monthly

Iran Petroleum Issue No. 101 December 2021

Iran Seeks to Diversify Petchem Exports Iran Petchem Jumps 50-Fold in 50 Years Kasra Nouri Director General of Public Relations

ecember 28 marks National to jumps in the petrochemical industry, Petrochemical Day in thereby increasing the production Iran. The petrochemical capacity in terms of diversity, marketing industry began in Iran 57 and exports. Iran’s output has now years ago. In 1977, Iran had reached 77 million tonnes, which would Dbrought its petrochemical production soon reach 100 million tonnes. The to 3 million tonnes. Following the 1979 figure forecast for the petrochemical Islamic Revolution, the country made production to reach by 2025 is 133 plans to gradually bring an end to crude million tonnes. It is also freocast to oil selling, making the petrochemical reach 150 million tonnes by 2027. Iran’s industry a priority for development. petrochemical development is pursued Industrial renovation, structural reforms based on the four elements of feedstock, and optimal production along with market, capital and technical knowhow. attention to local manufacturing and The petrochemical production is forecast development of technical knowhow were to be valued at $44 billion by the end among the major topics of petrochemical of the 4th National Development Plan. industry development over 40 years. Then Iran would become a petrochemical Over these years, the petrochemical hub in the world. Iran’s top position in industry has been subject to toughest the petrochemical sector must be seen ever sanctions in the oil and gas sector; against the backdrop of unjust and however, official data shows that Iran has irrational US sanctions. In the global managed to overcome all obstacles and village of the 21st century, there is no create an opportunity for self-sufficiency place for bullying. The countries that and self-reliance and develop local have imposed sanctions should not petrochemical technology. An outcome of sacrifice the future for their illegitimate this opportunity development reliance desires and steer from unfruitful on local forces along with interaction attempts aimed at stymieing progress with international companies has led by Iran. Ministry of Petroleum Islamic Republic 36 of Iran 10

Managing Editor: Kasra Nouri Europe Prospect Director General of Public Relations

Chief Editor: Parastoo Younchi for Greenhouse Gas

Deputy Chief Editor: Hamid-Reza Shakeri-Rad Emissions Mitigation Executive Editor: Negar Sadeqi

Graphic Designer: Saman Goodarzi

Photo Section, PR Office, MOP: 34 Hassan Hosseini

Reporter: Mahnaz Mohammad Qoli Javad Asghari

Translator: Kianoush Amiri

Coordinator: Maryam Dehlavi

Tel/Fax: (+98 21) 61626113 www.iranpetroleum.ir [email protected] Urmia, How South OPEC and Begging of Iran Energy Historical Pars Eased Iran Future Return to Ties with Russia, Circumvention Maximum Azerbaijan, City of Sanctions of Oil Output Armenia

saman goodarzi

Desing:

COVER 58 2446 14 06 Top story December 2021 Issue No.101 monthly Top story Iran Energy Ties with Russia, Azerbaijan, Armenia A high-ranking delegation from Iran’s Petroleum Ministry recently met with senior officials from Russia, Azerbaijan and Armenia with a view to broadening energy cooperation. During the meetings, Iran’s energy ties with the three countries as well as the latest oil market developments were discussed. Iran’s Minister of Petroleum Bijan Zangeneh, leading a high-ranking delegation, said upon arrival in Moscow he would exchange views with Russian officials on the world oil market conditions. “During this visit, we will have meetings with Russian state officials and oil companies, but our most important issue would be to study the latest developments in the world oil market that is currently in sensitive conditions,” said the minister. “Along with OPEC member states and allies, Russia has been instrumental and constructive over recent years,” he added. Zangeneh met with Russian Deputy Prime Minister Alexander Novak and Russian Energy Minister Nikolay Shulginov. They exchanged views on energy cooperation between the two nations and the prospect of global markets.

Need for Energy Cooperation energy sector within the framework of joint the global gas market prices because the Zangeneh and Novak insisted on deeper business forums. structure of gas markets is different from the cooperation between the two nations, structure of oil markets,” he said. particularly in the energy sector. Iran Open to Russian Investment The Iranian minister highlighted Russia’s Zangeneh described Russia as Iran’s strategic Iran-Azerbaijan Oil Ministers Meet important and positive role within OPEC+, partner, saying: “We welcome Russian Upon return from Moscow, Zangeneh saying: “Cooperation between the two nations companies’ investment in the petroleum received Azerbaijan’s Energy Minister Parviz in the energy sector is daily growing.” “Under industry.” In his meeting with Shulginov, Shahbazov in Tehran to discuss the recent the present circumstances, in light of unjust Zangeneh said: “We discussed and exchanged developments in the region and the global oil US sanctions on Iran and Russia, upgrading views on the world oil market.” Noting that market. Zangeneh underlined Azerbaijan’s convergence and cooperation between Russia has, over recent years, played a decisive positive role as one of the members of the role in the stability of oil market in the world, alliance between Organization of Petroleum the minister said: “During this meeting, in light Exporting Countries (OPEC) and non-OPEC Russiathe two have, nations over would recent be years, significant had close and of serious cooperation within the framework members and stated: “Iran has close relations cooperationinfluential,” he in said.the oil Zangeneh and energy said sector, Iran and of OPEC+, we talked to each other. Our views with Azerbaijan and the oil cooperation adding: “We want deeper cooperation in were close to each other.” Zangeneh touched between the two countries is under the order to neutralize the consequences of on the OPEC+ ministerial meeting scheduled framework of the OPEC+.” Shahbazov for sanctions.” Noting that major developments for January 4, saying: “Both sides noted that his part mentioned the close political and had transpired the international scene, he these meetings are instrumental in preserving economic relations between the two countries said: “Under any circumstances, Iran-Russia world oil market stability and possible ties will not change and Tehran is determined scenarios in the future in this sector.” role in OPEC+ constructive decisions, saying: to strengthen its ties with Moscow.” “Asand part expressed of this coalition,gratitude wefor wereIran’s able significant to Bilateral Cooperation resolve the crisis of the oil market in April.” Iran-Russia Ties Zangeneh said he discussed development of “The OPEC+ mechanism is a good tool for For his part, Novak expressed pleasure cooperation between Iran and Russia, adding: amending the oil market in the current with the growing trend of ties between “We have good cooperation with Russian situation, but for it to be more effective, this Tehran and Moscow, saying: “Russia is coalition must be developed. It is true that we agreed on the expansion of long-term energy technical points were postponed to the near undoubtedly calling for further convergence them in the oil and gas sector and equipment are taking action, but the crisis still remains,” cooperation. After the meeting, Zamani-Nia, future, he said: "The two delegations in this manufacturing.”firms. We intend toZangeneh continue continued cooperating as with Shahbazov stressed. Referring to the country's who is Iran’s deputy oil minister for the meeting tried to take into account the mutual and energy sector.” He said: “Over recent saying that Russia was Iran’s strategic partner, need for natural gas as fuel for its power international affairs, said the talks on some interests of the two countries." Iran and years,with Iran consultations in all fields, between particularly OPEC in member the oil and Tehran-Moscow partnership would not plants, the Azeri energy minister said: "I hope technical issues of gas export and gas-for- Armenia signed a gas-for-electricity barter states and the OPEC+ alliance have been be affected by international developments. we can use Iranian gas, and I also appreciate electricity barter were postponed to the near deal in 2004, based on which, for a 20-year effective, and Russia has sought to play a “In case Russian oil and gas equipment the Iranian exports of gas to Nakhichevan." future, after which a long-term contract will period, Iran would export gas to Armenia to constructive role.” “Iran and Russia have manufacturers intend to operate in Iran they be signed. Vartanian, for his part, said, “We be consumed by the country’s power plants, always had close and growing cooperation have to comply with the law on “Maximum Iran-Armenia Gas Talks have been negotiating with Iran for a year and in return, Iran imports electricity from in the oil and energy sector and this Use of Domestic Potential”. They would Iran’s Deputy Minister of Petroleum for and a half about gas export and the extension Armenia. Armenia has started importing gas cooperation will keep rising,” he added. Iran have to work in partnership with Iranian International Affairs and Trade Amir- of the gas-for-electricity deal; today’s from Iran since mid-2009. Iran and Armenia and Russia also sketched out a roadmap companies,” he said. Zangeneh said that Iran Hossein Zamani-Nia received an Armenian meeting was one of the most constructive have been cooperating for years in gas and for developing cooperation regardless of and Russia were cooperating also within the delegation led by Hakob Vartanian, Armenia’s negotiations in this regard.” Emphasizing that electricity swap, and two-way economic and international political events, while calling framework of the Gas Exporting Countries’ deputy minister for local government and in the meeting the basic points were agreed political ties have grown in tandem with an for the implementation of agreements in the Forum (GECF). “The GECF has no role in infrastructures. During the talks, the two sides upon, and the solution of some minor and increase in trade. 4 5 Petchem December 2021 Issue No.101 monthly Petchem Petchem Projects Started Up in Western Iran On December 24, President Hassan Rouhani remotely inaugurated three petrochemical projects in 3 provinces: Ilam, Hamedan and West Azerbaijan. The projects were the olefin and desulfurization unit of Ilam Petrochemical plant, the potassium sulfate unit of Urmia Petrochemical Plant and Hegmataneh Petrochemical Plant. They lie within the category of projects envisaged for the second jump in the petrochemical industry. Their startup would bring Iran’s annual petrochemical production capacity to 77 million tonnes. Completion of the value chain of petrochemical projects and business prosperity in the petrochemical sector are among the outstanding features of these projects, which are key to Iran’s access to world markets. A total of 17 petrochemical projects are expected to become operational by the end of the current calendar year, i.e. 21 March 2021. That would bring the petrochemical production capacity to 90 million tonnes.

Petchems Double in Value a bid to curb our hard currency revenue. Rouhani said in a speech that commissioning three petrochemical step was to blunt the impact of enemy projects worth over IRR 280,000 sanctions.As the Supreme The next Leader step said, was theto defuse first billion in a single day was indicative the sanctions. In a bid to neutralize the of the strength of Iran. “The 11th and impact of sanctions, the government 12th administrations take pride in the compensated for oil revenue by the Parsian Oil and Gas Company would there would be an extra 153,000 tonnes of petrochemical industry. We managed to exporting petroleum products, including operate the megaprojects. Each of these ethylene to be fed into WEP. medical-grade polymers market was double petrochemical products in terms petrochemicals. With the commissioning projects would include more projects, he worthstrategic more product than $23stands billion at 70%. in 2019, The of both value and weight compared with of remaining petrochemical projects up said, adding that a propylene pipeline was at 750,000 tonnes a year is valued at 2013,” he said. “Even if the government to the end of the calendar year (20 March under way. $439The olefin million. unit Seventy-one whose capacity percent stands of the Currently, because medical-grade PVC is had not done anything during these 2021) , Iran’s petrochemicals would be notwhich manufactured is expected todomestically, grow 5.9% producersby 2025. years of sanctions and economic war, the worth $25 billion.” 1st Olefin Unit of Ilam Petrochemical plant, including of medical equipment have to rely on two-fold increase in the petrochemical The olefin and desulfurization units engineering,desulfurization construction, unit and the installation olefin unit imports for their raw materials. With production would be considered a Jump in Petchem Output of Ilam Petrochemical Plant came on- and equipment manufacturing, has been the commissioning of the Hegmataneh breakthrough,” he added. Rouhani said Iran’s Minister of Petroleum Bijan stream during the ceremony. Earlier in supplied domestically. petrochemical plant, Iran would become Iran had brought its petrochemical output Zangeneh also said at the ceremony the 2014, the high-density polyethylene unit a major supplier of medical-grade PVC from 50 million tonnes to 100 million three projects were worth nearly $1 of the petrochemical plant had come Medical Equipment in the Middle East, which would be a top tonnes since 2013, with its value rising billion, adding that these projects were on-line. The Hegmataneh Petrochemical Plant currency earner for the country. from $11 billion to $25 billion. He said aimed at bringing prosperity to western was the second project that came online. 10 petrochemical projects had been Iran. He said $11.4 billion would be It is a downstream sector’s plant built in Potassium Sulfate Ranking inaugurated under his administration, invested in more petrochemical projects IranThe witholefin a unittotal of capacity this petrochemical of 765,000 Hamedan. It is planned to produce 45,000 The potassium sulfate and hydrochloric which would total 17 by the end of the with a capacity of 25 million tonnes in the tonnes.plant is PGPICthe first has olefin built unit the inunit western with an tonnes of medical-grade PVC, which is acid unit of the Urmia Petrochemical calendar year. “That is while the industry current calendar year. He told Rouhani investment of 866 million euros. Ilam gas used in building medical equipment and Plant has a capacity of 90,000 tonnes. and its managers had been sanctioned that two petrochemical megaprojects by a wicked person like [US President were also planned to become operational Built with an investment of 38 million commissioning of this plant upgraded Donald] Trump,” he added. Rouhani within the framework of the third jump in Ilamrefinery Petrochemical would provide Plant feedstock is tasked for with this euros,devices the like plant IV fluid would and gain syringes. $35 million Iran’sIt was internationalalso financed rankingby PGPIC. from The 12th to said Iran had enough raw materials for the petrochemical sector. Zangeneh said sweeteningolefin unit. The the desulfurizationinput feedstock unitof the of in annual revenue. The Hegmataneh 9th in the potassium sulfate production. petrochemicals production. “We are also the two megaprojects would be bigger medical plant has come online with Potassium sulfate is a valuable product making progress in terms of technology than the Bandar Imam Petrochemical pyrolysis gasoline and liquid fuel. The 38 million euros through partnership used in chemical fertilizers and lab and our domestically manufactured Plant in terms of size and value. “The olefin unit to supply ethylene, propylene, between the private and sector and substances in addition to being a catalyst. products are being supplied on world feedstock for these two megaprojects would be used as feedstock for the HDPE foreign parties for the annual production The project would end Iran’s dependence markets.” Rouhani said the Petroleum has been supplied, and investment and unitethylene and theproduced remaining by the products olefin unit would be of 45,000 tonnes of PVC in the form on importing this product. Ministry made a breakthrough in allotment has been arranged,” he added. sold. Currently, the West Ethylene Pipeline of medical-grade granulated powder. The plant would bring Iran’s potassium exporting gasoline, adding: “The enemy The minister said the Persian Gulf (WEP) is feeding the HDPE unit. In case The share of domestic manufacturing sulfate production capacity to 340,000 imposed restrictions on the oil sector in Petrochemical Industries Company and of equipment and machinery for this tonnes. 6 the olefin unit reaches 100% capacity, 7 Petchem December 2021 Issue No.101 monthly Petchem NPC Boss: Iran Seeks to Diversify Petchem Exports CEO of Iran’s National Petrochemical up to 2027. “Thirty strategic projects are Company (NPC) Behzad Mohammadi envisaged for sustainable development after recently presented a report on the activities studying feedstock which may be received of the petroleum industry on the occasion from the petroleum industry in coming years of National Petrochemical Day. He said and using basic products as feedstock, as well eight more petrochemical projects would as petrochemical imports and the needs of come online up to March 2021, adding that the downstream industry,” he added. the petrochemical industry has managed US-imposed sanctions. He said a post- 20mt Increased Capacity sanctions roadmap had been drawn up to be Mohammadi said the 30 strategic projects implemented, in case positive international would be funded by $16 billion to add 20 developments occur. As Joe Biden is taking million tonnes to Iran’s annual production

States, speculation is rife about the lifting under the three categories of combined ofoffice oil sanctions as the new on president Iran and ofthe the resumption United feedstock,capacity. He propylene classified production the strategic and projects of Iran’s talks with European nations and accelerative projects. “Three combined the US. Mohammadi said it was not clear feedstock projects are envisaged for optimal how Biden-led White House would treat use of available feedstock to supply variety Iran, adding: “However, we hope that if of products. Licenses have been issued for anything is to happen, this change would that purpose,” he said. Regarding propylene be in the sectors of technical savvy transfer projects, he said they would enhance the and attraction of foreign investment.” “We propylene production in the country and plan to raise investment attraction in this expand the chain of this product in the industry from $80 billion to 4108 billion. In case foreign investment is attracted positive had caused some problems for this industry; industry received 35 million tonnes of 15,000 small and large-sized businesses in petrochemical sector, 950,000 tonnes of events will take place in this sector,” he natural gas, ethane, gas condensate, gas the downstream sector within the framework propylenecountry. “Currently, is produced in the and refining an increase and to added. Mohammadi said sanctions remained managed effectively to generate revenue liquids, naphtha and kerosene as feedstock of 33 associations and unions. He said about 4.5 million tonnes would be the best effective, adding: “The new US president morehowever, than the thought. financial He situation declined hasto provide been in 2019, which was equivalent to 800,000 27 petrochemical projects would become news for the petrochemical industry,” he said. may bring about an overture or stick with b/d of crude oil. Mohammadi said the operational by March 2022 under the second the current situation. However, we are petrochemical industry would receive 2 petrochemical jump. “The petrochemical $80bn Invested in Petchem Sector not so unstable to be shocked by any new Diversityany figures about petrochemical revenue. mb/d of oil equivalent as feedstock by 2027. Mohammadi said completing the second sanctions.” Touching on the diversity of export increase from 66 million tonnes in March jump projects would bring the volume of markets, Mohammadi said: “A great deal 70% Exported 2020production to 100 capacity million tonneswill jump in 2021.50% to “With investment in this industry to $80 billion. Foreign Firms Openness of products is currently being exported The NPC chief said the number of the commissioning of these projects, Iran’s Mohammadi said some foreign companies to international markets. But we have to petrochemical plants had increased from petrochemical industry revenue will increase billion through the third jump and $108 have hinted they are ready to resume talks expand our products mix in order to reduce 56 in 2019 to 64 in 2020, adding that they from $15 billion in March 2020 to $25 billion billionHe added by 2027.that the “After figure the would completion reach $92of our export dependence on some nations would reach 70 by March 2021. Mohammadi next year,” he added. Mohammadi also said the second and third jump projects and the speculation in this regard, but we have not and broaden our markets.” “Currently, Iran’s that 28 projects would become operational startup of strategic projects by the end of the enteredwith petrochemical into any talks firms with in any Iran. company. “There is petrochemical industry development follows output was consumed domestically and rest by 2025 under the third petrochemical jump. 7th Development Plan, the petrochemical I have privately heard from some holdings a model that matches the world’s model. In wassaid exported.that about He30% said of IranIran’s was petrochemical producing “That would increase the capacity of the industry production capacity would reach that they have received positive pulses from light of Petroleum Ministry’s planning under 90 petrochemical products, including 18 petrochemical industry to 133 million tonnes an annual 150 million tonnes with an foreign companies,” he said. Asked if the US the aegis of the Minister of Petroleum, we polymer products supplied in 333 grades. with a revenue of $35 billion (based on the annual income of $44 billion. That would was planning to impose fresh sanctions on are seeking to develop the petrochemical “The diversity of products, as a sustainable 2016 prices), which would upgrade Iran’s give this industry a prominent status in Iran or toughen petrochemical sanctions, he industry in line with global markets as well development indicator, would reach 104 by national economy,” he said. Mohammadi said: “We have never had any comfortable as domestic demand. Otherwise, we are 2025 and 124 by 2027, which proves the added. said seven processes including those used situation, but if you look at the impact of doomed to fail.” diversity of petrochemical mix along with ranking to the first in the Middle East,” he in the production of methanol, ammonia, sanctions on production, capacity, diversity development,” he added. 4th Step in Petchem Development PP, PVM and HDPE had been nationalized, of products and currency generation, you Petchem Feedstock Mohammadi said appropriate planning adding there would be 10 such processes will see that the valuable achievements of Mohammadi said rich and accessible oil Petchem Output Up 50% had been made for the fourth step in the by 2021. He said 85 catalysts were used this industry indicate the ineffectiveness of and gas, used as feedstock for petrochemical Mohammadi said about 8 million tonnes petrochemical industry development in a bid in the petrochemical industry, adding: “20 unjust sanctions imposed on petrochemical plants, required development of the of products had been supplied in the to stabilize the industry in all aspects. He said have been manufactured domestically and companies and managers.” petrochemical industry as a pillar of national downstream sector in 2019, adding this planning for the fourth development phase 16 others would have been manufactured Mohammadi reiterated that US sanctions development. He said Iran’s petrochemical volume of products would create jobs in was based on the availability of feedstock domestically by March 2022.” 8 9 news December 2021 Issue No.101 monthly news

10 11 Dising: SAMAN GOODARZI Drilling December 2021 Issue No.101 monthly Drilling SP11 Recovery Due in 1 Year, as Drilling Starts n late December, operations started for drilling building several turbines and compressors,” he added. “We estimate that these pressure compression and production maintenance projects in South Pars would drillingthe first instructed well in the by development Minister of Petroleumof Phase 11 Bijan cost $50 billion in investment,” said Zangeneh. Zangeneh,of the giant began offshore on theSouth SPD11B Pars gas location. field. The The IMD-1 drilling rig is being used in this operation. The 700 mcm/d Recovery from South Pars minister said recovering 500 mcf/d of gas from SP11 Zangeneh said a variety of options were on the table would start in the second half of next calendar year for increased production from South Pars. to 21 March 2021. He said Iran would not remain idle “Iran is currently recovering over 700 mcm/d of gas because of sanctions. An initial agreement for SP11 development was signed in July 2017 between a Total- higher than that of seven years ago,” he added. led consortium comprising China’s CNPCI and Iran’s fromZangeneh the joint said South Iran’s Pars gas field,production which hadis 2.5 totaled times Petropars and National Iranian Oil Company (NIOC). 1,000 mcm/d, adding that gas consumption had But Total and CNPCI quit the deal after US President increased these years due to the coronavirus disease. Donald Trump pulled out of the 2015 Iran nuclear deal “Each gas well costs more than IRR 10,000 billion, and re-imposed oil sanctions on Iran. Finally in October and gas delivery to households requires tough 2019, the project was fully assigned to Petropars. Now steps. It would be unfair to waste it away. We have this company has promised to bring the project into to feed plants and industries,” said the minister. operation within 42 months for the recovery of 2 bcf/d of rich sour gas from the border block of SP11. gas coverage. He said Iran had recently decided to After taking full control of the project, Petropars increaseZangeneh gas said exploration 95% of Iran’s in the population Persian Gulf was littoral under said it had developed an initiative to realize states. “We expect Pars Oil and Gas Company early production from this phase- 500 mcf/d of and Petropars to start development of the joint gas- up to the second half of next calendar year Farzad and Belal gas fields,” he added. Noting that to 21 March 2021. Reza Dehqan, deputy CEO of development of the petroleum industry, as well NIOC for development and engineering, touched as reconstruction of hydrocarbon fields would be among Iran’s oil priorities, he said: “If we take no action for gas development we will face gas on the financing of the project, saying due to the shortage in two years.” bonds.impossibility of financing by the foreign investor, NIOC would account for financing through issuing Growth of Domestic Companies $85mn Investment Masoudi said development of SP11, the last Dehqan said $15 million had been already spent in remaining phase of South Pars, by domestic the SP11, adding that another $70 million would be companies signaled growth of domestic producers, provided up to next March. Hamid-Reza Masoudi, CEO contractors and manufacturers. of Petropars, said development of SP11 started this The drilling rig was installed in November, he said, operation, Zangeneh said: “We proved during the foreign technology for building pressure compressor adding that it had passed necessary technical tests weighing 2,200 tonnes, was loaded out in April to be years of sanctions that we would not be stopped. platforms to prevent any pressure fall-off in the South installedyear after the years following of waiting. month.. The Nowfirst jacket the MD-1 in this drilling phase, They closed every option upon us, but we showed rig, owned by power utility MAPNA, would spud 12 installationto start work of in the South 3,700-tonne Pars. He SPD11Bsaid that platform in the first appraisal-development wells in two phases. the petroleum industry running.” The minister IranianPars gas Compressorfield. Iran does not possess this technology. wouldphase, allowdrilling the and production completion of 400of five mcf/d wells of and gas. touchedinitiative on and the creation fact that to Iran’s find ways oil exports in order were to keep never Zangeneh; however, said pressure compression “In the second phase, with the drilling and wells would be drilled and the SPD11B platform zeroed despite pressure by the Trump administration. would be vital and necessary; adding that one of completion of seven more development wells, total wouldIn the befirst installed. phase, five The appraisal-development initial recovery from SP11 is “We showed that we are alive and resistant, and we the objectives sought in the SP11 development was recovery from this platform would reach 1bcf/d estimated at 500 mcf/d or 14 mcm/d. Then, through work forcefully. In addition to the toughest sanctions to boost pressure. He said onshore and offshore (28 mcm/d) of rich gas,” he said. Masoudi said that drilling operations and completion of another seven imposed on Iran on a regularly daily basis, the pressure compression studies were carried out after many agreements had been signed with Iranian development wells, recovery from this platform would coronavirus erupted. “But we did our job,” he said. foreign contractors pulled out of the project. “One manufacturers for commodity supply, adding: “The reach 1 bcf/d or 28 mcm/d of rich gas. of our decisions is that the Iranian company Oil that the gas produced at SP11 would be delivered Initiative and Creativity Zangeneh said SP11 would have no refinery, adding time a compressor and turbine for pressure boosting. nationalIranian share capacity of this and project make maximumis now 97%. use In of fact domestic by Addressing the ceremony to inaugurate drilling the Petroleum Ministry has planned to bring in ContractsTurbocompressor will be soon (OTC) signed manufacture with this for company the first for potential.”implementing SP11, we are trying to benefit from to the refinery of SP12. One objective sought by 12 13 Interview December 2021 Issue No.101 monthly Interview Ahmad Mohammadi, CEO of National Iranian South Oil Company (NISOC), has said Iran is ready to restore maximum oil production. In an interview, he said NISOC had previously experienced return to maximum output after Iran signed in 2015 the historic nuclear Begging of accord with six world powers.

How much oil can you addition to unjust sanctions, we are Return to supply? faced with the covid-19 pandemic run by NISOC. Of course; creating job We can return to the pre-May 2018 and falling demand for oil. Therefore, opportunities,enhance production particularly from oil for fields local sanctions levels in the shortest exports are less lucrative this time. residents, upgrading the contractual possible time. However, production has been framework in the upstream oil Maximum increasing and we are again ready to sector, maximum focus on domestic Did you have any monitoring return to maximum output level. manufacturing and boosting plans during the previous round domestic manufacturers, paying of sanctions too? Let’s focus on oil production attention to social responsibilities Mohammadi; Yes, although we faced less pressure projects aimed at enhancing and and increasing national oil output Output at that time, we had a monitoring preserving output levels. Can are among other objectives of however, noted that the scheme during the previous round they come online next year? this project. Currently, except for current round of sanctions of sanctions, too. Now, the petroleum These are all capital projects that the Gachsaran 1 and Gachsaran 2 were much tougher than industry is under tough pressure. I are envisaged to come online under packages which are currently in those imposed in the past. would like to say that this round of the stage of tender bid, all other This project sanctions is unique and worse than pertaining to some of them have contracts have been signed. The The following is the full text of during the imposed war. We have alreadya specific begun calendar. and weThe have activities very good contractors for other packages have involves 27 the interview he gave to “Iran maintained our potential for a return potential to enhance production been named and their activities packages that Marjan Tabatabaei Petroleum”: to maximum production. over the coming two years. Some of have started. Implementation are all among them like the Mansouri, Kaboud and the biggest If sanctions are lifted which Nargesi projects would show off in is some sort of modern order in projects First of all, would you please the main point is that sanctions We have maintained our increased NISOC-run fields would be the coming months. Some will come upstreamof this project oil projects. for the first Sanctions time and tell us about challenges caused imposers failed in their objectives, production in these years and we are prioritized for production? online next year and some others two the coronavirus slowed down the of NIOC, by sanctions? and I suppose that sanctions would fully ready to return to the production There is no difference. NISOC will years later. project to a large extent, but despite designed The main problem is that as much end in becoming ineffective. Sanctions ceiling set by the Petroleum Ministry. enhance output based on its capacity to enhance as oil is produced, oil is not exported are an all-out economic war and the and plans instructed by National Do you mean that some all the projects. We hope that these production sanctions, NISOC staff helped finalize to bring revenue. Sanctions are objective of this economic war has Doesn’t NISOC have any Iranian Oil Company (NIOC). oil production enhancement projects would be accelerated as from oil fields tougher and more complicated this been to bring Iran’s oil exports down problems for return to maximum projects would become economic conditions improve in the First, feedstock time. Financial problems in supplying to zero. Despite all our problems we production? In the post-JCPOA years, operational next calendar year? country. run by NISOC production equipment exist in the petroleum have faced, US failed in reaching its NISOC has taken necessary we witnessed quick return Yes, implementation of these projects for refineries industry like in other sectors. Of objective. Those at the forefront of oil measures to return to production. to production at NISOC. How Generally speaking, what has continued course, we have relied on domestic production have worked round the Of course, it is noteworthy that similar are these two periods? would contribute to enhanced output. percentage may be seen for the thoroughly manufacturing and we have had clock to defuse sanctions. I believe these measures have always An important measure was taken and production from other fields 28 reservoirs? without any halt. good cooperation with domestic that these frontline combatants been under way. Given the new at that time, but there are many Let’s go back to the Additionally, manufacturers. We cannot ignore the emerged winner. government policy, this issue differences. We had desirable hard 28-reservoir project. Are you our domestic problems caused by sanctions, but we has been seriously taken into currency reserves when we were happy with their progress? It variesAs some between foreign 14% companies and 65%. companies did not stay idle. Do you hope that sanctions consideration. In fact, NISOC, sanctioned at that time because of oil This project involves 27 packages quit the projects as soon as manufactured would be lifted? regardless of production cut under sales, but now we are faced with an that are all among the biggest the sanctions started, will nearly 15,000 What activities have persisted We are always hopeful. My personal sanctions, has sought to maximize all-out economic war. This time, in projects of NIOC, designed to you welcome them back if the commodities despite sanctions? analysis is that we would see a production and this readiness political atmosphere changes? as part of our First, feedstock production for good future. We largely hope that has always been on our agenda. The petroleum industry is dynamic campaign the sanctions would be lifted in the Based on a plan adopted by NISOC, for domestic without any halt. Additionally, our future and we would see maximum operators and directorates, we foreign investment. We welcome manufacturing domesticrefineries companieshas continued manufactured thoroughly production and exports, and we have been following up on this theand presence needs significant of international domestic and nearly 15,000 commodities as would retain our production share in issue. We are now in a situation companies and investors. In the part of our campaign for domestic OPEC. wherein we can urgently return to petroleum industry, particularly manufacturing. Of course, we had maximum output level, as long as upstream sector, there is great problems with purchasing some Are you ready to return to the Petroleum Ministry instructs us potential for domestic and foreign foreign-made commodities. However, maximum production? to do so. investment. 14 15 news December 2021 Issue No.101 monthly news CEO of Petroleum Engineering and Development Company been under way with minimum costs, less than $30 million. So far, 1 of this pipeline would be completed by the end of the current South (PEDEC) Touraj Dehqani has said that the giant South Azadegan more than $1 billion worth of oil has been processed in this way,” calendar year,” he said. “This pipeline involves 1,000 kilometers Azadegan he said. “Let’s not forget that sometimes we may need eight years in order to create 100,000-barrel processing capacity; nevertheless stations and a gauging station,” he added. “In Phase 1, 10 million Output tooil befield drilled, is 70% more developed. than 170 “The wells current have been production drilled capacitywith 107 of of we did it in less than a year. The project came online in 2018 barrelsof acid resistant would be 42-inch stored inpipe, twenty five pumping500,000-barrel stations, storage two pigging tanks themthe field at thehas production reached 140,000 stage,” b/d.he said. Of a Dehqani total 200 said wells in envisagedaddition to exactly when the US re-imposed sanctions,” said Deqhani. He also in Jask, which could be upgraded to 30 million barrels. Offshore Capacity at touched on the construction of the Goreh-Jask pipeline, saying it installations include a jetty, a logistic port, loading facilities and time in Iran prefabricated processing capacity. “This project has associated pipes.” 140,000b/d increased production capacity, South Azadegan saw for the first was 80% complete in its first stage. “Now we may say that Phase Gas Transmission Record Final Output Performance Oil, Condensate Refinery Exporting 2.3 mb/d Oil is Set at 818mcm/d Test in Azar Marking History in Iran Practical The Iranian Gas Transmission Company (IGTC)’s Final output performance test has started in the Iran’s First Vice President Es’haq Jahangiri has President Hassan Rouhani has said it would be managing director said the transmission capacity of heaped praise on the Petroleum Ministry for its possible for Iran to export 2.3 mb/d of oil. the national gas network has reached 818 mcm/d. “We have called on the Petroleum Ministry to Referring to the planned maintenance of 86 pressure KayvanAzar oil Yar-Ahmadifield as part saidof the the development test, which wouldplan a letter addressed to Minister of Petroleum Bijan bring the country’s oil exports to 2.3 mb/d; an boosting stations and more than 37,000 kilometers takefor the nearly field, a the month, chief was developer under wayof the with field an said. Zangeneh,record in the Jahangiri crude oil said: and “Mr. condensate Zangeneh, refining. Needless In amount that can either be exported or sold on the of high-pressure pipelines, Mehdi Jamshidi-Dana output of 65,000 b/d. domestic market,” he told a press conference. “Construction operations associated with like to offer my sincere gratitude to you and your He said the coronavirus pandemic had created calendar] year (March 20-November 20], 163 bcm of colleagues.to say, figures These speak valuable louder measures than words. will I wouldremain gasstated, were “In transmitted the first eight to consumptionmonths of this points. [Iranian In this commissioning and commissioning have been forever in history.” According to a report submitted adding that his administration felt responsible to sector, we also saw a four-percent increase compared donethe Azar after oil receiving field installations operation and license its pre- and by Minister Zangeneh, the Petroleum Ministry has runthe moststate difficultaffairs under days andany monthsconditions. for the country, to last year.” In terms of the storage of gas in the making necessary arrangements with relevant organized a chain of development activities in order country, Jamshidi-Dana said that in the cold season directorates at National Iranian Oil Company to increase value-added in the petroleum industry, administration, i.e. in 2013, we achieved positive and at maximum consumption the gas storages (NIOC) and Iranian Central Oil Fields Company enhance production capacity and improve the quality Rouhani added: “In the first year of my help the stability of the gas transmission network, (ICOFC),” he added. The agreement for developing of petroleum products to be exported. To that end, 15 percent, and in subsequent years, the country’s economic growth,growth anddespite reduced being inflation in the worst to about saw a 17-percent increase in the rate of gas injection consortium of Oil Industries Engineering and 2012 to 2.2 mb/d now. As a result, gasoline and gasoil conditions of oil revenues, increased.” toadding, Sarajeh “In underground the first eight gas months storage of this(UGS) year and we a Constructionthe Azar field (OIEC)was signed and Oilin 2012Industry with Pension a productionIran has raised increased its refining respectively, capacity from from 49.8 1.8 mb/d ml/d in “Before the 11th administration, the country’s 26-percent increase in the rate of gas injection to Fund Investment Company (OPIC) for early and 94 ml/d in 2012 to 107 ml/d and 113 ml/d in oil revenue was about $100 billion a year, and on Shourijeh UGS.” The mentioned storages supply gas production. In the early production phase, 9 wells 2019. Owing to measures undertaken to improve the average in 2014, 2015, 2016 and 2017; the years to six northern and northeastern provinces that are were drilled and 129 kilometers of pipe was laid. when our oil revenue was favorable, the country’s far from the southern gas-rich regions, eliminating capacity of Euro-4 and Euro-5 grade gasoline rose oil revenue reached an average of about $52 the need for importing gas from Turkmenistan. drilled while 61 km of new pipes were built. fromquality nil of in refined 2012 to petroleum more than products, 76 ml/d thein 2019. production billion,” he said. In the first phase of the project, 11 new wells were

necessary equipment particularly SPMs, offshore Goreh-Jask Offshore pipes, valves and joints, metering system and control Section to Start Work in Feb system have been ordered,” he added. “Based on The head of engineering and construction at Pars Oil operation by February,” said Fallahnejad. He said that and Gas Company (POGC), Rasoul Fallahnejad, has threeour planning, SPMs would we hope be installed to bring 7 the kilometers first phase from into the shore and at a depth of 50 meters. He added that the and early production in the Goreh-Jask Pipeline SPMs were twice the size of common ones. He said wouldexpressed come hope online that by the February. first stage “In of the commissioning offshore these new SPMS would handle the loading of 1 mb/d section of this project, we are faced with very special of oil. The entire project has been awarded to domestic conditions due to working in the Sea of Oman and companies, he said, adding that the Iranian Offshore connection with the ocean. The conditions are Engineering and Construction Company (IOEC) was totally different from previous projects built in the behind the construction of SPMs and offshore pipes. Persian Gulf. Under such circumstances, we will be IOEC has long experience in SPM and offshore pipe facing such phenomena as tsunami, ocean waves, storms and sea depth. The geological, geophysical, have been constructed and delivered. They will be geotechnical conditions and seismic testing are transferredconstruction. to “The the site necessary of the project pipes for after the being first phase that an SPM had already been tested there as part of be ready two to four months later. “In the onshore totally different,” he said. In parallel with construction coated in Bandar Imam and Khorramshahr offshore arrangements for new SPMs. section, the Iranian company Gamma is cooperating activities, commodity supply was also on the agenda, installations yard,” he said. Fallahnejad said necessary with IOEC within the framework of a consortium,” said said Fallahnejad. “Regarding commodity supply, all preparations had been made for pipe-laying, adding April or May while the second and third SPMs would Fallahnejad. He said the first floating SPM would be completed in 16 17 news December 2021 Issue No.101 monthly news Bu Ali Sina Petchem PRTC Builds 10 Petchem Plant Exports Up 100% Catalysts in 2020 CEO of Bu Ali Sina Petrochemical Plant The CEO of the Petrochemical Research and Jask Oil Terminal to Start Mohammad Ahmadzadeh has said Technology Company (PRTC) said his company 10-Month Gas Production work in March had so far produced 10 petrochemical catalysts at 203bcm calendar year the plant’s regional sales or had presented their production technology The operator of the Jask oil terminal project in that during the first half of the current in the current calendar year, which began on 21 CEO of National Iranian Gas Company (NIGC) Hassan petrochemical sales opened new channels March 2020. Addressing a ceremony held on the Montazer Torbati said Iran’s natural gas production had second major oil terminal will be inaugurated forwas selling up 100%. products He said through that the road increased occasion of Research Week, Ali Pajouhan said reached 203 bcm since the beginning of the calendar bysouthern the end Iran of the said current the first Iranian phase calendar of the country’s year transport. Ahmadzadeh said that the by the end of the year, “important and strategic company saw its margins grow three-fold catalysts in the petrochemical industry will be on-year. “BTU-wise, this amount of gas production Goreh-Jask oil transfer project, which is going to in 2019, not to mention its remarkable completely manufactured domestically.” He year. He said the figure showed a 10 bcm increase year- transmit(March 20, Iranian 2021). crude Due tooil the from significance Goreh in Bushehr of the progress in implementing projects. The said development of technical knowhow for the household sector and 3 bcm at power plants. We to Jask at the mouth of the Indian Ocean for company divided IRR 11,000 billion in production of petrochemical items, development sawis significant. increased So gas far, supply 7 bcm to has both been the consumed household by and exports, the Jask oil terminal project is being its margins. “Bu Ali Sina Petchem Plant of technical savvy of petrochemical catalysts, power plants sectors,” he said. Montazer Torbati said pursued seriously to be prepared for the time has three major projects under way – development of strategic chemical savvy gas production during the last month of autumn on that the pipeline project is completed. According light fraction sweetening, paraxylene and solving the problems of the units are the Iranian calendar year was up from a year ago. and TK-2001C tank. They are planned to some of the major goals of his company. The “Gas production during the same month increased includes one metering station, two 36-inch come online this year or early next year,” 52 mcm/d year-on-year. Meanwhile, household pipelinesto Vahid Maleki, each with the afirst length phase of sixof thekilometers, project he added. Referring to the company’s workshops, 10 laboratories, 25 pilot machines, gas consumption increased 46 mcm/d and power various coastal facilities, as well as a single point moreofficial than mentioned 50 set-ups the and numerous bench machinesdownstream in plants consumed 9mcm/d more gas year-on-year,” calendar year, he said: “During this time, three centers of Tehran, Arak and Mahshahr of the mentioned 36-inch pipes which have been margins in the first half of the current as some of PRTC infrastructure, adding: that the household sector was a major consumer of coatedmooring will (SPM). be loaded Maleki to noted be shipped that the for first Jask cargo in owing to 2.8-fold increase in production “Demoplants are among the unique equipment he added. Montazer Torbati said the figures showed the coming days. The pipe-laying operations for despiteBu Ali Sina’s all problems net profit caused set a newby sanctions record of this company of which the most important are gas consumption. He said the increased natural gas both six-kilometer pipelines of the terminal will and the covid-19 pandemic.” He said HDPE, PET, MTP and PP demoplants.” The CEO consumptiongas, calling for was energy partly efficiency due to the measures annually to increasing curb be completed in the Iranian calendar month of of the Petrochemical Research and Technology number of subscribers. “We are developing the year-on-year, adding that light products Company pointed to the registration of 250 gas supply and some 15-20 mcm of the 55 mcm/d said. As the country’s second major oil terminal, the company’s sales had increased 20% patent by PRTC, noting: “The most important increase is due to the fact that new households have JaskBahman terminal (ends is on under February construction 21, 2021), by thePars official Oil patent that has been recently registered is been connected to the gas network. The rest comes and Gas Company (POGC) on 60 hectares of land increased 39%, liquefied petroleum the PVM patent or MTP, which has been from increased consumption of hot water due to the and with nearly €260 million of investment. gas calendargrew 25% year and from benzene a year grew ago. 23% registered in the European Union.” outbreak of the coronavirus,” he added. during the first half of the current

permission from nobody to increase our production. Zangeneh: We Need However, we need to wait.” In response to a question about wooing foreign companies in case the US returns nobody’s Permission to the JCPOA and lifts its sanctions, the minister said: “Once the US returns to the JCPOA and then we will to Lift Oil Output decide about it.” Iran’s petroleum minister has said the country could JMMC Not Decision-Making Body export 2.3 mb/d of oil, noting that it would seek Zangeneh said OPEC+ Joint Ministerial Monitoring nobody’s permission to produce more. Committee (JMMC) would meet soon to review “Iran is entitled to increase its oil production and it compliance by OPEC member states and their allies. will get nobody’s permission for that purpose,” Bijan “They are not making any decision. They only report the compliance rate of member states. Compliance has restrictions, caused by sanctions, are lifted, we may been good. Some OPEC members rightfully expect that reviveZangeneh wells said. and “If then sanctions exporting are 2.3 lifted mb/d and of financial oil would be achievable,” he said. Zangeneh said he would not in the past months cut their output up to March 2021. say something which he knows could never come true. Thatthe nations is the most that didimportant not sufficiently job which cut JMMC their shouldproduction “Exporting 2.3 mb/d of oil is practical and there is report about.” Regarding development of new oil and market for it and in which case I think that oil prices will not decline,” he added. “I believe that OPEC is sensitive and committed enough to preserve oil prices. The can’t express ourselves in this regard,” said the minister. is discussing production cut to help stabilize oil prices, gas fields, the minister said: “For the moment, we have necessary mechanism is also ready. We have to see what Asked to explain how Iran would be authorized by Zangeneh said: “There is no need for permission. It is theno plan oil sector, to develop our priority new fields. is West In the Karoun, gas sector Jofair, we Sepehr focus fate would befall the sanctions. For the moment, we OPEC to raise its production at a time the organization our right to increase our oil production. We will seek andon the Ilam.” Belal, Farzad, South Pars and Kish gas fields. In 18 19 Market December 2020 Issue No.101 monthly Market

RacingIran Ahead Even in Covid-Stricken Oil Market Negar Sadeqi

It is not known yet when the US would end its maximum pressure campaign, the signature legacy of President Donald Trump, to bring Iran’s oil exports down to zero and drive Iran out of the oil trading market. Nonetheless, based on analysts’ views, US president-elect Joe Biden is not willing to continue his predecessor’s policy. Over the past two years only, Iran has experienced the toughest ever sanctions in four decades. The heavy burden of the sanctions led everyone to think Iran would fail in an unequal economic war. However, Iran’s oil exports were not zeroed; rather, Iran managed to export its petroleum products to various nations despite the outbreak of the coronavirus pandemic. Minister of Petroleum Bijan Zangeneh has said time and again that Iran would return to the oil market and regain its market share, as soon as US sanctions are lifted. He has even said Iran would not shy away from retaining its share from the countries that have seized it. Iran is returning to the oil market forcefully while being exempt from the OPEC+ oil deal. During the first round of President Hassan Rouhani’s administration, after Iran and six world powers signed the historic nuclear deal known as the Joint Comprehensive Plan of Action (JCPOA), Zangeneh convinced OPEC to exempt Iran from any output cut under its decision to reduce production along with allies. In the next phase of OPEC production cut, Iran’s oil was already under US sanctions. Zangeneh again filed the same request. Some nations opposed, but finally OPEC+ agreed to exempt Iran from production cut in order to help stabilize prices. 20 21 Market December 2021 Issue No.101 monthly Market

Covid Price Shock The year 2020 was not a good year for with rivalry for market share. Nasseri said: global economy and oil market mainly due to “Iranable to may sell easily its oil sell in a its chaotic oil on market the world filled the outbreak of the coronavirus pandemic. markets. Many customers are ready now World oil demand fell below zero and oil to supply part of their needs from Iran. prices dropped to below $20. Year 2020 They don’t want to limit their oil market to is now ending against the backdrop of a several nations. They would be happy with historic OPEC+ deal which helped boost more diversity.” Iran would not face a tough prices; however, the prices are unlikely to task in selling 1 mb/d to 2.mb/d of oil with return to the pre-2018 levels. On April 12, discounts and methods they have in mind.” 2020, OPEC and their partners agreed to “The market will welcome it in terms of cut 9.7 mb/d of oil from their total output for two months (May-June) as of May 1. buyers are waiting for Iran’s return,” he said. After the two-month period, OPEC+ was to supplier diversity. Definitely some of Iran’s oil cut 7.7 mb/ from its output for six months Positive Record ending on December 31. For the period prices have increased to $50 a barrel and thereby leaving no room for OPEC to raise OPEC members replaced Iran in the market. Iran has left behind two tough and running from January 1, 2021 to April 30, are forecast to exceed $50 barrel. But this output or even return to the 2018 levels.” Now they should reduce their output. cumbersome years in the face of the US in case OPEC 2022, OPEC+ agreed on cutting 5.8 mb/d price will allow the US resume its shale oil Zangeneh has also said that Iran is entitled maximum pressure campaign. To export 2.3 from its output. This decision helped boost production and increase its oil output next 2.3mb/d Oil Exports Planned to enhance production and the market has Now after two years, many analysts and OPEC+ oil prices which are now above $50. The year,” he said. Therefore, when oil market Zangeneh, in a meeting with the Planning capacity for that purpose. Asked if OPEC give a positive assessment of Zangeneh’s mb/d, Iran has intend to control 180th meeting of the OPEC Conference and balance is said to be needed, oil prices should and Budgeting Committee of parliament, would cooperate with Iran, Nasseri said: “To performance during tough years of sanctions. to inform OPEC the 12th OPEC+ meeting were held while remain between $30 and $35 a barrel for has said Iran would be exporting 2.3 mb/d export 2.3 mb/d, Iran has to inform OPEC Iran’s oil exports have not been down to zero the oil market covid-19 was racing ahead. OPEC + agreed to at least for two years in order to keep US of oil next calendar year to 20 March 2021. members of its intention and the timing despite all US pressure, and Iran has been members of its balance in the raise output by 500,000 b/d for one month. shale oil production from having economic Ever since the US re-imposed its tough oil envisaged for that purpose. OPEC is likely to able to export petroleum products. Nasseri intention and the long-term they Of the 20 states involved in the OPEC+ deal sanctions on Iran, the Petroleum Ministry ask Iran to reduce its output, but we should said: “The performance of the Petroleum timing envisaged (excluding Iran, Libya and Venezuela), 12 see how Iran would compromise.” “We have Ministry was higher than expected. Neutrally should try to countries had overproduced 2.346 mb/d, USjustification, Shale Oil said and Nasseri. Paris Climate Deal oil and petroleum products exports. The also to take into account the point that Iran speaking, I have to acknowledge that despite for that purpose. keep oil prices which were asked to compensate by March The US President-elect Joe Biden favors ministerhas refused had to said release on the any sidelines official dataof drilling on would say it has been under sanctions and all pessimistic analyses about Iran, we are OPEC is likely 2021. his country’s adhesion to the Paris climate operations for Phase 11 of the massive has reduced its output and exports more now witnessing Iran has managed to deal at about $45 deal that requires nations to cut their than others. Therefore, it would expect with this problem successfully.” “Iran’s crude to ask Iran by keeping Iran Oil Slot greenhouse gas emissions. Trump’s pullout seek nobody’s permission for enhancing its fellows to let it export as much oil as it can,” oil exports were above all expectations. to reduce its their output Iran is getting ready to return to the world from the Paris deal provided oil companies productionoffshore South level. Pars He gas also field, said thatthat Iranwithout would he added. However, that’s not the whole However, the outstanding point pertains output, but we oil market. However, the main question is to with an opportunity to increase their oil sanctions, Iran would easily reach the 2.3 story. Based on what American analysts and to Iran’s maximum supply of petroleum lower than their know how the market would react to Iran’s production, making the US an oil exporter. mb/d export. Experts say the timing of Biden have said, the new US president is products so as to minimize the impact of should see how production return? Iman Nasseri, Managing Drictor of European Union leaders agreed recently Iran’s planned re-entry to the market and likely to resume talks with Iran. In a bid to sanctions. Iran even managed to export Iran would Middle East division of FGE, said: “We may to cut net carbon emissions by 55 percent the amount it hopes to bring would be of convince Iran to return to the negotiating gasoline in the chaotic and covid-stricken capacity on the just have a look at the oil supply and demand. in the next decade from levels measured in table, the US should lift all oil sanctions. market. That partly blunted the pressure compromise long-term Analyses and statistical data tell us the 1990, overcoming the concerns of nations end, all oil and non-oil sanctions imposed That would be a good starting point for from oil sanctions,” he added. Asked about market need for increased OPEC and OPEC+ which are still heavily dependent on coal and onhigh Iran significance. must be lifted. Nasseri It would said: not“To bethat both sides. In other worlds, the maximum production in 2021 and particularly in the taking a critical step in the effort to become enough for the US to say it would lift all oil exports, Nasseri said: “Iran has over the second half of next year is higher than the climate-neutral by 2050. European leaders, sanctions. Rather, banking, insurance and signs of such policy have been visible in the pastthe significance seven years of managed Iran’s petroleum to improve products the amount Iran plans to supply on the market. who are keen to position themselves as at the shipping sanctions should be also lifted. pastpressure one month.campaign Austrian must be Ambassador modified. The to That would be a long process.” He said that Tehran Stefan Scholz said during an Iran- and bring into operation the Persian Gulf for Iran’s oil, notwithstanding what OPEC change, had failed in October to reach a the duration of this process is likely to lead Austria Energy Forum working group that quality of its petroleum and refined products andTherefore, OPEC+ there have wouldforecast definitely for the market be room dealforefront on an of even the globalless ambitious fight against target climate of 40 Biden to grant waivers to buyers of Iran’s Iran had proven an excellent performance fed on gas condensate. That ended Iran’s balance.” “Based on the OPEC+ agreement, percent. “Europe is the leader in combating oil so that Iran would be able to supply despite tough sanctions and the outbreak of dependenceStar refinery, on which gasoline is the imports largest andfacility during the second half of 2021, the market climate change,” tweeted Charles Michel, who part of the 2.3 mb/d it has promised on the covid-19. Abbas Baqerpour Ardakani, Iran’s even made Iran an exporter of gasoline. would need more oil in order to maintain its heads the group of EU leaders. “We decided market as absorption in the market is also ambassador to Vienna, said at the remotely- Furthermore, the gas condensate produced balance. Therefore, during the OPEC regular to cut our greenhouse gas emissions of at instrumental. Over the past two years, Iran held meeting that Tehran and Vienna could in South Pars was used as feedstock.” meeting, member states are likely to decide least 55 percent by 2030.” Now everyone has implemented numerous production about lifting their output from the current is waiting for Biden to see what decision projects in order to enhance output. It is the energy sector. petroleum products it would have to reduce levels,” he said. Nasseri also said in case he would adopt for his country which is now ready to make a comeback as soon as benefit from mutual technical capabilities in “Definitely, had Iran not been able to export OPEC and OPEC+ intend to control the oil among the top emitters of greenhouse gases sanctions have been lifted. Iran would be Iran Oil Buyers added. President Hassan Rouhani had also market balance in the long-term they should in the world. Asked about an acceptable oil naturally expecting fellow OPEC members Speculation is rife among the traditional saidits refinery that exporting run and 2.3 cut mb/d its oil ofproduction,” oil would be he try to keep oil prices at about $45 by keeping price, Nasseri said: “OPEC should look at to show cooperation for its return to the buyers of Iran’s oil about their intention to their output lower than their production the realities in the market. A $45 oil would market next calendar year. Iran could not sell restart purchasing oil from Iran. But the gas, gasoline and gasoil production as the key capacity on the long-term. “Currently, oil guarantee increased shale oil production, enough oil due to the sanctions and some question is to know if Iran would be easily achievementspossible. He touched of his administrations. on self-sufficiency in 22 23 OPEC December 2021 Issue No.101 monthly OPEC

OPECThere are doubts about and short and long-term Future cooperation within the Organization of ofOil the Petroleum Exporting Countries (OPEC). Based on estimates, demand for crude oil would decline in the long term, i.e. over 30 years. On the other hand, it has to be taken into consideration that the priorities of top oil producers are always changing and the share of oil will decline in their future energy mix. The main question is to know until when OPEC can continue to work. Homayoun Falakshahi, a senior oil analyst at market intelligence firm Kpler, maintains that as oil production costs of OPEC and Persian Gulf states are lower than non-OPEC states like Brazil and the United States, OPEC MCs would be the last remaining states to be producing oil. “I believe that by the end of the age of oil, OPEC member states would be the only nations to be still producing oil,” he said.

Negar Sadeqi is faced with on either increasing or the long-term for prices to reach a level decreasing its output. “If oil prices hike, that outside OPEC there would be no OPEC Dilemma oil production will become uneconomical huge investment,” said Falakshahi. In Shale oil is the undisputed rival to OPEC for non-OPEC. Meantime, since OPEC case oil prices exceed $50 a barrel, shale producers and their allies. Some analysts and allies are faced with production oil production will become economical. still hope that shale oil production would restrictions, non-OPEC producers will However, if oil prices remain within become uneconomical as oil prices keep make maximum investment and capacity the range of $40 investment in shale falling so that oil producers would feel building for increasing production and production would have no economic relaxed. But taking into consideration subsequently their revenue,” he said. the accelerated technological growth in Falakshahi said: “The coronavirus crisis recommend OPEC to have a price band of the shale oil production and the general in 2020 caused a sharp decline in world $40-$50justification. a barrel. That is why many analysts tendency on the part of various nations oil prices. Saudi Arabia saw its March- to use renewable energies, how could April revenue drop $50 billion, which UAE, Main Violator of OPEC+ Deal we express hope that shale would be Due to their budget dependence on oil gradually eliminated from the oil market hard currency reserves. Therefore, they revenue, some OPEC member states under the conditions. The fact is that over wereconstituted forced 10% to cut of their the country’s production total in have supplied more than quotas set for the past one decade, OPEC has sought order to boost prices.” them. In the closing statement of the 12th to prevent shale oil production from meeting of OPEC+ it was noted that 12 becoming economical. Even cooperation Political Pressure and Shale Output out of 20 states involved in the April 2020 between OPEC and Russia-led non- What should be done then to make shale agreement would have to cut totally 2.346 OPEC was a step in that direction. At the oil production uneconomical? Falakshahi mb/d from their oil output to compensate beginning, it seemed that OPEC and non- said: “Oil prices should remain low over for their overproduction until the end of OPEC were unlikely to reach agreement a period of 4-6 months for shale oil March 2021. All eyes have turned to Iraq on cutting output to prevent shale oil production to become uneconomical for and Russia for quota violations. From production. However, they reached a US oil companies.” He added that although May to October, Iraq supplied 610,000 landmark deal on production cut in OPEC and non-OPEC allies made gains b/d more than its quota while Russia’s 2017. Amid a tough price war between from the April 2020 agreement, the overproduction reached 531,000 b/d. Saudi Arabia and Russia, the deal was biggest winner of the OPEC+ agreement “More than anything else, we need to destabilized in March 2020. Speculation was US shale whose production became look at oil trading rather than domestic was rife that the agreement would economical to save the US economy production capacity,” said Falakshahi. fail. However, the covid-19 pandemic thanks to political pressure exerted by the Iraq’s overproduction is virtually changed the game. In April 2020, OPEC Trump administration on Saudi Arabia. In overshadowed by the decline in its and their allies reached agreement to other words, OPEC is the loser; if prices exports over recent months. All oil keep cutting production up to 2020 in a producers are apparently trying to bid to reverse the downward trend in oil and if prices grow shale oil will become honor the agreement. Although Iraqi oil prices. Falakshahi said: “Even now some economical.drop they will What be faced is the with best budget policy OPECdeficit production is under control of Western OPEC members are facing certain revenue and allies may adopt at a time they have emerged as loser? would be a tough task to convince them. their production has declined.” companiesHowever, Falakshahi that seek their said ownthe United profits, it problemsHe also touched and therefore on dilemma budget OPEC deficit as It has to bring stability to the market in Arab Emirates was the main violator of “There is nothing specific OPEC can do. 24 25 OPEC December 2021 Issue No.101 monthly OPEC

the OPEC+ agreement without having been highlighted by media. “Compared with October and November 2018 when the basis for calculations was the OPEC+ output cut, we see that Abu Dhabi has not honored its commitments to cut its output,” he said. “If we take a look at the average exports in October and November 2018 we see that the UAE saw its October 2020 exports decline. The UAE seized this opportunity to claim in the November meeting that it had remained committed to the OPEC+ agreement without having committed any violations. That is while Abu Dhabi’s November exports rate grew in November. He said that the UAE exported 2.8 mb/d of oil in August, thereby not being fully compliant with its commitments to cut output. “Coincidentally, Abu Dhabi has supplied more than envisaged, showing

region.its firm Meantime,determination it has to to highlight be taken its into accountclout with that OPEC the andUAE’s influence regional in policy the

years,” said Falakshahi. For Falakshahi, the UAE’shas taken foreign up added policy significance behavior in inrecent recent years shows that it is willing to follow in Saudi Arabia’s footsteps in foreign policy and economy. Within OPEC, it is building capacity with a view to push ahead with share from now,” said Falakshahi. It there was room for Iran’s oil,” said the in light of a recent agreement between decade. However, Mr. Zangeneh is highly remains unknown when the US would analyst. the UAE and [the Zionist Regime], it respected among OPEC member states OPEC member state. However, this lift oil sanctions on Iran. Iran’s Minister seems that Saudi Arabia would show and Iran is respected by fellow members,” countryits oil barrels knows and that become even if an it caninfluential iron out of Petroleum Bijan Zangeneh has Zangeneh , Technically and Politically no opposition to Iranian increased said Falakshahi. “Based on evidence from its differences with Saudi Arabia, it will recommended patience. The minister Right production within OPEC in a bid to be OPEC meetings, I am sure that as long have to deal with a longtime rival: fellow has, however, noted that Iran would seek Falakshahi said Minister Zangeneh was able to get closer to [the Zionist Regime],” as Mr. Zangeneh is serving as minister OPEC member, Iran. nobody’s permission for increasing its right “both technically and politically”. added Falakshahi. of petroleum in Iran, he will continue production as there is market for Iran’s “Technically speaking, Iran’s oil is heavy to defend Iran’s OPEC stance in the best Iran Comeback oil. “Iran had experienced the previous and semi-heavy, which Asian markets Iran Remains Influential possible manner. Ever since the US re-imposed oil round of sanctions and when it returned has experienced shortage of this type We saw that during the previous round sanctions on Iran in 2018, rarely could to the market it won exemption from of oil in recent years. Even Indian and OPEC member state. The answer is of sanctions, he managed to change anyone image that Iran would be able any production cut. Even when OPEC+ negativeOne may if ask it is if to Iran be isanswered still an influential based the game in Iran’s favor without being to blunt the impact of sanctions that reached agreement on production and built in recent years to process heavy on oil production and ranking of oil supported, thanks to his knowledge of largely restricted oil production and cut, Mr. Zangeneh won production cut crudeChinese oil. refineries Politically have speaking, been designed China and producers. Due to sanctions, Iran has export for Iran. However, Iran managed exemption for Iran,” said Falakshahi. India intend to expand their relations in so far failed to adjust its export with its exempted from production cut,” he added. to disappoint Donald Trump who had “If we want to draw a parallel between the Middle East and therefore they are production capacity although it claims FalakshahiOPEC and the said market. Zangeneh Iran remained was finally an imposed the sanctions. Now with Joe the present circumstances and what looking for balance in the region through the top spot in terms of hydrocarbon Biden the US president-elect, Iran and increased economic cooperation. Iran is reserves. “It is true that Iran’s clout want to measure the weight of all OPEC the US are likely to reach agreement say that the world was not faced with with OPEC has declined, but one has to ministersinfluential in OPEC terms minister, of experience adding: and “If we in coming years. “The UAE knows thewas coronavirus under way five crisis years at that ago, time. I should due to its energy resources,” he said. “I take into account the fact that Iran is a presence within this organization, Mr. quite well that after Donald Trump’s Even a couple of months prior to Iran’s thinkplaying that a significant OPEC would role also in thisagree regard with founding member of OPEC and is the Zangeneh alone is as senior as the rest departure, Iran, Europe and the Biden comeback to the market, global oil prices Mr. Zangeneh about Iran’s oil production top holder of oil and gas together in the altogether.” “I am sure that Iran’s voice is administration would reach agreements declined sharply. Everyone imagined that unless the world experiences a third or world. Until several years ago, Iran was louder within OPEC thanks to Zangeneh’s for Iran’s oil to be supplied once more on oil prices would fall again if Iran returns fourth wave of the coronavirus or the the second largest OPEC exporter, but presence. If Iran returns to the oil market, the market. It is natural for the UAE to to the market. However, the market vaccines developed for the coronavirus as long as Zangeneh is there, no adverse think of strategies to increase its market showed no negative reaction to Iran, as turn out to be ineffective. Meantime, sanctions imposed on Iran over the past action could be taken against Iran.” its influence has declined due to the 26 27 Analysis December 2021 Issue No.101 monthly Analysis

to be looked on in the long-term because it would not be easy to create a safe business environment in Europe.

Democrats, Republicans Both Will the Nord Stream 2 project become operational amid opposition from both Democrats and Republicans? Favor Nord Stream 2 Sanctions Responding to this question is not so easy. Amir Alizadeh, The Managing Drictor of the Association of Iranian Banks in Europe (AIBE), has said the North Stream 2 gas pipeline Europe currently needs the gas resources of would allow Russia to pump 55 bcm of more gas to Europe, specifically to Germany. In an interview, he said that the US imposed sanctions thisNow, project, this project but many has had European 94% progress. companies on the project. Alizadeh explained that Democrats and Republicans both favor US sanctions on the Nord Stream gas pipeline. fear US reprisal. To compare it with the

Seyedeh Ameneh Mousavi Europe’s dependence on gas stems from EU and not in Washington. However, the White Senator Ted Cruz is following up on this issue Iran immediately after the US quit the JCPOA, energy and environmental policies. Based House law which targets Nord Stream 2 is seriously. butJCPOA, in Germany, it is noted some that Europeancompanies firms are still left Russia has long been a major gas on EU objectives, greenhouse gas emissions similar to US sanctions imposed on Iran. The resisting pressure against cooperation with supplier to Europe, particularly Germany. Weren’t Germany’s concessions Russia because of economic interests. These Nord Stream 1 and Nord Stream 2 have The EU has set some criteria for member 2 project and is likely to keep the project from convincing enough to dissuade the been built in line with that policy. must mitigate significantly in coming years. US is firm about sanctions on the Nord Stream Americans from sanctioning the Nord the US. Of course, East Europe nations like Yes, that’s true. Nord Stream is a corporate nuclear power plants be shut down quickly the JCPOA which Democrats favor the US’s Stream 2 project? Ukrainecompanies and have Poland also have influential no good lobbies ties with within whose main shareholder is Russia’s Gazprom. asstates, possible. requiring Germany that allhas coal-fired already shut and down returnmoving to ahead the deal, despite Democrats 94% progress. and Republicans Unlike No compromise was reached. Of course, Russia and are already critics of the Nord In other words, Gazprom is the largest gas both support sanctions on Nord Stream 2. Stream 2 gas project and they are making company in the world to have the majority its own plans and policies. In the wake of the would let the project ahead in return for efforts to stop it because with Nord Stream 2 of Nord Stream’s shares. The project is Fukushimacoal-fired power Nuclear plants. Power But Plant each explosion country has Has the US sanctioned Nord Stream theirthe Germans concessions, first thoughtbut the USthe was White basically House they would be put aside from Central Asian registered in Switzerland with European in 2009, Germany is determined to halt the 2 for political or economic reasons? opposed to the Nord Stream 2 project. and Russian gas exports to Europe. The operation of all of its power plants on schedule. First and foremost, the US does not want When Trump came to power, all comprises delivery of Central Asian gas to Europe would However, you may know that it would be Europe to be more dependent upon Russia. including the Nord Stream 2 project and even have to stop, once Nord Stream 2 becomes –companies Nord Stream. accounting Royal Dutch for 50% Shell, of Austria’sfinancing. Currently, Russia is supplying one-third of the JCPOA were hindered and we have such operational. OMV,Five companies, France’s Engie each and holding Germany’s 10% of Uniper shares 80-million-strong Germany with no fossil Europe’s energy needs. Meantime, a new experience. Another reason for the halt in the resources.difficult for Germany European is nations, currently particularly generating source of income is being created for the Nord Stream 2 project was the poisoning of Are the Germans after diversity in Gazprom delivers gas from the North Sea and Russians to invest in their defense sector, their energy mix? Russiaand Wintershall to Europe. – Althoughare financing Nord the Stream project. pipes which goes against US interests. These are Navalny survived after he was moved to Germany has already started diversifying its have reached their maximum capacity, Europe no45% longer of its cost-effective. electricity from Renewables renewable should energies, the political aspects of opposition to the Germany.Russian opposition The opposition figurehead in Germany Alexy Navalny. called energy mix, including nations from the Middle needs more gas. That is why in parallel with supplybut this all figure such has need. reached Gas is itsa key peak element. and is The Nord Stream 2 project from Democrats and for the government to sanction Russia. The East, Central Asia, Russia and the US, in a bid the Nord Stream activities, the Nord Stream EU’s daily increasing demand for Russia’s gas Republicans. And economically speaking, the EU imposed sanction on Russia; however, the to reduce its dependence. Azerbaijan and 2 pipe-laying began with a 10-billion-euro and new pipelines like Nord Stream 1 and US has become the world’s largest shale gas Kazakhstan are currently among exporters of Nord Stream 2 are due to the same reason. producer and is willing to export gas to Europe. sanctioned. Debates are also under way in oil to Germany. Regarding LNG gas terminals, With sanctions effective against Nord Stream The US has in a way or other forced Germany theNord European Stream 2 Parliament project was on not whether specifically or not Qatar has invested abundantly. ofinvestment. US sanctions. The Once project operational, has had 94% the progressproject 2, this project could no longer be operated. The to build infrastructure for LNG terminals. the Nord Stream 2 project could be used wouldnow and let the Russia remaining deliver 6% 55 bcmis under more the gas impact to White House has adopted a law about Europe’s Germany also agreed in a show of compromise as a foreign trade tool. Many journalists Europe, particularly to Germany. energy security, which drew harsh criticism to say it was building two terminals aimed at believe that this infrastructure project has from European nations. The Europeans diversifying its energy mix. One LNG terminal Why is Europe such dependent on maintain that Europe’s energy security policy is under construction in northeast and another gas resources? should be adopted within the continent itself one is in northeast Germany.US oil lobbyist

28 29 Investment December 2021 Issue No.101 monthly Investment 7 Petro-Refineries Up for Investment Javad Asghari good regional market. Iraq, Afghanistan, method would further broaden trade the petrochemical industry produces a Pakistan and India are major buyers of communications with regional nations. single product and it converts natural ran hopes to support petro- products such as gasoline. Therefore, Then, this problem may be resolved gas to methanol and urea. The idea by adopting such methods as barter is now to diversify products by using investment so that investors would trade. The effective way to deal with diverse feedstock. That would make the refinery construction with public Petro-Refineriespetro-refineries would Defeat be lucrative.Sanctions sanctions would be converting crude petrochemical industry more resilient necessary capital initially needed. and more attractive. IThe restbe ablewould to beprovide provided at least through 30% of transferred to processing units as country rather than selling crude oil. The issuance of bonds, capital market and feedstockAt petro-refineries, in order to crude produce oil iscore oil to products at petro-refineries in the High Demand for Petro-Refineries bank facilities. Under the current petrochemicals and fuel. That would Crude oil is often exported in huge The petroleum industry has shown conditions with sanctions in effect, rather require special processing units.The volumesrefined products and therefore would oil be cargoes then exported. are than exporting crude oil to other nations monitored and sanctioned more easily. Minister of Petroleum Bijan Zangeneh in the petroleum industry is such saidstrong recently willingness that 1.5 for mb/d petro-refineries. of oil may be simultaneousgrowing tendency capability for petro-refineries which would IRR 16,000,000 bn Money Unused productsand building with refineries, high value-added. Iran may Today,turn An equivalent of IRR 16,000,000 billion to the minister, those building petro- theto building world is petro-refineries moving towards and integrating export of competitiveness in the oil markets. has remained idle in the country. That processed at petro-refineries. According raise profitability and enhance power exempt from paying for feedstock and circumvent sanctions, generate value- projects. For instance, the Persian Gulf herefineries would thensooner settle than with others the Nationalwould be refining and petrochemical industries by added,Building create petro-refineries jobs and earn would shareholders help can be a good source for financing such Development Fund of Iran (NDFI) on building petro-refineries which would 3,000 billion by issuing parallel “salam a rescheduled basis. All demands for wouldbe more convert economical crude thanoil to oil oil refineries. products and non-oil nations are focusing on the bonds”Star refinery for gasoline. has managed Demand to wasabsorb 80 IRR includingCrude oil processinggasoline, gasoil, at a petro-refinery jet fuel and big profits. Many developing nations times higher, showing general inclination fuel oil. But at the same time, products they have allocated necessary capital for investment in this sector. Therepetro-refinery has been construction a total demand have of had 1.5 such as LPG and naphtha may be used anddevelopment facilities forof petro-refineries that purpose. In and Iran, mb/dtechnical – 1.22 and mb/d economic for crude justification. oil and for developing the petrochemical section where the petroleum industry has been 240,000 b/d for condensate. They of these facilities to supply dozens of active since long time ago and there is receivedMakran petro-refineryauthorization to in work.Jask is It one petrochemicals. With the inauguration necessary feedstock and infrastructure, mayof the serve first aspetro-refining a model for theplants start that project with 120,000 b/d of oil, construction of such plants has been Ghadirinclude Investment the Lavan petro-refining with 300,000 b/d, assessed, and necessary planning has Behzad Mohammadi, CEO of National Shasta with 300,000 b/d, Palayesh productsof the Persian including Gulf Stargasoline. refinery, Iran Iran has long been made. Whereas over recent years Petrochemicalof other petro-refining Company projects. (NPC), had ParsianTadbir, Morvarid Makran, Jask beenhas become an exporter self-sufficient of fuel oil, in but all regardingrefined the petroleum industry, particularly the said license was issued for one petro- Port with 300,000 b/d and a private other products, in light of increased petrochemical sector, has faced tough US entity with 200,000 b/d. enough and the project had to be recent years and feeding power plants was highlighted in order to convert turnedrefinery into in Jask, a commercial but in fact model it was to not be withrecovery gas, fromthere the is enough South Pars gasoil gas for field in sanctions, the issue of petro-refineries lucrative. “We are in fact looking for export. generation of value-added. In 2018, the models to be attractive to investors,” Iran has also become a kerosene and Iranianmore oil parliament into refined adopted products a motion for the on he said. Regarding feedstock for such LPG exporter after connecting all villages to the gas network. Therefore, new petro- investment. In fact, Petroleum Ministry whose products would be directly used the construction of refineries with public forprojects, petrochemical Mohammadi production said: “A wouldrefinery products at subsidized prices and they be highly attractive. We have liquid canrefining export units their will products not have at to economical sell their publichopes toinvestment. provide 30% of necessary prices. Therefore, they would no longer capitalRegarding for the the petro-refineries positive impact fromof this there is such feedstock, products would befeedstock diverse.” at Aromatics refineries couldand wherever be produced issues, it is noteworthy that this and that is a big advantage. A section of be loss-producing like old refineries. method on Iran’s international financial Furthermore, petro-refineries have a

30 31 Market December 2021 Issue No.101 monthly Market

in the second quarter of 2020 decreased payment of dividends and investment in the oil and gas sector. The director of Saudi $ 25.5 billion; and since the beginning of Aramco Amin Nasser stated that Aramco’s Saudi the45%, year compared in total reachedwith the $ previous 36 billion year and and investment volume for 2021 will be the Saudi government to draw $ 13 billion The company had previously announced Policy in indecreased foreign exchange 49%. This reserves, development and borrow urged thatsignificantly it would less invest than about that $of 40 previous billion to plans. $ about $ 10 billion from domestic sources. 45 billion in 2021. According to him, Saudi Due to the worsening trend of the budget Arabia is increasing its maximum sustainable Oil Market production capacity from 12 to 13 mb/d. Ehsan Jenabi and reduce current expenditures. In the third In total, in 2020, the company’s investment deficit, the government decided to raise VAT costs will be something like $ 27 billion. audi Arabia has long been a swing slowed to $ 77.40 billion. Third-quarter Saudi Arabia’s state-owned oil company producer in OPEC. In fact, it has revenuequarter of compared 2020, the with deficit a year widening earlier trend rose intends to cut its capital expenditures to $ traditionally used its spare capacity 25 billion or less than that by 2021, i.e. about and market share to impose its value-added tax. Given the tax increase and half of what was originally planned. Almost policies on the oil market. Over to $ 57.5 billion, due to 15% increase in the until 2023, the investment volume of the Srecent years, the increase in production of Saudi economy will show more resilience unconventional crude oil along with the inthe the significant face of low increase price levels. in tax revenues,Saudi Arabia the major portion of Aramco’s new investment decline in demand has led to an increase in is to set the 2021 budget based on the $ 50 projectscompany have will beennot increase delayed significantly. due to falling A excess supply in the world oil market, which per barrel price. As the Saudi Ministry of oil prices. On the other hand, the company According to a has resulted in a sharp decline in prices and Finance has forecasted the price to be around Saudi $ 50 per barrel for the next three years, so to the shareholders without applying any Rystad study, Saudi Arabia made efforts to maintain its market share, liberalizing capital to expand South Korea has increased and has led to the price of oil in the budget of the country adjustmenttends to pay and the withoutpreviously considering considered the profit Arabia’s assuming oil interestsstructural and changes position in the by increasingoil market. itsAt marketfirst, investment in projects with higher-priority in decline in the share of Persian Gulf exporting is set at $ 50 per barrel until 2023. However, reduction of the company’s income level. The budget is to be share and the price war in the oil market. the upstream sector, reducing state subsidies countries. The breakeven price of crude oil the International Monetary Fund estimates prices are However, Saudi did not manage to reach that Saudi Arabia needs a higher price ($ 66 of the company’s assets and bonds to make balanced at below $ 40 per its goals in recent years, so it has inevitably privatization, concentrating on domestic estimated at about $ 84 per barrel, while the per barrel) to balance the budget. The Saudi only way out to fulfill this is to sell a portion $ 84 a barrel barrel in 2020, changed its traditional methods of monitoring consumptionthrough enhancing reduction energy to maintainefficiency export via breakevento balance Saudiprice ofArabia’s US crude financial oil and status shale is government tends to have a conservative view be argued that Saudi Arabia’s oil policy is in 2020 and and controlling the oil market. Some of the capacity, enhancing the use of natural gas oil is in the range of $ 40- $ 50 per barrel, of crude oil prices in its budget planning and the desired profit. In conclusion, it could the country’s oil most important factors that caused Saudi (along with oil and unconventional gas) in the which is expected to decrease over the years usually does not disclose its assumptions; relations with the United States, oil market now is facing revenues will Arabia to feel its position is threatened in the energy basket, using renewable energies and as productivity increases through utilizing therefore, the only way out to analyze the share,generally and influenced domestic funding.by three Undercomponents: pressure a huge budget oil market and has led the country to change nuclear energy. Over recent years, in parallel modern technologies. Of course, Saudi Arabia prices is estimating oil prices in the budget, by Trump administration, Saudi government be reduced to its market surveillance approach are: the with increasing US tight oil production, is trying to restructure its budget and increase using other forecasts. The Saudi government did not accept to make any voluntary deficit of 12 % less than $ 100 reduction of US imports from the country, US oil exports to West Asia has increased, seeks to stabilize its revenue level in the commitments apart from those in the OPEC of GDP billion, which domestic economic problems, rising costs although the share gained by US in this has order to lower breakeven price for oil in the medium and long term through controlling Plus. It seems that Biden’s administration and declining foreign exchange reserves. not been considerable. This, in turn, has budget;the share however, of taxes undersomething current like situation, 6%, in it will not follow the same approach with is currently Thus, in Saudis’ view, unconventional crude led to the reduction of the share of other is not able to combat shale oil. Russia is in a regard to putting Saudi under pressure to estimated at $ oil is a severe barrier to price hike. Therefore, exporting countries, especially the export better position compared with Saudi Arabia, Saudibudget Arabia deficits aims and to adopting gradually appropriate reduce its take some more voluntary measures. Saudi given these conditions, in order to ensure the level of Persian Gulf region countries. Saudi and needs $ 52 oil per barrel to balance its fiscal policies to improve fiscal performance. Arabia’s budget is to be balanced at $ 84 92 billion security of demand for crude oil produced and Arabia’s policy aimed at reducing US tight oil budget. The UAE, Iraq and Kuwait compared a barrel in 2020 and now is facing a huge to maintain its income stability, Saudi Arabia production through price cuts over recent with Saudi Arabia, enjoy a better status. Saudi achievedbudget deficit through in the efforts medium made and to enhancelong term took some measures. Chief among them are: years has failed on one hand, and its domestic Arabia has complied more than 100 percent productivity,to reach 4% of reduce GDP by expenditures 2023. This willand be accepting production cut and cooperating to its OPEC Plus production cuts in recent ofbudget other deficit countries of 12 such % of as GDP. Iraq Saudi and Russia Arabia with OPEC and non-OPEC countries to Over recent years, Saudi Arabia has seen a months in a bid to restore price stability. to support and empower the private sector incriticizes the OPEC the Plus non-fulfillment agreement. ofSaudi the pledgesArabia increase the price level, considering the declineeconomy in hasits oil faced exports severe share budget to the deficit. United throughachieve financial the Saudi discipline National whileDevelopment continuing volume of OPEC member countries the States, China and South Korea. Of course, Saudi oil revenues and budget Fund and the Public Investment Fund. In 2020. It has reduced domestic spending crude oil exports along with paying attention in some months Saudi’s export to China Saudi oil revenue in 2019 stood at around fact, Saudi Arabia’s strategy is to diversify andhas implementedincreased taxes, strict so thatfiscal the policies country’s in to production volume to enhance the has increased, but has not lasted and it has $ 200 billion. According to a Rystad study, effectiveness of the production cut agreement, sharply decreased in late 2019. Since 2016, US assuming oil prices are below $ 40 per barrel and “sukuk”, and in the same time seeks new experienced a better situation, and based on in 2020, the country’s oil revenues will be its financial instruments by issuing bonds this,budget and deficit has set in itsthe 2021 third budget quarter based of 2020 on $has reduced to less than $ 100 billion, which is government spending. 50 oil. Although Saudi Arabia is attempting Malaysiaacquiring and the Indonesia, shares of refineries Selling part across of 1oil mb/d. exports In hasearly begun 2020, to the grow US exportssignificantly. level In currently estimated at $ 92 billion. Saudi marketsAramco forrole its in products the Saudi to economy facilitate financing to prevent oil prices from falling down, the Aramcothe world, shares investing and internationalization in refineries in China, reached2017, the more country’s than 3.5exports million figure mb/d, exceeded and The net income of the Aramco, which has market conditions could be highly impacted of its oil sector proportionate with the over recent months, it has decreased to less the second quarter of 2020, as oil prices fell been declining since 2019, will reach a by the status of oil production and export in emerging structure of the global oil economy, than 3 mb/d. Meanwhile, the share of US andArabia’s Saudi budget oil production deficit reached reduced $ 29 under billion the in minimum in 2020. This has created some Iran, Libya, and Venezuela and to some extent attracting foreign investment and gaining exports to Asian countries such as China and OPEC Plus agreement. Saudi’s oil revenues problems for the company in two ways: Nigeria. 32 33 COVID November 2020 Issue No.100 monthly COVID

Ehsan Jenabi industry sector, it seems that investment in the Initiative (OGCI) or independently. But deep petroleum industry will have to rise over the investment cuts and project deferrals by oil and OVID-19 has had multiple impacts gas companies risk undermining policymakers’ on oil and gas markets. It has 2020 levels to stave off a crisis. In other words, long term post-COVID-19 goals and industry reduced prices and government substantiallynext three years greater by at sums least will25% be yearly needed from strategies. Since its outbreak, COVID-19 has claimed production to guarantee market stability. more than 1 million lives worldwide and Ccrude and revenues,petroleum significantly products. The lowered uncertainty Undoubtedly,by the end of theadverse decade economic to ensure consequences sufficient is responsible for income losses exceeding emanated demand,from reduced and inflated consumption stockpiles in of of the pandemic would have an undeniable those of any previous non-wartime recession various sectors especially transportation and impact on the global demand. Therefore, over the past 100 years. Even before the industry sectors has also urged oil and gas with the rollout of an effective vaccine, global pandemic, an estimated 1.3 billion people companies to cut capital expenditures (capex) demand has the potential to recover rapidly. worldwide had no access to electricity; 2.8 in a bid to shore up their balance sheets. The example in case is China-one of the major billion were deprived of clean cooking fuels; Even though, natural gas plays an important drivers of world economic growth- which 800 million lived in extreme poverty, with a role in the transition period, the existing has already seen a quick rebound in demand. daily income of less than $1.90 as measured However, it is noteworthy that such a recovery in 2011 international prices; and air pollution impact on investment in gas sector, as would accelerate the impact of any investment inside buildings caused 4 million premature circumstanceswell. It seems havethat lowhad (capex) a significant levels gap. In addition, higher and more volatile deaths annually (exceeding current COVID-19 prices would reduce the number of people who needs to maintain market stability. The could afford the various fuels they require, and pastis not experience sufficient toshows meet that oil and greater gas volatility would further enhance uncertainty andmortalities), widen generational, according to gender, UN figures. and income COVID-19 investment will be essential to avoid a for companies and governments. Another divisions.will significantly Beyond worsen the loss these of life numbers and livelihoods future of higher prices and increased important point which is necessary to be taken and the worsening dilemma of the world’s market volatility. Inadequate investment in consideration is that spending cuts by oil poorest that the coronavirus has caused, its and gas companies on upstream projects, along negative economic impact exceeds that of the unwanted price volatility. Governments with the price rises that would ensue, would andwould industry definitely leaders set set off up another the wave of expedite the trend of energy transitions toward International Energy Forum ( IEF) producer- low-carbon sources. Monetary2008 financial Fund crisis. projections. Global growthPeople employedwill decline consumer dialogue—whose fundamental Higher fuel prices may lead consuming into the–4.4% informal in 2020, economy, according self-employed to International people, aim is to enhance energy market stability, countries to increase their reserves and boost and lower-skilled workers are most affected by sustainability, and transparency—to avoid domestic oil production in a bid to strengthen the economic downturn. this outcome and to support the health of the energy security. Such actions might increase Against this backdrop, reduced upstream global economy. As producing countries global upstream investment so to escape spending by oil and gas companies and tighter are facing economic problems emanated any shortage. However, given the pledges investment constraints will make achieving global goals such as affordable access to they do not see investment an essential NDCs, they need to pay more attention to the modern energy services and healthy living frommeasure chaos to in be their taken. financial In case systems, investors levelof countries of greenhouse reflected gas in emissions their submitted resulted conditions more costly and more challenging, feel safe to invest in oil and gas from consuming fossil fuels. In other words, increasing social disparities worldwide. It projects, taking into account the good countries need to adopt policies to comply could be argued that lack of incentives for news on COVID-19 vaccine production, with COP approvals in order to avoid any producers to increase investment shortly COVID-19 and prospective investment is expected challenges with regard to environmental issues. after this stagnancy will delay and weaken to be rising. Having a glance at the Meanwhile, many governments are using the the restoration of market balances that are OPEC and IEA outlooks, one may conclude COVID-19 pandemic to accelerate responses to necessary for promoting global economic that demand will not rebound at least in climate change, create new opportunities for recovery and support global sustainable Investment in the next ten years. Although the two bodies employment, and achieve global sustainable development and greenhouse gas emissions have different views on the pace of demand development goals in which social equity plays reduction goals. Therefore, timely and adequate recovery after the pandemic, both believe a central role. In line with materialization of investment could be a proper tool to overcome Oil and Gas that another 27 million to 30 million barrels pledges stipulated in NDCs, more than 120 the adverse impacts and challenges emanated of oil equivalent (mmboe) will be needed by countries have adopted ambitious, forward- from COVID-19 outbreak. On the other hand, 2022 to close the gap between production looking policy agendas aimed at achieving lack of investment would likely lead to supply declines and demand levels. Although the net-zero greenhouse gas emissions, as have shortages and price volatility, which may result international, national, and independent oil in emergence of problems in the economy of outbreak of COVID-19 and its impacts on and gas companies in Europe, Asia, and the US, both producing and consuming countries and demand,market is especially filled with in ambiguity the transportation due to the and either as members of the Oil and Gas Climate may jeopardize energy security worldwide.

34 35 Analysis December 2021 Issue No.101 monthly Analysis Europe Prospect for Greenhouse Gas Emissions Mitigation The petroleum industry has always been an attractive sector for investment by big companies. However, the attractiveness and high profitability of this industry have been affected over recent years. Some imagine that in light of the daily-growing tendency of some countries to use clean and renewable energies, investment in the petroleum industry is likely to decline. Most green parties support this idea, particularly in European nations, that the world has to brace for renewables and curb oil and gas production. Such groups whose supporters have been increasing in number, over recent years, have managed to convince some politicians in European nations to focus on the use of clean energies, and at the same time reduce investment in fossil energies. Under such circumstances, a basic question may arise: “To what extent can adoption of renewable energies affect the future of investment by big companies in the petroleum industry?”

Shuaib Bahman The European Commission has noted in its part parties and environmentalists are trying to warn investment in shale oil, which is less economical that a quick revival of economic activities may politicians across the world about the dangers than conventional oil, shows that the US is Oil or Environment? significantly increase pollutant gas production. of continued use of fossil fuels, several global pursuing a long-term strategy in this regard. Based on the 2015 Paris Agreement, all the Therefore, the only preventive solution would be trends are likely to avoid reduced investment Therefore, the US is forecast to stick with shale signatories are required to specify their goals for to direct economic and investment incentives to in the petroleum industry. The first trend is oil production, particularly because this issue reducing fossil fuels consumption and pollutant cleaner production and consumption. The EC will the shift in global economic balance from West is directly linked with job creation in the US gas over coming decade. The European Union no longer invest in fossil fuel production, as noted to East. In coming years, China will surpass amid growing unemployment. The third trend has called for a 50% reduction in greenhouse in its post-covid economic revival policy. the US economically to become the world top is that oil producing nations continue to remain gas emissions, instead of the 40% set initially in The question that may arise here is to know how economic power. But there is no sign of decline dependent on energy revenue. Most nations 1990, up to 2030. Europe would act to realize its 2050 objectives in China’s oil demand yet. China, the biggest known as traditional oil producers will depend No consensus has been reached by European and bring its pollutant gas production down prospective economy, will see its energy demand on petrodollars to run their economy. Therefore, nations on this issue yet. EU members in their to zero. Will reduced investment in fossil fuels keep growing. Meantime, China becoming the no change will be seen in the oil strategy of these latest meeting held talks on this issue, but they production be enough for the EU to reach this top economic power in the world would shift nations. As long as there is demand for crude failed to reach an agreement due to challenges objective? Is the EU essentially able to replace the center of gravitation for energy demand oil, traditional producers will continue to export for the implementation of the project. However, fossil fuels with clean energies? and trade to Southeast Asia. The important oil. Given the trends described here, despite the some estimates show that European nations are point is that no Southeast Asian nation is seen Europeans’ willingness to reduce investment in likely to reach agreement, soon. The Europeans Oil Dependence shifting towards reduced use of oil. Therefore, the petroleum industry, this sector remains the have in recent years taken big steps towards For the EU, secure, clean, sustainable and big economies will continue to use oil as the key source of energy in the world due to demand. capping greenhouse gas emissions. The latest accessible energy supply is one of priorities major source of energy. The second trend is Under such conditions, in case the Europeans environmental report by the EU shows that that would preserve the competitiveness of the the US’s accelerated move towards shale oil insist on non-investment in the petroleum greenhouse gas production by member states Union. In fact, the EU is seeking to drive member production and exports in global markets. The industry, they will just impose losses on their has been down 24% from 1990. The bloc is states to joint energy policymaking rather than US move, backed by macro energy strategies, dependent oil companies because in the absence determined to take necessary measures to bring individual policymaking in the energy sector. shows that the country is willing to play a role of these companies, Chinese or even the US giants down to zero the level of pollutants by 2050. However, under circumstances where green in the global energy markets. Quite high level of will overtake their European rivals.

36 37 Analysis December 2021 Issue No.101 monthly Analysis OPEC+ Russia-Saudi Cooperation to collapse the OPEC+ alliance not interfere with each other’s and tip global producers into a export destinations, while trying damaging price war before the to sideline rivals. In light of COVID-19 pandemic hit global such unity, Russia realized that demand. Saudi Arabia and the US intend Additionally, Russia and to challenge their presence in Saudi Arabia agreed on a new the global markets. In fact, the cooperation roadmap, which will crisis triggered by strained ties between Russia and Saudi This will add to an existing list Arabia in the world markets ofbe 30signed projects in the worth first $2.5half ofbillion, 2021. that pushed prices below zero, including 24 initiatives in oil, gas was a result of this same policy. and nuclear energy. The Russians practically told the “We have 74 new initiatives and Saudis and the Americans that we will show what we achieve Moscow could not be eliminated Saudi Arabia it at our next meeting at the from international energy agreed end of March,” Prince Abdulaziz equations or at least any such said. However, the world market step would be costly. In addition OPEC+ on a new remains largely unstable, and to political issues, the special was initially cooperation oil demand requires short-term conditions dominating the oil supposed to roadmap, monitoring. Therefore, OPEC+’s market following the coronavirus agreement for member states increase its which will to increase crude oil production Russia-Saudi cooperation. This oil production be signed in by 500,000 b/d in January 2020 diseasepandemic is anwill external significantly factor affect and then decide every month in the market mechanism, but by about 2 the first half about whether to increase or it has heavily affected supply mb/d, i.e. 2% of 2021. This decrease their output, may run and demand in the oil market. of global oil will add to Shuaib Bahman or dependence of some members from the market to hit a record. exports, Russia represents into challenges in the future. Therefore, the future of dealing on big powers like the US. If the supply trend in the world non-OPEC and Saudi Arabia is OPEC+ was initially supposed with this pandemic can largely be consumption, an existing major development Despite all challenges the went on as before, this level of a key OPEC producer. Saudi to increase its oil production by indicative of future cooperation as of next list of 30 in the oil market mechanism is faced with, oil production could have given a Arabia’s Abdulaziz bin Salman between Moscow and Riyadh. over recent years has OPEC+ has managed to regulate big shock on the energy markets and Russia’s Alexander Novak oil consumption, as of next January projects worth been the formation the market in some sensitive announced following their latest January.about 2 mb/d, i.e. 2% of global uproot this virus, everything will $2.5 billion, of OPEC+, which periods. In some other periods, However, against the backdrop talks that OPEC+ may prolong beShould back the to normalworld find and a energy way to bringsA together OPEC producers due to the emergence of ofand the driven coronavirus up prices across significantly. the its current strategy to manage Fragile Cooperation consumption will rise in various including 24 and partners. OPEC+ is a joint discrepancies between key globe, a 10mb/d decline in oil oil markets until the end of 2022 nations. Under such conditions, initiatives in consultative and policymaking members, the mechanism has production gave no shock to in order to keep speculators “on Saudi energy equations follows daily-increasing demand for oil, gas and mechanism set up by OPEC failed to regulate the market. the market and it did not help their toes”. noA significanteconomic rules.part of In Russia- fact, the energy will lead some nations member states and 10 Russia- Russia and Saudi Arabia are push up prices either. In light level of Riyadh’s compliance like Russia and Saudi Arabia to nuclear energy led oil producers. The idea was the two nations whose names of the decline in oil demand, if “The OPEC+ deal has been with US policies has always increase production. Whereas, not merely to cut output; rather, are highlighted in the midst of oil producers are determined with us for almost nine been decisive in Saudi-Russian Moscow and Riyadh, among it was aimed at adopting a joint cooperation and discrepancies. to increase prices, they should months and will continue until cooperation. Currently, in light OPEC+ nations enjoy higher policy for market regulation. In one case, Russia-Saudi move towards further reducing April of presidential power transition capacity their efforts for However, OPEC+ compliance cooperation led to agreement supply. But most producers 2022, but it can be extended in the US, Saudi Arabia depends overtaking others may stir up with obligations has always within OPEC+, while in another have no such tendency and until the end of 2022,” Prince on Russia’s cooperation more discrepancies between them. been put to buts and ifs. Some case discrepancies between some favor production hike. The Abdulaziz said, adding that than it did four years ago. Unlike Russia-Saudi cooperation within analysts attribute disruption the two sides pushed oil prices policies pursued by Russia and market skeptics and speculators Donald Trump, Joe Biden will OPEC+ will continue as long as it within the OPEC+ mechanism down below zero. Saudi Arabia and negotiations will remain “on their toes”. not support Saudi energy policy. to non-compliance by some oil between Moscow and Riyadh are Saudi and Russia began 2020 Under Trump, an alliance was producers, while some others lay Agreement on Stability at loggerheads over strategy formed between Saudi Arabia havewould declined, benefit boththis cooperationsides. As soon the blame on individual policies OPEC+ removed about 10 mb/d in terms of oil production and in a dispute which threatened and the US so that they would willas either become party fragile. feels its profits of higher significance because 38 39 Energean Applies for Offshore Greece Gas Storage Energean has submitted a bid to the Greek in. pipeline. The field’s 1 bcm of sweet, lean gas government for a concession to operate a gas was used as fuel both at the Prinos field center storage facility in the depleting South Kavala and at the associated onshore process plant. Petrobras Offers Campos Basin field offshore northern Greece. During the 1990s wellhead compression was Fields for Sale South Kavala, discovered in 1972, was added to the jacket to maintain production, Petrobras has started the opportunity developed via a single-well jacket tied back to and the field currently has two producer wells. disclosure stage (teaser) for the sale the offshore Prinos field facilities through a 12- Energean took over as operator in 2007. of 50% of its stake in the Marlim, Voador, Marlim Leste and Marlim Sul concessions, jointly known as Polo Marlim, in the deepwater Campos basin. Petrobras will remain the operator of the fields. The Marlim and Voador fields ​​339.3 sq km (131 sq occupy an area of mi) in a water depth ranging between 400 m and 1,050 m (1,312 ft and 3,445 ft). Located about 150 km (93 mi) from Perenco Macaé, the fields share the production Tightens Grip on Gabon infrastructure. Between January Block and October 2020, they produced Operator Perenco has exercised its rights an average of 68,900 b/d of oil and to acquire Sasol’s 40% interest in block DE-8, China Fueling 934,000 cu m/d of gas. The Marlim pre-empting VAALCO Energy’s planned entry. Asian Offshore Wind Leste field is about 107 km (66.5 mi) However, VAALCO has been cleared to purchase Market Growth from Cabo de São Tomé in a water depth 27% of Sasol’s equity in the offshore Etame Marin From almost no offshore wind farms in 2015, ranging between 780 m and 2,000 m block, after the other partners decided not to Asia’s operational capacity has grown to more than (2,559 ft and 6,562 ft). apply their pre-emptive rights. 6 GW today. Fueled by China’s growth, the continent’s CEO Cary Bounds said: “Based on production installed base is expected to rise six-fold by 2025, when performance in November, our production Greece it will reach 52 GW and be almost on par with Europe, capacity, including volumes acquired the global offshore wind leader, according to Rystad from Sasol, would be over 9,000 Energy. China has contributed more than 94% of Asia’s b/d of oil… current operational offshore wind capacity. The country China now accounts for 5.9 GW of the continent’s 6.3 GW of offshore wind capacity, having already surpassed its target of 5 GW by 2020. The Chinese government will phase out its imposed feed-in-tariffs VIEW after 2021, which means many projects in the pipeline aim to reach this deadline. Gabon Brazil Australia Gas Scheme Approvals Challenged The Conservation Council of Western Australia (CCWA) has initiated court action against environmental approvals related VIEW Australia to gas field developments offshore VIEW northwest Australia. According to Woodside Energy, the CCWA has decided to serve notice on the state government and the company of a legal challenge in the Supreme Court of Western Australia concerning authorization to process gas at the North West Shelf and Pluto LNG facilities. News December 2021 Issue No.101 monthly News Nord Stream 2 Pipeline Faces New Sanctions Russia Backs OPEC+ 500,000 b/d Output Hike The United States is urging Russia expects to support an European allies and private increase in oil production by companies to halt work that the group, known as OPEC+, could help build the Nord of another 500,000 barrels Stream 2 natural gas pipeline per day (bpd) from February and is preparing wider at next month’s summit of the sanctions on the Russian leading global oil producers, project in coming weeks, Russian Deputy Prime Minister senior Trump administration Alexander Novak said. Oil prices are trading above $50 per barrel, Trump administration is after coming under pressure readyingofficials said. a fresh The round outgoing of this week from concerns new congressionally mandated fast-spreading variants of the sanctions “in the very near coronavirus will lead to reduced future” that it believes could fuel demand. In comments, deal a fatal blow to the Russia- cleared for publication, Novak to-Germany project led by also said that Moscow views state gas company Gazprom an oil price between $45 and $55 per barrel as the optimum been getting body blow on level to allow for recovery of its body, three blow officials to this, said. and “We’ve now 1 oil production, which has been we’re in the process of driving New work has been centered will compromise April, OPEC+ has progressively by 500,000 bpd),” Novak 2 a stake through the project on a 2.6 kilometer (1.6 mile) European energy security. the OPEC+ supply deal. Russia, reduced the cuts and is expected stretch in shallow waters of Russia says the sanctions othersignificantly leading reduced oil producers as part of in January to release an extra held in the government’s who spoke to Reuters on Germany’s Exclusive Economic amount to “unfair competition” and the Organization of the 500,000 bpd into the market. headquarters.told reporters atHe a said briefing Russia theheart,” condition said one of ofanonymity. the officials, Zone but not yet in the deep- Petroleum Exporting Countries, The group holds its next online supported a gradual production Russia this month resumed water sections off Denmark natural gas producers, and a group known as OPEC+, agreed summit on Jan. 4, when it is rise to avoid jolting the market. building the $11.6 billion that comprise most of the aimed at helping U.S. liquefied to reduce output to support the expected to discuss whether to OPEC+ had initially agreed to (9.5 billion euro) pipeline, pipeline. The feud may not die global oil market as the COVID-19 release another 500,000 bpd increase its production by 2 Washington says the project, downinsists once it will President-elect finish the Joe pandemic has weakened fuel in February. “If the situation million bpd starting from January, a one-year pause prompted whichunfinished will increase100-km stretch.European demand. Since the agreement stays normal and stable, we will but decided on a smaller increase bywhich existing is 90% U.S. complete, sanctions. after reliance on Russian gas, foreign diplomats say. on a record global supply cut in support this position (increase at its meeting earlier this month. Biden takes office on Jan. 20, NEWS NEWS NEWS NEWS S. Korea Restarts Three Pemex, Talos to Keep Italy Firms to Help Drive Citgo Sanctions Waiver Naphtha Crackers Talking Over Major Energy Transition Extended

Three naphtha crackers in South Korea, one of Asia’s Shared Oil Find Energy companies Eni and Snam are joining The U.S. Treasury Department has extended largest petrochemical centers, are to resume operations Mexico’s energy ministry has approved a 60-day forces with Italian state-lender CDP to work a measure barring transactions related to in December and January after months of maintenance extension for talks between state oil company on energy transition projects aimed at Venezuelan state oil company Petroleos de Pemex and a private consortium led by U.S.-based cutting carbon emissions. The three groups Venezuela’s 2020 bond until July 2021, amid prepare to ramp up production, they have purchased Talos Energy Inc over the future of a massive said in a joint statement that they would heavy U.S. sanctions on the South American largeand outages, volumes company of spot naphtha, officials said.lifting As prices the companies in the region shared crude deposit, Talos chief executive Tim team up to produce, transport and market country. The move effectively bars PDVSA to their highest in months, trade sources said. [LDIS/A] Duncan told Reuters. The energy ministry’s green hydrogen as well as to use the gas for creditors from seizing shares in the parent “There is more demand (for naphtha). All these crackers previous deadline for a deal on an initial so- rail transport. Italy is targeting investments company of U.S. refiner Citgo Petroleum Corp, a are recovering and returning to the market,” one of the called unitization agreement for the offshore of around 10 billion euros ($12.2 billion) PDVSA subsidiary, which were used as collateral sources said. Petrochemicals producers across Asia are Zama discovery would have expired by now. The in hydrogen by 2030 as part of its strategy for the bond - for the next seven months. increasing output on the back of strong margins, the country’s energy ministry has agreed to let the to decarbonise the economy as it moves A previous measure was set to expire sources said. Lotte Chemical began test runs at its 1.1 parties continue negotiating through March 25, to phase out fossil fuels. Cassa Depositi e on Jan. 19, the day before U.S. President- million tonnes per year (tpy) cracker in early December Duncan said, which would determine who Prestiti (CDP), controlled by the Italian elect Joe Biden is set to be sworn and plans to resume commercial production runs the potentially lucrative project as Treasury, is the main shareholder of oil in. President Donald Trump’s well as a preliminary split of the reservoir, and gas major Eni and gas infrastructure 5 administration in early 2019 6 among other development details. 4 group Snam. sanctioned PDVSA. later this month, a company official said. The 3 42 plant has been shut since March after a fire. 43 News December 2021 Issue No.101 monthly News

US Shale Oil Pain Could Bleed Into 2021 Gas Price Rally Buoys North American LNG Developers U.S. oil and gas shares and North American LNG drilling activity are edging exporters are sounding more higher, but a disastrous year for the energy industry means for new projects in 2021 due to the go-go days of the shale aconfident sharp rally about in prices the prospects driven by boom may be gone for good. surging Asian demand, even as Deep spending cuts that most industry analysts expect came with the collapse in fuel demand and oil prices due to one. Natural gas futures in the COVID-19 pandemic have Europenext year and to Asiabe another have climbed difficult ended an era that put the U.S. to their highest levels in more atop the ranks of the world’s than a year due to a sharp biggest producers. The shale increase in demand late in industry will ring in the New 2020, especially out of China, Year pumping 7.44 million where buyers have scrambled barrels per day (bpd), down to secure supply. Asian nations have driven record growth of 2020. Shale producers werenearly hit 20% hard from after the borrowing beginning (LNG) as they seek to replace to expand production and “We are just going to keep producers Pioneer 7 dirtierin liquefied coal plantsnatural and gas fuel LNG producers. facility in Louisiana, 8 slashed spending and output slogging through everything,” Natural Resources, growing energy consumption. With spot prices in Asia said the rise in prices to cut losses. Shale wells’ quick said J.R. Reger, chief executive Diamondback Energy and Numerous projects slated hitting a six-year high, LNG “has translated into a pickup of Iron Oil, a Montana oil and ConocoPhillips forecast for groundbreaking in North operators are seeing greater in traction with customers for producer said in an interview. America were put off in the last interest in long-term supply long-term commitments for cuts.development Rising demand made it for the cleaner first His outlook for shale in 2021 current levels. Until this two years due to historically deals that would allow LNG purchases.” At the start of fuelschoice means at larger global firms consumption to impose is “stagnant.” Company outlays year,output “there flat to has slightly never above been weak prices and worries about developers to build new export 2020, a dozen or so developers may never return to its prior next year will reach $54 billion, a straight week in my whole oversupply. That concern has plants. Tom Mason, general peak. As growth resumes, OPEC up slightly from 2020 but well career where I haven’t had a dissipated after production counsel and president of LNG investment decisions (FIDs) and allies plan to increase their below 2019’s $104 billion, rig drilling somewhere,” said dropped this year in Australia, at Energy Transfer LP, which tosaid build they new planned projects to make in the final output, undercutting efforts estimates data provider HIS Robert Watson, CEO at Abraxas Malaysia, Norway and Qatar, is developing an export plant United States, Canada and Markit. Top independent shale Petroleum. some of the world’s largest at its Lake Charles import Mexico by the end of this year.

to restart some shale fields. NEWS NEWS US Crude, Fuel Stocks Dip, Refining Runs Slow Cairn Energy Wins Over $1.2bn from India U.S. crude stocks, gasoline and by 562,000 barrels in the for a 1.2 million-barrel rise. Cairn Energy said it had setback after losing another distillate inventories fell last week to Dec. 18 to 499.5 “It was good to see gasoline won an international international arbitration to be named due to not being million barrels, compared demand back above 8 million arbitration case against the case in September against authorizedsaid the official, to speak who publicly. declined runs ahead of the year-end, with analysts’ expectations bpd, which is supportive and Indian government over a Vodafone Plc over a $2 billion If the government decides to theweek, Energy as refineries Information reduced in a Reuters poll for a 3.2 shows people are getting back tax dispute that had caused retrospective tax dispute. appeal, it will keep the problem Administration said. million-barrel drop. on the road a bit,” said Phil concern among investors The government said it will alive and create nervousness Road fuel demand That follows a surprising Flynn, senior analyst at Price over retrospective tax claims consider all options, including for investors, said Anuradha improved marginally in 3-million-barrel jump in Futures Group in Chicago. on companies. The tribunal legal remedies. A government Dutt, partner at Indian law the most recent week, inventories reported by the Gasoline demand as measured ruled unanimously that India and analysts said steadier American Petroleum Institute, by product supplied by had breached its obligations award in Cairn’s case is so big, Vodafone in its case against fuel consumption in 2021 to Cairn under the U.K.-India “weofficial don’t told think Reuters we can that give the India.firm DMD, “Tax whichcertainty represented and will depend on whether crude runs fell by 169,000 most recent week, but is down Bilateral Investment Treaty that away without challenging rule of law are very critical COVID-19 vaccines become barrelsan industry per daygroup. in the Refinery week, refineries rose modestly in the and awarded Cairn damages for investors to come to a readily available weeks when compared with of $1.2 billion plus decision will be taken by the destination and both have been and support rates fell by 1.1 percentage thenearly year-ago 14% over period. the last four interest and costs, the it”, he said, adding that a final violated here which will have an economic points.EIA said. U.S. Refinery gasoline utilization stocks Fuel demand has been soft all company said in its will have to challenge both an impact, especially at a time 9 rebound.Crude fell by 1.1 million barrels, year due to COVID-19, down 10 statement. For India, casesPrime as Minister’s we will otherwise office. “We give when India wants to attract inventories fell compared with expectations this is the second a wrong signal to investors,” investment,” she said. 44 13% in 2020. 45 South Pars December 2021 Issue No.101 monthly South Pars How South Pars Eased Iran Circumvention of Sanctions Phase development of the giant offshore South Pars gas field defeated hypotheses of toughened US sanctions natural gas, ethane and LPG, have been against Iran’s petroleum industry. Iran’s oil and gas has overcome many challenges in the way of energy exports instrumental in the development of this and diversified refined petroleum products with a view to neutralizing the sanctions. Silent endeavor by the thePersian condensate Gulf Star recovered condensate at Southrefinery Pars that energy hub in the heart of the Persian Gulf. issupplies integrated 40% into of Iran’s the value-generating gasoline needs, Iran’s petrochemical industry, as a value- Petroleum Ministry in realizing oil revenue from energy exports does not allow it to release official information about cycle. A major buyer of the oil products generating industry, has been instrumental energy market. But observers believe that despite tougher ever sanctions targeting its oil, gas and petroleum products, is Venezuela. Iran used to be an importer in earning Iran hard currency in the nonoil Iran has managed to find a way out in the face of US-led economic war in a bid to make acceptable revenue from exports. of gasoline to meet its daily needs. Now exports sector. Thanks to South Pars gas, Creation of an industrial civilization in the strategic coasts of the Persian Gulf and heavy investment in the world’s largest it has joined gasoline exporters’ club, and the petrochemical industry is now endowed gas reservoir despite rounds of sanctions has further intertwined South Pars with national economy. That has given rise with a competitive privilege compared with regional and world nations. to a special status to Iran’s political, economic and international standing amid unwelcomed sanctions. This article seeks phasesIran’s refining in Assaluyeh industry and is Kangan, now credited the This industry owes its life and demise to to discover the new footprints of South Pars stakeholders outside Iran’s territory and offer a small introduction to the vital Southwith exports. Pars Gas With Complex 25 operational is supplying refining feeding petrochemical plants. Undoubtedly, role of Iran’s energy exports under the aegis of South Pars development. 780,000 b/d of gas condensate, thereby an increase in the production capacity of gas and other products from South Sahar Saeedian Feeding Gas to Power Plants of Nakhichevan. Therefore, increased Pars has been instrumental in drawing a Over recent years, due to climate change, gas production from South Pars would indelivering light of a significant sharp decline amounts in the of number roadmap for the petrochemical industry Gas Exports Grow 93% water shortages and subsequently the indirectly contribute to higher electricity offeedstock travels followingto the refining the outbreak facility. Currently, of the with a view to the realization of the 2nd and Recovery rate from the world’s largest supply to neighboring nations. coronavirus, gasoline consumption 3rd jumps in the petrochemical industry independent gas reservoir has reduced generation, the number of thermal Meantime, increased gas supply to power has fallen to an average 70 ml/d. Iran’s by 2025. That is why a large number of Iran’s dependence on gas imports from andlow-profile combined of hydraulic cycle power dams plants in power plants in recent years, has reduced the gasoline production capacity stands at petrochemical projects have been launched neighboring nations. Apart from that, it has increased owing to increased gas share of liquid fossil fuels (gasoil and 110 ml/d and therefore 40 ml/d is now over years. Iran is determined to complete has cleared the way for enhanced exports production from South Pars. Currently, fuel oil) in the power plants’ energy mix extra, which Iran can export by land or by and launch 27 petrochemical projects owing to increased production from the natural gas claims the top spot in sea. The director of the Persian Gulf Star with an investment of $17 billion to bring supplying feedstock to power plants in that less environmental pollution and the the number of petrochemical plants to to Turkey and Iraq. Both have won US possibilityfrom 43% inof 2013exporting to 10%, gasoil now. and Add fuel to oil. 83, which would be fed with 62 million sanctionsSouth Pars waivers. field. Iran Iraq is isexporting OPEC’s second gas power generation is being done by CEO of NIGC Hassan Montazer Torbati has productsrefinery has in East announced Asia have that increased. marketing The tonnes of crude oil a year, or 1.4 mb/d. largest oil producer, but it depends on thermalthe country. power More plants than which 90% ofare Iran’s fed by said that gas supply to power plants since activities for selling refined petroleum Therefore, Iran’s petrochemical industry Iran’s gas to feed its power plants to natural gas. One may wonder how gas 2013 has saved the country $75 billion. metric tons of four products – light would reach an output capacity of 100 generate electricity. Iran is also drawing supply to power plants would contribute “Without a 2.5-fold increase in the South naphtha,refinery exported intermediate more naphtha, than 800,000 heavy million tonnes a year with an investment up a plan to export gas to Afghanistan. to increasing Iran’s energy exports. The Pars gas production over this period of of $70 billion. The products will be worth This project would be handled by the time, at least 150 billion liters of liquid of the current calendar year to 21 March more than $25 billion. Therefore, despite private sector. Iran exported 17.4 bcm of power generation in the country would fuel would have to be consumed by power fraction and solvent 402 – in the first half all economic problems Iran is dealing with gas to neighboring nations last calendar bemost the significant possibility achievement of electricity of exports increased to plants. Therefore, by increasing gas due to sanctions, the country has seen a year, up from 9 bcm in the calendar neighboring nations and providing the supply to power plants, $75 billion was 2nd,2021. 3rd It was Petchem up 120% Jump year-on-year. historic jump in petrochemical production. year to March 2014. That indicates over ground for establishing a regional hub of saved and Iran turned from an importer of The network of South Pars products’ This sector has served Iran a powerful electricity among neighboring states. petroleum products to an exporter of such buyers does not end here. Midstream tool in dealing with sanctions and earned supplying household, industrial and A review of Iran’s electricity exports products,” he said. and downstream industries, particularly Iran hard currency. The CEO of National power93% growth plant gasin seven needs, years. National Apart Iranian from status shows that statistically speaking, petrochemicals fed with gas condensate, Petrochemical Company has said Iran Gas Company (NIGC) has announced that Iraq, Afghanistan and Pakistan remain the Gasoline Exporters Club would earn a record $25 billion from the it is exporting on average 70 mcm/d of main destinations. Iran is also exporting With the construction of the giant petrochemical sector by next calendar gas to neighboring nations. electricity to Armenia, Republic of Azerbaijan and the Autonomous Republic following the 2nd and 3rd jumps. objectives set out in Iran’s 6th year.South The Parsfigure with would a record reach of $34 less billion than Five-YearThe figure Economic is far from Development four decades has been instrumental Plan due to historic US sanctions and either directly or indirectly in lack of cooperation on the part of helping the country achieve its transnational interests. achievement. Iran’s rivals, it remains a significant

46 47 SP14 December 2021 Issue No.101 monthly SP14 SP14 Development, Iran Oil Industry Priority There are a total of 13 refineries at the giant offshore South Pars gas field which Iran shares with neighboring Qatar. So far, 12 refineries have become operational and all offshore platforms, except for the SP11 platform, are producing at maximum capacity. The SP14 refinery is the last one. Due to financial shortages, it was not prioritized. Now that all prioritized refinery projects have been completed, development of the SP14 refinery has started. Over the past seven years, the Ministry of Petroleum has prioritized South Pars development phases for maximum recovery, particularly along border blocks. SP14 lies in the northernmost block near Iran-Qatar borders. South Pars is currently producing 700 mcm/d of gas, accounting for 75% of Iran’s gas needs. Profitability Cycle Running SP14, more than 22 bcm of gas has Mohammad Meshkinfam, CEO of Pars been recovered from this phase. The Oil and Gas Company (POGC) which runs Therefore, come online this calendar year while Apart from thefirst three section other of the sections SP14 refinerywould become is to the SP14 “Thethe South offshore Pars section field, recentlyof SP14 has said been that operational early next calendar year. The that, SP12, production was developedthe SP14 refinery entirely wasand theprofitable. gas produced He said: manager of SP14 development project has SP15, SP16, highlighted some measures undertaken prevailing conditions in the country, each with capacity of 500 mcf/d (14 7 Golden Years moved to the in the offshore section of SP14 as follows: foreign companies were not able to offer mcm/d), was on the agenda. Iran first started work in South Pars SP17&18 SP12 refinery Theat SP14 reservoir is transferred and natural to the conditions SP12 refinery of upgrading the steering consortium such guarantees and therefore options 20 years ago. So far, $80 billion has had remained to keep the SP12to keep are the such profitability that one-third cycle ofrunning.” this block structure, reforming the management had to be found to circumvent sanctions. 8 Contractors been invested in the reservoir. But the incomplete. cannot produce gas and practically this and executive structure in contracting, Therefore, the process of commodity The consortium set up in 2010 to significant fact is that gas production profitability phase is facing 1bcm feedstock shortage. ordering necessary commodities supply was delayed and the project did develop SP14 comprises eight companies from South Pars has increased 2.5-fold Lack of cycle running. not come online as initially scheduled. led by the Industrial Development and over the past seven years. Up to March management of consortium members to defeat Minister of Petroleum Bijan Zangeneh told Renovation Organization (IDRO). At 2013, a total of 108 gas wells were The offshore Now, if the SP14 refinery is completed, the internationaland benefiting restrictions from the potential particularly in MPs that the four platforms of SP14 were operational, but over the past seven cohesion, section of SP14 gas produced from this field had to feed the commodity section. The secondary ready and gas was being carried onshore were expected to become operational years, 228 new wells have been drilled. restrictions on was developed SP14this same production refinery was while moved one-third to the of SP12 the through two pipelines. first, the remaining phases of South Pars Currently, 336 wells are operating. Up contractors SP12 refinery is inactive. Therefore, the online by the end of the current calendar “Gas recovery started from the platforms to 2013, 11 offshore platforms had sooner than running. The offshore section of SP14 was units of the SP14 refinery are to come of this phase in May 2018 and the over a 35-month period, but insufficient been installed at South Pars while and a sudden SP13, SP22 developedrefinery to soonerkeep the than profitability SP13, SP22 cycle and gas processing. One reason why the SP14 additional capacity of SP12 and SP19 are Aparttechnical from and that, financial SP12, SP15,potential SP16, did not under the administration of President increase in SP24, in early 2018. Therefore, it would be year in order to operate the first train of used for sweetening. So far, 22 bcm of SP17&18let the five had megaprojects remained incomplete. come online. Lack Hassan Rouhani, 26 new platforms have and SP24, in planning. The two offshore platforms of gas from this phase has been sweetened. of management cohesion, restrictions been installed. Currently, 37 offshore costs led to early 2018 because it was a correct decision made refinery has been delayed was change in Therefore, if there is question of loss, on contractors and a sudden increase platforms are producing gas. In terms the failure to senseless to speak about non-profitability recovery of 1bcf/d of sour gas from the it pertains to offshore recovery,” he in costs led to the failure to all projects, of pipe-laying, 1,050 kilometers had all projects, restrictions with sanctions in effect. It was SouthSP14 were Pars finallyreservoir. installed The third to allow platform for the said. Over the past seven years, Iran’s including SP14. The 11th administration been built until 2013, but over the past necessaryby the management to specify topriority deal with projects financial and of SP14 was installed in June 2019, but policy has been based on developing had to handle all these projects. The seven years, 2,160 km of pipe has been including production started in January 2020. The the remaining phases of South Pars and main cause of delay in the construction laid. Currently, 3,200 km of offshore SP14 fourth and the last platform of this phase increasing the share of natural gas in the pipe is carrying gas from sea to onshore hadthe SP14 already refinery been completedwas no priority and was because energy mix. However, due to challenges of unjust international sanctions that refineries. Regarding the number of readythe refinery to come of online,a neighboring was facing phase, feedstock which in March 2020. caused by the tightening of international barredof the SP14 access refinery to foreign-made was the imposition products refining trains, only 20 refining trains shortages. Therefore, it was in the best of the South Pars field became operational sanctions, access to some key items including compressors, control systems, were processing gas to be fed into the interests of the project to consider acquiring Minister Defends Prioritization like compressors, control systems and instruments and turboexpanders. national trunkline up to 2013, but over The involvement of some state-owned instruments, turboexpanders and CRA Although all these items had been ordered the past seven years 30 new refining companies as members of the SP14 pipes has faced restrictions. earlier, European manufacturers refused trains have become operational. There ofmaximum SP12. profit. That is why the gas consortium led these companies to The SP14 development project is aimed to deliver them. Therefore, the necessary are currently 50 trains active. produced at SP14 was moved to the refinery receive bank guarantees in compliance at the production of 2 bcf/d (56 mcm/d) equipment was re-ordered; however, South Pars was producing 28 mcm/d of SP14 Supplying Sour Gas with the requirements of bylaw on of natural gas. To that end, construction money transfer problems remained in gas by 2013. Its output has increased to Ever since gas production started from government tender bids. In light of and installation of four offshore platforms, effect. 700 mcm/d in seven years. 48 49 Investment December 2021 Issue No.101 monthly Investment Ferdowsi & Soroush Up for Investment ore than 112 years of prospecting view to acquiring technology for heavy crude recovery in Soroush’s output went on a downward trend in 2005. for hydrocarbon reservoirs in Iran has resulted in the exploration of the the most suitable method for heavy crude oil recovery. Iranian Offshore Oil Company (IOOC), Soroush is among fractured carbonated reservoirs. It would also help find Although known as the largest oil field run by the seven years; however, due to its huge oil and gas deposits Moil and gas reservoirs,supergiant implying South that Pars at gasleast field one and reservoir Full development of Ferdowsi would require five to categorythe oldest. of Developing crude oils produced this ageing in field Iran wouldand the require world. has been exploredAzadegan per year oil in field. Iran Iranin the sits past atop century. over 100 Themodern oil from technologies. Soroush along The Soroush with the field’s oil extracted crude oil from is a attractive.and the profitability of its development, investment the Persian Gulf, setting a record for the development of this field continues to be highly In 1966, a Swiss company explored Ferdowsi oil field in Technology Transfer Onethe adjacent of the main Norouz properties field is oftransferred the Soroush to theplatform Persian in Iran. The Ferdowsi giant Production of heavy crude oil and isGulf that floating it simultaneously terminal before produces being and sold exports to customers. its oil in the discovery of giant fields development of technologies required and gas. It is also among few platforms where non- gas in its Dalan and Kangan layers, oil field, which contains some heavy crude have been talked about for the 1979 Islamic Revolution, the Americans and the decades all acrossfor the transmission globe. In Iran, and studies refining started of to flaring associated petroleum gas is under way. Before is known to be the largest heavy crude oil field recovery. During a conference held in Tehran a couple in the Middle East. The Ferdowsi oil field is located west heavy crude. Technologies required for the production, Italians intended to develop the Soroush field for oil of the South Pars gas field and near the Golshan gas transferthat effect and after treatment the discovery of heavy of oilcrude fields oil containinghave been foreign investment and technology, Soroush had been Ferdowsifield. Ferdowsi was spudded is 190 kilometers in the year off of Bushehr its discovery Port andin already developed in the world, although they are of years ago to introduce Iranian fields which need order88 kilometers to identify away heavy from crude coastline. oil layers. The Onefirst yearoil well later, in being upgraded. So it shows that Iran has been active. IOOC recently signed an MOU with Sahand University a second well was drilled to measure the potential of its Iran’s petroleum industry experts have applied various introduced as the largest IOOC-run oil field. gas layers. Based on studies conducted on the two wells, methods with regard to the production, transfer and The Netherlands’ Panterra was also hired as foreign master development plan studies were carried out by of Technology for enhanced recovery from Soroush field. Swiss Adax SA for the description of the Ferdowsi oil technologies have already been applied at industrial level.refining of heavy crude oil on lab scale. Some of these partner to the project. NIOC officials say this field would outhave enhanced a 5% recovery recovery rate projects under normal using the conditions, state-of-the- which oilfield in whose place with studies a production signaled huge capacity heavy of crude70,000 oil b/d. there. Due Soroush Development artis lower technologies, than that Soroush of other recovery fields. Therefore, rate will byincrease carrying The oil field was estimated to hold 31 billion barrels of the National Iranian Oil Company (NIOC) instructed billion barrels of extra oil. Under this 10-year plan, theto the Petroleum significance Engineering of Ferdowsi’s and Development heavy crude oil Company reserves, developmentSoroush oil field by Shell. is known Now to it beneeds the enhancedlargest offshore recovery universitiesby 10-15%, whichwill be would obliged mean to cooperate between with1 and foreign 1.5 (PEDEC) with 3D seismic testing, drilling two appraisal oil field in Iran. It started production in 2001 after research institutes and consultants on research wells for a more precise assessment, and taking samples work with a view to enhanced recovery. Miscible from the crude oil layers in order to submit a renewed recoverabletechnology as oil its output production increase has by fallen. about With 1 billion a 10% barrels, and immiscible gas injection, as well as chemical MDP. The drilling of a third well started in April 2010 whichincrease would in its be recovery valued rate,at $60 the billion field wouldat current see marketits injection is envisaged to enhance recovery from with a view to assessing the oil and gas layers of the prices. NIOC named Soroush with 14 billion barrels of oil in place as one of choices for investment under the is being drawn up for terms of the newly developed Iran Petroleum Contract enhancedSoroush field. recovery Officials say a roadmap layers,field. Initial known studies as Bourgan, showed Daryan, the existence Gadvan, of Fahlyan abundant and (IPC). Iran hopes to use investment and technology from Soroush. Iran Sourmeh.heavy crude oil with various API gravities in the five owned by big oil companies across the globe in order hopes to utilize the experience Ferdowsi Gas Potential in Lower Layers NIOC ordered the second well drilling (F2) in order to lift output from its mature fields which are mainly with heavy to examine the gas potential in the Dalan, Kangan and productionaged above at50. the The rate Soroush of 14,000 field b/d was from discovered its Kajdomi in crudeof other oil fields and Faraqoun layers, which proved positive. 1962. After a first well was drilled in this field, it started high viscosity in war on Iran (1980-1988) and its production was subsequentlylayer. The field halted. was severely Renovation damaged and development during the Iraqi of this In 2005, Adax SA appraised the Ferdowsi field based Soroush field. on the first and second wells and estimated the in-place oil at 35 billion barrels with a recovery rate of 6%. field started in early 2000. The field started production Development of Ferdowsi oil field is under way with a anew in early 2002. However, like most Iranian oil fields,

50 51 Investment December 2021 Issue No.101 monthly Investment Halegan, Salman Attractive to Investors alegan is among Iran’s ten gas In the end, the field was estimated to hold its shared status, its development has always under way, gas production from Salman could fields whose investment plan was 12,400 bcf of gas. The significant point with the been a priority for Iran’s petroleum industry. rise after making some arrangements. presented to a Tehran international discovery of this gas field is that all geophysical, In the 2000s the platforms of this field that had The field is owned 67% by Iran and 33% by the conference a couple of years ago. reservoir and petroleum engineering studies, as been damaged during the 1980-1988 imposed UAE. There is not precise figure on gas production Halegan is located in Fars Province well as reservoir layer tests were handled by the war were renovated. In compliance with the from Salman whose rate of recovery stands at Hin southern Iran. It is 73 kilometers north of Directorate of Exploration of NIOC. Petroleum Ministry’s policy of prioritizing 51%. The oil extracted from Salman field is Assaluyeh and 25 kilometers south of Sefid Fars province is a gas hub in the Middle East development of jointly owned fields, Salman is the carried to Lavan Island via a subsea pipeline of Baghoun gas field. It neighbors Sefid Zakhour region. Some exploration studies in this province most important of the five fields for development. 22 inches in diameter for final processing on and Dey gas fields from north. In a bid to gain have proven the existence of huge gas reserves. Given the history of oil production in the Salman onshore facilities and then exported or stored a 15% share in the world gas trading, Iran is Halegan is the latest gas reservoir whose field, it seems that the main objective of Iran’s to feed the Lavan refining facility. Despite being implementing gas efficiency plans in the housing, existence was proven there. Compared with petroleum industry in such ageing fields as ageing, Salman still has an acceptable level of commercial and industrial sectors and firmly gas fields located nearby, Halegan has bigger Salman has been to apply cutting edge technology deposits. A timely development of this field seeking to increase its gas production capacity. dimensions. for maximum efficient recovery (MER) and would boost its output. Five platforms are To that effect, onshore fields are in the limelight Iran’s efforts to return to its genuine standing enhancing the rate of recovery from these fields. currently operating in this field. Among the three for domestic and foreign investment due to easy among gas exporting countries herald a tough Despite the high recovery rate in the Salman field, reservoirs in Salman, the one located at a depth access and low investment needed for their road ahead in coming years. An analyst with some layers of this field have yet to be depleted. of 10,000 meters under seabed accounts for 70% development. National Iranian Oil Company energy consultancy Wood Mackenzie has Therefore, it is possible to enhance output from of the Salman output. A layer located at a depth of (NIOC) intends to establish a gas hub in the highlighted $100 billion opportunities for this mature brownfield. Salman contains light 8,000 feet accounts for 20% of the Salman output south of Fars Province. NIOC’s gas production investment in Iran’s oil and gas industry, saying crude oil with API gravity varying between 33 and a third layer at a depth of 5,000 feet for and refining plan involves development of Sefid Iran needs big foreign investment. and 37. Renewed development of the Salman 10%. Salman is estimated to contain 4.5 billion Zakhour, Sefid Baghoun, Halegan and several He has highlighted the vastness of Iran’s oil field allows for increased output. If enhanced barrels of oil in place. Since 1999 onwards, when other gas fields. Halegan was discovered in 2005 and gas facilities across the country, saying oil recovery (EOR) methods are applied, a a number of oil and gas fields were developed following implementation of a 2D seismic test on they require development activities on a large much higher output is envisioned. Salman under buyback deals, studies on the Salman 1,000 square kilometers of land a year earlier scale. The analyst said in addition to exploration field incorporates an asymmetric anticline field were carried out under the supervision of in Fars Province. The seismic test ended in the activities needed to expand facilities by attracting which is 14 kilometers long and 11 kilometers Petroiran Development Company (PEDCO) and discovery of Halegan and several other gas fields. fresh investment; existing oil facilities are in wide. Geologically, it is composed of three oil the Petroleum Engineering and Development Halegan is 50 kilometers long and 11 kilometers desperate need of renovation due to the maturity production layers dating from the Jurassic and Company (PEDEC). wide. It holds 12.4 tcf of gas (355 bcm) of gas of oil wells. “With opportunities introduced Cretaceous eras. Salman field also incorporates a The primary processing of crude oil is done reserves in place, 8.938 tcf of which is recoverable by Iran for investment we need to see which gas layer. The field was discovered in the 1960s by on platform before being carried to Lavan thanks to a 70% recovery rate. Such a high companies and governments would take the Lavan Petroleum Company. The first exploration in a 144-kilometer-long pipe for secondary recovery rate is rare among gas fields in Iran. initiative. These opportunities would benefit both well in this field was drilled in 1956 to allow for processing, storage and export. Furthermore, Halegan is estimated to hold 249 sides,” he said. production three years later. According to the Gas produced from the nine wells in this field is million barrels of gas condensate in place, 98 latest data, Salman field has 44 oil and 10 gas carried to Siri Island via a 36-inch pipe. million barrels of which is recoverable. Halegan’s Oil Output Up in Salman wells. Based on studies currently gas and condensate deposits are estimated Salman oil field located in the Persian Gulf to be valued at $83 billion, while discovery of is jointly owned by Iran and the United Arab this gas field had cost only $36 million over 2.5 Emirates (UAE). The offshore shared field has years. Development of Halegan would allow a high-pressure gas layers, too. Discovered about 45 sustainable output of 50 mcm/d of gas over a years ago, Salman field has since been supplying 20-year period. A 4,999-meter deep well was oil. It is located in Hormuzgan Province and more drilled in order to yield better results. Later on, specifically 144 kilometers south of Lavan Island. several reservoir layers including Kangan, Upper Whereas about 70% of oil and gas layers of this Dalan, Nar and Lower Dalan, were appraised. oilfield is located in Iran’s territorial waters and

52 53 Sports December 2021 Issue No.101 monthly Sports Pars Jonoubi Eyes Pro League Pars Jonoubi Jam soccer team is back to good days following its return to the first league of Iranian soccer clubs after it was eliminated from the premier league. It hopes to make a comeback to the pro league. Pars Jonoubi Jam is led by Mohammad Nostrati who has recently taken over. Nostrati, a former defender of Iran’s national soccer team, has just joined the club of coaches. He hopes to bring Pars Jonoubi Jam to the premier league in a bid to set a good record for himself. The following is an interview with Nosrati about his decision to accept coaching Pars Jonoubi.

Arash Jafari is good. The club manager, Mr. Bahram Therefore, I have to say that they are We have diversity in our line-up. I Rezaian, and the executive manager, Mr. meeting my expectations. However, I think that younger players are apt to How come you accepted to lead Pars Cheraghi, are doing their best for the team should say that we have still a long way to grow and progress. We have tried to Jonoubi Jam while you had first gone to resolve all problems. Therefore, I have go to become better. hire local players and absorb talented to Chouka? to say that working at Pars Jonoubi is good ones. Nasseripour is an example. I have and we are happy. Can Pars Jonoubi go back to the currently an 18 and a 21-year-old player. agreement with Chouka of Talesh, but premier league? afterAs you several noted, days I had I saw first that reached the ground Pars Jonoubi started off the league The Pars club is not the only one. There players to Iranian football. was not prepared in Talesh and it would very well and it adopted a challenging are 12 or 13 other teams which are all Our final objective is to introduce young not be prepared any time soon. I found stance from the very beginning. determined to win. We’re no exception. Are you happy with the The beginning of leagues is always We have a combination of experienced and continuation of matches decided to leave it. Then I was presented instrumental in the results of teams. young players. More important than that under covid-19 condition? withit difficult a proposal to work from with Pars that Jonoubi. team and I had I is motivation. However, it is too premature Thanks to God, health fruitful talks with Bahram Rezaian, CEO planning and our team is no exception. to talk about this issue. We are just at the protocols are largely of Pars Jonoubi club, and Iraj Khorramdel, Therefore,All teams enter from matches the very afterbeginning sufficient we beginning of the way and I have to say respected at the clubs and CEO of Pars Special Economic Energy Zone. sought to dictate our power and style upon that we have many plans for this round. there is no problem in this I assessed the conditions and I saw that We are still far from our ideal team.Our regard. We also comply I could work with this team effectively. the league gave strong motivation to the line-up will be completed as new players with all requirements That is why I accepted to lead Pars Jonoubi playersour rivals. and Victory the team, during and the boosted first days our self-of are set to join us and then we can think of in the club so that our and thanks to God you see that we have bigger objectives. We are facing a tough players and other staff achieved good results. the top after achieving good results and we would face no problem. haveconfidence. to continue Thanks this to trend. God we are now at to grow on a weekly basis so that our team It’s not possible for Would you please explain further? road towards the first league and we have people to attend You see, Pars Jonoubi is a club in the How do you evaluate performance of stadiums. At least they real sense of the world. It has very the referees at the first league? league.would find We cana character. reach that I assure objective you inthat light can watch the matches good hardware and software facilities. I don’t want to talk about this issue, in ofour our objective combination. is to find I note our thatway weinto will the try pro on TV and feel happy my view experts can comment on that. our best to reach this objective and we will with their teams’ win. managers. There is also good football In general, the performance of referees spare no effort. We should not deprive courtFurthermore, for training it is andled bythe qualified club is up to was not as good as they should be. For people of happiness. standards. This team has identity. It has instance, in our last match, we lost due to Has the club prepared necessary The Ministry of been a pro league team and has its own the referees’ error. Even in the pro league tools and facilities for you to win? Health, Ministry fans. The conditions are good to operate at matches, referees do not have a good The club’s manager has done a lot recently of Sports and the this club and its manager himself resolves performance. I hope that the federation and he has tried his best to provide Football Federation problems and therefore I focus on training would resolve this problem this year. the best conditions for the team. As I have given the nod and matches. mentioned, we have good hardware and for the matches to Have Pars Jonoubi met your software facilities at the club. We have also continue. I personally How do you see the team conditions? expectations so far? hired our players. Several more are to join believe that we can The team’s condition is good. Iran’s I’m happy with the performance of my us. Therefore, the club has had very helpful organize matches by football is entirely faced with economic players in the league. Everyone knows cooperation with the technical group and respecting protocols. challenges. Even big teams like Persepolis the team. I hope that this virus and Esteqlal are faced with the same would be eradicated problem. Thanks to God, we have not had didthat a planning lot to emerge in the winner league inis verythe league difficult, You have young players at your team, soon and our people can matchesparticularly and in I amthe gratefulfirst weeks. to all My of playersthem. don’t you? return to normal life. 54 any specific problems and our condition 55 History December 2021 Issue No.101 monthly History

of operation, that would yield a minimum of £150,000,000 per year in foreign exchange to the Iranian Government. By the The 1933 1933 agreement; however, Iran’s income did not exceed the sum of £15,000,000 (infrom that royalties, year), and taxes would and annualyield no profits more Agreement than 25,000,000 pounds annually in case the supplemental agreement had been Ali Bahrami enforced.”

Much has been said about Protests Quelled D’Arcy and his team, who The Pahlavi I regime claimed to be anti- adamantly remained in position. But many people noticed the Iran until they discovered oil. The catastrophicBritish and it clauses always intalked the agreement, about its firm D’Arcy Concession marked the start including the incorporation of a 32-year 1st Oil Deal massively. Finally, the Pahlavi ruler sat cease to describe the annulment of the period for its expiry. Sporadic protests of British dominance on Iran’s God- down with Cadman at the negotiating D’Arcy Concession and the signing of the were organized, which were all suppressed. given wealth and triggered a chain Constitutionalists and Qajar loyalists, table and signed the agreement. The 1933 new agreement as big success in restoring of developments intertwined with theAmid British fierce were struggle extracting between Iran’s oil Concession became the second oil deal in Iran’s rights. Even festivities were held to boosted its foothold in Iran’s politics and and making future plans. What was contemporary Iran. The Pahlavis embarked celebrate this victory. But in fact, the real economy.Britain took This benefit chapter from in the turmoilagreement and oil in the country. As soon as the Iran supposed to gain in return for this on a widespread publicity campaign about winner was Britain because the agreement – adding 32 years to the duration of the Qajar dynasty was unseated and unlimited wealth? this concession. But what was the fact deal – drew protests in various cities. By Pahlavi I came to power, the D’Arcy Mohammad Qoli Majd, in his book “Reza behind it? Britain had a good opportunity to correct incorporating this clause, Britain was in Shah and Britain, based on US State The provisions of the 1933 agreement thehad weaknesses brought Iran of more the D’Arcy losses Concession, than profits.” fact establishing a deep state. Opponents Concession was thrown into the Department Documents”, highlights the 60- are provided in the book “Downfall: while making Iran believe it had achieved royal fireplace. It was not the end year agreement, saying: “In exchange, the Proceedings of the First Seminar on a big victory in its oil sector. Apparently, of oil deals in Iran. In 1933, a new owner of the D’Arcy concession agreement Reasons of Pahlavi Collapse”. “The 1933 the 1933 Concession gave Iran a bigger dismissed.were suppressed Teimourtash and government was arrested officials agreement was signed. was supposed to pay Persia 20,000 liras agreement was stuck during direct talks share than that of the D’Arcy Concession; who did not favor Britain’s influence were (about 100,000 dollars), in cash as well as between Reza Shah and Sir John Cadman, however, unlike the D’Arcy Concession, the al-Mamalek were killed. In the 1933 The present piece of writing aims chairman of APOC. According to one article new concession gave Iran no share in the agreement,and imprisoned. Britain Sardar won Asadnew rights and Mostofi for to draw a parallel between the company.” “As soon as the Concession in the Concession, APOC started work operating company’s assets. Furthermore, exploiting mines, building railroads, D’Arcy Concession and the 1933 expired,giving 10% the shareassets in of ownership the company of operating (Anglo- in Iran on January 1, 1933. APOC was the government could not verify AOPC’s ports and transport vehicles without Persian Oil Company), both inside and required to pay the Persian Government accounts and discounts. Iran’s revenue paying anything to Iran. The irony was Concession in terms of relative outside Iran, shall go to the Government 4 shillings for each tonne of oil sold in under the new deal did not show any that if Iran wanted to use these facilities strengths and weaknesses. The of Persia,” writes Qoli Majd. Despite being for any reason like self-defense, it had to D’Arcy Concession was signed five entirely colonialist, the agreement failed share from extra revenue. But the total D’Arcy agreement. The apparent increase compensate AOPC. Such advantages show to satisfy Britain. The British took every paymentIran or exported to Iran shouldin addition not limit to a 20%750,000 wassignificant the result increase of increased compared production with the and why Britain favored the annulment of years before Muzaffar ad-Din Shah, change to modify the provisions of the liras a year.” The share of Iran in the 1933 higher market prices. the D’Arcy Concession and the signature the Qajar ruler, signed off on the agreement in their own best interest. The World Bank says in a report: “The of a new one. Ever since Reza Shah came country’s first-ever Constitution. the D’Arcy Concession. That is why some most important clause of the 1933 to power, Britain was stating the D’Arcy The agreement was signed at Time Playing in Britain’s Favor peopleConcession imagined was 4% that higher the 1933 than deal that was of Agreement which is very damaging to Iran Concession was no longer valid and it had As soon as Pahlavi I came to power in more advantageous to Iran. But when the is the one which refers to the prolongation agreed to some concessions in return for Sahebqeranieh Palace, later terms of the deal are taken into account, of the period of the concession for a further the annulment of the D’Arcy agreement. renamed Niavaran Palace. Seven over the payment regime and the amount more points are highlighted. Gholam- period of 32 years. In the year 1961, in In February 1931, the Indo-European years after the deal was signed, oil ofPersia, gains the from government the oil agreement. filed objections Objections Reza Nejati in his book “Aggression” accordance with the D’Arcy agreement all Telegraph Line that was no longer a to the agreement did not cease to increase writes: “Many cite this agreement as a the properties of the Company would have necessity because of the development of was found in southern Iran. The major step by Reza Shah in improving been left to the Iranian Government free wireless telegraph was granted to Iran. discovery led Britain to focus further Finally, Reza Shah Pahlavi threw away the the provisions of the D’Arcy Concession. of charge and without any compensation. One may imagine that the D’Arcy on Iran’s huge wealth. Due to lack of under the influence of the Pahlavi Court. The property of the Company would have Concession was torched, but the trend of his ministers. This gesture showed the therefore become the property of Iran by of subsequent events and the 1933 modern technology, the bulk of that irreversibilityagreement into of a Iran’s fireplace efforts in the to modify presence deceasedFirst Iran’s time share and amounted again under to 16% various from 1961, when the D’Arcy concession would Agreement showed it what was supposed huge wealth had remained hidden. the text of the agreement. Sir John Cadman, pretexts.the total profits.That was Second, while thisAPOC’s 16% revenue had have expired. And from 1961 to 1993 the to further serve Iran’s national interests However, Britain had already made chairman of Anglo-Persian Oil Company had increased because of higher output, exploitation (income) of all Iranian oil ended in harming Iranians. The 1933 all necessary arrangements. and Iran’s share should have increased resources would have reverted to Iranian Agreement was worse than the D’Arcy and economic developments ensued automatically. However, Reza Shah did not ownership: On the basis of the present state Concession. (APOC), intensified his action. Political 56 57 Tourism December 2021 Issue No.101 monthly Tourism

Traditional Bazaar Urmia Bazaar is known for its variety of ware and is located in the southeastern part of the city. Although many parts of the bazaar can no longer be seen as they have been ravaged by time, yet one can still see a major part still standing here. Structures like bazaars have been always in function being used and occupied on a continual basis. That is why various sections of them may be destroyed and Urmia, Historical City rebuilt. There are many landmarks near it with many different sections. The Friday ran’s West Azarbaijan Province shares populated city in Iran. According to latest Mesopotamia and Asia the Minor – Urmia Mosque can be seen in one part, the construction of which can be placed in the border with Azerbaijan Republic and census, Urmia is home to 667,499 people, has been a major trading center.Most 12th century. Some other sections of the bazaar have been built during the Safavid Armenia in the north, East Azarbaijan which makes it the tenth most densely residents of Urmia are of Turkic origin, and Zanjan provinces in the east, populated city in Iran and the second in but there are also Jews, Nestorians and period. There are beautiful bath houses, the architecture of which is reminiscent Kurdestan province in the south and northwestern Iran. Urmia Lake is east of Armenians in this city. As of 1921, Urmia of the Zand and Qajar periods. This can be noticed by the distinct style of the Turkey and Iraq in the west. Located in this city. Thanks to its three-millennium was also called, Urumia and Urmi. During constructions. Urmia Bazaar has many wings and narrow alleys and each of them I are unique in their own ways. Besides these, one can also see many mosques, northwestern Iran, the province covers history, Urmia is the most ancient city the Pahlavi Dynasty (1925–1979), the city around 43,600 square kilometers, or in northwestern Iran. It is among the 19 was called Rezaiyeh after Reza Shah, the arcades, bathhouses and abodes in the area which indicate that the people were 2.25% of Iran’s total area. West Azarbaijan historic cities of Iran, registered by the dynasty’s founder, whose name ultimately very prosperous here and enjoyed their lives. All these activities were in progress province shares 135 kilometers of sea United Nations Educational, Scientific derives from the Islamic concept of Reza till a few years back when many parts of the complex were gradually ruined. border with Azerbaijan Republic and and Cultural Organization (UNESCO). via the eighth Shiite imam.Urmia is often Armenia, 200 kilometers of border with Some historians in Urmia believe that nicknamed “Cradle of Water” and “Paris Iraq and 488 kilometers with Turkey. Due Zoroaster was born in this city.During the of Iran”. Urmia’s climate is cold semi-arid to its geographic, environmental, cultural past centuries, Urmia has experienced with cold winters, mild springs, hot dry and historic strong points, the province numerous events including occupation summers and warm autumns. Precipitation enjoys great potential for investment and by Ottomans and Russians. Due to is heavily concentrated in late autumn, attraction of tourists. Urmia, the capital city its geographically strategic position – winter, and especially spring, while summer of West Azarbaijan province, is a densely located at the intersection of Caucasus, precipitation is very scarce. Museum of Archeology Urmia’s Museum of Archeology is one of the Photo: Nazila Haghighati most museums in this city. It exhibits 27,000 artifacts including pottery, Friday Mosque chinaware, glasswork, stone Urmia’s Friday Mosque is one inscriptions, jewelry and of the most ancient monuments warfare. The most ancient in the city. Located near Urmia’s artifacts put on display in traditional bazaar, the mosque this museum date back dates back to Seljuq dynasty. Some to 6th millennium BC and historians believe that a fire temple the newest ones date from used to stand there before Muslims Qajar dynasty. conquered Iran. The building materials used in this mosque are stone and brick. The history of the ancient dome of this mosque dates back to the period of the Seljuquids and its altar to the Eilkhanian era 676 AH. Evidence of broken articles found in excavations from the base of the 40 pillars in Museum of the domed nocturnal area, have further fortified this theory. These Anthropology pillars have been repaired several Urmia’s Museum of times. There are old arcades around Anthropology launched two the courtyard of the mosque which years ago is among sight- belong to early Zandiyeh period. Its seeing destinations in this engraving also indicates the date of city. The museum, which construction, i.e., 1184 AH. is housed at a former City Kufi inscriptions around the dome, Hall building, showcases and plaster molding of the altar can more than 500 objects in be accounted as special adornments agriculture, animal husbandry, of this mosque. The new parts clothing, armament, lighting, have been constructed over recent photography and arts. 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St. Mary Church This church is one of the most ancient in Iran. It was built in the first century and is among East churches. Churches emerged in Iran after the arrival of Christianity. During the 4th and 5th centuries, Nestorian churches were built in Iran. St. Mary Church was restored by a Chinese prince who had travelled Shams Tabrizi to Iran for pilgrimage in 644. The church underwent restoration in the following centuries, but the most Tomb important one was in 1918 by Russia’s Orthodox The tomb of Sufi Persian poet Shams Church. In 1944, the Ottomans destroyed the church Tabrizi in the city of Khoy in West after their occupation of Urmia and rebuilt it based on Azarbaijan province is a place for Sassanid architecture. The church has two sections. sight-seeing and homage. In 2007, he The older section is used mainly for pilgrimage, while was proven to have been buried there. the newer section sees religious ceremonies every Next to this tomb stands a minaret- Sunday. The altar and several tombs where style tower dating back to the Safavid cardinals are buried are the outstanding dynasty. features of the older section of the The external surface of the minaret church. One of the tombs belongs is adorned with antlers belonging to to Bishop Johanna who travelled deer hunted by Shah Esmaeil Safavid to the US to learn English during his 40-day stay there. Evidence and then returned to indicates that the monument was establish Iran’s first built at the order of Shah Esmaeil English school in and its minaret was then decorated Urmia. with antlers to show the king’s brinksmanship. Miniature images show that there were initially three minarets, but due to natural events, two have disappeared. The tomb was restored in 2007 with the help of Italian architects.

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Father Superior of the monastery, a large narthex-like St. Thaddeus western extension was added to the medieval church. Monastery This structure exactly duplicates the design of the St Thaddeus Monastery is an ancient cathedral at Etchmiadzin. Armenian monastery located in the mountainous The 19th century additions are from carved sandstone. area of Iran’s West Azerbaijan Province, about 20 The earliest parts are of black and white stone, hence kilometers from the town of Maku. The monastery is its Turkic name Kara Kilisa, the Black Church. A fortified visible from a distance due to the massiveness of the wall surrounds the church and its now-abandoned church, strongly characterized by the polygonal drums monastery buildings. In July 2008, the St. Thaddeus and conical roofs of its two domes. There are several monastery was added to UNESCO’s World Heritage List, chapels nearby: three on the hills east of the stream, along with two other Armenian monuments located one approximately 3km south of the monastery on the in the same province: Saint Stepanos Monastery and road to Bastam, and another that serves as the church the chapel of Dzordzor. According to Armenian Church for the village of Ghara-Kilisa. One of the 12 Apostles, tradition, the Apostles Thaddeus and Bartholomew St. Thaddeus, also known as Saint Jude, (not to be traveled through Armenia in AD 45 to preach the word confused with Judas Iscariot), was martyred while of God; many people were converted and numerous spreading the Gospel. He is revered as an apostle secret Christian communities were established there. of the Armenian Apostolic Church. Legend The ancient Christian historian Moses of Khorene tells has it that a church dedicated to him was the following story, considered a legend by most modern first built on the present site in AD 68. Not historiography. Thaddeus converted King Abgar V of much appears to remain of the original Edessa. After his death, the Armenian kingdom was church, which was extensively rebuilt in split into two parts. His son Ananun crowned himself in 1329 after an earthquake damaged the Edessa, while his nephew Sanatruk ruled in Armenia. structure in 1319. Nevertheless, some About 66 AD, Ananun gave the order to kill St. Thaddeus of the parts surrounding the altar apse in Edessa. The king’s daughter Sandokht, who had date from the 10th century. Much of the converted to Christianity, was martyred with Thaddeus. present structure dates from 1811 when Her tomb is said to be located near the Ghara Kilisa. It Qajar prince Abbas Mirza helped only has one service a year, on the Day of St. Thaddeus in renovations and repairs. (near July first), which is attended by Armenian pilgrims Undertaken by Simeon, from all over Iran and other countries.

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