar of Abbas, six new was gas of gas processing for SP22-24 SP14three andmonths. SP22-24 “As promised would platformsinstalled in would May. Heboost said the that would be ready for operation reach 3 bcf/d by the end of the said that one of ten platforms South Pars gas capacity by of progress in construction, with regard to drilling and current [calendar] year,” said 86 mcm/d by next March. He pre-commissioning and the other sweetening trains of installation and operation of commissioning of existing soon. Meshkinfam said that calendar year ends on March haswhich been Iran installed Marine whileIndustrial a platforms3 bcf/d (84 will mcm/d). be done The based on SP22-24pipelines ofGas these Processing platforms. would be online by the end of Meshkinfam. Iran’s current secondCompany one (SADRA) is ready is for building load- well as measures undertaken Train refineries in SP13 and SP22-24 platforms at SADRA Yard, as 4 20, 2019. Noting that two gas the client’s planning and in light the calendar year. 5 Interview July 2018 Issue No. 73 monthly Interview

Demand for natural gas is growing on the global scale. Over 20 years to come, the energy mix is set to tilt towards gas. Iran, sitting atop 18% of world gas reserves but holding a meager share in global gas trading, is striving to highlight its role as a LNG, Iran potential producer and exporter of liquefied natural gas (LNG). Bargaining Since talks are gathering momentum with that oil prices have seen relative stability in Mohammad Chip the past one year with prices have increased Hossein Adeli thatregard we to will LNG see exports a boost in in global gas exports markets, in cominglargely affecting analyses related to this market, I think example,from $45 therea barrel are to estimates above $70. for Estimates 2018 to see a million tonnes, which are expected to reach 295 also show a bigger increase in oil prices. For LNG exports millionyears. LNG tonnes exports (more currently than 315 stand bcm) at by 283 end- be apart from the failure of some producers like currently China is 1.9 mb/d increase in oil demand, which would stand at 283 expected to million tonnes, increase the 30%2018. share That inis whilethe gas the market world with total the gas remaining exports standLibya, betweenNigeria or $65 Venezuela and $75 toa barrel,enhance which output. is which are gas share of Mohammad Hossein stand at about 1,000 bcm. LNG has currently a aTherefore suitable priceoil prices in case are no currently geopolitical thought events to Adeli, former secretary general expected to its energy mix reach 295 of Gas Exporting Countries Forum 70%Over going the to pipelinepast one (about year we 690 have bcm). seen from 6% to million tonnes 15% and India (GECF), tells Iran Petroleum that the sharp oil price fluctuations. How has it tooccur. say that oil and gas prices are strongly affected the gas price? interrelatedBut in response because to your long-term question, gas I contractshave in (more than from 5% to share of gas in global energy mix would 315 bcm) by 9% by 2030, rise from the current 22% to 26% over 20 end-2018. which will years. Before answering this question I have to say Asia are based on oil prices. Oil is a global and That is while benefit the gas Here is the full text of the interview Mr Adeli the world total market gave to Iran Petroleum: gas exports stand at about Negar Sadeqi and Roya Khaleqi 1,000 bcm in gas supply, demand was down in early 2017; Over recent years, there has been however,the US and the Africa. upward Due trend to the in predicted gas supply increase would growing attention towards gas as a source of clean energy in the world. The gas share is also expected to grow in energy mixes of continue. How long will increased gas supply countries in coming years. Would you please continue? give your assessment of gas market?

During the four to five years to come, the next ManyThe gas leading market consumers remains aof growing gas like market,China and wave of LNG export growth is expected to i.e. it is being focused upon by many countries. willemerge hit theowing market to investment in coming byyears Qatar. will But pertain the most important development which I believe India have been seeking to increase the share wasof gas more in their than energy thought mix. all Thatthroughout is why demandlast year Chinato China is expectedand India, to which increase are theto increase gas share the of for gas and more generally demand for LNG share of gas in their energy mix. For instance,

and in the first half of current year. Meantime, its energy mix from 6% to 15% and India from gas supply has been on the rise. In addition to 5% to 9% by 2030, which will benefit the gas traditional suppliers of gas like Russia, countries market. Therefore, the gas market will witness like Algeria, Qatar and the United States moved good conditions owning to the annual 1.8% beento boost very their dynamic exports over in the2017 past and one 2018. year and growth How up much to 2040. will LNG supply and demand willTherefore continue you to can be seeso with that balancedthe gas market supply has and reach in coming days?

demand. Of course, gas supply is still expected As you may know, gas supply is being carried 6 to drop a bit after exports began from Australia, out via pipeline or in LNG form in the world. 7 Interview July 2018 Issue No. 73 monthly Interview

predictable commodity whose this pertains to pipeline gas price is included in long-term execute development projects gas prices are a bit higher than exports. Had we been able to contracts. Of course, oil-based manyin LNG countries exports we in thewould region, have oil prices. How much does oil- whichbeen able would to export have been LNG an to based and long-term advantage and bargaining chip contract gas price stand in Asia? for Iran. But gas exports via currently stands at $12 while pipeline have also their own long-termOil-based contractsgas price inconsider Asia advantages. Shall we still put all our eggs in one basket? are the highest in gas trading mainlygas price due at to$11.2. the difference Asian prices between spot, single-cargo Yes, that’s true. Pipeline has transactions and their long- its own advantages and I don’t deny this fact. But the reason The price related to seasonal supply and befor carriedme to prefer from anLNG origin exports to of gas in term nature. It is also partly to pipeline is that LNG may different parts different parts of Europe, like such market, the buyer and the southdemand. Europe, The price north of Europe gas in sellerany spot have desired nothing by tobuyer. do with In I believe that of Europe, and Britain, currently stands political communications and sanctioning like south Iran’s LNG Europe, between $7.7 and $8.8. Gas transit issues. When the issue of Iran’s would have north Europe thisis currently price is tradedfor domestic at $2.8 at oil embargo is brought the US Henry Hub. Of course up, LNG sanctions are cost high and Britain, predictable. Will LNG be still had we had a currently stock exchange in the US. advantageous to pipeline? If this country decides to 15% share in stands priceexport of gas gas it exports; will not namely,be at $2. this grading between $7.7 liquefactionThree parameters or sweetening, affect the In such case, imposition and $8.8. of sanctions on Iran and resulting in a $3 to $4 increase elimination of Iran from transport and re-gasification, athe commodity LNG market which should is slapped be withcompensated. sanctions When the country you have in the Now prices. that the US has that imposes the sanctions stepped up its rhetoric or people who decline to buy against Iran by deciding to reimpose sanctions on the country’s petroleum will have to pay for costs. sector, how will global gas highI believe had thatwe had sanctioning a 15% share market be affected once US Iran’s LNG would have cost sanctions have been snapped other nations would have to back into place? in this grading. As a result, Gas is an important which means the power alternative for all sources of on circumstances, gas price pay more for Iran’s sanctions, market and it would have sanctions are tougher than if anything happens to oil to is that gas prices increase market. Were Iran a key player we have to image if three Iran notdefinitely been easily influenced to decide the gas pipelineof Iran. I sanctionsbelieve that because LNG increaseenergy including its price, oil. gas Therefore, prices will increase. The key point in the gas market how would LNG, Pars LNG and Persian about re-imposing sanctions US oil sanctions affect gas haveLNG projectsbeen exporting had become 35 to dueas soon to the as meageroil prices share climb. of prices? operational Iran would LNG is carried on vessels to be will be subsequently increased. As far as Iran is concerned, making up 15% of world internationalon Iran because parameter gas would of unloaded Experts wherever believe you that like. oilThat prices would go happen up within at thetwo (3%), nothing important consideration a variety of 45 million tonnes of LNG, have become an influential gas will have a big share in tosame four time. months, That depending means when willIran transpirein the global the gasglobal market gas We have to take into oil sanctions would have of global gas trade stands low the global fuel mix over the total. In such case, the Iran strength. Although Iran’s share 8 assumptions. For instance, 9 Interview July 2018 Issue No. 73 monthly Interview

coming two decades. How much will be Asia’s share in this market and will Asian gas producers will become among major buyers in this import?

of gas in the global energy mixWithin will 20increase years, fromthe share the current 22% to 26%, which

coal are currently the main sourceswill be a of big energy figure. in Oil the and world, but in coming years gas and renewable will together become the biggest source of

oil and coal consumption will energy in the world. Meantime Within 20 we should years, the fordecline 40% and of global as I said gas earlier demand acknowledge China and India will account share of gas the fact in the global by 2040. Furthermore, gas that under consumption in South Asia will energy mix grow significantly and almost conditions will increase willtreble happen the current up to 2040amount. is that of sanctions from the The interesting event which many foreign current 22% seeSoutheast their economic Asian nations growth like companies to 26%, andVietnam per capita and Bangladesh income triple will to with interests which will be in the US would be something about a big figure $15,000reach East which Europe indicates levels. higher That or fearing American threats would gas consumption.Given Iran’s 18% share Given the present Council resolutions required with the US would face attended a conference where of global gas deposits, how circumstances, do you think no restrictions in their a number of European quit Iran much do you think Iran’s share in the Europe and Asia that Iran will continue to be economic cooperation with companies with no business share of global gas trading andmarkets. pipeline is that if the two attractive to LNG investors? underUN member US sanctions states to which sanction are Iran? in the US said they would will be in 20 years? countriesThe difference in question between are LNG Iran, but currently we are not like to cut cooperation neighbor it would become and investment for many of that the US has walked clear that gas exports via ourWe projectsneed foreign and wepartnership have to willunilateral. not be Inunder other legal words, and Yes, that’s it. I reiterate have no interest in the US, Answering this question pipeline would be much make necessary international as of November onward we intends to impose sanctions with Iran. These companies depends on Iran’s gas export better, but if they are not arrangements to attract rather we will be only under away from the JCPOA and shouldstrategy say in thatcoming if we years. intend But to neighbor and have no strategic foreign investment and win USofficial sanctions international and a number sanctions, any country willing to do acknowledgenor do they fear the Americanfact that usefrom gas an as expert a strategic point offactor view, of I issues the best method and of companies doing business against Iran. Therefore, underthreats. conditions Of course of we sanctions should strength in the international possibility for circumventing with the US will support it, but many foreign companies with political issues in gas exports foreign partnership. As far as no nation or European and Butbusiness the fact with is Iranthat thiswill USbe interests in the US or fearing Iran’s present circumstances sanctionsubjected does to such not sanctions.comply projectmarket andwe have raise first our toshare put of and US sanctions against Iran with international rules and into operation the Iran LNG would be LNG. Flexibility is fundamentallyare concerned Idifferent have to notefrom Asian companies are required therefore countries are free American threats would quit Ofhigh course in LNG it doesexports not while mean we that that pre-JCPOA sanctions were thatby international had earlier sanctioned law to do so. to go along with the US or Iran, but there are companies projectsLNG trading. and reachWe should a stage also to have no flexibility in pipeline. It is not so that all countries internationalthat would stay arrangements in Iran without implement the other two LNG my view we have now to move underthe current sanctions circumstances. legally that all companies in the forany them fear. Nowto continue we have with to make their I’m opposed to pipeline. But in andBefore based the onJCPOA, international we were Iran Do would you sanction mean that Iran anew. worldnot. But will we be should following not thinkUS bring our LNG exports to 50 companies with no business million tonnes within 20 years. towards LNG for Iran’s gas activities in Iran with peace of 10 Then we can have a very good exports. regulations as UN Security policies. Several weeks ago I mind. 11 SP July 2018 Issue No. 73 monthly SP

Platform Launch Record six world powers had yet production from the Smashed One year after the South Pars development and SP Output inauguration of SP12, SP15 investmentto be concluded. in the However, petroleum capacityoffshore reservoir.increased Iran’sin South and SP16 came online in Parsproduction from 240 and mcm/d refining in To Grow 84mcm/d aimed at the producing 50 6industry Phases were Operational never halted. Iran’s Petroleum Ministry, under President Hassan Rouhani, inaugurated mcm/dJanuary of2016. sweet SP15&16 gas, 80,000 was Simultaneously recovery2013 to 570 from mcm/d South inPars April 11 conventional phases of the giant South Pars gas field (12, 15, 16, 17, b/d of gas condensate, 1 Six standard phases of 2017. Furthermore, rich gas South Pars (SP17, 18, 19, 20 18, 19, 20 and 21) without any foreign help. That raised South Pars gas one million tonnes a day of and 21) were inaugurated SP11totaled Contract 1.24 bcm in 2017. output from 240 mcm/d to 570 mcm/d. Development of these phases ethanemillion andtonnes 400 a tonnes day of LPG,a day

under sanctions inflicted higher costs on Iran’s petroleum industry and took more time managed to set a new gas- tosimultaneously inaugurate all in these April 2017. In July 2017, the National than normal; however, it kept Iran’s petroleum industry development running. outof sulfur. record Iranian due to companies their phasesIt initially at theseemed same impossible time, but Iranian Oil Company (NIOC) signed a $4.8 billion contract ow, Petroleum Ministry countries jointly own South tonnes a day of sulfur plus their ability to do so despite with a French energy targets operation of SP 10 million tonnes a year of performance in SP15&16. Iranian contractors proved major Total-led consortium 13, 22-24 and part of record,Norway’s which Statoil was had overruled earlier the development of South comprising also China’s CNPC SP12,Pars. Biggest in South On inauguration day, registered a 6.5-month gas-out Parsall restrictions. needs the capitalAlthough and contract,and Iran’s which Petropars was basedfor the of work in these phases shows Pars Ministerliquefied ofnatural Petroleum gas (LNG). Bijan technological knowhow of development of SP11. The thatSP14 within by next seven March. months, The pace SP12, which equals three Zangeneh described SP12 by Iranian companies which model, was aimed at rfeaching South Pars would add 84 set a five-month-and-ten-day petroleum industry will not on the newly developed IPC one to come online under the phase of the supergiant gas record in SP16. waitforeign for companies, foreign companies Iranian for this contract, two offshore standard phases, was the first as the most Iranian-made With the inauguration of compressingan output of 56 platforms, mcm/d. Under Petroleummcm/d of gas Ministry to Iran’s in theoutput. two without foreign administration,SP12, SP15&16 theduring South the whose cost will be calculated administrationsA glance at performance of President of Rouhani administration fieldtechnicians mainly because were Parsfirst twogas outputyears of increased the 11th 130 intogood. the tenure of the 11th N came on-stream in Iranianfully involved engineers in andits administration,Three and a half 11 years phases of contractors’ help. It design, engineering, separately at $2.5 billion, will increaseRouhani in thegas Southproduction Pars commodity supply, phasesmcm/d. was in coincidence declinebe built. in the South Pars fromdevelopment the giant shows offshore a 2.4-fold thisMarch megaproject 2015 by Iran’s boosted manufacturing and The development of these recoverySouth Pars from gas 21field phases became blocks,Cases of which natural would gas leadflow to reservoir over three and a half Petropars. The startup of ministry was still struggling operational, letting Iran start a decline in gas production with the time Iran’s petroleum Many experts insisted that Iran’s Gross National startup. in total to reach Qatar in theyears South only. Pars mega project Product (GNP) by three with financial shortages and could not be developed percent. Production from Iran’s nuclear talks with without foreign help, but SP12SP12 earned development Iran an is extra supposed$17.5 million to produce in daily 57revenue. mcm/d of natural gas, 110,000 the field was developed and b/d of gas condensate, 600 Iran’s production level is equal to that of Qatar. The two

12 13 SP July 2018 Issue No. 73 monthly SP

in coming years, prompted seek waiver from the US to said Mohammad Meshkinfam, the Ministry of Petroleum to continue with its presence in CEO of Pars Oil and Gas up its threat of unlawful and By imposing unlawful and attract foreign investment unilateralAlthough sanctionsthe US has against stepped Southcalendar Pars year. development in unilateralone and a halfsanctions years. against for the development of SP11 The significant role of and use technology for the itsIran. mind Iran’s about Minister operating Zangeneh the someCompany problems (POGC). regarding the economic, social and political the US thinks it could halt compressing platforms, each gave Total 60 days to make up construction“But,” he added, of compressing “We will face stillIran’s prioritizes petroleum SP13, industry, 14, 22, the infrastructurethe development is no of secretIran’s theIran’s development petroleum industry,of this weighing 20,000 tonnes, platforms whose technology Iranian Ministry of Petroleum industry and impose an project. of South Pars are on the did not possess such knowhow As Iran Petroleum went to SP11 development activities 23 and 24. Six more platforms to anyone. To highlight the because Iranian contractors press, Total had yet to release does not exist in Iran.” Meshkinfam has said that tosignificance note that withof development $40 a barrel of embargo on Iran’s oil sales an official report regarding its decided not to wait for foreign SouthPOGC agendaPars gas by production next March. ofthis crude field, oil, it would the South be enough Pars notin the recall global that markets. even under The spentto build nearly the platforms. $90 million on projectprobable will pullout go ahead from under SP11. companiesare under way as it and did Iran not forhas capacity would increase by 84 gas would be valued at $4,400 theTrump tough administration international may theThe project, Total-led and consortium some bidding In case Total quits, the if the Chinese company pulls Given the arrangements crude oil exports and sales outthe leadershiptoo, Petropars of CNPCI which and has tomany use otherforeign phases. capital and to made,mcm/d installation by that time. of standbillion. at Iran’s below revenue $80 billion from industrysanctions pushed imposed ahead on Iran with its rounds were held. already developed SP12 and transferThe best technology option would into be the Platform 14B will allow gas even with a barrel of oil at in 2010, Iran’s petroleum whichHowever, terminated US President sanctions Donald SP19, will continue developing country; however, experience Trump pulled out of JCPOA sweetening trains of SP13 and development. petroleum industry will go onerecovery sweetening from SP14. train Two of SP22- gas and$100. spending of $70 billion, imposed on the Islamic envisagedthe gas field. in two stages; aheadhas shown with thatits development Iran’s 24 are currently operational developmentAfter two decades of South of efforts Pars is Republic. Total said it would first“Development includes production of SP11 is and the second train of gas of natural gas, drilling of sweetening in SP22-24 is to wells, and construction maywith alternateor without between foreign help. hasapproaching had over its85% final progress stages. of a platform to carry gas However, this trend of activity means completion of SP13 andThe exceptdevelopment for SP11, of theall otherfield andcome SP22-24 on-stream by nextsoon. March, That phases would have been no problem with this part,” Sixfastness Platforms and slowness. in 2018 developed over the coming onshore. Petropars will have which marks the turn of Iran’s

14 15 West Karoun July 2018 Issue No. 73 monthly West Karoun

and application of modern technologies to CEO of NIOC, said at the inauguration of the enhance the recovery rate prompted NIOC three oil projects that Phase 1 of Yadavaran to offer this field for development under the field had cost $3 billion, Phase 1 of North West Karoun Output newly-developed Iran Petroleum Contract Azadegan $2.55 billion and North Yaran (IPC) by foreign contractors in partnership less than $600 million. NIOC targets 1 mb/d with domestic companies. South Azadegan production in West Karoun. Minister of holds 33 billion barrels of oil in place with Petroleum Bijan Zangeneh has said that Keeps Rising a recovery rate of 5.5%, which is planned to reaching such output would be possible Iran holds about 67 billion barrels of oil in place in the jointly reach 20% once the field is fully developed. after attracting foreign investment and enhancing the rate of recovery. PEDEC owned oil fields in the West Karoun area. Until 2013, Iran was 220,000 Output Hike in 3 Years managing director Dehqani has welcomed extracting nearly 50,000 b/d of oil from these fields which Alongside the development of South the presence of multinational companies Azadegan by Iranian contractors, the pace in Iran to provide the country with capital are shared with neighboring Iraq. But now Iran’s output has of implementation of phase 1 development and technological knowhow, saying: “The exceeded 300,000 b/d. of Yadavaran by China’s Sinopec, South process of development in West Karoun is Azadegan by CNPPC and North Yaran by not waiting for foreign companies and it is n the current calendar year to March development of these fields, dismissing any Persia Oil and Gas Industries Development continuing seriously.” Reaching a sustainable 2018, the West Karoun output is set pretext for decline in output. Company (POGIDC) increased. All the three 1mb/d output from West Karoun in coming Ito rise anew. Touraj Dehqani, CEO of Financial discipline, injection of financial projects were inaugurated in November years would need $18 billion to $20 billion Petroleum Engineering and Development resources, weekly gatherings for studying 2016, and the West Karoun oil recovery in investment. NIOC counts on foreign Company (PEDEC), has said that “we welcome implementation of projects and following capacity reached 260,000 b/d. All these fields companies for such investment. the presence of international companies in up on their progress in the presence of were not producing any oil until 2013. The Iran in order to provide Iran with capital and senior Petroleum Ministry and NIOC contract for the development of Yadavaran Agreement Talks Continue technology”, but the process of development officials came to fruition within four years. was signed in three phases with Sinopec. NIOC is currently in talks with foreign in West Karoun would not wait for foreign In spite of the impact of international Under the buyback agreement, Yadavaran companies for the second phase companies and would go ahead. The oil fields sanctions, oil recovery from the West would produce 85,000 b/d of oil in Phase development of West Karoun fields. In located in West Karoun are all green fields, Karoun area soared past 300,000 b/d. In 1, 180,000 b/d in Phase 2 and 300,000 b/d October 2016, a heads of agreement (HOA) stretching from near the oil-rich city of Ahvaz the meantime, negotiations were held with in Phase 3. Feasibility studies conducted on was signed between NIOC and POGIDC for the in Khuzestan Province to Iran’s border with foreign companies for the second phase the project indicated that the recovery rate development of Yaran. NIOC plans to award Iraq. If the West Karoun area is shaped like development of oil fields in West Karoun. from the Sarvak layer (heavy crude) was 6% the development of Yaran (both North and a rectangle, its length stretches from the and from the Fahlyan layer (light crude) was South Yaran) to POGIDC. PEDEC is currently CNPCI Dismissed western bank of Karoun River near Jofair to 14%. It is estimated to hold 34 billion barrels in charge of developing South Yaran whose Iran-Iraq border and its width stretches from In October 2009, NIOC struck a $2.5 in place. North Azadegan is located 120 output has reached 10,000 b/d. Besides Chazabeh to Darquain. billion buyback deal with CNPCI for the kilometers west of Ahvaz along the border talks with foreign companies for the second West Karoun incorporates North Azadegan, development of South Azadegan oil field. with Iraq. The contract for its development phase development of Yadavaran field under South Azadegan, North Yaran, South Yaran With final changes made into the master was signed with CNPC in two phases, each IPC model, negotiations are under way with and Yadavaran oil fields. Prior to the development plan (MDP), the project started of which having 75,000 b/d capacity. North Sinopec for the second phase development time that the administration of President in September 2012 after a revised MDP Azadegan is estimated to hold 5.6 billion of the field. In case an agreement is reached, Hassan Rouhani took office in 2013, the oil was approved. South Azadegan is set to barrels in place. A buyback contract was the second phase development will be production from the West Karoun fields be developed in two phases; Phase 1 eyes signed with POGIDC for the recovery of attached to the first phase development had dropped to 45,000 b/d. A buyback deal 320,000 b/d of oil, while Phase 2 targets 30,000 b/d from North Yaran, whose reserves under buyback. As long as planning is under had been signed with China’s CNPC for the 600,000 b/d of oil. The Chinese side did are estimated at 1 billion barrels in place. way for the integral development of the development of the giant South Azadegan. not honor the terms of the agreement, and On the day of inauguration of the three Azadegan field, progressive production hike Furthermore, buyback contracts had been NIOC had to dismiss it from the project in aforesaid projects, Iran was recovering from South Azadegan would be on the NIOC signed with Iranian and Chinese companies April 2014 after verbal and written notices. 115,000 b/d from Yadavaran, 75,000 b/d agenda. Once an agreement is signed for for the development of North Azadegan, After CNPCI quit, NIOC assigned the job to from North Azadegan and 30,000 b/d from integral development, both North and South Yadavaran and North Yaran. South Yaran was 30 Iranian contractors. Three years later, North Yaran. The first phase recovery from Azadegan would be given to contractor. being developed by PEDEC. Due to National they are recovering 100,000 b/d of oil Yadavaran was planned to reach 85,000 b/d, West Karoun fields are planned to be Iranian Oil Company (NIOC) restrictions from South Azadegan. By next March, this which finally reached 115,000 b/d under developed in two phases; phase 1 will see output is expected to increase by 70,000

resulting from tough sanctions imposed coordination between contractor and client. production from these fields exceed 500,000 Mojtaba Mohammad Qoli Photo: on Iran’s petroleum industry, there was b/d. Alongside this development project The total investment for developing these b/d, while phase 2 would bring output to little hope for output hike in these fields. by Iranian contractors, the necessity of fields was nearly $7 billion. Ali Kardor, more than 1.2 mb/d. The Petroleum Ministry had prioritized faster development of South Azadegan

16 17 Investment July 2018 Issue No. 73 monthly Investment

heavy crude oil reserves, the National buyback as the framework for the Iranian Oil Company (NIOC) instructed development of Ferdowsi. Due to the Ferdowsi, Mideast Biggest the Petroleum Engineering and specialty of technology applied to Development Company (PEDEC) with 3D the development of heavy crude oil seismic testing, drilling two appraisal and the necessity to use special tools, wells for a more precise assessment, and NIOC intends to offer this field to taking samples from the crude oil layers foreign companies for buyback-style Heavy Crude Oil Field in order to submit a renewed MDP. The development. PEDEC is currently in talks More than 108 years of prospecting for hydrocarbon drilling of a third well started in April with foreign companies to provide them reservoirs in Iran have resulted in the exploration of the 2010 with a view to assessing the oil with necessary information on the field. supergiant South Pars gas field and Azadegan oil field. Iran and gas layers of the field. Initial studies The foreign parties are required to sign sits atop more than 100 oil and gas reservoirs, implying showed the existence of abundant heavy memorandums of understanding before that at least one reservoir has been explored per year in Iran in the past crude oil with various API gravities in the receiving more data. In Phase 1, Ferdowsi five layers, known as Bourgan, Daryan, would be producing 10,000 b/d, which century. Gadvan, Fahlyan and Sourmeh. would exceed 300,000 b/d in the next n 1966, a Swiss company explored the phases. Ferdowsi oil field in the Persian Gulf, Ferdowsi Gas Potential in Lower Layers setting a record in the discovery of NIOC ordered the second well drilling Transfer of Technology I (F2) in order to examine the gas potential Production of heavy crude oil and giant fields in Iran. The giant Ferdowsi oil field, which contains some gas in its Dalan in the Dalan, Kangan and Faraqoun development of technologies required for and Kangan layers, is known to be the layers, which proved positive. transmission and refining of heavy crude largest heavy crude oil field in the Middle In 2005, Adax SA appraised the Ferdowsi have been talked about for decades all East. field based on the first and second wells across the globe. In Iran, studies started The Ferdowsi oil field is located west and estimated the in-place oil at 35 to that effect after the discovery of oil of the South Pars gas field and near billion barrels with a recovery rate of 6%. fields containing heavy crude. the Golshan gas field. Ferdowsi is 190 Development of Ferdowsi oil field is Technologies required for the kilometers from Bushehr Port and 88 under way with a view to acquiring production, transfer and treatment kilometers away from coastline. The first technology for heavy crude recovery in of heavy crude oil have already been oil well in Ferdowsi was spudded in the fractured carbonated reservoirs. It would developed in the world although they year of its discovery in order to identify also help find the most suitable method are being upgraded. Iran has not sit heavy crude oil layers. One year later, a for heavy crude oil recovery. with fingers crossed. Iranian petroleum second well was drilled to measure the Ferdowsi was offered for investment industry experts have applied various potential of its gas layers. during a conference held in Tehran a methods with regard to the production, Based on studies conducted on the two couple of years ago to unveil the Iran transfer and refining of heavy crude oil wells, master development plan studies Petroleum Contract (IPC), a new model on lab scale. Some of these technologies were carried out by Swiss Adax SA for the of oil contract. Full development of have already been applied at industrial description of the Ferdowsi oil field whose Ferdowsi would require five to seven level. NIOC expects foreign companies to studies signaled huge heavy crude oil years; however, due to its huge oil and contribute to the development of such there. The oil field was estimated to hold gas deposits and the profitability of oil fields as Ferdowsi in a bid to bring in 31 billion barrels of oil in place with a its development, investment for the technology for the development of these production capacity of 70,000 b/d. development of this field continues to fields, the objective pursued seriously by Due to the significance of Ferdowsi’s be highly attractive. NIOC is envisaging the Iranian Ministry of Petroleum. Hassan Hosseini Hassan Photo:

18 19 Investment July 2018 Issue No. 73 monthly Investment Aghar Gas Output to Double Sitting atop 18% of the world's proven gas

Hossein Montazeri, CEO of ZOGPC has said that reserves, Iran ranks the first in terms of holding development of Phase 2 of the Aghar gas field gasnatural production gas in the has world. reached Owing 800 to mcm/d, development 600 was on the agenda for increased production. of gas fields in recent years, Iran’s average That would help double the Aghar output to 40 mcm/d. Meanwhile, facilities will be established mcm/d of which is consumed domestically. near the Farashband gas refinery in order to The annually growing domestic consumption handle the processing of more gas. of natural gas and Iran’s obligation to pump The Aghar gas is planned to be injected into ofgas Petroleum to neighboring to prioritize countries enhancing including its Iraq gas installations,oil fields located four in gas southern gathering Iran, centers particularly and and Turkey have prompted Iran’s Ministry aMaroun. stream Agharpipe which is equipped would takewith gaswellhead to the

production capacity. center is also available, containing slug catcher, The Iranian Central Oil Fields Company two-phaseFarashband and refinery. three-phase A gathering separators, and separation control (ICOFC), which administers development of 10 room, pumping station and pig launcher and gas fields in Iran, supplies more than 35% of Iran’s gas. Therefore, development of ICOFC- run gas fields is of prime significance for the receiver. The Aghar gas field’s production National Iranian Oil Company (NIOC). capacity amounts to 95.22 mcm/d of natural gas ICOFC recently introduced opportunities for completedand 4,300 b/d after of four condensate. years, during which the investment under the newly developed IPC previousThe Aghar study gas modelsfield’s feasibility have been study updated, has been new format. Phase 2 of Aghar gas field is one of these data has been included, petrophysical logs have lucrative projects for foreign investment. been interpreted and assessed, and fractures Located 110 kilometers southeast of the southern city of Shiraz in Fars Province, the Aghar gas field was discovered in 1972. Thirteen have been modelled. of a total 16 wells drilled in this field are The findings of studies indicate a 40% increase producing gas. Production of gas started there in naturalin the in-place depletion gas scenario, reserves dueof Aghjar to wellhead with pipelines,1998. Natural measuring gas and 90 gas kilometers condensate each, produced to the a recovery rate of more than 71%. In the from Aghar are transmitted via two separate is handled by the Zagros Oil and Gas Production ofpressure 22 mcm/d restrictions, up to 2023, the whenfinal recovery the installation will be Farashband gas refinery for treatment. This job ofmaintained a compressor at 34.7% would with bring a production the recovery ceiling rate

Company (ZOGPC), an offshoot of ICOFC. ceiling and boost recovery, conducing periodical Since the Aghar field is among big fields after staticto 71.5%. tests, Drilling appraisal to maintain drilling, phasicthe production increase Kangan among those run by ZOGPC, Gholam- mcm/d and optimization scenario following installationin the PGC production of compressor, of the as gas well field as spuddingup to 30 six new wells to raise output to 30 mcm/d are

among plans envisaged in the new studies.

20 21 news July 2018 Issue No. 73 monthly news Polymer Project Bandar Abbas Sulfur Feedstock Granulation Unit Q1 Petchem Exports Guaranteed Operational SPGC Condensate Output Produce $3bn at 650,000b/d announcedThe head of that the necessaryNational Petrochemical feedstock for withThe sulfura production granulation capacity unit of of 250 Bandar tonnes Company (NPC), Reza Norouzzadeh, has Abbas refinery has become operational more than 650,000 b/d of gas condensate, its Iran’s petrochemical exports exceeded 13 million supplied fully as propylene production The South Pars Gas Complex (SPGC) is producing tonnes in the first quarter of the current calendar the Di Polymer Arya project would be comea day, on-streamCEO of the inrefinery order toHashem eliminate Namvar than 650,000 b/d of gas condensate, over 10,000 year, generating $3.158 billion in revenue. thesaid. harmful “The sulfur environmental granulation impacts unit has of tonnes/dCEO Hadi ofHashemzadeh ethane, upwards has said. of 10,000 “Today, tonnes/d more of tones,Twenty while petrochemical 16 petrochemical plants locatedplants in in the the has increased in Iran. sulfur particles in the air and reduce Mahshahr area produced a total of 4.599 million this“There unit is is nothing under construction to worry about we feel compelledfeedstock supply to provide to this feedstock project. fromAs said that sulfur granules measuring 2 to LPG and about 1,800 tonnes/d of sulfur are being Assaluyeh region supplied more than 5.868 the Shazand Petrochemical Plant and 6environmental inches would pollution,”be produced he atsaid. this Namvar unit addingproduced that at it SPGC,” was ready he said. to operate He added two that more SPGC had million tonnes of products in the same period. soon see its inauguration by accelerating already steered 10 big gas refineries in the country, Iran’s calendar year starts on March 21. the way sulfur used to be supplied on the Furthermore, the output of 20 other heavily dependent on propylene, noting marketto be loaded was harmful in wholesale. to the He environment added that energyrefineries mix, in owingSP13, SP22to its keyand gas-basedSP24. Hashemzadeh products petrochemical plants scattered across Iran was thataffairs,” increased he said. propylene He added production that Iran was said that SPGC was accounting for 70% of Iran’s more than 2.795 million tonnes. The Khuzestan, Ehtemam Jam, Khorasan, due to particles it spread into air. quarterlike gas condensate.of the current He calendar said that year the (startedcomplex March had Carbon Iran, Shimi Baft, Khark, Kermanshah, haswas aon production the agenda. capacity Located of in 175,000 the city of “With the startup of the granulation sweetened more than 39 bcm of gas in the first Nouri, Morvarid and Shiraz petrochemical plants Khomein in central Iran, Di Polymer Arya unit, the total sulfur in the Bandar Abbas showed the highest performance in the final which is 62% complete now, is to undergo thatrefinery granulated will be granulated,sulfur could generating be supplied 21) and fed into national gas trunkline. “This output month of Q1. During that month, petrochemical tonnes of polypropylene. The project, more value-added,” said Namvar, adding was more than 16% higher year-on-year,” he added. exports reached $962 million for exporting 1.7 output capacity would rise to 300,000 He said that 549 mcm of natural gas had been million tonnes of products. pre-commissioning in 2019. The facility’s ain 1,050-tonne packs of 50 kilogramsstorage tank and to one receive tonne. fed into Pars Petrochemical Company in the first In the Pars Special Economic Energy Zone melted“The sulfur sulfur granulation from the sulfur unit comprisesrecovery saidquarter that of 4 thebcm year. of gas Referring had been to injectedsour gas into injection the (PSEEZ), more than 2.759 million tonnes of tonnes in the second phase. unit, a melted sulfur transfer system, into the Iran Gas Trunkline 5 (IGAT5), Hashemzadeh products worth $1.636 billion were exported in The project was initially estimated to cost two granulation systems and a granule he added, 55 million barrels of gas condensate, hadthe samethe highest quarter. with 732,000 tonnes, while in IRR 3,500 billion, but now the figure has trunkline202,527 tonnes in the first of granulated quarter. Over sulfur, the 792,326 same period, tonnes In terms of weight, Zagros Petrochemical Plant jumpedsaid the to major IRR 7,500 cause billion. of concern was to granule storage silos, each having 350 of ethane, 519,467 tonnes of propane and 287,256 Hamid Kabiri, CEO of Di Polymer Ayra, conveyor belt. This unit has three sulfur terms of value; Nouri Petrochemical Plant came first with revenue of $441 million. supply feedstock. tonnes of capacity,” he said. tonnes of butane were produced at SPGC.

Masjed Soleyman, adding $1.2bn Gas Gathering Deals in East Karoun that an agreement had liquid production will increase soon sign separate agreements 38,000 b/d to provide further construction Masjed Soleyman twoThe gas National gathering Iranian agreements Oil Khuzestan Province, NIOC will Petrochemicalbeen finalized withPlant under- for Company (NIOC) is set to sign and Maroun Petrochemical Companywith the Persian to upgrade Gulf andHolding feedstockMostafavi to said the that Bandar a total Imam investmentworth $1.2 billionand business in the East Majid Petrochemical Plant.” associatedgathering flare petroleum gas. “Except gas Karoun area, NIOC director of of ethane and heavier gas gatheringfor West Karoun is under where way within agreements would prevent the renovate flare gas gathering compoundsof 1.6 million plus tonnes 14 million a year burningMostafavi of said. over He760 said mcf/d the (22 gatheringinstallations projects of NISOC-run were mainly barrels of condensate would the implementation of new onareas.” small He scale, said addingthe 30 gasthey be supplied as feedstock to projectsthe framework will put of an NGL end 3200, to 30 associated gas gathering petrochemical units, which projectsmcm/d) wereof gas. envisaged He added for that would be a long stride ofwould these be projects, online in 510 two mcf/d years. in overcoming feedstock saidflare agas gas burning gathering in Khuzestanstation at extra“With feedstock the implementation would be shortages in the petrochemical Province,” he added. Mostafavi East Karoun. Referring to NIOC supplied to under-construction feedstock is estimated to be which could be injected into in March, adding that Maroun plan to combat gas flaring, Bidboland-2 Petrochemical feedstock would be valued 3,Parsi Maroun field became6 and Mansouri operational Mostafavi said: “In light of Plant and 250 mcf/d to Maroun sector. This amount of gas gathering projects would the accumulation of flare annually, while petrochemical valued at $2,600 million a year. saidfields that or serveabout as 100 fuel mcf/d in the become operational by next rungas pollutionareas particularly in the National in productsat $1,300 suppliedmillion for by NIOC this extra 16“These mcm/d projects of natural will alsogas, country,” said Mostafavi. He Iranian South Oil Company- Petrochemical Plant,” he said. provide NIOC with about “After gas gathering, NISOC gas of gas was being flared near March. 22 23 Interview July 2018 Issue No. 73 monthly Interview

Amid anti-Iran policy of US President Donald Trump, who is seeking to impose secondary sanctions on Tehran following his withdrawal from the 2015 historic nuclear deal, the director of investment at Iran’s Win-Win National Petrochemical Company (NPC) has good news.

Policy in

thereby removing a major risk to attracting and have expressed willingness to proceed with Hossein Petchem Ali-Morad But you must keep in mind that attracting foreign investment. That would positively foreigncooperation. investment is subject to international affect international companies’ decision about Sector cooperation with Iran. foreign Which stage are MOUs in now? over the past You must know that over the past two years conditions and Iran’s interactions with other companies, two years nations. Many European and Asian companies particularly and due to companies,were in talks but for this investment issue has in been Iran affected and by Asian the JCPOA and due to the JCPOA overtures, a number of transfer of technology to Iranian petrochemical companies, overtures, Hossein Ali-Morad told andMOUs European were signed companies between on the the NPC other, or for leading have not petrochemical holdings on one side and Asian political events. Now the situation has totally a number “Iran Petroleum” that arrangements purposes of studying grounds for cooperation stepped back and the possibility of presence of these changed and in the aftermath of the US’s pullout of MOUs were made months before Trump’s from the JCPOA, Iran’s relations with various from Iran’s were signed withdrawal from the deal to remove wrongEuropean to conclude and Asian that nations the negative are entering strategy a new of lucrative between the obstacles to banking transactions. He said companies in Iran’s petrochemical industry aphase country based would on win-win immediately policy. and It woulddirectly be affect petrochemical NPC or leading in the interview that Iran was developing its in such sectors as investment, financing and industry petrochemical ties with Asian and European nations based on supply of technologies. despite all At present, in light of the US’s pullout from the the strategy of other countries. negative holdings on one win-win policy. The following is the full text of the side and Asian JCPOA, these companies have slowed down and I reiterate that foreign companies, particularly propaganda interview Mr. Ali-Morad gave to “Iran Petroleum”: and European even suspended their activities in Iran and are allAsian negative companies, propaganda have not spread stepped following back from Iran’s lucrative petrochemical industry despite companies course,waiting Chinesefor the European companies governments’ are less considerate action European companies, rather there are leading to save the JCPOA and create new conditions. Of Marjan Tabatabaei Washington’s withdrawal from the JCPOA.

European firms willing to cooperate with Iran. Recently, a European company has signed the ongoinget’s first talktalks about with the Europeans?impact of the US’s text of the agreement we had already finalized. withdrawal from the JCPOA. How do you see saidThe representativethat the agreement of the was company an indicator insisted of on meeting with me to exchange contracts. He areNaturally cautious foreign because companies, of their shared particularly interest to tell negotiators with the EU that a suitable leading European firms that signed post-JCPOA, willingness for continued cooperation with Iran suspended their transactions waiting for the with American firms. Some of them have foreignsolution investment needed to beis dependentdrawn up and on a finalized. variety of in order to be able to regulate and plan their internalI deem it and necessary external to factors, note here whose that resultant attracting fallout from the US’s withdrawal from the JCPOA will decide the presence or absence of foreign cooperationL with foreign companies and the cooperation with Iran. Therefore, the future of of compliance with international banking and on the result of ongoing negotiations between non-bankinginvestors. For regulations, instance, I can know refer your to thecustomer issue fate of NPC talks with foreign investors hinge

whatIran’s would Foreign happen Ministry when and the the deadline European set Union by (KYC), secure payment services in compliance about the JCPOA terms. We have to wait and see with international relations and the Financial Action Task Force (on Money Laundering) Iran for the EU expires. We hope that this result foreign(FATF). exchangeI see some rate domestic as a right decisions and suitable like the administratorwould benefit bothof petrochemical Iran and the industry,European we and are strategygovernment’s which recent would decision help stabilize to unify national multi-tier notAsian the sides. only Theside important to propose point cooperation is that as with the macro economy and business environment, 24 25 Interview July 2018 Issue No. 73 monthly Interview

be able to create through suitable mechanisms Given Trump’s anti-Iran stance, speaking, the sanctions you are talking about unilateral sanctions will be imposed on Iran’s areand mainly we always economic found anda solution. more precisely Generally target relevanttheir experts organs will and travel prepare to Iran the soon ground so that for wethe can funds in hard currency in order to make optimal petrochemical industry. Have you made any finalize the basic and infrastructure issues with useproject of stray funds capitals in Iranian which currency may go and towards then projectgold assessment to that effect? banking and monetary procedures more than or housing and drive them toward petrochemical the banking sector. That would affect our implementation of the project by that company. had set up six months ago a working group under So the Chinese and the Russians must have projects, in which case we may attract investment Fortunately, the Iranian Ministry of Petroleum are faced with are of technological and technical become active now. natureour manufacturing. we may not be If wewrong say thatas we the can threats turn we Such dynamism existed before, particularly with the title of “Working Group to Study Solutions them into a chance for the growth of domestic the Chinese, and you must know that China is one for prioritizedWhat stage projects. is such fund in and what would to Removing Obstacles to JCPOA and Banking be your solution for attracting investment in andTransactions”. holdings to The share NPC experience followed suit in sanctions and set up its have been worked out for the economy and the case renowned companies pull out of Iran? capabilities. Fortunately, necessary mechanisms of our target markets for petrochemical products. bustingown working with a group. view to The creating idea was effective for companies unity and transfer of technology by Chinese and Preliminary steps for such fund were taken one However, the issue of attracting investment in this sector and prepare the petrochemical Hossein banking, particularly Central Bank transactions. Hossein industry to face any new restrictions including Ali-Morad negativeThroughout and [Iran’s positive Foreign points Affairswill be Minister]raised, so that withRussian 40 tocompanies 50 Chinese tops investors, our agenda 2 to now.3 of them Their are month ago during a meeting of project managers. Ali-Morad inMr. case [Mohammad these sanctions Javad] take Zarif’s effect negotiations, we would allbe seriousness has been proven to us. I’ve had talks deputyIn the near minister future of and petroleum, owing to we support are determined from Dr [Norouzzadeh], managing director of NPC and secondary What solutionssanctions. are envisaged? serious.What We arrangements are following up have on talksyou made with them. for order to arrange activities based on changes in the issue Generally ableHave to use any suitable new talks banking been approaches. held with Russia shipping insurance? to set up a financing working group in the NPC in chances which had been ignored in the post- of attracting speaking, The principal point is to use conditions and and China for alternatives? working group would be to establish a project the international arena. The first agenda for this investment the sanctions domestic potentialities and persuading small and We had similar experience during the pre- and transfer you are medium-sizedJCPOA era. For Europeaninstance, the companies first point to is cooperate to use an agreement was signed for cooperation and reliance on our own capabilities and facilities talking about During the last visit to Iran by Chinese president, andsanctions well thought-out era. Through use cooperation of new international and by fund. of technology Furthermore, it is evident that due to the limited are mainly that, a Chinese union of private oil and petrochemical project managers, as well as limited by Chinese China’s private sector investment. After financial potential of private sector investors, economic with Iran’s domestic industry, and finally using the petrochemical companies signed an and Russian mechanisms, we will consider a suitable strategy. companies,capabilities particularlyof Russian and leading Chinese companies. Is there nothing to worry about as the petrochemical industry in compliance with plans companies and more financial resources in the country; development of In the post-JCPOA era, we focused on European Europeans are quitting? is almost impossible without foreign investment tops our precisely MOUdirector with for Iran’s the accelerationdeputy petroleum target the minister and NPC managing agenda now Butpetrochemical everything firmsnow dependswhich had on the technical and technological banking I already explained about the and financing through international outcomebig investment of negotiations projects in under the US. way predicting solutions like working out sector suitableof Chinese location private for investment. investment is concerned we believe in resources.necessary Therefore, and legal mechanisms in addition to for Under the MOU, NPC will provide sections and as far as financing driving liquidity towards petrochemical we will see feedback in the near industry including establishment of betweenHow Iraniando you foreseeand European the outcome? parties. by the Chinese party. God willing, directlyproject fund or indirectly as a good engage solution. the strongly willing to invest in one of Therefore, if we can either with the direct or indirect participation ten years of tough and unjust pre- future. A Chinese company is project funds in Iranian and hard currency During the pre-sanctions era – I mean NPC in such projects, we will our projects through relying on our our country’s islands, which we ofcontinue NPC (for negotiations instance through with EuropeanPersian domesticJCPOA sanctions capability – we and continued we with andare following a group up on seriously. of Gulfsmall Holding’s and medium involvement), sized enterprises we have to A high-ranking delegation and with the Commonwealth of ofwere projects not halted. and China (which are less affected neverThe launch stopped Independentby US sanctions) States and (CIS), meet Russia the

financial needs of petrochemical projects. I deem it necessary to remind

26 27 Interview July 2018 Issue No. 73 monthly Interview

the new talks? companies which are ready to supply necessary

foreigntwo points; investment, first and and foremost, second, the the big time- impact of insurance agencies,agencies. thereTherefore, was no to needget facilities for the each new technical and technological political conditions on financing and attracting Both before and after the JCPOA implementation, Centralfrom foreign Bank banks,or Ministry financial of Economy institutes, guarantees credit and agreement,technology. attractionI am sure thatof investment after implementing at any we had several rounds of talks with Swiss Casale. as state guarantee and loans were guaranteed and level and using modern technologies, the path consuming process of foreign financing and direct They were very willing to cooperate with Iran. for the development of petrochemical industry investment. Therefore, the NPC and its Directorate During the years of sanctions, Casale was among would become smoother, which would give rise of Investment adopted a three-phase financing companies that did never sever ties with Iran. repayingrepaid by six the packages NPC. It is of noteworthy facilities granted that banking by the to some sort of interdependence between the follows:approach to be pursued in the wake of the US’s company,Within the but same it is framework, proprietor ofit istechnology still ready and for we facilities are being repaid. We recently finished withdrawal from the JCPOA. The phases are as havecooperation to identify with such Iran. companies Casale is a and small-sized to supplant hope that we can unify the petrochemical industry Japan Bank of International Cooperation (JBIC). I Iranian and global economies, which would Short-term financing lever of power to witness once more development pullfinally out, result we will in technological activate new growthmechanisms for the for Hossein Short-term financing convertible to long-term top HowEuropeans much who investment may pull is out needed of Iran. for in the country anew in order to benefit from this country. Even if leading companies decide to financing petrochemical projects? Ali-Morad Development of long-term financing structure millionof petrochemical usance, guaranteed sector and by its the blossoming. Persian Gulf After cooperation with SMEs, which I explained in itIn would light ofbe available impossible instruments to jump into and mid-term given current and projects which are being operated by the private the JCPOA implementation, JBIC granted a €650 response to previous questions, for financing by international conditions, I personally believe that At present we have about 63 petrochemical foreign investors, banks and financial institutes. domestic capabilities to make maximum use of Hossein we are well billion in investment to be completed and come Holding. Our plan both before and after the US That would help the county benefit from long-term financing at a time the US has walked away sector. These projects would need about $35 withdrawal from the JCPOA has been to acquire aware of Asian Ali-Morad from the JCPOA. Furthermore, we are well aware for the purpose of development of petrochemical short-term and then mid-term financing facilities. such cooperation. Generally speaking, in light and European of Asian and European prime banks’ agreement industry,online. Given about the 38 accessibility projects have to feedstockrecently been and talksDue to so the that present we can circumstances, make required our planning pace has to of previous talks and based on feedbacks I have prime banks’ with and fear for the Office of Foreign Control Asset slowed down. We are waiting for the outcome of got from foreign companies, I am optimistic agreement (OFAC). In other words, we know that these banks projects would need more than $48 billion in aboutHave the you results received of our any new final strategy. message from After the JCPOA with and fear takinghave already into consideration been fined heavily. these points, Therefore, it seems they thatstay proposed, which have been authorized. These reachDo this you objective. have any plans to transfer in state- France’s Total for severance of cooperation? implementation, for the Office away from Iran and become more conservative. By of-the-art technology? JBIC granted a of Foreign the meantime, due to the possibility of acquiring investment. You may ask how such investment €650 million Control Asset easierwe will insurance be following coverage up on forshort-term SME manufacturers financing. In would be attracted. As far as the financing of these necessary to support domestic companies As a member of working group engaged in direct usance, (OFAC) projects is concerned I have to note that in the In the petrochemical technology sector, it is talks with Total’s highest petrochemical official, I guaranteed past when the NPC was in charge of petrochemical wouldhave not make received an assessment any direct of message new conditions about Total by the Persian and vendors, we can directly purchase from them. development projects, the NPC financial resources like Petrochemical Research and Technology pullout. I think that they are waiting so that they There were recently talks with Swiss order to develop modern technologies needed and our negotiations with the Europeans before Gulf Holding Casale. Are any other companies involved in and even NPC-branded products were considered inCompany this sector (PRTC) in cooperation and domestic with capabilities foreign in as financial support and were acceptable to foreign banks, financial institutes and credit and regulating their strategy.

28 29 Petchem July 2018 Issue No. 73 monthly Petchem

nputs, transformation be instrumental in economic processes, and outputs growth in terms of job creation, involve the acquisition generation of hard currency Iran Petchem Targets and consumption of resources

equipment, buildings, industryvalue and requires independence. projects which Value Chain Completion land,– money, administration labor, materials, and wouldDevelopment help complete of petrochemical the value Completion of value chain, preventing sales of raw resources chain and supply products of and materials and diversity in the production mix are keywords chain activities are carried out higher value added to feed which have been heard from Iranian petrochemical industry determinesmanagement. costs How and value affects downstream petrochemical officials in recent years as a necessity for the development of I of value chain, generation of hydrocarbon industry. Generally speaking, a value chain is a set of activities coveringprofits. all activities pertaining higherindustry. diversity Therefore, in products completion toIn commodity more clear productionterms, it is a and chain and upgrading the value of that a firm operating in a specific industry performs, in order to deliver a petrochemical products with valuable product or service for the market. The idea of the value chain is based a focus on upgrading the role on the process view of organizations, the idea of seeing a manufacturing (or substance transformation, i.e. of petrochemical industry in A to Z of consumer products national economic indicators service) organization as a system, made up of subsystems each with inputs, strategicallymanufacturing. important Now if we was put high on the agenda of transformation processes and outputs. petrochemicalapply this definition industry, to the which is diverse in products, made for petrochemical industry pursuepetrochemical a single industry. objective, Plans which is to prevent selling of Sinceits significance most petrochemical will take raw materials, compete the products,up added significance.including polymers, value chain and convert basic constitute the raw material and intermediary products to for downstream industries and will be used in the value chain, it may be concluded that considerationproducts of high that value-added. huge oil and petrochemical products are gasIt must reserves be taken provide into easily an intermediary commodity accessible feedstock to the which will generate value as petrochemical industry for its it goes ahead throughout the advantage of feedstock, we have concluded that completion of thedevelopment chance to inmove Iran. towards Given the value chainchain. inIt themay petrochemical now be industry would mean supply of midstream and downstream supplyingOver recent finished years, productswe have petrochemical products insteadwitnessed of sellinga variety raw of materials.projects and supply of feedstock to petrochemical industry, which has been put forward as a yearlying economicin such direction. development planMeantime, has paved Iran’s the sixth ground five- for Crude oil, associated gas the balanced development of andgovernment such products priority. as butane, petrochemical industry and propane and ethane need to be converted to end products in order to objectives to be completion of value chain. envisagedTherefore, fora variety involvement of polymer in industry is a subsection of products, GTPP, etc. have been chemicalrealized. Theindustry, petrochemical whose state plans, the petrochemical products are derived from crude productiondownstream capacity projects. is Basedset on to reach 180 million tonnes petrochemical industry include by 2025 and about 30 diversityoil or natural of products gas. The and features supply of petrochemical projects are of feedstock to thousands of envisaged for this purpose under 30 downstream plants. That would the sixth development plan. 31 Petchem July 2018 Issue No. 73 monthly Petchem

Value Chain Completion and development on larger swaths of Value Chain and Profitability Value Creation Advantages of Downstream Completion of value chain in obligations,are developed. the “Themore more value-added the appointed CEO of Persian Petrochemical Development the petrochemical industry Iran’sLower land. Investment Needs petrochemical sector fulfills its Jafar Rabiei, newly- such circumstances, we will be Company, said due to its Preventing raw materials selling, increasing nonoil exports Operation of new projects and petrochemical industry is ablewill beto created,”create sustainable he said. “Under jobs Gulf Petrochemical Industries and pursuing resilient economy Development of downstream buildingconstitutes downstream a significant units strategy. and generate higher revenue chain was being followed up Possibility of construction across the country to avoid alongside them may lead to the poverty, creating jobs, generating within the framework of resilient profitability the issue of value industrial centralization valuesignificant and completing in terms of theeradicating value is to create value-added and Creating high value-added subsequently higher value-added on seriously. “One of our plans supply of final products and and upstream industries, economy.”Existing Capacities our talks with the Ministry of Contributing to higher national security, particularly along petrochemical industry must downstreamchain. Compared industry with needsmidstream profits for our stockholders. In borderContributing areas to fair distribution of wealth in Iran bein production.programmed In sofact, as Iran’sto reduce lower investment with a faster director of downstream division have discussed cooperation in selling raw materials in favor of Reza Mohtashamipour, feedstockPetroleum supply and Holdings, in addition we to midstreamDriving nationalindustries economy Value Chain and Role in investment return. of NPC, said there was big completing the value chain,” he Lower investment needs compared with upstream and Economy completionNew SP Phases of the valueand Chain chain. potential in Iran’s downstream letting our affiliates step into midstream and basic industries Completion productionpetrochemical capacity industry. was He three said envisage projects and we have A higher rate of return on investment compared with that Iran’s installed petrochemical added. “For that purpose, we Reza Norouzzadeh, CEO held talks with foreign investors, is the standard-bearer of value including Chinese and European, Lucrative regional market The petrochemical industry petrochemicalof National Petrochemical industry could industryto four times development the current is notoutput. to to bring capital and technology Diversity of downstream products including plastic, tire, helpCompany boost (NPC) economic said growthIran’s of new phases of South Pars gas create“The priority new capacities, in downstream rather it is materialspaint and resin, glue, compounds, detergents, etc. creation. Following the startup once the value chain is completed to use the existing capacities,” he and supply products of higher MuchRelative lower advantage pollution in termscompared of access with toother necessary manufacturing raw and downstream industries is prioritizing maximum use of into Iran for expanding this chain industries field, the petrochemical industry new projects are planned with added. value-added.” agas view feedstock. to completing To that the effect, value the

chain.Value Chain and Job Creation

downstreamAnother important petrochemical aspect of projectsvalue chain have is becomejob creation. operational, When many opportunities would be

would help prepare the ground created for job creation. That

forValue further Chain development. and Water Completion of downstream projects in all provinces would reduce dependence on water, reduce need for investment and create more

downstream petrochemical jobs. These advantages prioritize

industry.Value Chain and Neighboring Markets Given consumer markets in neighboring countries, downstream industries could

petrochemicalcapture the bulk sector of these has markets. theTo that possibility end, the of downstream undergoing 32 33 Condensate July 2018 Issue No. 73 monthly Condensate

were valued at $15 million a condensate supply to small Condensate Exports Down fromCondensate Bandar Abbas,” Used he said. day.Facilitated Condensate Domestically domestic refiners in recent Supply increasedyears through domestic the Iran supply Energy and Gas condensate consumption of renewed sanctions on theExchange, impossibility he added: of its “In supply light of as Domestic Use Up Amid Washington’s threat Since taking office in 2013, the administration of President Hassan limited to the Persian Gulf Star has provided the necessary in Iran is not supposed to be Iran, speculation is rife that Rouhani has focused on putting an end on selling raw materials. facilitiesfrom Ilam for and onshore Khangiran, loading NIOC of Iran’s gas condensate exports This issue was followed up on seriously by Minister of Petroleum refinery. Under Iran’s 6th Five- longhave agodropped. decided But to the provide fact Bijan Zangeneh although international sanctions against Iran were production,Year Economic which Development would reach of matter is that NIOC had South Pars gas condensate.” still in place. The Bandar Abbas Gas Condensate Refinery, known as the Persian 1Plan, mb/d, Iran’s will gas be condensateconsumed domestic refiners with Gulf Star, is known as the symbol of initiative to end raw material selling in the supplycondensate. may fourth decade of the establishment of the Islamic Republic. The treatment facility Petrochemicaldomestically. After Plant the is thePersian increase,“Gas condensate in Gulf Star refinery, Borzouyeh has undergone development thanks to Iran’s historic nuclear deal, formally largest consumer of gas case market known as the Joint Comprehensive Plan of Action (JCPOA), with six world powers to help Iran join exporters of refined petroleum products. condensate in Iran. ondemand arrangements, grows. Saeed Khoshroo, director of theFurthermore, delivery of based ven US unilateral on foreign gasoline imports, saidinternational loading gas affairs condensate at National gas condensate Construction of the Bandar saving the nation billions of Iranian Oil Company (NIOC), to buyers is timed to Epetroleum industry sanctions on Iran. Port, destined for domestic ensure production units sanctions on Iran’s started at Shahid Rajaei about feedstock supply gas condensate exports initiallyAbbas condensate planned to refinery come dollars. Ali-Reza Sadeq-Abadi, for several months,” said becausecould no condensate longer affect is Iran’s being onlinedates back in four to 2006.years Itto was CEO of National Iranian Oil consumption,domestic recently. industries Refining and Distribution “Inand order prevent to support selling raw gasoline production, but this Company (NIORDC), said the actionKhoshroo. to ensure sustained intoused force domestically in January now. 2016, objectivemake Iran was self-sufficient not realized in condensate refinery had addition to supplying Noting that NIOC has taken When the JCPOA entered ofsupplied gasoil, 3.7500 billion million liters liters of gasmaterials, condensate NIOC fromhas in condensate parked on water; gasoline, 1.7 billion liters imagineIran had 3775 verymillion large barrels crude of until 2013. The project was and 9 billion liters of other prioritized after the Rouhani oilof liquefied products petroleum since becoming gas Parsthe condensateIlam and Khangiran supply is feeling comfortable even becameadministration operational took inoffice. May fields to resume South carriers (VLCC). Now Iran 2017The first and phase the second of the phasefacility was put into operation two operational. He added that fromonce Bandar infrastructure Abbas and has though US President Donald the operation of this refinery thenbeen from completed,” Assaluyeh he Trump has decided to restore production from the two saved Iran $5.4 billion in phasesmonths currently later. Euro-4 stands gasoline at hard currency. past month, 40,000 ml/d“The ofPersian Euro-5 Gulf gasoline Star added.tonnes “Over of South the producing 650,000 b/d of andrefinery 6 ml/d is delivering of middle 24 Pars gas condensate condensate,24 ml/d. Iran half is currently of which distillate products,” said has been supplied

that the oil products is used domestically. That Sadeq-Abadi, adding means Iran no longer depends

34 35 Interview July 2018 Issue No. 73 monthly Interview

have proven their competence under the toughest conditions FOCUS ever since the 1980-1988 Is US sincere in claiming that it would tap its strategic Iran Oil petroleum stocks after imposing oil sanctions on Iran? imposed war. In the most optimistic scenario, how much oil can Dipping into strategic stocks was the idea of Henry Kissinger. ‘Unsanctionable’ producers supply on the It was put into practice in 1974 in reaction to Arab nations’ oil In the run-up to November 4, when US President Donald Trump market? boycott. The stocks may be tapped only when oil flow stops will restore sanctions on Iran’s petroleum sector, speculation is production capacity in OPEC due to the outbreak of war. The US currently owns 667 million rising about the materialization of this decision. Despite repeated andFigures non-OPEC about genuinecountries oil are barrels of oil in its strategic stocks with Trump saying at least threats by US officials to reduce Iran’s oil exports to zero, many 35 million barrels may be consumed. That indicates the US data in the oil producing government’s fear and anxiety after restoring sanctions on experts believe that Iran’s oil could not be slapped with an embargo. Iran’s among the most confidential Iran. The US did not dip into its strategic stocks even during former National Representative to OPEC Fereidoun Barkeshli, who is now real production capacity of George Bush’s invasion of Iraq. president of Vienna Energy Research Group, tells “Iran Petroleum” that the nations. We don’t know the more than twenty years now, National Iranian Oil Company (NIOC) has hired the most competent marketers Saudi Arabia or Russia. For who have proven themselves even during the 1980-1988 imposed war. Here is the to have capacity to produce full text of the interview Mr. Barkeshli gave to “Iran Petroleum”: 12Saudi mb/d Arabia of oil, has never been seen claiming so

emerged immediately after the Roya Khaleqi whichfar. Even took during 6 mb/d the offSaddam market 174th meeting perturbed the regime’s invasion of Kuwait, global market to some extent, on Iran. Trump’s defeat to How do you assess the already[Russian dented President his chanceVladimir] of oil market under the current casesimmediately, in oil affairs Saudi call Arabia into did Putin in Finland’s Helsinki has circumstances? success in winning seats in the not prove such capacity. Such of oil alliance may be able to Prior to the 174th ministerial causing a $1.65 decline in the North Sea Brent price. would undoubtedly blunt his meeting of OPEC and the Do you think that the oil question Saudi Arabia’s ability course it must be noted that theTherefore, world economic it is impossible growth to Senate and the House. That fourth meeting between OPEC market can eliminate Iran’s to produce more than 10.5 add 1mb/d to their output. Of calculate any reliable figure for and non-OPEC from July 22 to oil now? mb/d. Therefore, an alternative their oil output fall by more desired pressure on the Islamic Before answering this isto facingIran’s oil,similar i.e. Saudi conditions Arabia, Venezuela and Libya have seen and growth in demand for oil. sanctionsRepublic of are Iran. concerned, to reasonable decisions made andhas beenit may sidelined. be able to Russia supply Therefore, at best, demand for July 23, 2018 in Vienna, owing itNow may as be far said as inIran’s a single oil by OPEC oil ministers to keep oil on the market by dipping than 1 mb/d, while Nigeria, crude oil will increase by 1.8 to question, I 'd like to point out collective output unchanged into stocks of oil bought from Angola and Gabon have hit 1.9 mb/d.To what extent can that the date of November 4, snagsHow in production. much will oil OPEC contribute to market when President Trump plans phrase that “Iran’s oil is the market to deplete major exports, subject to approval by demand reach in the third stability now? and remove 1.8 mb/d from to enforce a ban on Iran’s oil oilunsanctionable”. money, as it has Although already the alsoTurkmenistan stocked oil or in Kazakhstan. its offshore and fourth seasons of the done,US may due block to its transfer control of over Iran’s global oil prices were steady and the Senate, overlaps with andOf course, onshore Saudi storage Arabia facilities, has current year? interaction with market players, consumers’ stocks in 2016, the House of Representatives enough and the prices were the date set for midterm which it can tap to supply oil OPECThrough has constructivebeen instrumental and strong in growing in harmony with continues to be fraught with global oil market stability even SWIFT, it would be possible to growing oil demand and world variety of challenges which to say is that producers of The year 2018 has been and elections in the US. Due to a wayfind awith solution the Europeans to this problem. in conventionalon the market. crude What oil I want have thisFruitful regard, negotiations which give are cause under oil market had adapted itself to likely to lose some of his more or less reached their tariffsevents on for imports the oil market. from China The under toughest conditions. OPEC economic growth. The global Trump is faced with, he is the alliance between OPEC and supporters even from the maximum production capacity andUS’s therecent European move to Union levy heavyand theowes market its success from tocollapse Iran and under non-OPEC, which comprised and are unable to provide Saudi Arabia, which helped keep to optimism. It should be also he is likely to realize only part system has the best oil have disturbed trade ties global oil market is indebted to Republican Party and at best marketersnoted that inNIOC’s the world, marketing who But new developments having of his threats to exert pressure in my view, the 24 members the latter’s retaliatory measures very difficult conditions. The 24 small and big oil producers. any extra supply. Therefore, between industrialized nations. OPEC services.

36 37 Analysis June 2018 Issue No. 72 monthly Analysis

production. Therefore, a United Nations (Vienna), all across the globe. Even halt to Iran’s oil exports Ambassador Extraordinary Washington’s European Removing Iran Oil from Market would create a void which and Plenipotentiary, allies disagree with these may not be filled easily. Even Mikhail Ivanovich sanctions. Furthermore, Challenges and Consequences if such void is filled with Ulyanov, reaffirmed his buyers of Iran’s oil will the turn of time, oil prices country’s opposition to the bow to US pressure to stop Shuaib Bahman government has embarked European nations. will be struck with shock imposition of unilateral importing Iran’s oil only if on a diplomatic charm No Suitable Alternative: in the short and mid-term. sanctions on Iran, calling they receive guarantees for S President Donald offensive to convince Iran is currently exporting Consumers Independence: for Iran’s sustained oil their energy supply, which is Trump, who has buyers of Iran’s oil to stop about 2.5 mb/d of oil. The After the US unveiled its supply on markets. He impossible now. Uunilaterally pulled purchasing from Tehran US has announced it will do plot against Iran’s oil, many made it clear that Iran’s Furthermore, any oil price out of the 2015 nuclear in a bid to ratchet up its utmost to minimize any countries including India, oil would stabilize global hike would significantly deal signed between Iran unprecedented pressure disturbance in oil markets China, Japan and South market. drive up energy commodity and six world powers, has on the Islamic Republic, through relying on Saudi Korea disagreed as they are prices, including gasoline threatened to reduce Iran’s global market rules do Arabia and some other Arab among traditional buyers Unrealistic Approach prices, in the US, which oil sales to zero. The main not follow Washington’s oil producers; however, the of Iran’s oil. Under the The US initially claimed would directly impact objective sought by the decision. To that effect, the reality is that no country, previous round of sanctions, that it had no intention people’s everyday life. Trump administration is to US administration’s policy even Saudi Arabia, would these countries showed of granting any waiver to That would pose a threat drive down to nil Iran’s oil of imposing sanctions on be able to offset the market their determination to keep buyers of Iran’s oil, saying to Republicans’ chance exports in November in a bid Iran’s oil will face serious prospective shortage in the buying Iran’s oil under it was necessary for serving of victory in the midterm to impose its own policies. challenges for a variety of short term in case Iran’s any circumstances. What national interests. But as elections scheduled for Iran’s oil sector has already reasons: Oil Price Hike: oil is frozen out. First and strengthens the position time passed and consumers November 6 this year in experienced embargo. But Any decline in or halt to foremost there are doubts of the traditional buyers resisted US pressure, the US. That represents a the difference is that in 2012 Iran’s oil exports would about Saudi Arabia’s of Iran’s oil now is that Washington had to rethink big challenge for President Iran’s oil buyers enjoyed definitely impact global alleged spare capacity of Europe would not follow US and announce that it would Trump who has sought to sanctions waiver after oil supply, which would in 2 mb/d. Second, even if sanctions. If the European consider sanctions waivers prove himself as a successful cutting their oil purchase return introduce a shock to there is such capacity the Union’s proposed package for some countries. The head of state. Should he from Iran by 20% over a markets and drive up energy Saudis will have to win for Iran covers oil sale, Iran US is expected to grant stop targeting Iran’s oil, six-month period. This time, prices. In other words, any over fellow OPEC members will continue to sell oil to exemption to India, Japan, his foreign policy will face the Trump administration decline in or halt to Iran’s oil for any increase in output. Asia and Europe. South Korea and China to challenges, but if he exerts eyes a full halt to Iran’s oil exports would pressure oil Without a consensus, it Producers’ Opposition: be able to keep buying oil pressure on Iran his party exports. Such unlawful and markets to unprecedented would be impossible for In addition to consumers’ from Iran. will be defeated in the mid- unilateral move by the US levels since the 1973-1974 the Saudi government to lift concerns about any Should the US refuse to term elections. administration will lead to and 1979-1980 oil crises. its output to such extent. change in Iran’s oil grant such exemptions, While continuing to the failure of the policy of Oil prices will be on the Meantime, oil markets are supply, some producers it will face opposition in apparently impose tough eliminating Iran from global receiving end of any such hit by oil shortage due to remain opposed to the its anti-Iran policy. It has sanctions on Iran’s oil sector, oil market. pressure on the market, war in Libya and domestic US decision to impose become common knowledge the Trump administration is which would definitely face unrest in Venezuela, not sanctions on Iran’s crude that the US’s unilateral unlikely to be able to force Bankrupt Policy strong opposition from big to mention the drop in oil. Russia’s Permanent actions against Iran have buyers of Iran oil to cut their Although the US consumers like China and Angolan and Nigerian oil Representative to the failed to win any consensus imports from Iran.

38 39 ProductionIPF Aasta Hansteen Emerging as Norwegian Sea Gas Hub Petrobras Puts More Offshore Equinor and its partners plan to turn production later this year via Fields Up for Sale the Aasta Hansteen development Norway’s first spar platform. At facilities into a gas hub for other present the cylindrical hull is in the Petrobras has initiated the non-binding nearby finds in the Norwegian Digernes Sound near Stord on the phase for sales of its interests in further Sea, according to the Norwegian Norwegian west coast. fields offshore Brazil. Petroleum Directorate’s latest house The topsides is on its way from South The latest offers are 50% of the magazine. Korea for mating with the hull off company’s non-operated interest in the Aasta Hansteen is due to start Stord. Tartaruga Verde field and Module III of the Espadarte field, both in deepwater in the Campos basin. Also offered is Petrobras’ entire stake in the shallow-water Baúna field in the BM-S- 40 concession in the Santos basin. At this stage, interested qualified bidders will receive instructions on the divestment process, including guidelines for the Mauritania preparation and submission of non- Awards Shell 2 Offshore binding proposals, and access to a virtual Blocks Norway data room containing more information Shell has signed two production- about the fields. sharing contracts with Mauritania’s Thailand Oil government for offshore blocks C-10 and Field Operational C-19, covering exploration and potential Phase 4 development activities will future production of hydrocarbons. start this month at the Bualuang oil field “This move represents Shell’s entry in the Gulf of Thailand with a rig arriving to into the West African Atlantic Margin drill three replacement production wells and exploration basin, which has to work over two existing wells. As a result, significant potential,” said Andy operator Ophir Energy expects production Brown, Shell’s Upstream to rise during the second half to average Director. more than 9,000 b/d. After the program is complete, the company plans to drill the Mauritania Bualuang North prospect targeting 1-5 MMboe. If successful, the well will be VIEW Thailand tied into the existing production facilities. Brazil

Drilling Resumed in Western Australia 3---Australia Makes Big Oil Find The Quadrant Energy/Carnarvon Petroleum partnership has VIEW VIEW confirmed a significant oil discovery Australia in the Dorado-1 well offshore Western Australia. Light oil was recovered from the Caley member, with a gross hydrocarbon package of 96.1 m (315 ft) and a net pay thickness of 79.6 m (261 ft) in porous and permeable sands. This followed wireline testing after the well had drilled down to around 4,044 m (13,268 ft) MD in 8-1/2- in. hole. Currently the well is still in a hydrocarbon-bearing column. news July 2018 Issue No. 73 monthly news Oil Market Hits a Cyclical Pause China Pledges $14.7bn Investment in South Africa Brent crude futures prices Chinese President Xi Jinping are trading in contango for investment during a state traders anticipate an increase promised $14.7 billion of inthe crude first timeavailability in 10 months, during as isvisit on toa missionSouth Africa, to kick-start where futures are trading in contango economicPresident growthCyril Ramaphosa after a forthe theremainder four contracts of 2018. closest Brent to delivery, from September decade of stagnation. The rand firmed more than managers2018 through have January sold a large 2019. pledge,one percent which after takes Ramaphosa the numberHedge funds of long and positions other money in amountannounced overseas China’s economies investment recent weeks, depressing the have committed to invest in

managers tend to hold a majorityfront-end of of their the curve. positions Portfolio in South Africa to $35 billion contracts close to expiry because easesince worries the start about of the the month. health Those commitments will help which has performed poorly position-buildingthat’s where the liquidity by the hedge is despiteof the South investor African optimism economy, fundsnormally spurred greatest. the riseJust inas spot OPEC and non-OPEC allies have strengthening dollar 1 banks lent a combined 2 prices and calendar spreads in responded to pressure from and the intensifying scandal-plagued Jacob Zuma the United States to counter when Ramaphosa replaced imports from Africa’s most quarter of 2018, liquidation is rising prices by increasing their United States and China are also that we must work as partners industrialized economy. utility$2.8 billion Eskom to andstruggling logistics the second half of 2017 and first trade conflict between the toin February.improve the “We lives have of ouragreed Ramaphosa will host Xi and South African state power More fundamentally, traders been loaded in June and July, Because the oil market is peoples by elevating our the leaders of Brazil, Russia has focused on revitalising havenow acceleratingreacted to pledges the correction. of production. Extra barrels have forward-looking,weighing on oil prices. concerns about business, commercial and economiesand India at in a Johannesburgsummit of the Eskom,company which Transnet. received Ramaphosa an increased output and exports ensuring increased availability the strength of consumption laterBRICS this group week, of emergingwhere he will with more promised in August, growth later in 2018 and 2019 be looking to secure further are being discounted back to tradeXi said ties,” China Ramaphosa would take told a reportedinjection ofa $171 $2.5 billionmillion from full- from Saudi Arabia, Kuwait, growthin the second as a result half ofof thea year. joint news conference with Xi. agreements signed, Chinese China Development Bank and the United Arab Emirates and Fears about slower consumption investment pledges. Among Russia.NEWS Saudi Arabia and its NEWS lower oil prices in the near-term. “activeNEWS measures” to expand NEWS year. Russia’s Petchem Giant Africa’s Richest Man India Offers Uganda Sinopec Expects Best Prepares for IPO Eyes $4.5bn Oil Refinery Credit to Boost Energy Quarter in Years China Petroleum and Chemical Corp expects to report its best quarter since 2013, based on potentiallyRussian petrochemical worth between company $2 to $3 Sibur billion is Africa’s richest man, Aliko Dangote, has expandIndia has its offeredelectricity Uganda distribution a total $205 infrastructure million andpreparing which formay an happen initial publicby the offeringend of the (IPO) year, arranged more than $4.5 billion in debt financing andworth invest of credit in its to agriculture help the East sector, African which country for his Nigerian oil refinery project and aims to Reuters calculations on a company forecast, start production in early 2020, he told Reuters. boosted by a “favourable” downstream refining familiarfinancial with market Sibur sources plans toldsaid Reuters.that the company withDangote, capacity who ofbuilt 650,000 his fortune barrels in percement, day (bpd) is to employs majority of its workforce. usuallybusiness known and resurgent as Sinopec, crude said oil in prices. a statement One of the three financial market sources building the world’s largest single oil refinery dayA statement visit said issuedModi and in Kampala his host Presidentwhere India’s The state oil major and China’s top refiner, Yoweriprime minister Museveni Narendra also discussed Modi started reform a of two- the is looking at the possibility of an IPO in Moscow help to reduce Nigeria’s dependence on imported it expects first-half net profit to rise by 50 and London and may raise between $2 to $3 petroleum. Despite being a crude oil exporter, percent from 27.1 billion yuan ($3.98 billion) billion. Another of the three sources said that Nigeria imports the bulk of its petroleum U.N. security council. in the same period a year ago. the company was looking to raise “a couple of because of a lack of domestic refining capacity. linesA loan and of substations$141 million while would another be extended That would be 40.65 billion yuan, according billion dollars” from the deal. Lenders would commit about $3.15 billion, with $64to Kampala million towould build spent electricity on boosting transmission to Reuters calculations and the highest on Asked about a potential IPO, Sibur said in hethe was World investing Bank’s more private than sector 60 percent arm providing agriculture and diary production, the 5 forrecords Sinopec back since to 2013. the third On a quarterquarterly 2013, basis, a written reply to Reuters that it is 3 $150 million, Dangote said, adding that 4 that would be 21.9 billion yuan, the highest 6 considering different “strategic options” 42 how to finance its growth. from his own cash flow. statement said. records show. 43 news July 2018 Issue No. 73 monthly news Rosneft Suing Exxon-Led Oil Project Colombia to Develop New Oil Bidding Regime Colombia is preparing changes to its bidding process for oil areas in ExxonMobil-ledRussian oil major Sakhalin-1 Rosneft’s an effort to increase investment consortium$1.4 billion lawsuitrelates toagainst a row the over how oil should be shared of the oil regulator said, after between the Sakhalin-1 repeatedand find new cancellations reserves, ofthe its head concession and an adjacent including contracts adjusted tolatest international oil round. Thecrude changes, price RosneftBy bringing field, the court legal papers action, show. for companies to propose its closest foreign partners: explorationfluctuations onand land the notchance yet on Rosneft is taking on one of offer, will help attract spending and nearly double reserves to at Rosneft and ExxonMobil have least 10 years of consumption, multiple joint projects. But Rosneft and its powerful boss Igor Sechin have a track record Orlando Velandia of the National of assertively fighting their conditionsHydrocarbons for theAgency country, (ANH) to Sakhalincorner in district commercial arbitration disputes. achievesaid. “We’re competitiveness looking to improve and 8 Rosneft filed the suit in the 7 motivate companies to make accusing the consortium rock formations bidding round comes after a four- ofcourt unjust in Russia’s enrichment, far east, an that straddle two or year pause when low oil prices allegation the consortium the Northern Chayvo oilfield, proposals about areas,” Velandia the offers of other bidders. adjacentcontrolled to by the Rosneft. concession area tosaid receive in an interview.offers for 15 The onshore ANH companies“Once we evaluate can make the offers areas disclose the exact nature of controlledThe Northern by the Chayvo Sakhalin-1 field is determinedmore permits. by an examination, areasin April at postponedits Sinu-San the Jacinto deadline Colombiastopped many has been Latin awarding American inand a continualthey’re added competitive to the map, denied. Rosneft did not most “Since disagreements oil cross-flows between can be auction until the second half of blockscountries to the from highest offering bidder acreage. every court documents reviewed in the oil industry for companies of this nature two to three years, but bidding Companies would no longer the dispute. According to extractionconsortium. activities It is commonplace on one are resolved out of court by in the new system will privilege beprocess,” required Velandia to outline said. planned the year. It was the sixth time the investments or compensate relatedby Reuters, to an the agreement court asked over brokerage, said in a research countryround was hosting delayed. oil auctions Colombia this access to additional areas, the government if spending Rosneft to present documents permit,concession because to influence the oil lies oil in negotiation,” Aton, a Russian is the third Latin American the first company that requests flows on a neighbouring NEWSthe “cross-flows” of oil from note. year,NEWS after Mexico and Brazil. Its Velandia said, likely improving falls short, he added. Algeria to Set Up Oil Trading Venture US Refiners Boost Purchases of CPC Blend Sonatrach is in talks with oil focussed on producing oil and down the price of comparable gas, while leaving marketing to record monthly volume of oil, such as the crude produced start a trading joint venture OuldPotential Kaddour partners, told Reuters which have in crudeU.S. refiners from the will Caspian import region a buy additional crude from West majors and trading firms to heldAlgiers. talks with Sonatrach in in July after snapping up the shippingAfrica, Middle rules Eastcan makeand Europe. it more company reached a deal this venturethird parties. is one of several steps cargoes when prices reached throughnear the theCaspian CPC pipelinein Kazakhstan and That is because U.S. domestic after the Algerian state energy aimedSonatrach’s at easing move the to burden form a of near six-year lows, according to and Russia. That oil is pumped to ship crude from the Gulf coast recent weeks, include BP, Total, its hefty fuel import bill that toexpensive the northeast for East than Coast it is refiners to year to buy its first overseas biggestRoyal Dutch independent Shell, Chevron, oil trader, tripled year-on-year in 2017 to relyloaded on incrude the Mediterranean.imports, have therefinery, venture its chiefhad been executive expected told Repsol and Vitol , the world’s unusuallymarket sources large volumeand Thomson of crude U.S. East Coast refiners, which atReuters. the end A ofdecision July but on could forming isReuters one of shipping many changes data. The in the barrels of CPC crude that will import oil. East Coast refiners be delayed by a month, two the sources said. Vitol, BP and a record $2.5 billion. international oil trade caused by reachbought the most United of the States 3.7 million in July, “can get oil cheaper from the notShell immediately declined to respondcomment. to It signed a contract this year Urals than the Eagle Ford,” Total, Chevron and Repsol did suchwith Vitoldeal into decades,receive products and said said Kyle Cooper, a consultant sourceswill said. have small shares in Mayexchange it had for agreed crude, to the buy first a flood of U.S.exports shale ofoil crude headed according to the Thomson Blendfor options crude broker fell to aIon six-year Energy. in“The the foreigntrade joint firm requests for comment. fromoverseas. the United Record theReuters oil produced data. The in East the Coastshale During May, the price of CPC venture,” Sonatrach aSonatrach’s shift among expansion national oil into States to Europe and refiners have limited access to CPC, making it relatively cheaper 9 companiesrefining and that trading for decades reflects ExxonMobil’s 175,000 barrel- 10 discount to Dated Brent BFO- per-day (bpd) Augusta refinery fields hundreds of miles away CEO Abdelmoumen in Sicily, Italy. Asia have pushed in Texas or North Dakota. They than West African grades. 44 45 Market July 2018 Issue No. 73 monthly Market

South Korean players have continued to Fuel Oil pick up full-range cargoes to supplement Singapore fuel oil cracks have staged a condensate splitter intake. Nevertheless, the spectacular recovery from April’s 22-month lack of support from the gasoline blending low of -US$7.7/bbl, averaging -US$2.8/bbl Global Oil and Asian side is also apparent in Asia with Spore 95 month-to-date. This is in line with Asia’s fuel mogas cracks having weakened in particular. oil deficit which is estimated to widen by 36 kb/d y-o-y in July. The drop in supplies Middle Distillates (gasoil, jet fuel) continues to outpace the fall in demand with Product Market, July Gas oil/diesel cracks in the EoS have been the ongoing startup of S-Oil’s 68.4 kb/cd Dated Brent moved in a tight US$72-75/bbl range over the second recovering over the past few days from RFCC unit. 10 days of July. A slew of bearish events have hit the market since a sharp drop in June. Asian cracks have On top of this, the largely unexpected return then and prices are on a downtrend, erasing the gains made in the become increasingly dependent on shorts of Pakistan to the buyers’ market tightened in the West as regional demand growth has the market further. run-up to the OPEC meeting held on 22 June. Although there are struggled to keep up with the brisk pace of Indeed, Pakistani tender data for August several push and pull factors at play, supply returns from Libya and Canada, and last year. suggests that imports may reach 120,000 Saudi and Russian production increases, and the recent US stance on Iranian Q2-2018 demand increased by 170,000 b/d b/d. However, it is noteworthy that y-o-y, compared to 380,000 b/d y-o-y growth most of these supporting factors (Iran sanctions amid US-China trade war weigh on the market. in Q1-2018 and 450,000 b/d in Q4-2017. is the exception) will not last beyond This, together with high crude intake growth September as peak power generation n the other hand, the market has Asian Product Markets and evidence of yield switching towards the demand in the Middle East and Pakistan become increasingly focused on the Light Distillates (gasoline, naphtha) gas oil/diesel pool from key markets such will have dissipated, while there will also squeeze on spare capacity which has Singapore naphtha cracks crashed to a near as South Korea, means that gas oil/diesel be an uptick in incoming flows from the O cracks have likely peaked for now. emerged with increased output and exports two-year low in June, averaging -US$2.93/ West given the currently favorable arb from the leading members of the supply bbl due to high levels of LPG substitution Jet/kero regards have been on the rise spread. accord. This will keep price support in place in steam crackers and the weakness in the over the last few days. Regional demand Therefore, cracks are expected to weaken over the next month or two, as overall crude gasoline market. This has been also evident growth has remained strong with higher beyond September, ending the year at demand remains high, with perceptions of in Europe, with full-range grades weighed prices being less of a pressuring factor around -$5.50 per barrel. greater tightness driving some additional down by a relative lack of blending demand. here compared to road fuels and with an We see some relevant changes to the upside risk in the event of further outages. While refinery yield shifts towards the emerging middle class in key markets global crude slate coming up over Q3 due The extent of the reshuffle in crude flows middle distillate pool, could help take some providing a boost to the aviation sector. to sizeable increases in Saudi Arabian and due to various political elements is still of the pressure of the light ends complex . Partly on the back of this, fundamentals for Russian crude production, most of which will not clear. In general, the expectation is Asian naphtha cracks, meanwhile, have jet over the next months appear notably be medium-gravity and below. At the same potential rerouting of at least several recently rebounded a little after the West/ stronger than for the gas oil/diesel side. time, we are seeing a slowdown in US y-o-y hundred thousand b/d of crude to weigh East arbitrage spread had come under Meanwhile, European import requirements production growth, while China may shun US on the Brent complex, if it translates into increasing pressure over early July. Support are set to continue rising with the balance barrels. Consequently, we expect to see Asian a significant curtailment of Asia-bound US from petrochemical players to have firmed there tightening by 60,000 b/d m-o-m refiners process a more fuel oil rich crude flows. post-maintenance season is expected , while (15%), keeping a firm pull on arb barrels. diet in the near future. 46 47 Review July 2018 Issue No. 73 monthly Review

will be used for softening heavy crude oil inwater. order The to steamfacilitate produced its pumping by this to plant the Petroleum Development Oman (PDO), in cooperation with Glass Point, has finished Oman Oil Initiatives managementthe first phase of of water the Miraah and renewable project. wouldground. be Miraah enough is toexpected supply energyto save to5.6 energiesPDO plans in to a bidbecome to shift more its missioninvolved from in an Iman Nikzad means Oman would be earning eight to nine trillion BTU of natural gas a year, which oil and gas industry regulatory company to energy production capacity of Miraah will 209,000 households in Oman. The solar reserves in place, the Persian Gulf times its current oil revenue – good news for the be 6,000 tonnes of steam, which would aOman company Shale regulating Oil and energyGas resources. stateith 5.5 of billion Oman barrels is ranked of knownthe 22nd oil tinySolar state’s Energy economy. Helps Oil Extraction in the world and the 7th in the Middle East in steam produced in Miraah will be used in turned to clean and renewable energies, Oman reduce gas consumption up to 80%. The oil reserves and operates 70% of its oil Like many nations in the world which have PDO runs more than 90% of Oman’s mbd, is known as the 25th largest producer of has decided to use solar energy for extracting threeenhanced square recovery kilometers from ofAmal land, West has oilcost field. crudeterms oilof oilin thedeposits. world, Oman, and the with largest an output non-OPEC of 1 production. PDO is held at 60% by the preparing itself to build one of the The Miraah facility, which is spread on Omani government, 34% by Royal Dutch largestand producing solar power oil. Therefore, plants in theOman is East countries, Oman depends on petrodollars Shell, 4% by French energy major Total and producer in the Middle East. Like many Middle 4600 million. be used for generating electricity; toW keep its economy running. According to rather,world. Thisit would power be usedplant merelywill not official data, oil and gas account for more than the67% rate of Oman’s of 544,000 state b/d, revenue. trading each barrel for Oman first started exporting oil in July 1967 at for boiling water to produce oil. The Miraah solar facility is able Oman delivers crude oil mainly to China, $1.42. comprisesto generate rows 1GW of of glasses energy to be whichused for are oil curved production. at the Miraah Thailand, South Korea and Japan. Last year, direction of a boiler isChina exporting received oil, 78% known of Oman’sas Oman oil Blend exports. with Mina al Fahal is currently the only port where Oman pipe filled with API=32. Oman is using a two-million-barrel twovery decades, large crude Oman carrier has not(VLLC) seen for any storing sharp and loading crude oil ship-to-ship. Over the past

influctuations north of Oman in its withoil reserves reserves and estimated exports. Last year, two new oil fields were discovered applying new enhancement technologiesat 67 million likebarrels. miscible, Oman polymer is currently

technologiesand steam injection has knowhow. Application of new crude oil production significantly reduced

costs from $9.3 to $8 a barrel. That

48 49 Review July 2018 Issue No. 73 monthly Review

largest oil block, Block 6, is administered by 2% by Portugal’s Partex Oil and Gas. Oman’s China’s CNPC (20%). ORPIC managed to raise the Sohar refining willbetween also supplyPDO and necessary KPI, the crudecompanies oil to havethe each Occidental Petroleum is currently the largest Daleel Petroleum, which runs Block 5, is a joint capacity to 198,000 b/d. 50% of the Ad Duqm refinery. Oman and Kuwait foreignPDO. company in Oman and the second venture 50-50 by Oman’s Petropas and CNPC. Oman feedsalso holds 186,000 a 26% b/d share of crude in India’s oil into Bina Petropas runs Block 7 and Rima Cluster oil field refinery whose capacity stands at 120,000 b/d. facility in equal shares. Petroleum controls Block 9 and Block 62 in the in southern Iran. aThis member is the state first ofinvestment the Gulf Cooperation project for an Council largest oil producer in the country. Occidental Spain’s Repsol, South Korea’s KOGAS, Britain’s refineries to produce petroleum products whose integrated refining and petrochemical project in BP, Partex, Total and Shell are other important amount is not too much. north and Mukhaizna in the south. companies involved in Oman’s petroleum Oman’s pipeline network is mainly based (GCC). The aforesaid project will be also the first The Consolidated Contractors Energy (OOC)industry. is tasked with investment in the energy on the delivery of crude oil to Mina al Fahl, refineryOil analysts in the say GCC the area storage to import facilities crude whose oil as Development (CCED) is in charge of Blocks 3 In addition to PDO, the Oman Oil Company petrochemicalthe only oil export plants, terminal which in are the an country. integral feedstock. and 4. CEED is held by Oman (50%), partThe pipelineof economic also developmentfeeds industrial plan, and as well as Sweden’s Tethys Oil (30%) and sector in the country. oil and gas dependent downstream industries capacity is more than Oman’s need; constitute Oman has currently two refineries with a orthe petroleum most important products section to the of storage the megaproject. facility refining capacity of 304,000 b/d of oil. Mina theyIn case would other be Persian able to Gulfreduce states the carry tankers crude route oil al Fahl is Oman’s top refinery with a capacity in the country. PDO operates more than 1,600 of 106,000 b/d. It came online in 1982. The kilometers of pipeline across the country. Sohar refinery, which came online in 2006, Furthermore, the Omani state has launched an thefive deliveryto seven ofdays products for selling to target their marketsproducts can process 116,000 b/d of oil. The Oil exportOil Fields terminal and Pipeline to develop in the Oman Sohar refinery. andin the create Arab economic Sea. That incentiveswould shorten for buyers time for of Refineries and Petroleum Industries Company (ORPIC) is in charge of which Oman intends to operate by 2021 are the running these refineries. In 2016, The most important strategic oil projects refined petroleum products without having to go through the strategic Strait of Hormuz where $7230,000-barrel billion, construction Ad Duqm of refinery several petrochemicalin partnership 18.5 mb/d of oil is transited. Meantime, the with Kuwait Petroleum International (KPI) for strategic Ras Markaz area, which is located at oil and petroleum product storage facilities the intersection of Middle East, Asia and Africa, plants near the refinery, and building crude will take up added significance. Oman intends to bring on stream the first phase of these storage with capacity of 200 million barrels in the Ras Gulffacilities littoral by 2019.states in crude oil enhancement Markaz area. Under an agreement signed In light of huge investment made by the Persian

capacity,and refinery oil analysts construction believe projects that construction with a view of newto boosting storage refined sites and petroleum loading terminalsproduct exports outside

nearer access to consumer markets, shortened thedistance Persian for Gulf oil tankers and the and Strait attraction of Hormuz, of new oil buyers have taken up added importance

for these nations. Based on such viewpoint, Omancreate is a tryingbig hub its for best storage to finish and the export Ad Duqm of petrorefinery in order to boost exports and

refined petroleum products in the Ras Markaz area to reach aforesaid objectives.

50 51 R&D July 2018 Issue No. 73 monthly R&D

Why did NIOC feel the divided into three sections; acid necessity of taking action in the field of drilling additives theseAnother wastes aspect are pertains released to they and related technical impactenvironmental the environment issues. When and they and fluid, cement and drilling knowhow? mud. What potentialities and Since several years ago, we capabilities did you consider shifted the strategy of research managementneed to be managed. of reservoir, in choosing RIPI for that and technology to conducting particularlyAnother issue substances is the which purpose? we use during drilling for RIPI Develops Drilling Additives Universities are often one- Formulation universitiesresearch and and practical research studies. centers order to prevent drilling mud This project is multi-pronged. The pace of development in oil and gas industries unimaginably depends on drilling. hadBut firstto become and foremost, familiar with fromwell control. contacting For theexample, interior in fare well in cement research Drilling is known as master key to development of hydrocarbon reservoirs. It is a global oil issues and needs during a of the well these substances anddimensional. another one A university may have may good industry which has made significant advancement in every aspect. However, Iran has so far penetrate and when the well failed to catch up with other countries in terms of its development. Upon the request of the 100 years of background, oil becomes operational the same But the important feature of Directorate of Research and Technology of National Iranian Oil Company, RIPI was tasked productionspecific period was of delayed time. Despite due to performance in drilling mud. sections in the upstream division, with developing strategic chemical additives used in the drilling, completion and stimulation of wells. geologicalmaterials block layers oil on flow. one Inhand other whichRIPI is enableits numerous it to operate research like To know more about RIPI’s breakthrough, “Iran Petroleum” has conducted an interview with Ebrahim lack of scientific support and andwords, consequently we inflict damage production on the specialized healthcare center or Taleqani, NIOC director of research and technology. The full text of the interview is as follows: objectivesresearch maturity in practical at universities. research falls and we have to use acid clinic for offering consultation to wasOne toof parametersmeet petroleum for defining industry the needs, particularly in cases which environment, disturb production important anew. That would pollute the concerned,industry. the reason why feature of was mechanical equipment and was the problem we faced with As far as this project is chemicalinflicted heavy substances, costs. Onewhich of arethem and impose heavy costs. This RIPI is its currently imposing costs on the asRIPI a reference was chosen lab in in the the cement sector numerous isin aall professional wells. When center all these with issues sector was that RIPI is known substances are largely used in longwere background put together, in RIPI this which sector research petroleum industry. Chemical previousof cement experiences and its additives. and sections in Our objective is to develop strategicThis potentiality projects of envisioned RIPI, like by the upstream knowhowwells. to manage decided to embark on a project. consumption of chemicals megaprojectThat was the tobeginning serve the of drilling division, and indigenize their domestic chemical additive self-sufficiency nationalthe Directorate economic of Research development and which Technology throughout the 4th companies cross through industry. This project has been enable it to theseproduction. layers Foreignbecause service of having FOCUS operate like necessary knowledge and As far as this project is concerned, the reason why RIPI specialized high-quality materials, but we was chosen in the cement sector was that RIPI is known as a reference lab in the sector of cement and its additives. healthcare to the exorbitant costs of these This potentiality of RIPI, like previous experiences and center additives,have been their harmed. quite In low addition quality strategic projects envisioned by the Directorate of Research was one of major reasons and Technology throughout the 4th national economic justifying the implementation of development plan, inspired the belief that RIPI was fully ready to provide services in basic sciences

this project.Does it mean that the project has had economic advantages in addition to scientific, research and technological privileges? Yes, of course! Economically speaking, tens of billions of rials has been saved in the country

project has provided the ground foras it saving was spent hard oncurrency imports. and This 52 creating jobs in the country. 53 R&D July 2018 Issue No. 73 monthly R&D

plan, inspired the belief that or outside the country That needs to be done inside RIPI was fully ready to provide theservices capacity in basic of universities sciences. and ofthroughout important specific issues weprocedure have centersFurthermore, of excellence RIPI has as used well as and mechanism. This is one companies involved in this sector potential for the materialization ofto legaldeal with.procedures At RIPI, of there is

in the How country. come we had not developed such material in technological Would you trade. please explain the past years? Was it not the economic benefits of this necessary to do so? project, particularly in terms of saving hard currency? industry is not even 12 years Research in the petroleum be compared merely with The test started, research was 11 years Economic benefits could not old andyet. Whenwe had this to manufactureproject field for the such materials; however, there whichpaying may or not be payingable to money.operate developed For instance, we have 10 rigs When this of upgraded productivity and additives project was no scientific and research as efficiently as 60 rigs in case was to be started, rathersupport. a combination Additives are of not several conducted in materials,merely a chemical. each of which They arehaving hasquick been drilling. transacted That would for these save research us 10 rigs a year. No money three steps. was 11 years materials interact among this well to this project for testing which must be taken into For that themselvestheir own application. and affect oneThese Could such achievement had left behind that stage and and use of these technological 10 rigs. These are hidden costs old and apply to all wells? wereenter had tothe locate well. aBut new the well well technological trading. Trading Multiply the number of wells purpose, we had to alongside each other inside additives. How many wells were or wait for the same well to sufferingaccount. from such problem by Well No. 22 manufacture theanother. well whereThey have temperature to be placed tested? werefindings merely have working their specific with the purchase costs and the rental of Cheshmeh It may be argued that ‘additives materialsmechanisms. at a If time, researchers this process such designformulation is also design’ available, happened but for additives was to be conducted projectreturn to we previous were never conditions. faced with becomes different on industrial on costs, which would equal Khosh materials; throughoutand pressure this of soilprocess, is fluid. eachin this well project. we need Formulation to have a The test field for the developed theFortunately, hurdle of throughout non-handover the of scale and legal and corporate of rigs. This is how we can save oil field, If no overlapping happens for measurement in the drilling however, in three steps. For that purpose, placed alongside each other technological services need to industryseveral rigs is the per number year. A criterion of days of administered there was conflicting impacts will occur. specific combination of additives. Well No. 22 of Cheshmeh Khosh anda well. belief All necessaryin the conclusion sides were of issues are brought up. Drilling by Iran no scientific butSubstances they may A giveand B,no when result wereTherefore, shifted we from will researchneed a variety to oil field, administered by Iran work brought this project to Central used alone, are influential, practice,of specialties. converting In 2013, idea projects to Central Oil Fields Company be provided from now onward. asdrilling. initially For planned example, that if drilling would and research of substances must be placed two(ICOFC), depths was with envisaged. different Two sizes of is now 20% complete and the ButRIPI will owns it accept license to and become finishes 75 days and not 80 days Oil Fields support when juxtaposed. A number field tests were conducted for remainingfruition. I believe 80% depends that this on project the knowledge for the project. companies complete a well in 30 Company product. It was a megaproject application of what has been someone is author, but a tobe 35important. days and International they drill 10 wells Otherwise,alongside each manufacturing other. That isa additives,whose findings we have are already tangible left now. projectdrilling wasbit and the casing. establishment a contractor? For instance, (ICOFC), substancewhen knowledge and its makesinjection sense. behindRegarding the these lab, semi-industrial products and An outstanding feature of this to existence what did not exist was into well could have been and even industrial scale and a traditional method of client- developed now. We have brought publisher too. Knowledge is morea year. wells We can it would do 3 to be 4 likewells not envisaged done very easily at a chemical of a “project team” rather than a scattered knowledge into a developed by the author. In our a year. If we cannot drill five previously. We have transformed environmentown context, RIPIlike a scientists company, examine drilling plans and take different wells would give field test and received final contractor. In this team, RIPI sciencehave produced should bescience. transformed In an intohaving consideration two more rigs. the Nownumber if we of meaninglab. Combining to science materials and we in researchconfirmation. units In constitute this triangle the context,and NIOC they were are cooperating referred to whenprofessional it is used and regularly cohesive and one. our into trading and service- wells to be drilled, we will notice have mastered this science in of cooperation, RIPI and its astogether. research Of contractorcourse, in legal and knowledgeThis knowledge bank will is upgraded prove useful providing to production and that the number of drills is an indicator of how many years we copy of combined materials first side of the triangle, NIOC instrumental and therefore this application of the achievements wouldthis project. not make Presenting sense in a single andDirectorate party to of contract, Research as and the kindclient. of The management project team resulted was in to see the economic benefits of exploration wells. Knowledge One option to compensate this secondTechnology, side, servingand an operationalas client is not exported. It is like an shortcominghave lagged behind would inbe drilling. to raise of this What project. is your specific plan IP serving the value-added of the number of rigs and enhance all wells. Our experts have notthe successreach any of conclusionthe project. inside for upgrading the project at inunits. the Eachoptimal company management has its everysufficient well skills with toits consider own special company (Directorate of theIn somewell we cases, had when to return we did and this stage? own IP. IP outputs are seen we need to boost the pace of a specific combination for Exploration, Iran Central Oil reexamine the compounds to their efficiency. For that purpose, Fields Company) as the third of the product. The outputs 54 features. side. They trustfully provided We have to step into are technological services. drilling. 55 SportSports July 2018 Issue No. 73 monthly Sports Interview with NIOC Athletes Coach Iraj Eyri

activity, this team has won 11 Our Team Is Cornerstone championship titles, which is a

runner-up once and came third of Iran Athletics record. NIOC athletes finished NIOC Athletics owes its success to head coach Iraj Eyri. twice. That has been unique for Eyri, who was a leading athlete in Iran, is now serving Iran’sInternational athletics. Record as the head coach of NIOC Athletics. In an interview with “Iran Petroleum”, he has shared his views about NIOC of presence in numerous Interview Exclusive NIOC Athletics has record Athletics as follows: there are no centralized athletic Would you please tell us international matches. Although about NIOC Athletics? managed to take part in Your team has shown strong internationalmatches in Asia, athletics NIOC athletesmatches

recently hosted an international performance in recent years. athleticson some event,occasions. in which Kazakhstan teams fromThis isthe the Petroleum result of effortsMinistry made and by a group. Thanks to support

from 12 countries participated. NIOC, in recent years we have NIOC Athletes finished runner- had memorable days and time. silverup in theand Kazakhstan three bronze matches. medals Now we have grown into Iran’s Individually, three gold, three athletics center of excellence. We are now a major pillar of Iran’s were won by NIOC athletes. championship title in the Athletics.It seems that there are NIOC Athletes also won the international matches held on many national players in NIOC the occasion of the anniversary Athletics, is that right? 11 Championships in 14 Years of the 1979 Islamic Revolution. managersYes, of course! our club In recent has been years, a In the past, NIOC Athletes majordue to sponsorbeing supported of athletics by inNIOC NIOC Runner-up in had competed in China-Taipei, athletes would win the national Hungary and Kazakhstan you can see that most athletes athletic team valuable medals and Numerous National Athletes Kazakhstan Athletics Matches tournaments, winning titles. Iran at the national level. Now become a source of honor and Iran’s Petroleum Ministry has made acceptable investment in sports. A their performance before joining national players who have hail from NIOC and improve variety of teams have been active in different disciplines and reached Most NIOC athletes are good results. One of these disciplines has been athletics. NIOC-sponsored pride Do for club our managers country. provide national team. athletics team has proven successful in recent years, winning top prizes in made contribution to Iran’s A large number of NIOC sufficient support for the international competitions. Throughout its activity inside Iran, the NIOC athletics. Some of them are Ali Athletes members will attend athletes and technical staff? team has won championship titles on many occasions besides winning honors at the Samari in disc throw, Keyvan Asian games in Indonesia international level. Qanbarzadeh in high jump, Reza to represent Iran. Are you support we could never achieve Sure they do! Were it not for their Qasemi in 100 meters and 200 optimistic about winning the Amir Sadeqi-Panah meters, Moslem Niadoust in championship title? have been among the best in recent contribution has been of great 800 meters and 1,500 meters, such success. As I mentioned we 1,500 meters, Amir Moradi in Over the past couple of years, 14employees. years after, More this members team has Federation, NIOC Athletics we have proven ourselves in activity, we won the championship government passed a motion joined NIOC Athletics and now years. Through 14 years of our MoqaddamHossein Kayhani in hammer in 3,000 throw onn 2004, the recruitment the Iranian of sport brillianthelp. The future athletes of this put teamup by latest match we attended, we Supporting National meters steeplechase, Reza managed to win top honors. asNIOC they have have contributed shown a strong to the managedinternational to win matches. the second In the title compelledtitle 11 times, to offer while my we gratitude finished to that decision, a number of Champions performance in international second or third three times. I feel and Ayoub Azakhi. in a 12-team tournament of nationalchampions athletes by ministries. were hired After Therefore, NIOC Athletes has strongly supported national Mr. Qouchani, current manager of athletes,Over these making years, efforts NIOC toAthletics National Honors have been supportive of Iran’s matches. prominentKazakhstan. athletes That was to thea big national event. thankfulNIOC Athletics, to other due managers to his relentless at the allay economic concerns of national team and NIOC athletes by NIOC. That was the kick-off team,I assure each you of that whom we willhave be given able to efforts made for this team. I am also of NIOC Athletics. In the same have participated in most Asian A review of honors achieved and international matches. initiativeyear, NIOC also Athletics started competed to pick national level makes everything Petroleum Ministry and NIOC for national players. In light of by NIOC Athletics at the These athletes are expected to that we would be able to meet their inI national athletics league. An shine in the Indonesian athletics their support for our team. I hope the financial conditions of the take part in Indonesia-hosted matches and put up Iran’s flag. Islamic Republic of Iran Athletics clear. Throughout 14 years of Asian matches, shortly. 56 the athletic children of NIOC We are very optimistic that these expectations in the future. 57 Tourism July 2018 Issue No. 73 monthly Tourism

Kerman, Land of Haj Aqa Ali Rafsanjan Domicile

With a built-up area of 7,000 square meters, Haj Aqa Ali KermanHistoric is among historically important Wonders provinces in Iran. Due to myriads Domicile is known as an architectural masterpiece in Iran. It is the natural sites and tourist attractions, Kerman has long been a remarkable sight- biggest adobe house in the world, built in 1757 by Haj Aqa Ali Mulla seeing destination for both Iranian and foreign visitors. Kerman Province trigonometricalZaim. At that time shapes), the Qajar water dynasty reservoir was ruling(decorated in Persia. with brick The monument has eight sections: bazaar (with 21 ceilings of various is home to five UNESCO-registered sites. No other province has as many UNESCO-listed sites as Kerman. Besides the provincial capital, Kerman, other and tilework and designed to supply water to Qasem Abad village), cities are also home to historical monuments and natural attractions. Here is a 40-column mosque, bathroom, and ice reservoir. review of tourist attractions in the cities of Rafsanjan, Anar and Babak.

58 59 60 July 2018 registered onUNESCO Cultural Heritagelistin2015. among thefirstplaceswhere humanitiessettledinPersia. Itwas mountain. Thevillageisseveral thousandyears old.Meymand is shaped housesofresidents ofthisvillagehave beenbuiltinthe Tourism Rock Village Meymand isarock villagenearthecityofBabak.Thecave- IssueNo.73

Photo:

Hassan Hosseini Tourism monthly 61 Tourism July 2018 Issue No. 73 monthly Tourism Hassan Hosseini Photo:

Bayaz Village Bayaz village is located

Province, close to the city in the north of Kerman feature of Bayaz is cotton plantsof Anar. which The outstanding blanket the

Bayaz means white, village in white. In Arabic,

aquifersreferring and to cotton old mills, plants. an Historical monuments, a mosque, a water reservoirAbbasid era and caravanserai, a castle are among tourist attractions

of the village.

62 63 July 2018 Issue No. 73 Tourism

Lake Makhrageh

lake is thatLake it Makhrageh would be possible is located to 32enjoy kilometers traveling south there of from Babak, one stretching in a vast desert land. Among important points with this

point to another while watching the reflection of sky. It may be compared with Bolivia’s Salar de Uyuni, which is the world’s largest salt flat.

Thank you for reading Iran Petroleum

64 Arg eAnar Kerman,

Photo:Hassan Hosseini