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Iran Issue No. 95 May 2020 Petchem Revenue Topped $14.5bn

China & PIHOOPEC: Cooperation Anti-Covidfor Restoring MeasuresBalance to the Oil Market

Developing Persian Gulf Fields to Avert South Pars Output Fall Petchem Opportunity

Kasra Nouri forDirector General Oil of Public Producers Relations

he world oil market, over the the status they have today, offering a reason past one year, has experienced for concentration on the petrochemical unprecedented price decline and industry. widespread instability. That has Petrochemical products could not posedT a challenge to major oil producers be replaced easily in the near future. due to considerable dependence of their Even from a social perspective, the annual budget on oil revenues. petrochemical industry can contribute to The current price decline, mainly economic dynamism through creating job emanated from the Covid-19 outbreak, opportunities steadily. will not last for good; however, it would A review of news on ’s petroleum set alarm bells tolling for oil producers industry, even over recent weeks, indicates to adopt more realistic policies, and that Iranian oil policymakers have been make better thought out plans in order focusing on the development of the to wean their budget off oil for creating petrochemical industry. Four new projects – Kimia Pars Middle petrochemical sectors. For oil producers, East, Urea Unit of Lordegan Petrochemical thenew petrochemical value chains in industry the refining represents and an unrivalled opportunity to end crude oil Plant and triple PET exports – along with sales. It can serve as a point of departure aPlant, 35% Olefin growth Unit in Iran’sof Ilam petrochemical Petrochemical for generating value-added and guarantee output are indication of how Iran’s their measures for development. Petroleum Ministry is concentrating on With a more realistic look at future it the petrochemical industry to diversify its would be easy to predict that very soon, oil sources of income and put an end to its and petroleum products would not enjoy dependence on oil sales. Ministry of Petroleum 26 Islamic Republic 28 of Iran

Managing Editor: Kasra Nouri Director General of Public Relations

Editor in chief: Parastoo Younchi

Executive Editor: Hamid-Reza Shakeri-Rad

Graphic Designer: Saman Goodarzi

Photo Section, PR Office, MOP: Hassan Hosseini 48

Reporter: Negar Sadeqi Javad Asghari

Translator: Kianoush Amiri

Coordinator: Abbas Lotfi

Tel/Fax: (+98 21) 61626113 www.iranpetroleum.ir [email protected] Arg-e Bam, Sumar, Dey & Petchem District 4, OPEC+ World’s Sefid Zakhour Role in Beating Extends Deal COVER Largest Adobe Investment Heart of Iran to Shore Up Monument Attractiveness Market Gas Prices 42

Hassan Hosseini Photo: 60 14 36 06 Obituary May 2020 Issue No.95 monthly Obituary

ceiling instead of setting quotas price was considered high enough for member states. Since the to make investment in this sector sanctions had sharply cut Iran’s attractive, while it was at a level Obituary Hossein Kazempour Ardebili oil production and exports, Saudi not to leave any negative impacts Iran’s -serving governor for OPEC Hossein Kazempour Ardebili, who died in May, was a key figure in the Islamic Arabia and fellow members were on the global economic growth,” Republic’s . He was a seasoned negotiator who proved to be instrumental in many decision-makings free to increase their production he wrote. Iran achieved such by the Organization of the Petroleum Exporting Countries (OPEC). Kazempour Ardebili was known as the architect of the and even take Iran’s share success without having any special international affairs department of Iran’s petroleum ministry. Addressing the memorial service held for him, Minister of Petroleum in the market without being privileges. Iran’s growing clout Bijan Zangeneh said he was a “reliable friend”, and Foreign Minister Mohammad Javad Zarif described him as “humble and brave”. accused of non-compliance. This with OPEC was impossible without proposal had been made by some any increase in oil production n the words of his friends, he was named Iran’s governor OPEC member states who had and exports. In the oil markets, Kazempour Ardebili always for OPEC and remained in the barrels speak. Assali believes that won concessions through post until the end of the second of Iran’s OPEC governor who was Kazempour Ardebili managed to negotiations thanks to his term of Mohammad Khatami in coincidentallybenefited from presiding the inexperience over the stronger reasoning and 2005. During President Mahmoud OPEC meeting.” With Kazempour state in drawing up OPEC’s Iarguments. Ahmadinejad’s tenure, Kazempour make Iran a key and influential OPEC Secretary General Ardebili stepped down when sought by Iran was to revive the oil market. Kazempour Mohammad Sanusi Barkindo, Gholam-Hossein Nozari was Iran’sArdebili interests back in and office, strengthen an objective strategicAnother documentsrole played andby influence Ardebili-engi- in his message of condolences, appointed minister of petroleum. its within the OPEC. Iran Kazempour Ardebili was his role said “Hossein’s commitment and He was again reappointed Iran’s was exempted from production in the Declaration of Cooperation, OPEC Secre- neered dedication to OPEC throughout his governor for OPEC in 2013. cut because when the country was which Barkindo highlighted in his Declaration of life’s work were not only markers under sanctions fellow members message. Kazempour Ardebili tary General Cooperation of his personal qualities, but those Oil Price Revival had increased their output, was also instrumental in the Mohammad Sa- of the great nation which he so Mehdi Assali, Iran’s former thereby driving down oil prices election of Mohammad-Hossein nusi Barkindo, remains ably represented throughout national representative to OPEC and boosting shale oil. Adeli as secretary general of the marked in the the years”. “His expertise and Gas Exporting Countries Forum in his message experience were central to OPEC’s term as Iran’s governor for OPEC Declaration of Cooperation (GECF) for two consecutive of condolences, history many achievements and its (1995-2008)said Kazempour coincided Ardebili’s with first such Kazempour Ardebili’s endeavor terms in 2013. In his message of OPEC. Un- greatest successes. Hossein was developments as an increased was not limited to defending of condolences, Yury Sentyurin, said “Hossein’s der that decla- a champion of the Declaration Iran’s interests in OPEC. He GECF Secretary General, said: “Mr. commitment of Cooperation that has brought determining oil prices, increased Kazempour’s legacy with a focus and ration, unparalleled recognition and number of oilfinancial producers markets and oil- OPEC position in the global oil on strengthening international OPEC mem- respect for OPEC, as evidenced thirsty China’s entry into the oil market.firmly believed As the representative in a stronger of a stability and cooperation, dedication to by our proactive leadership in market, and above all shale oil and founding member of OPEC, he was altogether with promoting secure OPEC through- ber states and confronting the severe market gas production in the US. Assali instrumental in the drafting of the and environmentally friendly allies downturn resulting from impact of said Kazempour Ardebili was OPEC Long-Term Strategy (LTS) energy systems is highly praised out his have so far re- the COVID-19 pandemic,” read his instrumental in the revival of oil. by the professional community. life’s work were message. years. In a column, Assali wrote: Being devoted to the soft power not only mark- moved historic Cut Exemption which is being reviewed every five of diplomacy, he has made indeed number of bar- Prominent Diplomat When Kazempour Ardebili started of OPEC Statute, the strategic meaningful tribute in ensuring ers Kazempour Ardebili had survived long-term“The first draft objective of the envisaged LTS, in light energy security and advocating of his personal rels from their the June 1981 bombing at the Iran was redoubling its efforts to for OPEC was to maximize the positive development on global output in a bid headquarters of the Islamic regainhis second its market term in share office lost in 2013,due interests of member states energy markets.” qualities, but to help stabi- Republic party in . He to sanctions. Efforts undertaken including achievement of proper those served as minister of commerce by Zangeneh and Kazempour oil prices; however, in the revised Legacy of the great na- lize oil from 1980 to 1981. Then he Ardebili to win exemption from oil document, Saudi Arabia, along Kazempour Ardebili-engineered markets served as deputy minister of production cuts for Iran marked with friendly nations, insisted on Declaration of Cooperation tion which he so foreign affairs for economy for history. the elimination of the objective remains marked in the history ably represented four years prior to becoming UN sanctions against Iran had of maximizing oil revenue and of OPEC. Under that declaration, deputy minister of petroleum for destabilized the country’s position leading the market in the direction OPEC member states and allies throughout international affairs and Board within OPEC and Kazempour of proper prices.” “But Iran have so far removed historic the years member at National Iranian Oil insisted that this strategy has to number of barrels from their circumstances. focus on maximizing long-term output in a bid to help stabilize oil years. Kazempour Ardebili was ArdebiliAssali said: took “Due office to under UN sanctions such oil revenue of member states markets. Addressing the 179th appointedCompany, whichIran’s heambassador held for five to against Iran and the country’s through fair prices. We had OPEC meeting, Barkindo said the Japan in 1990 and remained in halted oil exports, OPEC members OPEC meetings missed Kazempour agreed on a total production both producer and consumer. The Ardebili. defined fair prices as optimal for 4 this post for five years. In 1995, 5 Opec May 2020 Issue No.95 monthly Opec OPEC+ Extends Deal to Shore Up Prices OPEC and allies agreed in their June 6 meeting to extend a recently-reached deal on cutting their production to help boost prices that have suffered due to falling demand following the coronavirus outbreak. The statement comes shortly after OPEC and non-OPEC allies, known as OPEC+, agreed to extend their deepest round of production cuts in history to take roughly 10% of oil supplies off the market through to the end of next month. Oil prices have surged since some of the world’s most powerful oil producers brought in a production cut of 9.7 mb/d starting on May 1. The move was designed to prop up prices at a time when the coronavirus pandemic had led to an unprecedented demand shock in energy markets. The output cuts from OPEC+ were initially scheduled to be scaled back to 7.7 mb/d from July 1 through to the end of the year. But the new deal means the group will now cut 9.6 mb/d through to the end of July. The figure is 100,000 b/d lower than the previous agreement because Mexico said it remained committed to the terms of the original deal and subsequent reduction in cuts. Iran’s Minister of Petroleum Bijan Zangeneh after the OPEC ministerial meeting said that balance would be restored to the oil market once the entire global economy would recover. Zangeneh said oil producers that had not complied with the previous OPEC+ production cut had promised to compensate for their non-compliance in coming months so that “the supply glut in the market would be reduced and prices would recover”. He said Brent prices’ growth to above $40 a barrel showed that OPEC had made proper decisions. “In the long-term, as far as the global economy does not recover and the world does not get rid of negative economic growth, demand for oil will not increase and oil prices will not be balanced. But so far OPEC+ agenda has been correct,” he added.

Covid-19 Specter Non-Compliance The 179th OPEC ministerial meeting and the 11th OPEC+ Iran’s Zangeneh said the countries that had not respected their production cuts would compensate in the coming three months in order to help prices meeting were held through videoconference due to the recover. He said that non-OPEC would account for 40% of production cuts with Russia holding a 10% share. The International Energy Agency estimated that specter of the coronavirus outbreak. The global economy has shrunk and demand for oil has declined due to the globe. Two days after the OPEC+ meeting, Saudi Arabia and Russia said the success of the energy alliance’s latest production cuts relies on all members Covid-19. Various nations are easing down their lockdown, complyingroughly 25% with of demandthe terms was of thedrained deal. from“We havethe market no room in whatsoeverApril as confinement for lack of measures conformity,” brought Saudi mobility Energy Ministerto a near Prince standstill Abdulaziz for billions bin Salman of people said across during an but the market remains oversupplied. Based on the 179th online press conference. Those that failed to conform to the OPEC+ deal in May and June should compensate with extra cuts from July through to September, ministerial meeting’s remarks, the global economy is set Prince Abdulaziz said. Russian Energy Minister Alexander Novak said via an interpreter that he fully agreed with his Saudi counterpart. “I can say that to contract 3.4%. Major economies like the US, Japan and overall conformity levels are extremely high, considering the magnitude of the cuts and how bad the situation is.” “We have spent a lot of time discussing full Britain would see their economy contract and only China conformity and how this will be compensated because the success of the deal and the success of our efforts rest on all countries doing their part,” he added. would experience positive growth. Economic shrinkage tells oil producers that demand for oil is falling. Demand Compliance Mechanism Iran New OPEC Governor Zangeneh said OPEC and non-OPEC oil producers had 90% compliance with the deal. He said that market Amir-Hossein Zamaninia, Iran’s deputy calendar year compared with the previous quarter, causing price was the only factor forcing member states to remain committed to their obligations. “Oil prices, market petroleum minister for international affairs and worriesfor oil was among down 9 mb/d in the firstpetroleum quarter industry. of the current performance and reactions are the only mechanism for OPEC and OPEC+ in implementing their decisions,” commerce, was appointed Iran’s governor for OPEC’s estimates show that capital expenditure would he added. Spokesperson of Iraq’s Ministry of Oil, Assem Jihad, said in a statement, “Despite the economic OPEC, replacing the recently deceased Hossein decline 23% in 2020. In the OPEC+ emergency meeting Kazempour Ardebili. The appointment was in April, oil producers agreed to remove 9.7 mb/d from spokesperson emphasized that Iraq had remained strong advocate over the years of all efforts that help in signed off by 13 OPEC ministers during the their production. Iran and Venezuela, due to US sanctions, restoringand financial stability circumstances and balance that to Iraq the oilis facing, market. the Nigeria’s country petroleum remains committed ministry said to the Abuja agreement.” backed the The idea of 179th meeting of the OPEC videoconference held and Libya, due to domestic crisis, were exempt from compensating for its excessive output in May and June. Iraq produced 520,000 b/d above its quota in May, on June 6. OPEC governor serves as a member any output cut. But Mexico, whose share in the cut was while overproduction by Nigeria was 120,000 b/d, Angola’s was 130,000 b/d, Kazakhstan’s was 180,000 b/d country’s top envoy to the organization’s 100,000 b/d, said it would no longer cut this amount from and that of Russia was 100,000 b/d, OPEC+ data showed. The OPEC+ joint ministerial monitoring committee, secretariat. Zamaninia holds a law degree from its production. In their Declaration of Cooperation signed known as the JMMC, will meet monthly until December to monitor the market, compliance and recommend the US and has been involved in Iran’s nuclear in April, the 23 OPEC+ countries had agreed to cut 9.7 levels of cuts. JMMC’s upcoming meeting is scheduled for 18 June. Prince Abdulaziz bin Salman told the negotiations with world powers for years under mb/d from their output in May and June, 7.7 m/d for the Foreign Minister Javad Zarif. Kazempour who next six months and then 5.8 mb/d for 16 months. Iraq, He said: “Demand is returning as major oil-consuming economies overcome pandemic lockdown. But we are was Zangeneh’s right hand in OPEC died May 16 Nigeria, Kazakhstan and Angola were reported to have not notvideoconference out of the woods of OPEC+ yet and ministers challenges that ahead confidence remain.” would Novak be saidrestored the oil to market market remained through active fragile, commitment. adding that complied with May’s production cut. the gradual end of lockdowns and subsequent economic overture was helping improve demand for crude oil. at a critical time. of a brain hemorrhage, leaving major shoes to fill 6 7 Opec May 2020 Issue No.95 monthly Opec

has already dropped by 14 to down 37 and gas rigs down 28. months by withdrawing almost 15 mb/d so far, said Novak, 10% of global supplies from the expressing his expectations to see Oil Prices market. Oil Prices Rally global crude demand and supply Oil posted its biggest monthly The group, known as OPEC+, balancing out in the next two advance on record, just a few also demanded countries such as months. “The OPEC + deal allowed weeks after prices made a Nigeria and Iraq, which exceeded us to reduce production evenly dramatic plunge below zero. production quotas in May and following OPEC+ Deal across all countries in a regulated Crude surged about 88 per cent June, compensate with extra cuts Oil prices gained more than $10 in May as OPEC member states and their partners way, if there weren’t a deal, the in May, with U.S. futures rising in July to September. started removing 9.7 mb/d from their total output in a bid to help shore up reduction in demand would not go above US$35 a barrel for the OPEC+ had initially agreed in prices following low demand due to the coronavirus outbreak. On average, the away, a chaotic slump in demand April to cut supply by 9.7 mb/d 13-member Organization of the Petroleum Exporting Countries (OPEC) pumped 24.77 mb/d would affect Russia,” TASS quoted by massive supply curbs by during May-June to prop up this month, down 5.91 mb/d from April’s revised figure. In May, they delivered 4.48 mb/d of the minister as saying. producersfirst time since across March, the world. driven Still, prices that collapsed due to the the pledged reduction, equal to 74% compliance. prices are well below levels at coronavirus crisis. Those cuts US Rig Count Still in Freefall the beginning of the year, and were due to taper to 7.7 mb/d PEC and its non-OPEC easing oil-output cuts in July, as The U.S. rig count was down 17 demand that was crushed by the from July to December. allies, known as OPEC+, States-Saudi defense partnership,” agreed by OPEC+ in April. rigs in a week to 301, with oil rigs coronavirus crisis may need to “The agreed to cut supply by the“reaffirmed White House the strong said, amid United Kremlin spokesman Dmitry down 15 to 222, gas rigs down show a sustained improvement OPEC+ deal a record 9.7 mb/d from tensions over Saudi’s oil output. Peskov said that Russia would 2 at 77, and miscellaneous rigs for the rally to extend further. OMay 1. OPEC’s share, to be made “The two leaders agreed on the analyze the global oil market May’s output worked out and by 10 members from their October importance of stability in global before deciding on any potential data from Baker Hughes. Year on OPEC, Russia Agree Russia has 2018 output in most cases, is changes in the OPEC+ agreement. year,flat at the two, U.S. according rig count to is current down OPEC, Russia and allies agreed would be the achieved the 6.084 mb/d. the strong United States-Saudi Putin and Bin Salman exchanged 683 rigs from last year’s 984, to extend record oil production lowest May’s output would be the lowest defenseenergy markets, partnership. and reaffirmedThe views about the situation in with oil rigs down 578, gas rigs cuts until the end of July, by OPEC since targeted indica- by OPEC since 2002, excluding president and King Salman also the world energy market, the down 107, and miscellaneous rigs prolonging a deal that has tor we membership changes since then, discussed other critical regional Kremlin said in a statement. They up to two. The U.S. Offshore Rig helped crude prices 2002, excluding Reuters survey records show. The and bilateral issues and their “noted the importance of joint double in the membership agreed on, biggest drop in supply came from cooperation as leaders of the G7 efforts” and agreed the nations’ year-over-year, according to Baker past two which is Saudi Arabia, which pumped a and G20, respectively,” said White energy ministries would closely Hughes.Count is Meanwhile,flat at 12 and in down Canada 11 the changes since 2 million bar- record 11.7 mb/d in April. House spokesman Judd Deere. coordinate. rig count dropped one rig to 20, then, United Arab Emirates and Kuwait with oil rigs down one to seven Reuters survey rels also cut back sharply, sources in Saudi Thirst Russia Fulfills Pledge of reduction per the survey said. Saudi Arabia along with Kuwait Russia reached the output level region is down 65 rigs records show. Both had also pumped at record and the United Arab Emirates pledged by the world’s largest fromand gas last rigs year’s flat at 13. The The day,” Russia’s rates in April. increased their production in oil producing countries, also 85, with oil Energy Minister Iraq, a laggard in making cuts in March, causing a sharp decline known as the OPEC+ alliance, rigs biggest drop in Alexander No- 2019, curbed output according in oil prices. According to OPEC’s as the country reduced its oil supply came to the survey following reduced monthly review, the trio added production by 2 mb/d. “The from vak exports from the south of the more than 2 mb/d to their April OPEC+ deal worked out and was quoted country, although at 38% its output. Saudi Arabia accounted for Russia has achieved the Saudi Arabia, compliance was much lower 1mb/d, UAE for 100,000 b/d and targeted indicator we which pumped a than that of the Persian Gulf Kuwait for 80,000 b/d. The Saudi agreed on, which is OPEC members. Another laggard, government also called on fellow 2 million barrels record 11.7 mb/d Nigeria, made only 19% of its OPEC members, as well as non- of reduction per in April. promised reduction, the survey OPEC partners to further reduce day,” Russia’s found. Venezuela and Iran reduced their production. Energy Minister output in May, while Libyan Alexander Novak supply rate was steady. All three Putin, MBS Talk was quoted as were exempt from voluntary Russia and Saudi Arabia agreed saying by a source cuts because of US sanctions on May 28 to closely coordinate on with knowledge or internal issues limiting the OPEC+ output cuts deal, two of his speech production. weeks ahead of a crucial meeting delivered at a of the group. The talks between State Council Trump, Saudi King Discuss Oil President Vladimir Putin and meeting. Due to U.S. President Donald Trump Saudi Crown Prince Mohammed output cuts in and Saudi Arabia’s King Salman Bin Salman come as Russia was other countries, spoke on the phone on May 8 and said to be determined to start global oil supply 8 9 petchem May 2020 Issue No.95 monthly petchem Petchem Revenue Topped $14.5bn The CEO of National Petrochemical No Production Hitch would cut foreign imports, create prosperity and provinces, as well as some cities in other provinces. 120,000-tonne capacity. PRTC owns the licenses of Company (NPC), Behzad Despite all restrictions imposed by the attractive jobs in the downstream sector of the The second pipeline would extend from Neka to both projects, thereby dispensing with the need for Mohammadi, has said that the Covid-19 outbreak on the global economy, Iran’s petrochemical industry and improve the value Damghan. The propylene produced from natural foreign technology. petrochemical sector earned Iran petrochemical industry plans to operate 16 projects chain and supply products of higher value. gas would be stored in Damghan to be used for the $14.5 billion in revenue last calendar year to with a total investment of $12 billion in the current development of downstream industries in North Diverse Products with High Value-Added March 2020. Mohammadi said last calendar year calendar year. Once operational, these projects Propylene Shortages Khorasan, Khorasan Razavi, South Khorasan and Iran has experienced a big jump in its was marked with success for petrochemicals would bring Iran’s petrochemical production from Iran would make up 4% of world propylene Semnan provinces. NPC would be also operating petrochemical production over the past seven production as production forecasts came true. 31 million tonnes to 37 million tonnes. However, the GTPP project in Eslamabad Gharb in order to years. There are other projects under way to help He said the petrochemical output reached 31 the main question which remains is whether or not for the entire world, 21% in China, 17% in the US expand the propylene chain. These projects will enhance petrochemicals supply. However, the million tonnes last calendar year, 23 million these projects would be affected by the Covid-19 andproduction 16% in bySaudi 2025, Arabia. while Minister this figure of Petroleumwill be 18% be GTPP or MTP, which would help end Iran’s key point is whether there is demand for these tonnes of which was exported and the rest was outbreak. Mohammadi said 4 projects were likely Bijan Zangeneh has already offered solutions propylene imports. Mohammadi expressed hope products. Mohammadi said: “We need to remain supplied on domestic markets. Mohammadi to be delayed due to Covid-19outbreak, but 12 for compensating for propylene shortages. “By that this project would be started under the 12th vigilant about what is happening across the world. noted that petrochemicals prices dropped 30% setting up two propylene lines – one extending administration. He said this project would push We must know where we are or where they on average last calendar year year-on-year, million tonnes to Iran’s petrochemicals output. from northern Iran to southern Alborz and one petrochemical industry development towards are.” “By making efforts towards development adding that petrochemicals exports earned Iran Iran’sprojects petrochemicals will definitely production come on-stream capacity to addcurrently 20 extending from Assaluyeh to central Fars – an smart development and help produce higher-value of technical knowhow, we need to push the $9.5 billion while domestic market purchased stands at 66 million tonnes, which would at worst, extended propylene chain could be created,” he products based on domestic needs. petrochemical industry towards more diversity reach 86 million tonnes by next March. said. Mohammadi has put at 175,000 tonnes, the in products of high value-added with a view to that Iran’s petrochemicals production saw 6% amount of propylene Iran currently needs. In other Propylene Chain and Petchems completing the supply chain in order to make the $5 billion of petrochemicals. The official said Focus on Investment Packages words, with the production of 985,000 tonnes of In Iran, propylene is merely converted petrochemical industry more attractive,” he said. calendar year year-on-year. That is while the In addition to completing petrochemical projects, to PP and EH2. By 2025, Iran would be Mohammadi said: “We need to follow the world in Covid-19growth during outbreak the firsthad 50slashed days demand.of the current Demand several methanol projects would come online by plants, 175,000 tonnes more is needed. Iran’s producing four derivatives from propylene. By order to have a proper assessment of development. for petrochemicals was down 40% due to lower March 2022. Many worry about the economic propylene productionby Iranian refineries is planned and to reachpetrochemical 1.95 implementing leading industries, 12 products Blind development and implementing projects with demand for crude oil in the world. Mohammadi; viability of methanol projects. “To resolve this issue, million tonnes by 2024, while the country would be would be manufactured from propylene. In the long yields should be excluded as they would lose however, said the conditions are improving. investment packages for using surplus methanol faced with 700,000 tonnes of propylene shortages. meantime, all MTP and GTTP projects would be their attractiveness in the world after several years. Iran’s petrochemical industry is moving towards to produce propylene and supply national needs implemented using technical knowhow provided Therefore, we need to move towards an intelligent stability and remains a key segment in Iran’s are focused on this product,” said Mohammadi. 2 Propylene Lines in Iran by Petrochemical Research and Technology development of the petrochemical industry in order economy. It is noteworthy that the Persian Gulf He called for more steps to be taken in the Two propylene production lines are envisaged for Company (PRTC). Mohammadi said the MTP to survive in the global market.” Petrochemical Industries Company (PGPIC), a petrochemical industry for a smarter development the production of 3-3.5 million tonnes of propylene project in Assaluyeh would have a 470,000-tonne major petrochemical holding with a big share of the petrochemical industry. capacity, while the GTTP project would have a in petrochemicals production and exports, was These projects are on the agenda for Assaluyeh to Marvdasht, which would be operated slapped with US sanctions last year. Mohammadi petrochemical development in the byin the NPC. country. Propylene The wouldfirst pipeline be produced extends from from surplus said the major impact of US sanctions targeting methanol, propylene, ethylene and methanol in Assaluyeh to be injected into a 430km PGPIC was the imposition of additional costs on benzene sections. These projects pipeline. It would then be transported to a storage exports, particularly in the transport sector. hub in Marvdasht to be used in the development of a propylene chain in Fars and

10 11 petchem May 2020 Issue No.95 monthly petchem Value Chain, Petchem Missing Link Propylene, Missing Link project would come online and therefore the methanol production capacity over two years value-added from the petrochemical industry. petrochemical industry development plan. In Iran’s petrochemical industry has extra methanol could be used for propylene to 10 million tonnes. Iran is currently producing over 60 million this plan, in addition to concentration on the production. By 2025, propylene would have a tonnes of petrochemicals, the bulk of which implementation of projects, feedstock receipt, sector over recent decades. Iran’s non-oil 4% share in Iran’s petrochemical production, Iran Eyes PVM is exported to earn Iran hard currency production and export, special attention is exportsexperienced to world significant markets jumps mainly in itscomprise upstream far below the world’s 18%, China’s 21%, the Iran’s petrochemical industry is set to revenue. Ammonia and urea have been largely products derived from petrochemicals. US’s 17% and Saudi Arabia’s 16% share. Two become propylene-oriented. That is why produced over recent years. Petrochemical supply of products for which Iran depends However, market actors have long been propylene production lines are envisaged no new permits are issued for building plants have converted ethane to ethylene to onpaid imports. to diversification Iran has always in the focused value chain on and concerned with propylene and polypropylene for the production of 3-3.5 million tonnes of methanol units in Iran unless new grades shortages as they constitute the main material are to be launched. The increased methanol the petrochemical chain is completed, this as well as completing the value chain in the in the development of petrochemical value extends from Assaluyeh to Marvdasht, which production comes at a time while Iran would industryfinally supply could polyethylene be brought into polymers. the mainland Once petrochemicaldiversification inindustry. petrochemical On one hand,production, there is chain. Iran’s minister of petroleum, Bijan wouldpropylene be operated in the country. by NPC. The The first second pipeline be supplying 25 million tonnes of methanol to allow for sustainable job creation. Article no accurate system to explain requirements Zangeneh, recently said increased propylene pipeline would extend from Neka to Damghan. 44 of the Constitution does not envisage for the expansion and completion of the production is in favor of developing the The propylene produced from natural gas than the 16 million tonnes the market can any possibility for direct investment in the value chain while on the other, inclination for petrochemical value chain. Zangeneh touched would be stored in Damghan to be used for absorb.on global Concerns markets are over growing five years, about far themore petrochemical sector. Therefore, investment exports due to higher income has prioritized on the packages of investment for leading the development of downstream industries future methanol market while converting must be directed towards completing the exports over value chain expansion by industries of downstream petrochemical in North Khorasan, Khorasan Razavi, South gas to methanol, methanol to propylene and value chain and developing the existing petrochemical companies. That along with the sector, saying they would be soon submitted Khorasan and Semnan provinces. Over subsequently propylene to polypropylene technologies. privatization of the petrochemical industry to government. He said: “We can work in the recent years, ethanol conversion level in would generate a high value-added. In Iran, in Iran has further overshadowed the value benzene, ethylene, methanol and propylene it is now possible to convert natural gas to Downstream Sector to Double Iran chain. Value chain completion would boost the sections. The methanol and propylene world, 60-70% of ethylene is converted into methanol. At Petrochemical Research and Income value of petrochemical products’ mix. Under units overlap largely and due to propylene varietiesIran has jumped of polyethylene significantly. and glycolAcross as the well Technology Company (PRTC), a pilot project The head of the Iran Export Confederation the 5th Five-Year Economic Development Plan, shortages in the country we can create a as to non-polyethylene polymers. Therefore, with an annual capacity of 120,000 tonnes has said that completing the petrochemical Iran’s petrochemical industry would focus on major propylene chain by extending one polyethylene-dependent industries have been a year has been successfully implemented sector’s value chain would double the current the production of basic chemicals or polymers, propylene line from northern Iran to Alborz developed in the country, while propylene- for transforming methanol to propylene. $20 billion revenue from petrochemical but petrochemical development would and one from Assaluyeh to Fars Province. dependent chemical industries have not The Arak division of PRTC also plans to exports. Of course, when it comes to exports, require projects to complete the value chain Behzad Mohammadi, CEO of National been developed. Iran would see its methanol convert propylene to polypropylene. PRTC and supply products of higher value-added to Petrochemical Company, said the top managers and experts hope to launch a to be taken into consideration. Transfer of feed downstream petrochemical industries. priority of the petrochemical industry was to years. Kaveh methanol, Marjan methanol 130,000-tonne polypropylene unit that is knowhowfinancial estimates and technology are not shouldthe only be things the Therefore, completing the production implement packages of projects pertaining to andproduction Bushehr grow methanol 25 million projects tonnes are overin their five currently in the pre-commissioning phase. priority for development and export projects chain, more diversity in the production and methanol, propylene, ethylene and benzene. PRTC has in its propylene-via-methanol so that Iran’s energy advantages would be upgrading the value of petrochemicals’ mix Iran would see methanol surplus after new respectively. Completion of these three (PVM) demo developed a polymer-grade used while new export markets would be would help this goal materialize, which final stage with 97%, 80%projects and would60% progress, add 5.61 propylene with purity over 99.6% at the created. Export-oriented production has would help improve Iran’s exports level both million tonnes to Mahshahr research center. It is the most to be taken into account in the talks with quantitatively and qualitatively in addition to the current used polymer grade in the petrochemical foreign companies and move in a direction for supplying domestic needs. One objective of chain. Oil and gas draws its highest new investments to facilitate Iran’s petrochemical industry by 2025 is to exploration of new markets. become the region’s top petrochemical power. Iran is drawing up its

12 13 stock market May 2020 Issue No.95 monthly stock market

In the petroleumPetchem industry, petrochemical companies have gained Role fame for their early and fastin . Some Stock experts say the rate of return of investment Market in petrochemical projects is six years. Under circumstances of sanctions and Covid-19 outbreak, where many petroleum industry companies had to restrict or even halt their production, petrochemical companies continued their normal production and supply of products. That proves the petrochemical sector remains a reliable industry. The experience of previous years in the mercantile exchange shows that petrochemical companies have often distributed attractive among shareholders. That is why some petrochemical companies are attractive to investors looking for annual profits. Such features have also pushed people to direct their investment to the stock market. Stock market indices have been on upward and downward trend; however, petrochemical have always shown to be spared any decline. That explains why petrochemical shares are largely attractive. Economists believe that state assets listing would give rise to such economic benefits as profitability, removing budget deficit, encouraging people to invest in the stock market, deepening the and preventing any market bubble. The capital market is largely prosperous these days. With the listing of state assets on this market, people are encouraged to invest in the stock market and their capital would not move towards gold and foreign currency. Moreover, people would get further familiar with the capital market and their knowledge of finance would grow.

etrochemical stocks are warmly Petrochemical Company are among the year would make more gains in the stock market. Their share exceeds 42% in the territory for several consecutive days. welcomed in the stock market. The 40 companies with big impact on the exchange than in the gold, foreign currency chemical industries. That’s natural for the stock market and I Pars, Nouri and Shahid Tondguyan stock market last calendar year. Those and other parallel markets.” Regarding He said that PGPIC is a major player assure you that good days are awaiting the Ppetrochemical companies were who follow stock market developments alleged bubbles in the , in the capital market and it has already stock market,” he said. should know that petrochemical stocks he said: “A small segment of money stock offered many of its subsidiaries on list on the stock market successfully. has so far entered the capital market and the stock market. He added that the Petchem Stocks Now,the first more petrochemical petrochemical companies companies to trading. However, the effectiveness of there is still hot money that has yet to remaining companies would list on the The bulk of petrochemical companies’ are subscribing to the stock market with petrochemicalhave become influential companies in in everyday the stock enter this market. I don’t believe that the stock market in the current and next stocks may be in the hands of a bigger at least six of them being subsidiaries market and initial that government has deliberately intervened calendar year. “We plan to bring three of the Persian Gulf Petrochemical have breathed fresh life into the stock to make the stock market index green in a more companies into the stock market: the stocks are negotiable by these companies. Industries Company (PGPIC). Arya Sasol market are owing to decisions made by bid to sell its own stocks. Rather, I believe Arvand Petrochemical Company, which is However,petrochemical as long firm. as theIn other market words, conditions these Petrochemical Company was expected the Downstream Petrochemical Industries that the capital market convinced the known as the PVC giant in the country, Bu are bullish it would be lucrative for other to list on the stock market in March, but Development Department. Owing to government to sell its own stocks on the Ali Sina Petrochemical Company, which shareholders, too. Therefore, this issue the Covid-19 outbreak created some cooperation and interaction between this market. Put simply, the market attracted is similar to the Nouri Petrochemical must be taken into consideration in the restrictions. However, the important department and the Ministry of Industry, the government, which was a positive Company, and the big aromatic plant in purchase of stocks. Many companies would issue is that even news of petrochemical Trade and Mine as well as the Iran Mahshahr,” he said. “After that, we would be faced with restrictions in production, stocks listed on the stock market Mercantile Exchange, a transparent and convinced to offer its shares on the market. be able to introduce the Bandar Imam distribution and sales in coming months. would shake the market. Among 40 top lucrative market is seen. Jafar Rabiei, CEO Idevelopment. believe that we The have government very good was stocks finally Petrochemical Company, the largest Petrochemical companies would continue companies named by the Securities and of Persian Gulf Petrochemical Industries in the market that have yet to reach their petrochemical company in the country, their work and global developments Exchange Organization (SEO), there Company, has said that the Arvand, Bu natural prices because they are still being on the stock market.” Rabiei said: “I don’t also show that this bullish trend would are some petrochemical companies. Ali Sina and Bandar Imam petrochemical traded below the (NAV).” think that anyone has suffered losses after continue. Therefore, these companies The reason for this selection is the companies would soon list on the stock “Investment and holding companies purchasing shares of Pars Petrochemical would be able to remain highly lucrative market. Noting that the capital market was enjoy good potential for growth. They will Company, Nouri Petrochemical Company options in the capital market. Most performance. Shazand Petrochemical warmly welcomed, Rabiei said: “The stock and Shahid Tondguyan Petrochemical items petrochemical needs are polymer Company,significant Pars improvement Petrochemical in their Company, is not a place for people to become high dividends so that people would be Company. However, nobody should products that exist in the country and Kermanshah Petrochemical Industries rich overnight. Anyone entering the stock ablemake to very purchase good profits stocks andat lower distribute prices,” purchase or sell stocks emotionally.” “If most petrochemical companies do not Company, Pardis Petrochemical Company, market hastily will undoubtedly suffer he said. Rabiei said PGPIC was holding those who purchased these stocks wait need to communicate with foreign entities. Kharg Petrochemical Company, Persian losses.” He added: “The about 40% of Iran’s petrochemical market. at least one year I am sure that they will That would be instrumental in blunting Gulf Petrochemical Industries Company, has a higher yield compared with other PGPIC is also accounting for 40% of the impact of sanctions on the Iranian Zagros Petrochemical Company, Maroun markets. Certainly those who are eying Iran’s petrochemical exports. PGPIC and offered stocks. Nobody has to worry economy and facilitating circumvention of Petrochemical Company and Ghadir long-term investment of more than one subsidiaries hold about 12% of the capital aboutmake bigthe profitsindex slipping out of PGPIC’s into the newly- negative sanctions.

14 15 May 2020 Issue No.95 Ethylene monthly Ethylene

Countdown for the World’s Largest Ethylene Pipeline in Iran ran has picked its petrochemical industry as a means 2008. However, due to technical problems and lack of a major challenge in the way of this pipeline was local allocated for ethylene delivery. This project is aimed at of reducing raw substances sales with a view to budget allocation, so far it has only had 80% progress. obstructions in the provinces crossed by this pipeline. helping the Gachsaran petrochemical plant. Compressor Currently, 5,000 persons are directly working in the The second phase of the Kavian plant is now ready and stations 2 and 7 are located in Siah Makan and Gachsaran, industry has over the past decade been through a petrochemical plants under construction in western Iran. waiting to receive feedstock. The WEP project would respectively. Constructing these two stations began Iperiodcreating of growth sufficient and development. value-added. The petrochemical Once they become operational, 3,000 more jobs would create new job opportunities in the area. In the meantime, last February and is likely to be over in two years. One of the major petrochemical projects cashed in on be created. Whereas upstream plants are located on commissioning of several petrochemical plants on Given the possibility of ethylene surplus in WEP, 1.8 largely today is the West Ethylene Pipeline (WEP) that WEP’s path, downstream industries are expected to quit the WEP path would create job opportunities in the million tonnes of ethylene supplied by the Kavian and would feed a number of petrochemical plants lying on raw substance sales by supplying diverse petrochemical neighboring provinces. Morvarid petrochemical plants are being delivered to its way. Bijan Zangeneh, Iran’s minister of petroleum products. Once operational, WEP would have capacity to petrochemical plants located on the WEP path. With said recently that WEP would be virtually the third carry 3.5 million tonnes of ethylene – 2.5 million tonnes Phases 1, 2 Complete Kavian’s 2-million-tonne, Gachsaran’s 1-million-tonne petrochemical hub in the country behind Assaluyeh of which would be supplied from South Pars and 1 million Thanks to support by the minister of petroleum and and Morvarid’s 150,000-tonne capacity, there would be and Mahshahr. The petrochemical industry has over tonnes from Gachsaran. A total of 12 petrochemical plants cooperation on the part of the judiciary and police a 3.15 million-tonne production capacity in the future. recent years been taken into serious consideration would be fed. in Khuzestan Province, the last obstacle in the way If Gacsharan ethylene plant becomes operational while more than ever due to acceptable productivity and hard of completing WEP was removed and the challenge consumer plants don’t, there would be possibility of currency generation. WEP is Iran’s largest petroleum Western Iran, New Petchem Hub to the construction of the power transmission line of ethylene surplus, in which case, the ethylene supplied by industry investment for development in the west of the The sections crossing Hamedan, Dehdasht, Mamesani, Compressor N. 3 in Ahvaz Province was overcome. Phases the Gachsaran petrochemical plant would be swapped country. Once all petrochemical plants located on the Boroujen and Kazeroun are yet to start. Tabriz 1 and 2 are now complete. In these phases, the main with the ethylene produced by the Kavian plant so that WEP route become operational, it would be possible Petrochemical Plantthe same as Ilam Petrochemical principle was “coordination and synchronization” with the surplus would be exported from Assaluyeh. The third Plant has been connected to WEP. The 2,700-km WEP other plants located on the path. None of operational connection will carry ethylene from Sanandaj to Bu Ali Turkey and Iraq. Iran’s petrochemical industry, which is pipeline would feed 11 petrochemical plants including petrochemical plants were likely to be waiting for Sina Petrochemical Plant through a 190-km pipeline. But currentlyto deliver onfinal its products path towards to neighboring growth and countries: development, Kermanshah, Andimeshk, Lorestan, Kordestan, Miandoab WEP to receive feedstock; rather, the two phases came as long as the project is not 40% complete, it will not start. would need to complete its value chain. Concurrently and Mahabad. The Kavian, Lorestan and Mahabad online several months prior to the commissioning of the During the construction of the third phase of WEP, 400 with the development of the upstream sector and the petrochemical plants as well as the Kermanshah polymer petrochemical plants so that they would receive their job oppotunities would be created. Phase 1 is expected plant are already operational. The ethylene produced ethylene feedstock. to come online by 2023. WEP feeds petrochemical plants downstream segments of this key industry must be by the Kavian plant is delivered to the Kermanshah located in Khuzestan, Fars, Lorestan, Kohguiluyeh Boyer takencommissioning into consideration of South Parsas a nationalgas field strategy.phases, the In order Petrochemical Plant. WEP carries the Kavian plant’s Phase 3 under Way Ahmad, Chahar Mahal Bakhtiari, Kurdestan, Kermanshah, to guarantee a balanced petrochemical development, products with a view to developing the petrochemical Operations for completing Phase 3 of WEP have started. West Azarbaijan, East Azarbaijan, Ilam and Hamedan measures are needed for creating downstream industries industry in western Iran. Iran’s petrochemical industry, provinces. Production of some alcoholic substances, across Iran. Iran is currently constructing the largest which has been growing fast over recent years, will enter 150km section of the pipeline, stretching from Miandoab products for agricultural purposes and chemicals are ethylene pipeline in the world in a bid to develop its a new phase next year as petrochemical plants come toDuring Tabriz, the came first online.days of Itthe is noteworthycurrent calendar that 143year, km a of among advantages of WEP. Ethylene cylinders are popular petrochemical industry and create higher value-added online. Western Iran can become a reliable petrochemical this pipeline belonged to National Iranian Oil Products from ethane. WEP’s maximum capacity is three million hub in the future due to the development of the Distribution Company (NIOPDC). The second section is provide the biggest services to the economy of western petrochemical industry and planning for downstream connected to the Dena area, which is 60 kilometers long Iran.today, This showing pipeline the and significance the plants of located ethylene. on WEP its path can this pipeline. Compressors aside, the pipeline has so far industrial projects. Products supplied by these plants stretching from Siah Makan to Gachsaran Petrochemical have potential to process and supply products of high costtonnes. IRR So 12,000 far, five billion. compressors The total have investment been installed made in on the would meet the domestic needs and serve exports, as Plant. The necessary environmental permits have been value-added and to be instrumental in Iran’s economic plants located on the WEP path reaches $3.5 billion. The well. Ilam petrochemical plant has already come on- obtained and the contractor has been chosen. The growth, removing unemployment and creating revenue investments currently under way total $1.2 billion. WEP stream. Operations are also under way in western Iran for objective behind this project is to carry ethylene from the for western Iran. Chief among advantages of developing is the most important project dating from the 4th Five- building three more petrochemical plants. The planned downstream petrochemical projects along with such Year Economic Development Plan. This key petrochemical commissioning of several new petrochemical plants in the Mamesani, Kazeroun, Dehdasht and Boroujen project was aimed at making up for underdevelopment western Iran would eradicate deprivation and create petrochemicalGachsaran olefin plants plant located to the mainon this WEP route route. have Because yet to through creating a permanent market for petrochemicals, in western provinces, job creation, engagement of the development infrastructure in underdeveloped areas. be completed, the Gachsaran ethylene plant would be supplyingmajor projects products as WEP, to match are acquiring market needsbigger and profits be more private sector, motivating the process of production Due to the full support of the National Petrochemical temporarily connected to the main pipeline. However, and upgrading technology in the oil sector. Adopted in whenever these projects become 40% complete, the presenting an alternative to petrochemical development 2002, the project was expected to come online by early Abbas Sha’ri-Moqaddam, a former CEO of NPC, said that government or NPC would start building the sections plansprofitable, in various helping parts national of the job country. creation plans, and 16 Company (NPC), WEP is currently in its final stage. 17 news May 2020 Issue No.95 monthly news CEO of Shahid Tondguyan Petrochemical Company Reza Qasemi Shahri said polyethylene products at this petrochemical company and we registered a 109,000-tonne output capacity,” Iran terephthalate (PET) exports tripled last calendar year on an annual basis. Addressing the Annual General Assembly of the company, he said: “Last calendar year, some 1.14 million capacity. He said the company’s plan was to increase output with a view to supplying domestic tonnes of varieties of PET chain products were produced at Shahid Tondguyan Petrochemical industrialhe said. Shahri needs also and said completing that during value a five-month chains. He period,touched the on plantthe sales produced and export at full of nominal more Trebles PET Company,” he said. “We exported about 46,000 tonnes of products to world markets, which than 618,000 tonnes of products in domestic and international markets, saying: “Domestic was three times higher year-on-year,” he said. He added that last calendar year was the year PET sales reached 573,000 tonnes last calendar year, the highest in four years.” Shahri said Exports the jump in products had been achieved after fully supplying domestic needs and registering four months of last calendar year, it was possible to produce more than 100,000 tonnes of highest ever records in sales. with the biggest output since commissioning petrochemical company. “During the first SP1 Platform Loading Arm Separated at RIPI Inks Two MOUs Balaroud Oil Field Overhaul Ends Kharg Terminal Awarded to NIDC Mehdi Rajabi, director of production operations Abbas Assadrouz, CEO of the Iran Oil Terminals The Research Institute of Petroleum Industry Abdollah Mousavi, CEO of National Iranian at South Pars Phase 1 platform, announced the Company (IOTC), has announced the completion (RIPI) has signed two memorandums of Drilling Company (NIDC) said the state-owned completion of annual overhaul. of operations for separating the loading arms of a understanding (MOUs) with two Iranian “With the conclusion of the overhaul, gas jetty in the Kharg oil terminal for overhaul. companies in a bid to assess the capabilities of production at this platform reached the full He said that the loading arm number 2 of the firmHe said had sevenwon the Iranian tender companies bid held forhad the bid for capacity of 28 mcm/d,” he said. eastern jetty of the terminal was separated by IOTC development of the Balaroud oil field. Noting that the overhaul operation lasted 28 days, experts based on their pre-determined schedule. directorfledging ofgroups RIPI and Kambizproviding Sedqianizadeh, research services. CEO of was announced winner after technical review Rajabi said that the overhaul was done according He added that the overhaul was aimed at Farab The first Oil and MOU Gas was Projects signed Development between Jafar Company, Tofiqi, ofthe its development proposal. Located of the Balaroud in Khuzestan field. Province, NIDC to the predetermined schedule. improving crude oil exports by developing for assessing the capability of knowledge-based Balaroud would be developed in two phases. He said that no serious challenge was caused by infrastructure and equipment in the largest companies and helping supply their lab needs. Mousavi said the development project the Covid-19 outbreak within the and Gas export terminal in the country. Assadrouz Cooperation for marketing and development of was estimated to cost € 41 million, adding: Company (POGC). Rajabi said safe and sustainable underlined the necessity of supporting domestic business by knowledge-based companies and gas production in winter was the major objective manufacturing, saying the loading arm would startups, establishing communications with oil, water transfer as well as the downhole services of the annual overhaul of South Pars platforms. He be transferred to the mechanical reparation of“Development rig supply and of thisproviding field will technical include and location, drilling added: “In ongoing annual overhauls, segments of workshop at the Kharg oil terminal so that are targeted at this MOU. services.” Highlighting NIDC’s capabilities in pipelines were reported to be in critical conditions further action would be taken for separating gas,Furthermore, refining and RIPI petrochemical would identify projects the operators drilling services, as well as integrated technical after examination by the technical inspection unit defective sections and replacing them with new technological needs and cooperate throughout services and the company’s experience of drilling of the Directorate of Production and Operations.” and domestically-manufactured ones. commercialization in order to help market at Balaroud, he said: “Drilling six development “Following the supply of equipment, various The overhaul of this arm includes separation, technological products. Farab Oil and Gas wells using two heavy drilling rigs over 24 months teams particularly welders, installers and dismounting, transfer to workshop, dismantling, Projects Development Company will identify is envisaged. A third drilling rig is also likely upon operators, the platform started full operation,” he inspection, replacement, assembly, transfer and agreement between NIDC and National Iranian added. reinstallation. empowerment. South Oil Company (NISOC).” qualified groups for setting up startups and their

pipeline within eight days but the Turkish side didn’t Iran Turkey Gas Exports to welcome that,” Jamshidi-Dana said. Turkey imported Resume in July 7.7 bcm of gas from Iran in 2019, or some 17% of its Iran expects gas exports to Turkey to resume by mid- total gas imports, under the long-term contract that allows Ankara to buy 9.6 bcm/y. 7, following an explosion on a pipeline in Turkey that forcedJuly at thesupplies latest, to a besenior suspended Iranian at gas the official end of said March. June International Arbitration Mehdi Jamshidi-Dana, former director for dispatching Jamshidi-Dana warned that Iran could take the issue at state-owned National Iranian Gas Company and to international arbitration if it was not resolved, but now interim caretaker of its Gas Transmission stressed that “friendly relationship and professional Company, also said NIGC rejected a claim from Turkey acting by Turkey” would mean Tehran would not that the suspension of supplies represented a force take the matter that far. Talks for an extension of the majeure event. “We predict that the repair of the contract meanwhile are underway, he said, though Iran-Turkey gas pipeline will end in the month of Tir progress was being impacted by the global pandemic situation. “Negotiations to sign new contract are being energy ministry and gas importer Botas have not carried out slowly because of the coronavirus outbreak. made(July 21) an announcementand gas flow will on resume,” progress he in said. repairing Turkey’s the under the two sides’ 25-year take-or-pay contract usually taking around three to seven days, Jamshidi- But our examinations show that imports of Iran’s gas pipeline, but Jamshidi-Dana said Turkey had claimed that came into effect in 2001. The explosion on the Dana said. “Iran has announced in writing that it does have advantages for them. It’s still not clear what a new the pipeline explosion was a force majeure event, line took place on March 31, but repairs had still not not accept this is a force majeure event. In several contract would be. But Turkey undoubtedly needs to meaning Ankara could avoid paying for gas not taken been completed despite work following such attacks correspondences, we said Iran is ready to repair this import gas from Iran,” Jamshidi-Dana said. 18 19 news May 2020 Issue No.95 monthly news Four New Plants to NIDC Drilling Boost Petchem Output Exploration Wells The production capacity of country’s National Iranian Drilling Company (NIDC) Planning for Investment petrochemical industries will be increased is proceeding with its plan to drill a total Domestic Companies to by 107,000 tonnes after launching four new Study ICOFC Fields in PSEEZ petrochemical projects. Upon $103 million Mehdipour said. Mehdipour said the drilling Iraj Khorramdel, CEO of Pars Special Economic worth of investment in petrochemical of a14 third exploration exploration wells, well NIDC had official ended, Reza while CEO of Iranian Central Oil Fields Company Energy Zone (PSEEZ), has announced the planned industry, country’s production capacity operation was beginning for a 9th onshore (ICOFC) Ramin Hatami said the company would establishment of a trauma center in the near of petrochemicals will soar as much as exploration well. “The drilling of Well Arman-1 future. “This calendar year, we are determined 107,000 tonnes at large. Chief Executive in Khuzestan Province started in November domestic companies. He said the decision was to attract investment in various industrial of Iranian Investment Petrochemical 2018 after installing Fath-32 drilling rig,” he aassign strategic feasibility obligation studies in the on developmenteight of its fields of oil to sectors,” he said. He added: “This year we are Group [IIPG] Rasoul Ashrafzadeh made added. Mehdipour said the drilling projects determined to attract investment in various the remarks and revealed the construction were going on schedule owing to cooperation Petroleum Ministry and Board of Directors of industrial sectors. Many domestic industries operation of four petrochemical projects between NIDC and Directorate of Exploration Nationaland gas fields. Iranian “Pursuant Oil Company to notification (NIOC) regarding by the have shown inclination for investment in PSEEZ. with $103 million worth of investment. of National Iranian Oil Company (NIOC). “After the policy and strategy for development and Through investment in South Pars, we will see Once these four giant petrochemical drilling ended in Arman-1, the drilling rig projects are launched, 107,000 tonnes was moved to a new location in Genaveh and gas reservoirs, comprehensive studies on Tabnak, national wealth generation.” “We have prioritized would be added to the current production the drilling of an exploration well started,” he maximum efficient recovery (MER) from oil and constructionsignificant jump and in completion job creation, of aproduction trauma center and capacity of petrochemicals in the added. “Of a total 14 wells, 9 wells have been as the Naftshahr, Sarvestan and Saadatabad oil because it is a major need for people and industry country, he added. He pointed to budget drilled. Two wells in Khuzestan Province and Shanol, Varavi, Aghar and Dalan gas fields as well in South Pars, which will start soon. Another allocation for the implementation of one well in Fars Province have been completed. healthcare measure would be to complete and these projects and added, “These projects The drilling of six other wells is under way determinefields will be reservoir assigned properties, to domestic developing consulting equip Toheed Hospital in Jam city in partnership will be launched in less developed and in the provinces of Khuzestan, Bushehr and engineering companies in five packages to with National Iranian Gas Company (NIGC) to disadvantaged areas in the country.” Kohguiluyeh and Boyer Ahmad by Fath 31, 32, performance, make calculations and present engage medical specialists and subspecialists,” Launching the aforementioned 33, 40, 74 and 89 drilling rigs,” said Mehdipour. developmentsubsurface and plans surface and models,enhance predict recovery,” the saidfield he added. Khorramdel touched on planning for petrochemical projects would generate “In implementing the 14 exploration wells, new employment opportunities as 32,300 meters of drilling has so far been run by ICOFC have already been assigned to other in Bushehr Province, saying: “Feasibility for well, he emphasized. Elsewhere in his recorded. Up to year-end, four more wells companiesHatami. “Studies and their for resultsseven other will be oil announced and gas fields in theupgrading establishment scientific of and a branch academic of the infrastructure Petroleum remarks, Ashrafzadeh pointed to these will be completed,” he said. Mehdipour said a coming months,” he said. ICOFC runs 84 oil and University of Technology, setting up a technical four petrochemical projects which include major achievement of these projects was the college in Kangan, setting up an incubator in methyl amine in Sonqor, caustic soda Chahar Mahal and Bakhtiari, Khorasan Razavi, Province after drilling Dang-1 exploration well Khuzestan,gas fields in Fars, the 11 Qom, provinces Kermanshah, of Ilam, Kohguiluyeh Bushehr, crystal melamine production plant in discoveryby Fath-33 of and the thegiant discovery Eram gas of field the secondin Fars and Boyer Ahmad, Lorestan and Hormuzgan. So empowercooperation teachers with the are Office among of measuresVice President whose for flakesLordegan production and poly-aluminum plant in Mahshahr, chloride largest oil reservoir in Khuzestan Province, arrangementScientific Affairs is under and planning way.” to scientifically production plant in Urmia. operational. far 13 gas fields and 13 oil fields have become known as the Namavaran oil field.

Petchem Output of 12 strategic products from propylene in the production of petrochemical products in the past current year, based on which the demand of Iranian calendar year (ended on March 19) and Capacity Up 35% downstream industries will be met,” he added. The said, “Last year was a successful year in terms of The head of National Petrochemical Company deputy oil minister further pointed out that 16 petrochemical production, there was no problem (NPC), Behzad Mohammadi, said Iran’s annual petrochemical projects, valued at over $11 billion, in this due, and the projected annual output petrochemical production will increase 35% will be put into operation in the current year. He was achieved.” According to Mohammadi, the in the current Iranian calendar year (ends on called the current year as a prosperous and golden petrochemical industry is not like the oil industry March 20, 2021). He said that the operation of year for Iran’s petrochemical industry and added, and it is practically unsanctionable. 16 petrochemical projects in the current year “according to the scheduled program, a number of “For oil, the ways of selling and the costumers will increase the production capacity of the 16 petrochemical projects will be inaugurated by petrochemical industry by 35%. He pointed to yearend but it is likely that three to four of these with petrochemicals. There are hundreds of the plan of enhancing the production capacity projects would be put into operation with delay holdingsare specific which and arelimited eager but for that buying is not our the diverse case of propylene in the smartening process of the due to the outbreak of coronavirus pandemic.” petrochemical industry and put the current “Tehran Times” reporter in a press conference on production capacity of propylene in the country at petrochemical industry smart is the only way for a thepetrochemical sidelines of products”, the 24th Iran the International,official has told Oil, Gas, more than 950,000 tonnes. Presently, the country stableThe official presence had previouslyin the global said markets. that making Mohammadi the is facing a shortage of propylene and for this reiterated, “In the petrochemical sector we Show 2019). “However, we are holding meetings reason, planning has been made for increasing should have a global view.” He also emphasized withRefining our andcustomers Petrochemical to explore Exhibition various aspects(Iran Oil of production capacity of propylene in petrochemical moving in the way of attracting more investors to possible impacts of the U.S. sanctions on our trade”, industry, he stated. “We have targeted production he added. 20 this industry. The official further mentioned the 21 sp11 May 2020 Issue No.95 monthly sp11 Zangeneh: Sanctions Didn’t Halt Our Projects Iran’s President Hassan Rouhani inaugurated the installation of the first jacket of Phase 11 of the massive South Pars gas field. Addressing the ceremony, Minister of Petroleum Bijan Zangeneh said that the offshore activities of the South Pars gas field would be over this calendar year (started on 20 March 2020). “The implementation of South Pars development projects was coincided with financial difficulties and we had to endure low oil prices,” he said.

technology is needed in this phase because South we had no $100 oil. Of course, National Development “What’s more is that we will not be stopped started in 1997. After 22 years, South Pars Pars would be faced with production decline in Fund of Iran (NDFI) was of great help to us.” by sanctions. We will go ahead despite all these evelopment of the South Pars gas field coming years. According to Zangeneh, $2.4 billion the installation of 11B jacket. A total of 27 of the contract’s value was specifically for the SP11 Recovery in 14 Months the Goreh-Jask project, West Karoun development Dis in the final stage of development with compression platform. Zangeneh touched on the installation of the 11B projectssanctions and and petrochemical all of our projects projects including are active,” joint fields,he Pars, whose completion would allow for the recovery platform jacket on its location, saying: “With the added. ofdevelopment nearly 80 mcm/d phases of have sour been gas. defined This gas for will South be Projects Active installation of this $25 million jacket, it would then processed to be injected into the national gas 350,000 Persons-Hours of Safe Work trunkline or to feed petrochemical plants. given blessing for the Iranian nation, adding that planned to be drilled.” He said that no production Hamid-Reza Masoudi, CEO of Petropars, said Iran is currently recovering 700 mcm/d of gas productionZangeneh said from the South South Pars Pars had gas increased field was from a God- platformbecome possible would be to built drill for12 wellsthis jacket. while five“With wells the are 350,000 persons-hours had been spent on building from South Pars, which would reach 750 mcm/d 280 mcm/d in 2013 to 700 mcm/d now. He added this jacket, which he said, was accident-free. He by next March. The increase in gas recovery from that another 50 mcm/d would be added to the giant would possible to recover 14 mcm/d from this phase added that the jacket had been designed and South Pars comes at a time the US imposed tough ininstallation 14 months,” of this he said. jacket Zangeneh and drilling said of onshore five wells, and it built fully by Iranian designers, consultants and sanctions on Iran’s petroleum industry following gas recovery was now proportionate to its share of offshore pressure compression was being studied, contractors. He said that after the installation of its unilateral withdrawal from the 2015 nuclear Southfield’s Parsoutput which this iscalendar shared year.with ZangenehQatar. said Iran’s adding that relevant studies would be completed in this jacket, a drilling rig would be mounted for deal. Consequently, many companies stopped October or November to allow for decision-making. cooperating with Iran and France’s Total and No $100 Oil mcf/d of rich gas. The SP11 development project in China’s CNPCI pulled out of the SP11 project. In Zangeneh said South Pars had been developed in drillinglocations five wells A and to B allow is under for theway recovery with each of location500 2017, Total agreed to develop SP11 at the head of recent years in the midst of sanctions. He added having 12 wells and two platforms each with a consortium comprising CNPCI and Petropars. that the brief period of no sanctions following a production capacity of 1bcf/d. According to However, following the restoration of sanctions, the Iran nuclear deal allowed for importing the two foreign companies quit. According to huge quantities of necessary commodities. the location of Platform 11B for the recovery Zangeneh, the Total-led consortium had spent $100 He said that 17 phases of South Pars were ofplanning, 500 mcf/d five ofwells gas. would Primary be productionfirst drilled from in million on the project before leaving Iran. The incomplete when the Rouhani administration this platform is expected to start next year. In project was then assigned to Petropars that has the order to accelerate the development of SP11, experience of development other phases of South Pars. Petropars is a qualified Iranian company complete.”took office. Noting“Now, all that the all incomplete offshore activities phases of gas production in this project are based in oil and gas projects. The SP11 project, worth willexcept end for in the the refinery current ofyear, SP14 the are minister now onconstruction maximum useactivities of available in the firstinstallations, location more than $4 billion, is aimed at the recovery said: “These activities have been done while spending minimum costs and allocating shortest of 56 mcm/d of gas. Pressure compression possible time.

we were faced with financial problems and

22 23 May 2020 Issue No.95 south pars monthly south pars Developing Persian Gulf Fields to Avert South Pars Output Fall As Iran’s Petropars outh Pars saw its output pressure fall-off in the reservoir cut in recent years. The country SP12 Output Falling starts developing reach 700 mcm/d in 2019 and guarantee sustainable even envisaged exporting gas and Pressure fall-off in SP12 will be and Minister of Petroleum production in the South Pars field. faster than that of other phases. Like Phase 11 of the Bijan Zangeneh’s promise Acid job, perforation, workover (LNG). giant South Pars gas field Sof Iran outperforming Qatar producing liquefied natural gas of wells, drilling new wells, Pressure fall-off is a natural with a view to making in South Pars recovery came and laying new pipes between phenomenon. Preventive measures many other oil and gas fields, South first recovery in 2021, Iran true. Now, in a bid to guarantee platforms are among -term are needed now. Drop in production andPars features. is a non-homogenous In the central fieldparts with of its own specific reservoir thickness would be soon completing sustained production from South solutions, while concentration Pars that supplies more than 75% on the development of blocks tangible enough. the reservoir rock is more suitable development of all phases of Iran’s gas, pressure fall-off in surrounding South Pars is a inGas this recovery field; however, from south may Pars not be forthe gasfield, storage gas layers and transmission.are thicker, while of this offshore field which coming years has to be avoided. long-term solution. Based on the is based on the gas expansion However, as we approach the it shares with neighboring Mohammad Meshkinfam, CEO of planning made, the gas produced mechanism. In other words, gas phases closer to the reservoir, the Qatar. Pars Oil and Gas Company (POGC), in Belal field whose development production from this reservoir gas column will become less thick agreement was signed with would be synonymous with a while the reservoir features will the Persian Gulf would help avoid Petropars last year, and the gas gradual decline in the reservoir be weaker. On the basis of this rule ahas sudden said developing drop in the other South fields Pars in produced in Phase 1 of the Kish pressure, which is natural in all gas and based on information gained production rate in coming years. gas field would be transmitted reservoirs. However, such natural from the appraisal wells drilled in Reservoir pressure fall-off and to the platforms of SP12 to offset and sustained decline in the gas SP12, it was forecast from the very reduced output in South Pars possible production cut in this pressure would continue until it beginning that production from is unavoidable in coming years. phase. reaches the minimum pressure the platforms of this phase would Therefore, POGC, which is tasked Furthermore, comprehensive needed for the transfer of gas from happen in a shorter period of time. with developing Persian Gulf gas studies and planning have been under way to guarantee sustainable due to the impossibility of any 2014. It has since been producing Apart from South Pars; North furthersea to onshore decline refinery.in pressure, After gas that, gas.SP12 However, was officially Meshkinfam inaugurated has said in Pars,fields, Farzad has to A,remedy Farzad the B, situation.Golshan, drilling, installing compressors, production will start falling until the as gas production from Platform Ferdowsi, Kish and Belal are the extendinggas production offshore at South pipelines Pars. Infill well stops producing. C of SP12 is nearing its end, this and building new platforms are Meshkinfam said that pressure platform would be detached from development. However, the point among options. South Pars holds fall-off started ever since production this current location to be installed withfields developing that POGC allis tasked these blockswith their is 14.2 tcm gas, i.e. 8% of the world began in all South Pars platforms. in SP11 in 2021. Furthermore, the that some of them are jointly-owned total gas reserves, and 18 billion Except for Platform A and Platform gas produced at SP12 would be with other countries and therefore barrels of condensate. Iran holds C of SP12, its gas production maximum recovery from them currently stands at 82 mcf/d and of this phase through connecting 2013, Iran was producing below 230 mcf/d, respectively. thistransferred platform to to the the onshore existing refinery offshore Petroleum Ministry. Sustainable 300a 15% mcm/d share of in gas this from field. its Until sector When new platforms of SP11, SP13, pipeline. Meshkinfam has reiterated productionwould be highly for at significant least 25 years for the has SP14 and SP22-24 come online, the that the remaining seven wells to be guaranteed from now. brought its production to 700 initial drop will not be tangible, but would be drilled after the operation National Iranian Oil Company mcm/dof the joint by 2019.field. However,Relying on Iran this of production platform so that the (NIOC) envisages a short and a volume of production, Iran did not point where such decline in output envisaged 1bcf/d output would long-term solution to prevent have to worry about any gas supply wouldafter five matter. years, Iran will reach a materialize.

24 25 Analysis May 2020 Issue No.95 monthly Analysis OilOil PricePrice FallFall WinnersWinners

Shuaib Bahman from oil price decline in global markets, but to the Covid-19 pandemic and the failure of and cover margins as the May contract neared they would be faced with numerous economic OPEC+ to reach agreement, new groups of expiration, BB Energy, a medium-sized trading lthough some nations may have challenges in the long term. The issue is not winners emerged to benefit from the existing house based in London, bought 250,000 barrels welcomed the oil price decline in limited to transaction of commodities between circumstances. These new winners may be of the West Texas Intermediate crude futures global markets, some others see the producers and consumers; it also covers a wide classified under the following categories: for May delivery, according to a person with persistence of such a trend as a serious spectrum of challenges. For instance, if a factory The first group comprises nations whose oil knowledge of the situation. The WTI contract threat.A Among nations looking favorably at the oil fails to sell its commodities it would have to lay production has declined for numerous reasons. closed at minus $37.63 on that day. price decline, political and economic motivations off labor and in this way many jobs would be lost. Countries like Iran and Venezuela, under US As the information is confidential and on the are high. Political or economic interests may That would have long-term economic, social and sanctions, and Libya, engulfed in internal crisis, condition of being anonymous, a person said BB require a nation to welcome a decline in oil even political consequences. Therefore, despite have had to supply less oil. They have not been Energy had an edge: It was one of the few with prices. Over recent months, when oil prices the fact that a short-term fall in oil prices could forced to sell oil at lower prices and they may available space to store oil. The opportunity for have somewhat declined, some countries and help complete strategic reserves at low prices be considered as winner. In fact, the economy of the trading to take delivery of the oil was a rare companies emerged as beneficiary while some consumers would not benefit in the mid-term and these countries has suffered a less severe shock prize given the dearth of storage to hold plentiful others suffered gravely. Economic equations long-term. That is why most consumers follow than other producers because in recent years they supplies of oil across the country. are simple to understand. Any seller selling a the logic of market and prefer balance to low- were less dependent on oil revenue compared The volume they purchased was some 10% of commodity at a higher price would make bigger cost oil. This logic does not apply to all consumer with other producers. the 2.43 million barrels that were ultimately gains; nevertheless, any buyer buying at as nations as some countries may benefit from this The second group comprises traditional oil delivered physically for May, according to Nymex. much lower price as possible would make gains, opportunity for higher consumption while being producers. The decline in in oil prices in global It is unclear how much it paid for the barrels and too. However, the market does not necessarily indifferent to its consequences. That is also true markets means shale oil production is no if it’s still holding on to them or not. But the well- follow this simple logic all the time. Sometimes, for producers. Some producer nations, instead of longer economical and shale oil has been partly timed trade means BB Energy has emerged as one purchasing a commodity at lower prices may using the supply and demand logic for the market removed from the global markets. Therefore, of the clear winners of the fallout in oil, which has call a halt to its production or fail to cover all rebalance, try to compensate for their income the traditional producers of oil may be seen roiled global markets and economies dependent its production costs. Global markets follow the shortages by selling more oil, which would finally as winners of the oil price decline, specifically on the liquid asset. same logic. For oil consumers, purchasing at bring down prices. Saudi Arabia is a case in point. because their strong rivals have had to limit The fourth group comprises nations with lower prices may be a blessing and opportunity, It did not agree to reduce its oil production level their shale oil production and therefore any onshore and offshore storage capacity. They but in the long term energy production would and even sold oil at reduced prices. Therefore, long-term investment in this sector is faced with seized on the moment to store as much oil as they suffer losses. Furthermore, countries across the the market logic does not always respond to the serious challenges. The third group comprises could. According to official data, oil storage was world are economically interdependent and any political will of producers and consumers and for companies that had managed to buy oil at low the highest-demanded part of the energy market low revenue from oil sales by producers would whatsoever reason they may prefer low prices to and even negative prices. For instance, the day oil in recent months. In fact, low prices convinced affect their trade transactions with consumer market rebalance, in which case the market would prices turned negative will likely be remembered many countries to fil their storage tanks in a bid nations. Since most oil producers depend on oil need more time to return to the point of balance. as the climax of the darkest period ever for the to make more gains. Therefore, the countries revenue any decline in their sources of income petroleum industry, but for one lucky trading with storage facilities made highest gains from would erode at their power of purchase. Based New Winners house it was a lifetime opportunity. oil prices and they managed to fill their energy on this logic, oil consumers seem to be benefiting Throughout the recent oil price decline due While many rushed to liquidate positions strategic reserves. 26 27 Analysis May 2020 Issue No.95 monthly Analysis

currently depends on imports for 70% of its oil Third, contrary to imaginations that China should problems may hinder extraction, production, Shuaib Bahman needs. Despite all its significant economic and have been happy with the oil price decline, it refining and transfer of oil, the major concerns in s oil prices experience a sharp decline, industrial progress, China still depends on other welcomed the agreement reached between OPEC global markets have now spread to producers. Oil experts precisely look into supply and nations for meeting its energy needs. That is why and its partners to significantly reduce total producers are currently afraid of falling demand demand status to propose a remedy Chinese leaders have always sought to develop output, because China is well familiar with the in global markets. For consumers, any challenge for restoring balance to the global proper cooperation with oil producers and big logic dominating the market and it knows quite to energy supply could expose these countries oilA markets. Studying oil supply and demand international bodies like OPEC. The oil market well that in case oil prices remain low on the long- to serious threats. For producers, any decline in would require assessing the situation of major is currently faced with the challenge of low term, many producer nations would see their consumption and market imbalance would pose producers and consumers across the world. demand due to the Covid-19 outbreak with prices purchase power decline, and China would lose serious challenges. Producers have long sought On the producer side, the Organization of the dropping to their record lows over recent years. its market in these countries. Therefore, China to maintain energy supply levels in a bid to Petroleum Exporting Countries (OPEC) enjoys a Therefore, the issue of OPEC-China cooperation favors balance restoration to oil market in the guarantee energy security; however, consumers significant position. On the consumer side, China takes up added significance due to the following shortest possible time. Fourth, although the US have now embarked on fresh efforts to restore is a leading country in the world. Due to weaker reasons: First, China is a top consumer, mainly – itself a major oil consumer – has shown strong balance to global markets. To that effect, China, demand for oil on the part of China and Covid-19 importing oil from OPEC member states. willingness to join producers and consumers, it in cooperation with oil producers, is trying to spread, global markets suffered severely. Therefore, any cooperation between leading constantly threatens producers including OPEC take action in favor restoring balance to the oil Following the coronavirus outbreak, demand consumers and major bodies like OPEC would member countries. Therefore, cooperation market. Heavily depended on crude oil imports, for oil fell sharply in the world. In the first look, help restore balance to oil markets in the world. with China would largely alleviate US pressure China needs widespread cooperation with OPEC OPEC – the largest oil producer group – seems Second, China’s economic contraction emanated on OPEC states. In light of ongoing US-China in order to maintain its energy security. In fact, unlikely to have any significant cooperation with from coronavirus pandemic has impacted trade war, any conflict between these two big due to its growing energy needs, China constantly China – the largest oil consumer. However, these oil consumption at the international level. economies would impact other markets. China’s depends on oil supply. In case any problem two sides have long been in interaction without However, under the present circumstances, an unwillingness to purchase energy from the US is emerges in this cycle, China would suffer the acknowledging it publicly. OPEC and China have improvement in health conditions in China is one of the potentially challenging issues for the most economic losses. Therefore, it needs strong on many occasions exchanged views about oil improving business and production in this Asian administration of President Donald Trump. communications with oil producer nations. In the market issues. giant. Therefore, China would regain its status meantime, cooperation with OPEC member states as a top consumer of energy in the world, which Advantages of Cooperation could allay China’s major concerns about possible Cooperation under Present Circumstances would mean higher demand for oil in the global Financial and energy markets are more than ever lack of access to energy. For its part, OPEC needs China’s growing economy and industry, over markets. In fact, China’s return to its energy interdependent today. That makes cooperation the cooperation of countries like China with recent decades, have sharply enhanced the consumption patterns would help global support between China and OPEC inevitable. a view to regulating the market and restoring country’s energy consumption, making China for the petroleum industry and partly allay Leading consumer nations long feared that balance to the oil markets. Therefore, China-OPEC the largest oil importer in the world. China OPEC’s demand concerns in the market. political developments and tensions or technical cooperation would have advantages for both.

Cooperation for Restoring OPEC Balance to the Oil Market China

28 29 UK Offshore Sector Should Step Up Net Zero Efforts Britain’s Oil and Gas Authority (OGA) has But the industry should go also go further in IPF called for the UK offshore industry to move reducing its own carbon footprint, the OGA faster in helping the government achieve Net warned, or risk losing its social license to Zero greenhouse gas emissions by 2050. operate. The OGA has opened to consultation The authority said its established goal of proposed revisions to its strategy. These BPC Awarded Offshore maximizing economic recovery of the UK’s and concepts assessed in the UKCS energy Uruguay Block remaining oil and gas can be compatible with integration project could make a significant the transition to Net Zero, and the industry contribution to achieving Net Zero, it claims, Uruguay’s national regulatory has the skills, technology, and capital needed both through carbon capture and storage agency ANCAP has awarded Bahamas to devise suitable solutions. (CCS) and CCS plus hydrogen. Petroleum Co. (BPC) an exploration license for the AREA OFF-1 block. This follows a period under which BPC had to demonstrate its technical and operational credentials in order to qualify as an approved offshore ExxonMobil Joins operator. During the initial four- Petronas in Suriname Block year exploration period for OFF-1, Petronas Suriname Exploration & the company will reprocess around Production B.V. (PSEPBV) has completed 2,000 km (1,242 mi) of legacy 2D the farm-down of 50% of its participating seismic and perform new geotechnical interest in block 52 offshore Suriname to studies, at an estimated cost of around ExxonMobil Exploration and Production Suriname $200,000/yr. There is no drilling Qatar Petroleum in B.V. Block 52 covers an area of 4,749 sq km (1,834 UK commitment for the initial period. sq mi) in the Suriname-Guyana basin. Water depths Ivory Coast Farm-In Agreement range from 50 to 1,100 m (164 to 3,609 ft). Following Qatar Petroleum has entered a farm- the farm-down, PSEPBV as the operator of block in agreement with Total to acquire a 45% 52 holds 50% equity, while ExxonMobil holds the participating interest in blocks CI-705 and remaining 50%. Emeliana Rice-Oxley, Petronas’ CI-706 in the Ivorian-Tano basin offshore the vice president of Exploration, said the Republic of Côte d’Ivoire. The two blocks cover an company plans to drill a well on the area of about 3,200 sq km (1,236 sq mi), and present block in 3Q 2020 and acquire 3D multi-target hydrocarbon prospects in water depths seismic data. ranging from 1,000 to 2,000 m (3,281 to 6,562 ft). Qatar They are 35 km (22 mi) from shore and about 100 km (62 mi) from the Foxtrot, Espoir, and Baobab fields. Saad Sherida Al-Kaabi, the Minister of VIEW State for Energy Affairs, president and CEO of Qatar Petroleum said, this is company’s first investment in Côte d’Ivoire.

Suriname Melbana to Operate in Offshore Australia Melbana Energy has secured approval Uruguay from Australia’s National Offshore VIEW Australia Petroleum Titles Administrator for VIEW a 12-month suspension of a work program on the WA-488-P permit in the Bonaparte basin offshore northwest Australia. Permit Year 3 has at the same time extended by a year to Dec. 21, 2023. The permit includes the Beehive prospect, a carbonate build-up with prospective resources of up to 388 MMboe, covered by 3D seismic survey. Melbana has continued planning/permitting arrangements for an exploration well, despite the withdrawals of Total and Santos from conditional farm-in agreements. News May 2020 Issue No.95 monthly News Vitol Veteran Ian Taylor Dies at 64 Norway’s Aker BP, Equinor Approve Investments Ian Taylor, who built Vitol into Norwegian oil companies the world’s biggest oil trader, Aker BP and Equinor said they has died from pneumonia at would go ahead with several the age of 64, the company offshore projects, a day after said, after surviving bouts of politicians increased tax cancer and a stroke las t year. incentives for the industry. From drinking with Fidel The ruling minority Castro to providing billions of government and the main dollars to Kazakhstan, Taylor opposition parties agreed to was known as a risk taker allow oil companies to shield temporarily part of their the 2011 uprising against income from taxes to spur who even flew to Libya during investments and save jobs. the Oxford University graduate Aker BP has awarded a 1 becameMuammar CEO Gaddafi. of Vitol, In which 1995 billion Norwegian crowns with Britain’s blessing supplied ($106.44 million) contract the opposition in Benghazi with vital fuel in exchange for to build an unmanned oil crude oil cargoes. to oil service firm Kvaerner During Taylor’s time in charge, The Norwegian billionaire Vitol also carried on trading 1 Kjellplatform Inge for Roekke the Hod controls field. both Iranian fuel oil in 2012, despite businessmen and in 2007 Minister David Aker BP and Kvaerner. Aker statement. Majority state- electrify Gina Krog, 2 U.S. sanctions. Glencore’s stepped in to save Scottish Cameron, Taylor BP had previously decided to owned Equinor said it would and a 400 million CEO Ivan Glasenberg said fabric maker Harris Tweed was chairman of the Royal postpone the project, citing the go ahead with investment contract to electrify Sleipner, Taylor was “one of the last Hebrides. “He combined Opera House until 2019. After need to preserve cash, after the totalling almost 1.5 billion projects that could provide of the pioneers that helped energy and a determination to starting his career at Shell in COVID-19 pandemic crushed crowns to connect its offshore hundreds of jobs. Equinor transform the oil trading succeed with humility, humour 1978 and working in South oil demand and lowered prices. installations at the Gina Krog said the tax changes, backed industry”, adding that he and humanity,” Hardy said in America and southeast Asia, “The Hod development in and Sleipner fields to an both by ruling and the main would be missed. Described a statement. A Conservative Taylor joined privately-owned the Valhall area is the first onshore grid to cut carbon opposition parties, would by his successor Russell party donor who turned down Vitol in 1985, turning the once project to be launched as emissions. Equinor awarded stimulate investment and Hardy as “exceptional”, Taylor the offer of a knighthood modest Dutch fuel dealer into a a direct result of the tax oil service firm Aibel a 160 help to maintain activity in “a became one of Britain’s richest from former British Prime global trading operation. changes,” Aker BP said in a million crowns contract to challenging period”.

NEWS NEWS NEWS NEWS Germany Earmarks U.S. Oil Refiners’ Shares Thai PTT Delays TEPCO Renewable to €500mn for Electric Car Rebound Decision on $5.7bn Spend $9-18bn on Green Wall Street is betting on a strong recovery from Charging the coronavirus pandemic by pouring money Ohio Petchem Plant Power The German economy ministry wants to earmark Thai chemical company PTT PCL said its TEPCO Renewable Power, a unit of Tokyo Electric 500 million euros ($567 million) from Berlin’s demand for gasoline, jet fuel and diesel remains U.S. unit expects to decide in the next six to Power Company Holdings, plans to spend about 1-2 bumper stimulus package to support the roll- wellinto sharesbelow seasonalof U.S. oil lows. refiners, even though nine months whether to build a proposed trillion yen ($9-18 billion) to develop 6-7 gigawatts out of charging stations for electric cars, two Shares of Valero Energy Corp and Marathon $5.7 billion plant called an ethane cracker (GW) of offshore wind and hydroelectric power government sources told Reuters. The sum, Petroleum Corp were trading at their highest in Ohio, putting off a decision it had said projects by 2035, its president said. “We aim to boost would likely come in the first half of expanding electric vehicle infrastructure, will be Wells Fargo raised its price target on certain 2020. “While the pandemic has prevented yen now” through the investments, Seiichi Fubasami, targetedpart of 2.5 at billion private euros users, specifically including householdsaimed at levels since the first week of March. Brokerage us from moving as quickly as we would presidentour profit ofto TEPCO100 billion Renewable yen in 2030 Power, from told 40 Reuters billion and builders, the sources said. Berlin aims to upswing as lockdowns ease across the United like within our previous timeline, our in an interview. Its parent TEPCO, which has been install about one million public charging spots States.independent refiners, saying demand was on an best estimate is for a final investment struggling to restart nuclear power stations after the by 2030, up from 27,730 currently, a key step decision by the end of this year or in the Fukushima disaster of 2011, said in 2018 that it will in addressing consumers’ concerns about the incredibly strong recovery,” said Warren first quarter of next year,” Toasaporn develop 2-3 GW of offshore wind power each at driving range of battery-powered cars, “ThePies, stock energy market strategist has definitely at Ned Davis priced in an Boonyapipat, President and CEO of home and abroad, and 2-3 GW of hydroelectric which so far account for just 0.6% of Research. “Probably more than is PTT’s PTTGC America (PTTGCA) power overseas to help renewable energy vehicles on German roads. 3 taking place.” 4 unit, said in a statement. 5 become a core power source. 6 32 33 News May 2020 Issue No.95 monthly News Two Major Libyan Oilfields Reopen US Sanctions on Rosneft Remain Effective Russia lowering its direct southwestern Libya have stake in top oil producer reopenedTwo major after oilfields months in of a Rosneft will not alter its blockade that shut off most of exposure to U.S. sanctions, the country’s crude production, a U.S. Treasury spokesman costing billions of dollars in told Reuters. State holding lost revenue. The state-owned company Rosneftegaz has National Oil Corporation (NOC) lowered its 50.33% direct stake to 40.4% with subsidiary had resumed at the 300,000 RN-NeftKapitalInvest taking barrelconfirmed per daysome (bpd) production Sharara 9.6% and Rosneft unit RN- Capital 0.33%. “The reported months. Two engineers at the change in Rosneft’s ownership oilfield, shut for more than four does not alter the basis for was gradually restarting. El its inclusion on the SSI List,” field told Reuters production a U.S. Treasury spokesman reopened, an engineer there told Reuters. “The change... toldFeel, Reuters. a field linked There to was Sharara, no does not alter the Treasury Department’s concerns had restarted “after lengthy said. Production at with respect to a broad Inclusion in the list, overseen President Vladimir 8 whichimmediate previously confirmation produced from negotiations ... to reopen the Sharara will start 7 range of Russian malign Putin, include BP with 70,000the NOC bpd. regarding The resumptions the field, Hamada valve, which had been at 30,000 bpd and activity globally, and we will Foreign Assets Control, means a 19.75% stake and Qatar follow a rapid military retreat illegally closed last January” output is expected to return continue to use our sanctions U.S.by the persons U.S. Treasury’s are barred Office from of with 18.93%. As the three by forces loyal to eastern- but did give further details. to full capacity within 90 days, authorities as appropriate in Rosneftegaz entities combined based commander Khalifa The valve, on the pipeline NOC said. Sharara is operated response to that activity.” mid-to-long term new debt hold 50.33% of Rosneft and Haftar, whose allies had running from Sharara to by NOC in a joint venture with The United States added orengaging providing with assistance those firms for in give the state control of the the northern oil terminal of Spain’s Repsol, France’s Total, Rosneft and other Russian deepwater, Arctic offshore or company, Rosneft will still since January, shutting off Zawiya, was reopened and Austria’s OMV and Norway’s entities to its “Sectoral shale projects. International be able to develop offshore mostblockaded of Libya’s oilfields production. and ports Equinor. NOC declared force shareholders in Rosneft, blocks at home, said Yaroslav NOC said in a statement reached the terminal, the majeure on loadings from the (SSI List) in 2014 over Russia’s headed by Igor Sechin, a that production at Sharara Petroleumcrude flowing Facilities from Sharara Guard roleSanctions in the Identifications Ukraine crisis. List” longstanding ally of Russian Nortia GKS. Karnakov, a partner at law firm field in January. NEWS NEWS Gasoline Rises As U.S. Oil Producers Shut Wells Malaysia Names Petronas New CEO Energy companies evacuated halted production and acquired contracts in case the Malaysia’s prime minister Mahathir Mohamad. Tengku executive’s position at Petronas, 10% of production platforms evacuated offshore staff, while storm disrupts the market, which is fully owned by the and shut nearly 30% of Murphy Oil Corp and Royal traders said. The Miami- at Petroliam Nasional Bhd Malaysian government, is a offshore oil output, pushing Dutch Shell PLC evacuated based National Hurricane (Petronas)appointed theto take finance over chief as Muhammad Taufik Tengku Aziz, prime ministerial appointment. gasoline prices higher, as some platforms, the companies Center issued tropical storm chief executive at the state currently chief financial officer Wan Zul, as he is commonly Tropical Storm Cristobal said. Operators evacuated and storm surge warnings energy company, at a time fromwill take July over 1, the from prime Wan minister’s Zulkiflee known, is a Petronas veteran, entered the U.S. Gulf of Mexico. 65 offshore facilities and for areas from Louisiana to when lower oil prices and Wan Ariffin as Petronas CEO joining the company in 1983 as Cristobal was located 535 moved seven drill rigs out of Ocean Springs, Mississippi. the coronavirus pandemic a process engineer and working miles (860 km) south of the the storm’s path, according Winds were 40 miles per joinoffice the said. struggling Wan Zulkiflee, national who his way up through the ranks. mouth of the Mississippi River to offshore regulator Bureau hour (64 km per hour) and The government of premier carrierled Petronas Malaysia for fiveAirlines years, as will He took over as CEO in 2015 and moving north at 13 miles of Safety and Environmental expected to reach 60 miles Muhyiddinhave hit the Yassin firm’s hasprofits. made a and led the company through a per hour (21 km per hour), Enforcement. Well shut-ins per hour (96 km per hour) series of management changes said. The changes at Petronas period of tumultuous oil prices. according to the U.S. National took out 544,814 barrels per before landfall, according to at state-owned companies and comechairman, as the Muhyiddin’s new coronavirus office Benchmark Brent crude plunged Hurricane Center day of oil and 601 million NHC forecaster Richard Pasch. government agencies outbreak has wreaked havoc to near 12-year lows soon after (NHC). Equinor cubic feet of natural gas Cristobal was forecast to strike since coming to power on energy demand and he took over, prompting Petronas ASA, BP PLC production, BSEE said. Spot central Louisiana after passing in March following the dampened oil prices, forcing the to cut $12 billion from costs and 9 and Occidental Gulf Coast gasoline prices through U.S. offshore oil 10 unexpected resignation company to review costs and Petroleum Corp rose a half a penny as buyers production areas. of his predecessor, capital expenditure. The chief time. thousands of jobs for the first 34 35 Interview May 2020 Issue No.95 monthly Interview

Sustained gas supply in northeastern Iran was always a major cause of concern District 4 with for Iranian gas industry officials mainly due to Turkmenistan’s non-compliance more than 5,600 with its commitments to Iran. km of pipeline, seven production District 4, centers and Beating Heart of three gas compressor Khorasan steel mill, Mashhad order to ensure the safety of pipes. meetings. In addition, stations cement plant, Jajarm casting Last calendar year, more than congregational prayer rooms covering more plant, aluminum industry, Zavareh 5,400 km of pipe underwent leak and restaurants were shut down than 320,000 of Iran Gas cement plant, Qaen cement plant detection. Furthermore, in a bid to contain the virus spread. land, is the second as well as Neishabour steel mill. to guarantee the stability of gas Telecommuting for at-risk transmission, 89km of pigging was populations and those with largest gas How much gas has been done in the pipes. underlying diseases, reducing transmission zone, The district 4 transmitted from District 4 staff, cancelling non-emergency tasked with gas transmission area over recent years? What has been done assignments, shutting down guaranteeing has become key in Iran’s Given the extent of territory with regard to fighting the guesthouses, holding meetings sustainable gas covered by the district, about 28.9 coronavirus outbreak? through videoconference and gas distribution as it feeds bcm of gas was transmitted from Despite the outbreak of respecting social distancing distribution in the northern and northeastern this district last calendar year. Covid-19, gas supply has are among the major policies Mohammad provinces of provinces. Mohammad Kamel, continued without any halt. adopted for containing the Kamel : North Khorasan, CEO of Gas Transmission How are safety conditions Crisis management committees Covid-19 outbreak. Holding about South Khorasan Operations District 4, has spoken of pipes, leak detection and have been set up to take Among effective measures 33.8 tcm of and Khorasan pigging? action against the coronavirus undertaken for preventing the to “Iran Petroleum” to outline the Based on monthly schedules outbreak, collective activities pandemic, employees’ clock in, naturalgas, Razavi and part of activities under way in District 4. we regularly inspect pipelines in like training courses, cultural offices, corridors, elevators, equal to 16% Semnan Province of the world’s Mehdi Mehrabi seven production centers and reserves, 48% three gas compressor stations covering more than 320,000 of of the First of all, could you land, is the second largest gas Middle East’s please tell us about gas transmission zone, tasked with and 38% of transmission operation in guaranteeing sustainable gas OPEC District 4? distribution in the provinces of members’ total Holding about 33.8 tcm of North Khorasan, South Khorasan naturalgas, equal to 16% of the and Khorasan Razavi and part of gas reserves, world’s reserves, 48% of the Semnan Province. District 4 gas Iran is ranked Middle East’s and 38% of OPEC transmission is the beating heart the first in the members’ total gas reserves, of eastern Iran. District 4’s gas is Middle East supplied by the Iran gas trunkline, and the second Middle East and the second in the as well as Shahid Hasheminjejad worldIran is inranked terms the of gasfirst reserves. in the in the Therefore, the country enjoys sustainable transmission of clean world in terms a special status in the energy andrefinery. safe gasOur across mission the is zone. of gas reserves. sector. In the meantime, the safest Transmission of about 100 mcm/d and most appropriate way for of natural gas to more than 75 gas transmission would be to cities and major consumers lay out pipelines. To handle gas including Shariati power plant, distribution while preserving Mashhad power plant, Tous power this national asset, the Iran plant, Neishabour power plant, Gas Transmission Company Shirvan 1 power plant, Shirvan (IGTC) has been divided into 2 power plant, Ferdowsi power 10 districts. District 4 with plant and Qaen power plant, more than 5,600 km of pipeline, Bojnourd petrochemical plant, 36 37 Interview May 2020 Issue No.95 monthly Interview

stores, yards and restaurants staff and their families through refinery and the Shourijeh Given the potential of Iranian Iranian manpower. Every day communicating with parks of are being disinfected, the social media. gas storage facility, Dasht gas youth and manufacturers, we we have made progress and science and technology (signing temperature of all staff is being compression station have have tried to make sure about undoubtedly, international MOUs with Mashhad’s Park measured every day, food Dasht station is among certain conditions regarding gas the domestic manufacturing and sanctions will further accelerate of Science and Technology), is distributed in disposable installations with unique transmission drills, technical supply of all items and equipment. our progress. signing agreements for building recipients. In addition, masks, network maneuvering. conditions are conducive to Cold cutters, air obstruction equipment and spare parts. gloves and hand sanitizers are Would you please provide better gas transmission. These systems, fully hydraulic grease the services of domestic Last calendar year, 162 counts being distributed among staff approaches for the operation technical conditions highlight pumps, hot taps, spare parts companiesTherefore, hasbenefiting been always from of purchases were made from and families, and computers of this station? the operational flexibility of for line break systems and helpful. Under the present domestic manufacturers for IRR and telephones are disinfected The Dasht gas compressor station the zone in gas supply to north the test equipment have been circumstances, we are ready to 45 billion. regularly. Regarding education was launched in 2016 and since and northeastern Iran. The gas sourced domestically. We have engage domestic companies in materials, the staff have become the operating staff were not stations which are in operation the manufacturing of equipment A new chapter has started familiarized with the novel experienced enough in operating now, allowed us to reverse gas manufacturing and supply of needed for gas transmission. in IGTC’s self-sufficiency. coronavirus through pamphlets, these turbocompressors they took transmission from northern Iran equipment.become self-sufficient in the The major activities carried out What has been specifically text messages and contents steps towards sustainable gas to Khorasan Razavi Province and last calendar year in District done in District 4? available on the company’s transmission. prevent gas cut in the province. What did you specifically 4 included sharing technical website. The staff were Dasht station can receive gas do last calendar year? Have knowhow with manufacturers encouraged to stay home and from several points. In light of What are your plans for you made any plans with theA self-sufficiency innovation and committee creativity ofhas not leave home for unnecessary these multipurpose conditions developing cooperation with regard to this year’s slogan? staff.been Theset up committee to help benefit comprises from affairs. The HSE affairs for gas supply to northern domestic companies with In the oil and gas industry, forand imported suppliers and through strategic defining items, young and creative experts. department of District 4 also and northeastern provinces, regard to supplying necessary the focus has been always on exchangingthe process technicalof self-sufficiency views with Important measures have been Another self- provided education materials to gas capacity at Hasheminejad items and equipment? the potential and expertise of manufacturing companies and undertaken, like electronic Cold cutters, air sufficiency cards used in operating dresser- obstruction measure rand turbocompressors. The systems, fully taken was manufacturer of these cards hydraulic grease had stopped supplying these manufacturing cards in 1990, and without them pumps, hot taps, a stand it was impossible to use these spare parts for the overhaul for line break of turbines, to produce more than 45 kinds of systems and compressors. We finally managed which cards in the country. the test equipment After that we moved to saved about manufacture most control have been € 500,000. systems. About 80% of control sourced Building equipment for turbocompressors domestically. We a chamber for is manufactured domestically. have turbines also become self- taken was manufacturing a stand saved forAnother the overhaul self-sufficiency of turbines, measure which sufficient in the about € saved about € 500,000. Building manufacturing and 250,000. a chamber for turbines also saved supply of about € 250,000. equipment Domestic lubricants were also used instead of the oil, each barrel of which cost 4,000 dollars. Welding trucks, hydraulic cold cutters, transforming pneumatic cold cutters to hydraulic systems, cathodic protection monitoring and control, switching

providing hardware, providing infrastructuresupply instead for of rectifiers,distance control of automatic valves, demagnetizers, hot taps and line breaks are cases in point. 38 39 Investment May 2020 Issue No.95 monthly Investment

involves drilling new wells with The oil produced from this Sarvak formations – high diversion and spudding measuringn this field, 85Ilam and and 750 directional wells in order to carried to Ahvaz-3 production meters thick, respectively establish further contract with plantfield is through processed a 153-kilometer before being I– form Bangestan Reservoir the rock reservoir. Application whose thickness is 835 meters. of this method will require a brought to Kharg Island to be At present, 26,000 b/d of fewer number of wells than exportedpipeline. Thisthrough oil is the finally Kharg oil crude oil is being extracted vertical drilling. Danan, The contract for exploration Cheshmeh-Khosh is run by being carried to the Dehloran and development of Danan ICOFCterminal and or it to currently feed refineries. needs productionfrom Danan center field before through block was signed between NIOC investment and state-of-the-art Cheshmeh-Khosh pipeline. After being and a Vietnamese company in technology in order to preserve sweetened, it is pumped March 2008 for exploration and enhance its output. through a 52-kilometer and development activities, It has two reservoirs in pipeline to the Cheshmeh- the Asmari and Bangestan Khosh desalination unit. of hydrocarbon deposits in this formations. The Amsari Investment Danan is administered by blockidentification and winning and evaluation cooperation formation is made of sandstone Iranian Central Oil Fields of top international companies with favorable reservoir Company (ICOFC). A variety in the upstream sector after properties, while the Bangestan of scenarios have so far been issuing tender bids. The formation is over 700 meters Potential envisaged at National Iranian Vietnamese party has so far thick. Danan oil field in Ilam Oil Company (NIOC) for the invested more than $20 million Currently, oil is extracted from Province is located along development of the Danan in this block. the Asmari reservoir while Iran’s border with Iraq. Meanwhile, MAPNA Group the Bangestan formation is development of the Danan and Iranian Central Oil to produce 20,000 b/d. The It lies 80 kilometers northwest field. The broad lines for the Fields Company have signed recovery rate of Asmari would of Andimeshk and 30 kilometers under natural depletion, water a contract for improved oil be 27% to 35%, while the southeast of Dehloran. The field injectionfield (scenarios and gas categorized injection) recovery (IOR) in the Danan Bangestan reservoir would have been submitted and have a 6-8% recovery rate. incorporates Bangestan and experts have offered their MAPNA Group’s assignments Asmari reservoirs. views. willfield. include drilling of eleven crude oil production capacity vertical wells, design and standsThe Cheshmeh-Khosh at 18,000 b/d on field’s once the reservoir’s properties execution of acid fracturing average, while 115 mcf/d of areIn studyingexamined, the a staticDanan and field, operation, and geophysical natural gas could be extracted dynamic model is designed services (3D seismic survey, and the performance of the data processing, and The desalination unit of reservoir is studied under interpretation) in an area of Cheshmeh-Khoshfrom this field. is operating different scenarios. Natural 230 square kilometers, as well at a nominal capacity of depletion scenario includes as skid mounted desalination 181,000 b/d now. drilling new wells, including with a capacity of 10 thousand vertical and directional wells, b/d, and construction of a 55- new production technologies and gas injection scenario km pipeline. wouldICOFC beofficials used in have the said that involves returning gas to an injection well in the reservoir. New Technology Needed in Currently, oil recovery is These studies have indicated Cheshmeh-Khosh merelyCheshmeh-Khosh made from field. the Asmari that in the gas injection Cheshmeh-Khosh which was reservoir. Plans are under way scenario, oil production wells explored in 1964 and started for up to 20,000 b/d recovery face the problem of high production 11 years later is one from the Bangestan formation. GOR, while in water injection Branched and horizontal scenario, due to the low current output stands at 18,000 drilling, as well as hydraulic permeability of reservoir rock b/dof old and fields its gas in western production Iran. Its fracturing has been proposed the volume of injected water is stands at 3.3 mcm/d. for recovery from the Asmari limited; therefore the recovery Cheshmeh-Khosh which is 52 rate could not be improved. kilometers south of Dehloran The enhanced oil recovery Thus, the best scenario for and 70 kilometers west of (EOR)field. methods proposed for the development of the Danan Andimeshk is located in Ilam both reservoirs include water Province in western Iran. and gas injection. 40 field is natural depletion which 41 Investment May 2020 Issue No.95 monthly Investment Sumar, Dey & Sefid Zakhour Investment Attractiveness billion plus $67.38 million in investment is needed for the meters. The Exploration directorate of the National Iranian western province of Kermanshah, is jointly owned by Oil Company (NIOC) explored sweet gas in different layers of 5 mcm/d, while the produced gas would be injected into the Iranumar and oil field,Iraq. Itwhich holds was 475 discovered million barrels in 2009 of crude in the oil Iranmcm/d. Gas TheTrunkline refinery 2 (IGAT2).processing Meantime, capacity gasis planned condensate to increase will in place, 70 million barrels of which is recoverable. Deydevelopment & Sefid ofZakhour this field. barrels of condensate in place with a recovery rate of 35%. S Kangan Dalan. Sefid Zakhour is estimated to hold 205 million According to the NIOC Exploration Directorate forecasts, in case National Iranian Oil Company (NIOC) has prioritized its constructionbe transferred (EPC) to the framework. Shiraz refinery. Phase A 1 refinery is already is envisagedcomplete for development.Whereas Sumar But field when is shared Iran decided with neighboring to develop it,Iraq, Iran’s the The Dey and Sefid Zakhour fields are among newly discovered Zakhour anticline is located around 30 kilometers south of the andthe two Phase fields 2 is in under two phasesway. Acquisition under engineering, of land for procurement, laying out petroleum industry was under international sanctions and duogas reservoirs currently needsin Iran. investment The close distanceand state-of-the-art between the technology. two fields 17 wells are drilled 30 mcm/d of gas may be recovered. Sefid pipelines and drilling wells, completing the existing two it had to award the contract to Iranian companies under an has led officials to consider their development together. The EPCF agreement. The contract envisaged drilling two wells, andcity of10,000 Qir. The barrels planned of condensate. development Wellhead of Dey andequipment, Sefid Zakhour stream commodities and activating wellhead installations, laying out building stations for transmission and separation of oil and gas, kilometersIran has offered southwest Dey and of theSefid southern Zakhour city for of investment. Shiraz. Dey The and pipelines,fields in Fars green Province space andis expected processing to provide unit are 15.1 envisaged mcm of gas wellheadwells, drilling pipelines, and completion setting up ofa gas 11 andnew condensate fields, purchase separation of and establishing pumping and gathering systems. Production Sefid Zakhour anticline is located north of the Dey anticline, 150 in the development projects. Establishment of a center for center, installation of two pumps to transfer condensate from from Sumar was initially expected to start two years after the gathering and separation, laying out pipelines, installations for start of operations with Phase 1 output at 5,000 b/d and Phase wereSefid Zakhoursaid to contain are estimated 11.4 tcf ofto gas.hold With 6.2 tcf a recoveryand 6.5 tcf rate of gasof 75%, in Farashband processing unit and drilling projects are among installation of line break valves, establishment of logistics II output at 10,000 b/d, but this objective was not achieved. 8.5place, tcf respectively.of gas may be The extracted two fields from were them. discovered In order into 2005complete and activities considered for this project. The next objective sought Sefid Zakhour, purchase and installation of pig running system, However, the Iranian Central Oil Fields Company (IOFC), which by these projects is to administers Sumar, drilled one well which produced 3,000 develop the Farashband andcamps, gas power condensate supply, stability acquisition units, of hydrocarbon land for the refinery,dew point Zakhourexploration anticline data in was this said field, to 2D have seismic potential testing for wasproduction. conducted regulationdevelopment unit, of low-pressureFarashband refinery gas recovery including compressors, dehydration and 23-kilometer pipeline to Naftshahr production/desalination in 2003 and the results were analyzed and interpreted. Sefid processing capacity of 21 unit.b/d. TheIn preliminary oil produced assessment from this fieldreport is beingon the carried Sumar viaoil a spudded at a depth of 5,271 refinery to create a gas Taheri Port are among the most important equipment Drilling operations started and the first exploration well was installation ofneeded pumps in to the carry upstream liquids and from downstream the refinery sectors to Formation with an initial output of 5,000 b/d from four wells of this project. According to initial estimates, Dey wasfield envisaged.in 2009 and In 2010, the study development conducted of for the the field transfer in Asmari of oil billion plus $519.5 million in investment. desalination unit, installation of multiphase pumps, and Sefid Zakhour would need IRR 8615.4 andfrom a the single-phase Sumar oil transmissionfield to the Naftshahr system including production a and Due toand the the decline plan to in get the feedstock flow of and PIPESIM were envisaged. The preliminary feedstock into Fajr Jam refinery studiesseparator, indicated pump and that compressor at most 5,000 fitted b/d with of pre-salt OLGA delivery of gas produced in oil could be processed at the Naftshahr production from neighboring fields, and desalination unit. But as long as non-salt oil is being produced, processing of the entire oil is possible Sefidmost Zakhour important to Fajr plans Jam for refinerydomestic is among gas supply. the Asmari Formation, workover of an oil production well, installingin the old aunit. 25-kilometer Drilling three offshore new verticalstreamline fields stretching in from wells to manifold, acquisition of land and drilling of well, setting up manifold and two-phase separation system, purchase and installation of single-phase pumping system with a capacity of 10,000 b/d, 123 horsepower and 550 pam external pressure, laying out 23-kilometer pipeline to carry 10,000 b/d of oil to Naftshahr production and desalination unit, installing 48 kilometers of power supply lines and a 1.5MW electricity station stretching from Naftshahr to satellite manifold and Sumar wells are among the most important equipment and facilities needed for Phase 1. According to initial estimates, IRR 25.593

42 43 NISOC May 2020 Issue No.95 monthly NISOC NISOC Output Capacity Up Iran’s minister of petroleum, Bijan Zangeneh, recently said that despite the outbreak of the novel coronavirus, oil and gas production in Iran had not faced any disruption. Among Iranian oil production companies, National Iranian South Oil Company (NISOC) enjoys a special status because of its large contribution to Iran’s production. Ahmad Mohammadi, CEO of NISOC, tells “Iran Petroleum” that production from the oil fields run by this company had seen their output exceed the target by 10,000 b/d despite the impact of sanctions and the current restrictions. He has also said that as soon as sanctions have been lifted, NISOC would be able to bring production back to the pre-sanctions levels quickly. The following is the full text of the interview Mohammadi gave to “Iran Petroleum”:

Negar Sadeqi activities within EPC/EPD project should colleagues, particularly those living under way for six packages and the fate continue. Furthermore, we always think Given the reduction in oil far from their families, are trying their of remaining packages will be known How did the Covid-19 outbreak of providing development infrastructure production emanated from the best to guarantee safe and sustainable soon. I hope that construction starts in affect NISOC’s development for the day the sanctions have been lifted Covid-19 outbreak, how long will it production in oil-rich zones in southern some of them in the summer. projects? on Iran’s petroleum industry. In the take the oil output to rebound to the Iran. Furthermore, we have provided The Covid-19 outbreak slowed down, to meantime, NISOC’s production is largely pre-sanctions levels? help to people living near facilities and FOCUS some extent, the development projects According to arrangements, in case installations. The Covid-19 outbreak has as soon as it struck. It is noteworthy that cannot say that the petroleum industry is sanctions have been lifted, we will restore sure slowed down EPC/EPD projects as our conditions differed with that ofthe experiencingspent on feeding unprecedented refineries. Therefore, conditions we about 70% of oil production in less than a many specialists and service workers others in dealing with the coronavirus, as because oil prices have plummeted to month and 100% in three months to the who used to come from neighboring we were also under sanctions. Therefore, very low prices and therefore we have to pre-sanctions levels. cities and provinces were faced with we had to multiply our efforts in a bid halt our development projects. Despite restrictions. Despite all this, NISOC’s oil to minimize the impacts of both the so many problems we are faced with, Which project has been affected output was 10,000 ahead of plan because coronavirus and the sanctions. We were we will proceed with these projects to most by the Covid-19 outbreak? no workover project has been halted over faced with a tough task in not halting keep the business environment and It is really tough, particularly for our this period of time. employment alive and crate development colleagues working in operation zones proceeded with our activities through infrastructure. Of course, it has to be to work with the Covid-19 spread. In What would happen to NISOC’s 28 well-thoughtactivity in NISOC-run planning. fields. However, we noted that the methodology of sanctions all crises and emergency situations, we packages with the Covid-19 outbreak has changed this time and has become focus on two points: One is our main and petroleum industry sanctions? What stage is the Parsi and Paranj Many oil companies in the world more complicated. We are in the midst and natural task of safe and sustainable In six packages, two wells have so far agreement in now? have halted their development of an economic war. Oil production and production, supporting production and We are receiving necessary permits activities due to the sharp decline in sparing staff any damage and the other be completed soon. Therefore, a total of for the Parsi and Paranj fields’ oil prices. Does NISOC plan to follow add to this the Covid-19 outbreak. one is to help people and communities sevenbeen completed wells would and be five completed others are soon to development. At the same time, we suit? export is really complicated and difficult, living around facilities to respect their and the rigs installed on these wells will have held talks with MAPNA so that we The petroleum industry is an social responsibility. With the Covid-19 be moved to the location of new wells. would sign an agreement for logistics international one and we cannot separate outbreak, we have concentrated on The successful bidders for 9 other before the agreement takes effect. ourselves from others. NISOC accounts respecting all health protocols and our packages are known. Preparations are Given MAPNA’s potential, I hope that for supplying more than 80% of Iran’s we will soon see production logistics oil, which is earmarked for domestic work start in parallel with the required consumption and exports. In order to arrangements for the implementation of maintain the production capacity the agreement. and enhance output, development

44 45 IOPTC May 2020 Issue No.95 monthly IOPTC

and more than 10.552 billion liters was carried to southern ports for exports,” he said. FOCUS 99.99% Safety in Transmission Sustainability Yar-Mohammadi said that preventive maintenance was key to the transmission process. He added: “Sustainability in the transmission of crude oil and petroleum products Pipeline Transmission depends on overhaul, preventive maintenance, removing he Iranian Oil Pipelines and defects and technical monitoring.” “Without considering Telecommunication Company (IOPTC) section at IOPTC is 99.99%, which means minimum the aforesaid points, no sustainability in pipeline transmits millions of liters a day of a variety disruptionof IOPTC is inindependent. the telecommunications “The safety coefficient system of ofthe this transmission could be envisaged. Ordinary and smart company,” he said. Yar-Mohammadi said that due to the pig running are monitoring tools and methods which are kilometersT of underground pipeline and many pumping sensitivity of job assigned to IOPTC for the transmission instrumental in the sustainable and safe transmission of petroleum refined products via over 14,000 of crude oil and petroleum products, this company has and kerosene among other products before delivery to not been privatized. IOPTC covers 12 zones, monitoring intelligent pig running would detect corrosion inside Reliance on Domestic Manufacturing thestations storage to feed facilities refineries of National producing Iranian gasoline, Oil Products gasoil 14,000 kilometers of pipeline and a large number of theof fluids pipeline. via pipeline,” He said a he European said. The company official noted conducted that Yar-Mohammadi said extensive efforts were under Distribution Company (NIODPC). pumping stations located on various routes. He said: pig running in IOPTC pipelines in 2004, adding it was way in Iran for the development of smart pig running Qasem Arab Yar-Mohammadi, CEO of IOPTC, said: “Each area is managed independently. Except for similar to cardiac angiography. He said that pigging would technology, adding that it would not be far-reaching. “As its name suggests, the company has two tasks: provide very precise information about the interior of handling pipeline and telecommunications affairs. the approval of the Board of Directors, other affairs pipelines, adding that it would help detect any obstacle We largely depended on foreign companies and They complement each other and they are important aremacro decided policy-making upon independently.” like specific projectsHe added requiring that all we“Once, had we to purchasedid not have foreign anything tools specificand equipment,” to IPTC. alike.” He said that the primary task assigned to IOPT these areas were following a single objective, which is Yar-Mohammadi said that despite strict pig running, was to transmit crude oil, and supply feedstock to pipelineto the sustainable transmission transmission had been ofdone fluids without inside any pipes. halt. He changed a lot and turbines were being manufactured added that talks were under way for signing agreements domestically.he added. The Yar-Mohammadi official said the conditions said that in had most Iranian Oil Company (NIOC) or National Iranian South 128bnsustainable Liters transmission of Oil Fluid of fluids via pipeline. for a 2,100-km and a 2,800-km pipeline pigging.Yar- sectors of the petroleum industry, including pipeline oil refineries. “The crude oil received from National Yar-Mohammadi said IOPTC handled the transmission Mohammadi said one of the aforesaid projects would and telecommunications, dependence had ended. via transmission installations (pipelines and pumping of 128.59 billion liters of crude oil and petroleum be assigned to an Iranian knowledge-based company “2MW electro-engine, pumps, electric boards and Oil Company (NISOC) is sent to refineries as feedstock products last calendar year. “Over that period, more this year. “Signing an agreement with this knowledge- pipes are manufactured in the country. Sanctions are gasoline, gasoil, fuel oil and kerosene, are carried to than 68.615 billion liters of crude oil (or 431,579,000 based company would be a show of support for Iranian harmful and have had consequences, but they brought NIOPDCstations). storage In the next facilities step, for refined distribution,” products, he including said. Yar- companies, as well as domestic development of this us blessings, too”, he said. “The sanctions pressure Mohammadi said telecommunications was key to the than 49.422 billion liters of petroleum products was costly technology which has been monopolized by foreign pushed us to explore more domestic potential for deliveredbarrels) was to NIODPC carried tostorage oil refineries facilities while for distribution more companies,” he added. Yar-Mohammadi added that nearly manufacturing. Today, domestic manufacturing is an 5,000 kilometers of pipeline would be pigged in the instruction while effective and constructive steps have transmission of petroleum fluids. Therefore, he added, current calendar year. the microwave, wireless and fiber optic network been taken for domestic manufacturing,” he said. Yar- Mohammadi said 80% of IOPTC needs was supplied domestically.

46 47 Rep;ortnews May 2020 Issue No.95 monthly Rep;ortnews Iran Energy Exchange Rallies Amid Covid-19 Farzin Savadkoohi products markets, a big oil price shock caused global Imam petrochemical plant and the naphtha blending markets to crash. However, Iran’s IRENEX did not stop he Iran Energy Exchange (IRENEX) has always separateoil products pricing. offered Hamid on the Hosseini, IRENEX spokesman floor was traded for the the Bistoun petrochemical plant were traded on the been a good instrument for Iran to enhance the Iraniansuccessfully, Oil, Gas particularly and Petrochemical when refineries Products set Exporters’aside their Covid-19. During the week leading to 17 April 2020, of the Bandar Abbas and the raffinate of volume of its gasoline exports. Last calendar Union (OPEX), had earlier said: “ under conditions where despiteand recorded a sharp significant decline in figures gasoil asprices if there due were to smooth not of various hydrocarbon products yielded nearly IRR year to 20 March, it helped Iran raise its gasoline the trading of products has become transparent thanks to sales in preceding weeks, National Iranian Oil Products 328,683,000,000IRNEX international in the floor. physical In a single market day, of 9,891 IRENEX. tonnes exportsT 2.5 times. Competitive pricing and oversupply the IRENEX mechanism, buyers from neighboring nations Distribution Company (NIODPC) deemed it appropriate These developments in the capital market inspired hope have brought a sigh of relief to speculators who can managed to purchase whatever they needed. However, to launch the products mix trading and offer new into Iran’s hydrocarbon products and IRENEX trading. the point here is that oil products are traded in Iranian products. Therefore, it seems that Iran’s oil policies have been national currency, IRR. Trading in IRR would not earn effective particularly in this sector and therefore IRENEX trading,always cash one inmay on simply the refined conclude product that on IRENEX the energy would Iran any hard currency under the present circumstances. Significant Sales trading would not stop due to unexpected events. beexchange able to floor.bring If about gasoline good constitutes days to speculators the bulk of through IRENEX Hosseini had said this issue was being followed up on In the same week, oil products earned $86 million, by Bijan Zangeneh, minister of petroleum. According More Significant Role of Oil in Capital Market consumption at home was the main reason why gasoline to Hosseini, Zangeneh had recommended that IRENEX conditions. Some details were as follows: While the global petroleum industry is faced with serious exportsrefined productsproved successful. trading. Reformed In fact, marketing prices and processes reduced use any solution, if possible, for trading oil products in a295,000 significant barrels figure of for gasoline IRENEX 87 under offshore coronavirus for $3,345,300 stagnation at a time of oil price crash due to the Covid-19 went ahead smoothly under the aegis of brokering foreign currency so that the revenue would be paid either 295,000 barrels of gasoline 91 offshore for $4,672,800 outbreak, oil products warm welcome on IRENEX is of industry, thereby raising expectations for further exports in bills or in drafts. “That could eliminate the IRENEX Basic mix of 6 cargoes of 295,000-barrel gasoline 87 and high importance. That can be good news at a time of of gasoline and other petroleum and petrochemical weakness regarding trading in IRR. selling oil in IRENEX 6 cargoes of 27,000-barrel high-density fraction from the bottlenecks created by international sanctions against products through IRENEX. is associated with various challenges: transportation, Iran. Maybe that is why President Hassan Rouhani has insurance, documents and fund transfer,” he said. 300 tonnes of gasoline (5,000 ppm) of Isfahan destined recently instructed Minister Zangeneh to facilitate the Processing Lucrative on IRENEX forBandar Afghanistan Abbas Gas for Condensate $1,080,000 Refinery for $61,284,600 presence of petrochemical companies and oil trading Petrochemicals market players No Covid-19 Impact When other products are added, the total will be more in IRENEX. The president has called for a stronger remember well that last calendar The outbreak of the novel coronavirus changed many presence of oil and petrochemical companies in the year to 20 March all global equations. That left somewhat harmful impacts capital market, as well as facilitating arrangements certainsignificant. period In that of time. prosperous The conditions week, IRENEX were satisfactory earned in required in this regard. Rouhani also touched upon the Nobody expected IRENEX to keep working under such the$85,812,820. following IRENEX’sweek, too. profits were not limited to that sales of state-owned companies’ stocks on the capital circumstances.on the oil market, However, driving like oil prices other exchangedown significantly. markets in In a new achievement for IRENEX, the residues of the market with a view to upgrading IRENEX, noting that oil Iran, IRENEX did not take the Covid-19 outbreak seriously and petrochemical companies needed to become more and experienced an upward trend in its trading so that and more active in IRENEX. The president also called distillation tower of a refinery were exported. on the Petroleum Ministry to follow up on the progress Due to lockdown in most parts of the world Ali Hosseini, CEO of IRENEX, recently said that the first of oil projects, saying amid tough and unfair sanctions both buyers and sellersfor protection would be satisfiedagainst Covid-19 with trading. and cargo of refined residues in the distillation tower of the on the country, the Petroleum Ministry could accelerate stagnation in global oil and 10,000Imam Khomeini tonnes of Oil residues Refinery was (IKOR) traded had for been $144.33 exported per projects in order to help materialize the slogan of “jump tonne.through trading on the IRENEX international floor. A total in production” as instructed by Supreme Leader Ayatollah IRENEX continued to record trading of hydrocarbon Ali Khamenei. In light of all events transpiring IRENEX products in the following weeks. Iso-recycle and iso-feed these days, it may be concluded that the conditions are satisfactory at the time of the Covid-19 outbreak and the sharp decline in oil prices. IRENEX continues to remain products and solvent 402 of the Tabriz oil refinery, the attractive despite all these challenges. isofeed of the Shiraz oil refinery, the heavy fraction and industrial liquefied gas of the Bandar

48 49 REFINERY May 2020 Issue No.95 monthly REFINERY Isfahan Refinery Frustrated Sanctions After Iran’s National Iranian Oil Company (NIOC) and Russia’s Zarubezhneft struck an agreement for the development of Aban and West Paydar oil fields in western Iran, CEO of NIOC Ali Kardor and General Director of Zarubezhneft Sergei Ivanovich Kudryashov talked to journalists. The highlights of their remarks are as follows:

sfahan is known as a historical city with tourist that IORC was upgrading its main products including he said. Ebrahimi said that the quality of gasoline attractions. However, it has been home to a key oil gasoline and gasoil as part of its social responsibility with a capacity of 300 tonnes a day had come on- activities, as well as activities for upgrading social had been upgraded to Euro-5. Enumerating other streamthe granulated as part ofsulfur efforts production to remove unit environmental of the refinery (IORC) is currently supplying 20% of Iran’s health and supplying environmentally friendly fuel. companies,produced at he the touched Isfahan on refinery, a gasoil currently production at 12 company, ml/d, Irefining facility. The Isfahan Oil Refining Company To that effect, a gasoline production plant came online gasoil off-site utilities, DM water section, steam boilers, and packaging of sulfur. The granulated sulfur energy sector. Therefore, bottlenecks emanated from in 2013. Two years later, it started operating at full modernization of power supply system and gasoline unitpollution would during preserve the processthe quality of solidification, of product while storage sanctionsrefined petroleum have failed products, to leave a any key negative contribution impacts to the capacity to supply 12 ml/d of Euro-4 gasoline. He production units’ communications lines. “So far, accelerating the rate of production. Furthermore, the loading platforms, a pumping station and a wastewater environmental projects among new projects at this treatment system have been launched in Shahin Shahr. treatment had come online with a capacity of 750 on the refining sector in this ancient city. Isfahan’s cited a distillation unit, a liquefied gas unit and several cubicfirst national meters environmentalper hour. According project to plans,on wastewater transfer and andoil refinery other downstream started work sectors in 1989. are Refining chief among crude the oil, 375,000 b/d. After the startup of the distillation unit KV station, utilities for domestic projects, water cooling treatment of wastewater in Shahin Shahr has been supplying refined products and feeding petrochemical refining facility, saying: “The full capacity of IORC is towerOther activereconstruction, projects at natural Isfahan gas refinery decompression are a 230/33 done in partnership with two domestic companies is also feeding the Sepahan Oil Company, Isfahan in three distillation units, thereby reducing overload. station and RHU, he said. in three steps: building a pumping station, operating Petrochemicalmajor activities Plant, of this Arak refining Petrochemical facility. Isfahan Plant, refinery Jay Heand said a liquefied that more gas distillation unit, this capacity units would is distributed add to the Equipment 70% Domestically-Sourced treatment station on the site of the company. This Investment Co. (ICIIC). costs. Ebrahimi said the main objective was to improve facilitya transmission was built line over to athe period refinery of 24 and months building and a cost Oil Refining Company and Iran Chemical Industries thelongevity functionality of equipment of IORC and throughout significantly its work reduce process. repair work in 2001 in order to provide domestically- more than IRR 1,000 billion. Ebrahimi said the Isfahan Standard Output manufacturedEbrahimi said equipmentthe refinery’s for procurement the facility. It unithas largely started reverse osmosis technology in wastewater treatment. supply petroleum products in compliance capacityHe said in cut this by way 15,000 the b/d.refining But capacityin general does terms, not this particularly rotary machinery like turbine, pump, refinery was the first refining company in Iran using withA major international approach standards.pursued by Senior this major refinery is to increase because the refinery would see its refining compressorbeen involved and in toothedsupplying wheel. refining Eighty equipment, percent of Sludge Converted to Cement said following the commissioning of a third distillation With a view to reducing environmental pollution, express hope that it becomes unit,refining the unitvisbreaker would significantlyunits were put reduce out of costs. service. Ebrahimi “Such domestically. Payam Noor Isfahan University operated a research theofficials excellent at this supplier refining of facility equipment needed in the Isfahan refinery is sourced project on using the sludge recovered from the oil which is a harmful fuel and rather than that would Light Products Loading by 2021. That is why IORC is supplymodifications mass amounts would reduce of valuable production products rate like of fuelgasoline, Ebrahimi said 18 loading platforms had been built at at the Ardestan cement manufacturing plant under refined petroleum products gasoil, kerosene and jet fuel,” he added. supervisionwastewater treatmentof the provincial unit of Department the Isfahan refineryof the company in Iran. According solvent and vacuum bottom. Covering 1.5 ha of land, Environment. The project was assigned by IORC. tothe the second ranking leading of Industrial refining Gasoline Output Hike itthe cost refinery more forthan handling IRR 600 such billion. products The platforms as isorecycle, are Management Institute (IMI) Ebrahimi said in case of any further national need for arranged in nine rows; six platforms handle light expert group, of a total of 500 gasoline production, the two adjacent visbreaker units products (like solvents) and six others handle heavy companies evaluated in 2019, may be used and then the company’s feedstock supply products (like vacuum bottom and isorecycle). IORC is ranked the second would increase 60,000 b/d to 70,000 b/d. in terms of sales in general “A gasoil production project was approved in 2011 for RO-Based Waste Treatment producing Euro-5 grade gasoil. Once operational, petroleum products sales. this project would supply more than 22 ml/d measures to serve the environment. Ebrahimi said andMorteza the first Ebrahimi, in terms CEO of of of Euro-5 gasoil. Currently, 2 ml/d of Euro- The Isfahan refinery has undertaken numerous IORC, told “Iran Petroleum” 5 gasoil is available for urban commuting,”

50 51 pipeline May 2020 Issue No.95 monthly pipeline Bandar Abbas-Tehran Oil Pipeline Shortened onstruction of pipelines in Iran to transmit oil and petroleum products is as old as the petroleum industry in the country. In fact, ever since oil was discovered, extracted and Cprocessed in Iran, the issue of transmitting crude

parallel with each other, thereby making it impossible tooil makeand petroleum any distinction refined between products oil went transmission ahead in and pipeline construction. For Iran’s petroleum industry, there was no doubt that building a pipeline would facilitate the projected supply of petroleum products.

years following oil discovery in Iran. In 1911, the The first pipeline in Iran came online in 1910, two to Abadan was ready for operation. Due to the first oil pipeline stretching from Masjed Soleiman development projects for building pipelines became operationalsignificance oneof oil after pipeline another. for theSince petroleum around one industry, hundred years ago, construction of oil pipeline in Iran has not stopped. There is currently 14,000 km of pipeline across Iran, serving as the artery of Iran’s oil. This extended network is equipped with the most advanced industrial telecommunications equipment and manned by Iranian experts. It guarantees

petroleum products across the country. sustainableIn October 2000,distribution the Iranian of crude Oil Pipelinesoil and refined and Telecommunications Company (IOPTC) was are not visible. Therefore, one may easily ignore the when it comes to transmitting petroleum products. (NIOEC) to handle it,” he added. established as a subsidiary of the National Iranian Oil efforts of those involved in pipe manufacturing. One major feature of the project is its fully Iranian Arab Yar-Mohammadi said that a 99-km pipeline The pipe network crossing Tehran was initially implementation, which was impossible until several extending from Yazd to Naein had been under way in designed to carry 180,000 barrels of products, or years ago without foreign help. Qasem Arab Yar- parallel with the Rey pipeline by IOPTC experts. FeedingRefining and Refineries Distribution Company (NIORDC). 27.5 million liters of liquid hydrocarbon. In the next Mohammadi, CEO of IOPTC, told “Iran Petroleum” Transmitting 123 billion liters of petroleum products phase, this capacity increased to 205,000 barrels, or that the Naein-Kashan-Rey pipeline and 10 storage Environmentally Friendly Project 30 million liters. The important aspect of this project tanks with a total capacity of 300 million liters The Naein-Kashan-Rey pipeline project is a fully several petrochemical plants, supplying fuel to is that before implementation of this project there in Naein were aimed at completing the chain of environmentally friendly project. The pipes used in severala year, supply power of plants feedstock and distribution to seven refineries of 400 ml/d and was no pipeline serving Kashan, a city in central petroleum products transmission from Bandar Iran. The new pipeline will even shorten the route Abbas in southern Iran to the Rey oil terminal near environment. The startup of this pipeline project would campaign and domestic manufacturing of 70% of for the transfer of petroleum products from Bandar Tehran. “The Naein-Kashan-Rey pipeline is in fact the dispensethe project with would more inflict than minimum 1,500 oil tankersdamage carrying on the equipmentof petroleum were products part of as IOPTC part of achievements. self-sufficiency All extension of the Bandar Abbas-Naein pipeline which products on roads. That would reduce environmental then diverted to Isfahan and then Tehran. But the pollution and reduce the possibility of road crashes, their activities owing to extended pipelines serving onAbbas to Northern Gas Condensate provinces. Refinery The construction and Bandar ofAbbas this new pipeline cuts 150 km from the previous route, Iran’srefining petroleum facilities industry.in Iran have Twelve managed pipeline to implement zones 414-kmOil Refinery pipeline and Hormuzhas saved Oil costs Refinery in distribution, to Tehran andnot which is an outstanding feature of this project,” he roads. The commissioning of the Naein-Kashan-Rey across the country distribute crude oil and petroleum to mention its role in serving other cities than Tehran. said. Arab Yar-Mohammadi said two 63KV power pipelinenot to mention project heavy is a sign traffic of maturity congestion in Iran’s on inter-city pipeline products. But one project is instrumental. The The project has two pumping stations in the cities of supply posts in Naein and Kashan, as well as a 6-km pipelines carrying oil and petroleum products to Naein and Kashan and a terminal in Tehran. high-voltage power transmission line are among the are transported across Iran in 14,000 kilometers of Tehran and then to northern parts of the country are utilities of the pipeline project. “The pipeline is also pipelineindustry. with Crude pipes’ oil and diameters refined varyingpetroleum between products 4 and strategic. Big projects are connected to Tehran as a Reliance on Domestic Manufacturing equipped with leak detection system,” he added. He 32 inches. There are also 49 routes, 110 transmission direct hub of oil and petroleum products. In this project, 50,000 tonnes of pipeline was used centers and 9 pressure reduction stations guaranteeing and 80% of equipment was sourced domestically. kerosene and gasoline were also being supplied fuel distribution across Iran. Relying on its records and Invisible Project In fact, the project once more underlined Iran’s said that refined petroleum products including gasoil, experience, IOPTC is now able to handle much bigger The pipeline industry may not be visible because oil transmission industry potential and provided northern cities. “The project was assigned in 2013 by projects, which is too much for an industry subject to of its nature. Pipes are laid underground and they that Iranian industrialists consider no borders IOPTCfrom three to National refineries Iranian in southern Oil Engineering Iran to Tehran Company and unjust sanctions. 52 53 SPORT May 2020 Issue No.95 monthly SPORT

IranIsmaeil Kaboutaran joinedSports National Iranian Oil Company (NIOC)Owing sports in 2004 after winning national to championship Oil title. He has Industry also won the Asian championship title in track and field. He has a brilliant record in volleyball and football, not to mention his expertise in bodybuilding. He has also obtained certificates for training in the volleyball, bodybuilding, track and field, swimming and life guard sectors. For eight years, he was the head of the sports department of Iranian Offshore Oil Company (IOOC). He has been recently named acting head of Department of Health, Physical Exercises and Social Responsibility of the Ministry of Petroleum. The following is the full text of “Iran Petroleum” interview with him.

Arash Jafari out support. All across the world, major and capable companies step into championship sports As a national champion and athlete, What are you plans for basic sports in order to support championship teams. how do you assess sports in the and for children? Do you identify However, the issue of championship is Ministry of Petroleum? How do you talents? different in oil. The petroleum industry’s plan to upgrade its status? Identifying talents and growing them are two approach vis-à-vis championship sports are Sport has a long record in the petroleum important tasks with regard to basic sports associated with social responsibility. industry. It would not be exaggeration if and children. Champion teams are required It is we say that Iran’s sports sector owes to to allocate a 70% share to the children of staff What do you think of women’s noteworthy that the petroleum industry’s fundamental of petroleum industry. Therefore, we have to sports? Do you have any plans for take basic sports seriously. improvement? talent has nothing to as golf, tennis, swimming, horse riding, In sports, policies are equal for men and do with skills. It depends and influential activities. Such disciplines Would you please explain about women. Every policy envisaged for men on physical conditions sector. approaches for identifying talents in would apply to women, too. I would like football,Sports activities water polo are first instrumental emerged in in the the oil sports? to note that we hold a special view vis-à- and individual petroleum industry policies due to their We need to examine the conditions of vis women in some cases. Due to special movements role in safeguarding and upgrading the people to see if they meet requirements for conditions dominating women’s sports, health of petroleum industry staff. I feel individual or team sports. In identifying we need to support them. compelled to take steps in this direction, talents, you need to evaluate the physical and undoubtedly the strategies and plans of and mental conditions of individuals to see How do you see the petroleum this department would be in line with such which discipline may suit him. industry’s sport horizon? policies. It is noteworthy that talent has nothing I am optimistic. Sport is facing ups to do with skills. It depends on physical and downs everywhere in the world Do you have any plans to promote conditions and individual movements. All and we are no exception to this rule. sport for all? What is your priority? across the world, skill is not the only factor However, I am sure that conditions We often talk about promoting sports for focused upon; rather, individual skills would improve shortly. all and we easily forget it. What matters and movements should be also taken into is that development in every sector consideration. If one is capable enough he Any words for conclusion? requires numerous factors, ranging from would receive training for skills. I would like to offer my sincere infrastructure to human resources and gratitude to my predecessors. I Olympiads were a way to show off am the inheritor of the strong join hands and move towards development. sports in the petroleum industry. Don’t fundamentals laid earlier in the [Ministerfinancial issues. of Petroleum All actors Bijan] are Zangeneh’srequired to you think that their suspension is petroleum industry’s sports. harmful? Relying on my experience, the relevant policies and path. Of course, Given the present circumstances, knowledge and communications developmentemphasis on sportsin the properand health sense has of clarified the prioritizing sports activities is our main with the petroleum word is very tough; however, I hope that the task. Absorbing as many persons as industry’s sport, way would be cleared for us. For instance, possible from the petroleum industry I will try my expanding infrastructure in sports can family is the top priority of this department. best to improve become more diverse by presenting more I would like to add that as conditions conditions in the sport activities to let us attract a broader improve, there would be planning for the petroleum industry’s spectrum of staff into sports activities. For revival of Olympiads like in previous years. sport. instance, we cannot force those interested What are your plans for championship in rock climbing to opt for football or sports? volleyball. In short, development needs all-

54 55 History May 2020 Issue No.95 monthly History

Dictatorship Stabilized The Pahlavi I regime and its agents were assured that the country could no longer be run Qajar-style. Of course, the monarchy had some instructions to Iran Pahlavi I Petroleum Industry follow. Under the Pahlavi I regime, new bureaucracy was set up while a modern Army was established. These two state organs further empowered the Pahlavi I regime. Edmund Ironside, in The Ironside diaries, writes: “The policy of supporting Reza Khan and forming a strong central government in Iran could best serve British oil interests. However, in Oil Revenue for Regime more general terms, the Bolsheviks were threatening The D’Arcy Concession was awarded in 1901 when the Qajar dynasty was drawing to a close. Iran’s petroleum the British Empire in India rather than British oil industry was born during the Qajar period. When in 1907 D’Arcy discovered oil in Persia amid conflict for the interests in Iran.” conquest of Tehran, the Pahlavis were not yet known. However, ten years later, the British found Iran’s politics Following the 1920 coup which brought Reza Mir Panj to power to become war minister, the British much different from before and they continued to devour Persian petroleum. were weakening Qavam ul-Saltaneh, and instead empowered Reza Khan with oil revenue with a view n the previous issue, we discussed how the Iranian oil sector, i.e. the 1933 Agreement. colonialism. After Amir Kabir’s murder, Iranians to installing him as prime minister and replacing the Pahlavi I regime affected Iran’s petroleum Under the Pahlavi I dictatorship, the bulk of did their best to bring to fruition Constitutionalism; Qajar dynasty with the Pahlavi regime. industry developments that led to changes in the Constitutionalist dreams were shattered. Following however, rather than freedom and justice, they saw Ervand Abrahamian, in Iran Between Two D’Arcy Concession. The agreement was struck in the occupation of Iran in September 1941, any foreigners placing their boot on the ground. Revolutions, writes: “For instance, the British were I remaining dream was shattered, too. Firmly anchored in power, the Pahlavi I regime instrumental in the downfall of many governments lost in the midst of Constitutionalism. After 40 years of struggling against the unjust revealed its violent and autocratic face. It turned to opposed to Reza Khan. This issue was important with theThe final Pahlavi years I regime of the Qajar that unilaterally in power. It cancelledwas practically the and libertine Qajar dynasty, Iranians once more oil in 1933 in order to stabilize its power and brought regard to the downfall of the Qavam government D’Arcy Concession embarked on a new trend in the experienced the bitter taste of autocracy and about important changes. because Britain paid its arrears in oil money to Iran, 56 57 History May 2020 Issue No.95 monthly History

unpaid since 1915. The British government used to evade paying Iran’s oil money, but by paying the money it directly backed Reza Khan. For instance, in early 1922, Britain paid Iran 120,000 pounds and agreed to pay another 880,000 pounds in early 1923. That money helped fund the ministry of war. With the same money, Reza Khan divided the country into

in each zone. Britain saw Reza Khan as the executor offive the military military zones part with of the 15,000 1919 agreementtroops to be and deployed was struggling to install him at the head of a military government to stand against the Bolsheviks and protect British interests. Under such circumstances, arrangements were made for the overthrow of the Qajar government in 1925 and the Napoleon-style crowning of Reza Khan in military fatigue a year later.”

Oil Money for Dictatorship

muscles. Reza Khan had served as war minister in theNow Qajar it was government. time that the He Pahlavi knew quite I regime well flexedthat their model of governance was impossible. Stephanie Cronin, in his book The Army and Creation of the Pahlavi State in Iran, 1921-26, writes: “After the successful coup and the coming to power of Reza Khan, arrangements were made for the establishment of a government based on a modern Army and state bureaucracy. That is why under Reza Khan, the Army grew ten times and Bureaucracy 18 times. Subsequently, state budget rose from IRR 245 million to IRR 4.3 billion in 1941. Iranian military servants increased from 22,000 to 170,000. In the administrative sector, more than 90,000 full-time employees were recruited in nine in pressuring Bakhtiari chieftains, particularly had established. Reza Khan’s modern Army was Pahlavi I regime. Mohammad QoliMajd, in his book ministries. However, generally speaking, military Sheikh Khazal, into awarding oil shares to the called Reza Shah and Britain, writes: “Formation of organs overpowered civil organs. Even in provinces central government. Having torn apart the D’Arcy of crisis-stricken Iran. By 1921, all organs were new Army for Iran cost too much because the Army Concession, he maintained that he had taken a great not initially consistent with the financial conditions devoured 30% of Iran’s total budget and in some received orders from the Army. Oil saw its share in stride with regard to restoring Iran’s oil rights. That cases the country’s reserve money was used for thewhere budget government grow and officials the Army were and present, Bureaucracy they both is why after the annulment of the D’Arcy agreement, anysuffering action from in 1921 financial to allocate shortcomings. budget to This the issueArmy was purchasing arms. In addition to that, establishment of Tehran and many other cities were basking in lights. andof such the significancewar ministry. that He Reza even Khanthreatened did not Qavam shy from arms manufacturing plant, construction of an Army Khan. The oil income was directly and indirectly Reza Khan took political advantage of his heroic act and Ahmad Shah in person. An increase in Iran’s oil grew. The oil revenue grew significantly under Reza and launched efforts to bring an end to the dispute revenue changed rules of the game. Iran’s oil royalties military barracks cost too much. Another important government expenses. The injection of petrodollars increased from about 1 million pounds to about 4 issueofficers was club that in supervisory Tehran and inbodies other in cities Iran asexercised well as intothe biggest Iran’s economy state figure, was constituting slow in the beginningone-third ofand no elicited harsh criticism.” million pounds. Therefore, oil became one of the no supervision over Iran’s oil revenue from 1927 share was considered for it in the budget. However, it with Britain and finally signed an agreement which to 1941 and everything was in Reza Khan’s hands. made Reza Khan an independent power and boosted Oil and Military Power army reorganization and expansion, as well as Furthermore, oil revenue was deposited directly the military organs under his authority. That is the Having received oil money, Pahlavi I strengthened developmentmain sources of industrialfinancing hugeplants projects and education particularly into Reza Khan’s bank account in London. It was period when Anglo-Persian Oil Company (AOPC) was its military power. He had a military mindset and due to Reza Khan’s wealth accumulation that Iran’s thought that he would be able to cover up his parliament adopted a law for supervision on Anglo- Pahlavi I saw himself as proprietor of Iran’s oil. dependence on Britain and other colonial powers by Oilcenters Chaos affiliated with the Army. Iranian Oil Company’s revenue. There is evidence Abol-Hassanthe fifth largest Ebtehaj producer writes in thein his world.” diary: “Reza purchasing arms and forming a powerful army. The Army expenditures were extremely high and the showing that of a total $155 million paid in royalties Khan paid special attention to oil and oil income. According to Cronin and Abrahamian, Iran’s oil Shah was determined to build arms manufacturing to the Iranian government, $100 million had been He believed that due to his struggles Iran could revenue was totally spent on equipping the new plants. His Army did not survive even one week. paid directly into Reza Khan’s private account. get back its oil income. In other words, Reza Khan Army and increasing Reza Khan’s personal wealth The Army was devouring the oil money. Some sort Despite production of documents, this sum was much saw himself as owner of oil. He was instrumental because he felt he owed to the modern army he of chaos was governing oil spending under the less than spent for the Army.” 58 59 Tourism May 2020 Issue No.95 monthly Tourism

Bam under Sassanids When Sassanids were in power (224-651) in Iran, major developments transpired the country. The most significant among them were shift from feudalism, instated by Ashkanians, to kingdom, declaration and recognition of a single religion in the country, regulation of new administrative and military rules and creation of social classes among people.Expansion of urban communications and prosperity in business resulted in the accumulation of wealth, growth of population and finally the expansion of the city of Bam. In order to protect the city and its well-heeled residents from attacks, a towering wall was erected around Bam. The wall provided protection for businessmen and industrialists, but farmers and gardeners had to work on their lands and in their gardens which were outside the fortress. For this reason, another wall was decided to be constructed to include Arg-e Bam, the gardens and farmlands.During the end of the Sassanid rule, Bam was divided into three sections: Governing Fortress: It was built on a rock in the north of the city and overlooked the Bam Desert. Public Fortress: This one was built in the southern part of the city to house industrialists and businessmen.Suburbs: It housed farmlands World’s Largest Adobe Monument and gardens. The city of Bam is one of the most historically and geographically important cities in Kerman province in southeastern Iran. Bam is the only Iranian city to have been listed by the United Nations Educational, Scientific and Cultural Organization (UNESCO) as cultural heritage. The city has a mysterious history. Hassan Hosseini Hassan Photo:

60 61 Tourism May 2020 Issue No.95 monthly Tourism

Bam Embraces Islam After Islam arrived in Iran, more physical changes occurred in the

A bazaar,defense a school, systems, a bathroom, spaces a of zurkhaneh living as well (sports as religious, club), a military public benefit barracks and andceremonial a notorious facilities. jail were The alsofirst constructed.mosque was Thethen existence built in the of suchpublic places fortress. in Arg-e Bam shows that the ancient city of Bam was home to people, and the citadel inside it housed rulers. Looked from far distance, the citadel is like a pyramid whose base is where ordinary people lived, its body was the military barracks and its cone was reserved for rulers. When the Safavids came to power, Iran enjoyed a high level of security. People gradually left the city and built houses

were alerted about an imminent attack. outside the fortress. However, they used to flock the ancient city as soon as they

Bam in History Social Gaps Regularly attacked by The city is surrounded by invaders and struck by deep trenches which were natural disasters, the city of Bam recounts a history replete with ups had several entry gates, one of which and downs. This great citadel was stillfilled remains with water usable. for defense.There are The also city remnants of other gates. These gates a killer quake. However, the city were closed during night in order continuesnearly flattened to stand in 2003tall, thanks following to to protect the city. The ancient city restoration work. The tall walls of of Bam had four entry gates. One of the citadel, expanding on 6 ha of them was the main gate, another one land, provide wonderful scenery led to the mosque and two others for every viewer. The city looks were located in the easternmost to be surrounded by this fortress. and westernmost parts of the city. The walls still bear the hallmark of Ordinary people lived in small enemy attacks, but they have been houses connected to one another. restored many times as they were There are also two-storey houses the only protection to the city. which belonged to the rulers and rich residents. 62 63 news May 2020 Issue No.95 monthly Tourism

Citadel, Center of Governance The citadel was the center of governance. It was located in the most important and the most strategic part of the city. Located on a rock, it has its own fortresses. To reach the citadel, one has to go through several gates. The citadel is equipped with a towering watchtower known as kiosk. As it is so tall, that gives view to the entire city. It was even taller in the past. The main tower has been destructed and a new one has been built. This tower has a building known Iran to the ruler. These buildings had also a secret passageway which was used in emergency conditions.as four-season edifice. It was home to the ruler’s family. There are also other buildings belonging Petroleum

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Unique Urban Structure

method of construction used by Iranians in the past. The houses are built next to each other andFrom they above were theconnected tower and through the fortresses, narrow alleys. the first The thing interesting striking point a viewer’s is that mindevery isalley the or passageway leads to a religious center, the bazaar, the water reservoir or schools. Some of these alleys are roofed and some others are connected in a maze style. The main passageway stretches

from the first to the second entry gate. This is where the city’s bazaar was located. PetroleumMinistry -PublicRelations Thank you for reading Iran Petroleum [email protected] 64 65 Arg-e Bam, Kerman,Iran