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Iran Issue No. 69 March 2018 2nd IPC Deal First -Russia Upstream Contract Signed

$80bn Investment in Iran Petchem Sector news monthly

Iran US Firms Knocking at Petroleum Iran Doors Kasra Nouri Director General of Public Relations

he last Persian calendar year was special in terms of investment in Iran’s All these events indicate that Iran’s petroleum Tpetroleum industry. In spite of the industrystrategic advantagesoil and gas projectsare not hiddenin Iran. to any attempts made by the United States and its If you have any comments The international energy market and Iran’s investment into Iran’s oil, gas, petrochemical oilmajor and oil gas company. could not be easily swayed by the regional allies to block the flow of capital and Trump administration’s threats and political regarding the articles in this magazine, please have been signed between Iran and leading ploys. The world needs more and more energy internationaland refining industries, companies. major agreements as industries grow and Iran, which sits atop the feel free to contact us through e-mail. Some of these agreements which are proof world’s largest hydrocarbon reserves, remains of Iran’s success in attracting international Your views are appreciated investment were the deal with a French In crisis-stricken region, which energy giant Total-led consortium comprising remainsa major player the hub in of this energy market. production, Iran China’s CNPCI and Iran’s Petropars for the remains a safe island capable of guaranteeing development of Phase 11 of South Pars gas the future of energy market. This issue has not been ignored by oil and gas consumers and Zarubezhneft with Iran’s Dana Energy for proprietors of capital and technology in the thefield, development agreement with of Aban a consortium and West Paydarof Russia’s world.

recently said the country would need Energyoil fields, Development agreement for Company, the development South Korean billionsIran’s petroleum of dollars minister,in investment Bijan inZangeneh, addition of Sepehr and Jofair oil fields with Pasargad to technology. He noted that international Iran and develop South Pars, agreement with a companies, including American firms, would Spanish-Iraniancompanies’ agreement consortium to build for refineries manufacturing in be welcome. The Trump administration’s policies and resumption of gas swap with Turkmenistan and unilateral sanctions have harmed US oil corrosion-resistant alloy (CRA) pipes, companies rather than Iran, and have given two oil blocks in the . rise to conditions blocking their involvement in Iran-AzerbaijanIn parallel with agreementforegoing agreements, to jointly develop other Iran’s petroleum sector. It is the energy market, but not politics, y in Iran’s . One of them is that will decide for the country’s needs and PetroleumMinistr -PublicRelations major companies have expressed interest economic factors. Every politician thinking a $30 billion outline agreement for several otherwise is totally Greek to foresight. Thank you for reading Russia’s giant which had earlier signed Iran Petroleum [email protected] 1 Ministry of Petroleum Islamic 22 Republic of Iran 24 Managing Editor: $80bn Kasra Nouri Director General of Public Relations Investment in Editor in chief: Parastoo Younchi Iran Petchem Executive Editor: Hamid-Reza Shakeri-Rad Sector Graphic Designer: Saman Goodarzi

Photo Section, PR Office, MOP: 44 Hassan Hosseini

Reporter: Negar Sadeqi Javad Asghari

Translator: Kianoush Amiri

Coordinator: Abbas Lotfi

Tel/Fax: (+98 21) 61626113 www.iranpetroleum.ir [email protected] PEDC Seeks Qeshm Island, US Oil Policy; Zarubezhneft Boss: $2.4bn Deal with Local Company Effectiveness a Gem in Certain We Accept for Sepehr, Jofair and Objectives Iran-Russia Development COVER Efficiency Contract Risks

Photo:

Hassan Hosseini 14 58 36 6 8 IPC March 2018 Issue No. 69 monthly IPC

22 Fields Up for Development 36,000 b/d. A memorandum

deputy CEO of NIOC for befield. signed “The soon agreement with domestic for the signed with Zarubezhneft on nd developmentGholam-Reza and Manouchehri, engineering, companiesdevelopment and of completionBalal field will of of understanding (MOU) was 2 IPC Deal said: “The Aban and West company to study Aban is on the cards. Meantime, and12 July West 2016 Paydar for the under Russian IPC producing oil, but they will Forouzan field development provisions with a view to First soonPaydar face fields output are decline.already companies including negotiations with other Russian Iran shares with neighboring of this agreement is to enhance way, which we hope will be countries.accelerating The oil agreement and gas fields with Iran-Russia Therefore, the main objective Neft and Rosneft are under Zarubezhneft is meant for the investment to be made under “Nearly 30 EPC agreements thistheir contract production.” would “The be around total arefinalized on the one NIOC after agenda another.” for oil 48,000 b/d with an accumulated Upstream $670 million, 10% of which will outputtwo fields of 67 to producemillion barrels up to over ten years. The agreement is he said. “In drawing up the recovery enhancement,” he said, Contract contract,be spent onthe non-capital issue of domestic costs,” sectorexpressing in the hope second that half Iran of would the by the parties hereto. The main newexperience calendar prosperity year. in this subject to renewal upon request contribution of Iranian under this agreement include Signed manufacturing and maximum jobs envisaged to be carried out companies have been taken into conducting engineering studies, Iran has struck a second oil deal under the framework of the even 38 million barrels in ten Technological Savvy workover of wells and their newly developed Iran Petroleum Contract (IPC). The first years, but now thanks to this side has accepted necessary Mohammad Iravani, CEO equipment with downhole agreement was signed last July between the National Iranian Oil agreement, 67 million barrels obligations.consideration Implementation and the Russian of of Dana Energy, highlighted pumps, reconstruction, repair With a Company (NIOC) and a French Total-led consortium comprising will be added to their combined this agreement heralds transfer transfer of technology and The total combined China’s CNPCI and Iran’s Petropars for the development of output to reach 105 million installations, installation investment Phase 11 of the giant offshore South Pars gas field. ofand separator, renovation installation of existing of production minister said enhanced recovery ofHe enhanced said this recoveryagreement (EOR) would “Thefinancing private as thesector most in importantIran is to be made issue in Iran-Russia cooperation. of 67 million wasbarrels,” a key said factor Zangeneh. in this contract. The bringtechnology,” prosperity said toManouchehri. domestic facing restrictions which we transforming a production under this barrels of oil he second such deal of oil contracts, and I hope it “This agreement is signed for a manufacturers of equipment for multiphase flowmeter, and contract was signed on March period of ten years, during which the petroleum industry, adding: “Ever since introducing the in Phase 1, and purchase and hope will be removed,” he said. from these T14 between the NIOC Zangeneh said Zarubezhneft’s “We hope that in the near future new model of oil contracts, the installationwell into a waste of oil, injectiongas and water well would be two fields, partnershipwould not be with the last,”a private he said. solutions for enhanced recovery it would become possible to Iranian Ministry of Petroleum transmission unit, drilling eight around $670 Zarubezhneft and Iranian Iranian company was another we hope to be able to find new manufacture hundreds and was seeking to create E&P appraisal/production wells, at current privateand a consortium company Dana of Russia’s Energy new achievement. “A fully negotiations were under way even thousands of ESP pumps companies and engage them in purchase and installation of million, 10% prices,$4 for the enhanced recovery from private E&P Iranian company is from these fields.” Zangeneh said downhole pumps, installation of which will the Aban and West Paydar oil including Gazprom Neft, Tatneft, also touched on negotiations Iravani said the main idea and operation of separator, billion will the new contracts,” he added. be spent on Lukoilwith other and RussianGazprom companies for the underin the country.”way for upstream Manouchehri oil behind IPC deals was to conducting 3D seismic studies, be added neighboring on its eastern consortiuminvolved,” he was said, the noting second that IPC the development of other oil and transfer technical knowhow and drilling relief wells in Phase non-capital to state border.fields which Zarubezhneft Iran shares will with hold an deal.agreement The minister with the said Russian-led increased we are actively following up and management to Iranian 2. The CAPEX calculated for the costs 80% share in the contract, while production from Aban and West Ministry of Petroleum would be onprojects, the negotiations saying: “Currently, for the companies. “The most important development of Aban and West revenue, the remaining 20% will belong Paydar would earn Iran $4 billion facinggas fields. tough He tasks said thein the Iranian new development of 22 oil and to Dana Energy. Iran’s Minister in revenue. “With a combined calendar year which started on is transfer of technology, $674 million (including direct issue in Iran-Russia agreement production of 67 million barrels March 21, adding: management of knowledge and capital,Paydar fieldsand downhole is estimated pumps at speaking at the signing ceremony “Most of talks are in their viewgas fields.” to signing He said agreements talks had for of thePetroleum new IPC Bijan deal, Zangeneh, said some current prices, $4 billion will thebeen Yaran, almost Mansouri, finalized Sepehr with a Indirect costs are estimated at financing,” he said. of oil from these two fields, at signature of new contracts Details on Oil Fields $68repair million. and replacement Once operational, costs). agreement to enhance the Aban said. “This agreement has been final stage and we hope to see a positive assessment of andof “firsts” West werePaydar recorded output. in“For the the signedbe added for to the state development revenue,” he of manufacturing would be negotiationsand Jofair fields. under He wayalso forgave kilometers southwest of the city asoon.” key part Zangeneh of the dealsaid withdomestic the development of Azar, Ab ofAban Dehloran, oil field and is located West Paydar 38 Province,this project particularly will create workshops technical company is helping develop are already producing, and Zarubezhneft, adding that Teimour, Changouleh, Dehloran, tojobs repair on a andlarge rebuild scale in ESP Ilam pumps first time, a renowned Russian theytwo jointly will undergo owned improved fields which oil Iranian companies would be northwest of the oil-rich city of were already cooperating with involved in drilling and other Koupal. Manouchehri said Ahvazfield is andsituated 35 kilometers 150 kilometers from Furthermore, Zarubezhneft is Iranian oil fields. Of course, we such agreement not been signed activities. “Signature of such talksMaroun had (Bangestan) begun on Yadavaran and Cheshmeh-Khosh processing for the first time in that area. of technical services; however, forrecovery the development (IOR),” he added. of Aban “Had and contracts is fundamental for facility in Ilam Province. Both the Russians in oil and purchase the petroleum industry. It is on the agenda. He said NIOC expected to apply its enhanced for oil production within the production from these two also risky, but we have to accept wasfield, in while talks Azadegan with India was for stillthe Iran and Iraq. Their current partiesoil recovery would (EOR) learn technology about the in frameworkthis is the first of the such new contract model West Paydar fields accumulated development of Farzad B gas productionfields are jointly together owned stands by at technologythese fields andso that its application.the Iranian

fields would have not reached risks,” he added. 4 5 Sergei Ivanovich

March 2018 Issue No. 69 Kudryashov,news Ali Kardor, monthly General Director of Zarubezhneft monthly CEO of NIOCnews Zarubezhneft Boss: Zarubezhneft is Zarubezhneft is An oil contract is a proprietor of accepting contract naturally fraught technology in terms of We Accept Iran-Russia risks. with risks; we have enhanced recovery and to accept the risks we hope that the rate of and push ahead with recovery from Aban and Contract Risks After Iran’s National Iranian Oil Company would increase after the (NIOC) and Russia’s Zarubezhneft struck an the job, seriously. implementationWest Paydar oil fields of this agreement. 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: Each contract is fraught with different risks including political and pricing risks. Negotiations are under way with Iranian, European and Asian companies for the development of

other fields. We face no disturbance today.

France’s Total is pushing ahead with the development of Phase 11 of South Pars gas

field on schedule. Using ESP pumps and drilling new wells are among our plans to increase production from

We have asked these fields. candidate companies to form consortiums before bidding for

including Azadegan oil oil and gas projects

field. 6 7 IPC March 2018 Issue No. 69 monthly IPC

he agreement, which been held with PEDC for coincided with the 3rd IPC Deal Signed with Local Firms T67th anniversary of operator of the project we nationalization of petroleum signedthe project, with saying:an Iranian “It isE&P 100%.believe I that hope the that job in has practice been industry in Iran, will see the the first IPC-style contract Iranianassigned companies to an Iranian would firm be $2.4bn Deal with Local Company He said that PEDC is b/d of oil. Accumulated requiredcompany.” by the agreement He underlined the productiontwo fields produce from Jofair 110,000 to provide nearly $3 billion given the bulk of the project.” for Sepehr, Jofair Development and Sepehr will reach this agreement on the National Iranian Oil Company (NIOC) has signed a long-term $2.4 billion 512 million barrels over “In addition to conventional anniversarysignificance of the signingvictory of agreement with local firm Pasargad Energy Development Company (PEDC) for a 20-year period. It is the horizontalfinance for drillingthe project. in this the development of the Sepehr and Jofair oil fields. already said that the victory Iran’s petroleum industry the Islamic Revolution. “I had thatfirst antime Iranian in the private history of project, improved oil nationalized oil which means company is set to operate whichrecovery are (IOR) complicated, and enhanced must feelingof the Islamic free to Revolutionmake decisions integrated development oil recovery (EOR) methods, Zangeneh touched on “For the time being, national PEDC’sbe applied,” involvement he added. in the oilabout means production we must levels.” have our followsand production the terms projects of the Iranat construction of the $1.8 own E&P companies and we oil fields. The agreement billion Iran Gas Trunkline 6 must be able to operate big the newly developed model ofPetroleum oil contracts Contract to replace (IPC), old delivering gas from Iran to the minister. buybacks. neighboring(IGAT6), which Iraq, is currentlysaying: projectsZangeneh by said ourselves,” Iranian said The contract was signed on “Given the successful companies were required March 18 in the presence of to boost their potential. Iranian Minister of Petroleum with this company, we “Currently, 14 Iranian decidedexperience that of PEDC cooperation could companies have been Ali Kardor and CEO of PEDC cleared to operate E&P MehdiBijan Zangeneh, Mir-Moezzi. CEO of NIOC better than other bidders Implementation of this finance such a big project agreement is forecast to cost numberprojects. of We companies, have sufficient $2.427 billion with indirect owning to its affiliation with eitherprojects independently to assign to this or in costs estimated at $413 fromPasargad young Bank.” manpower. He partnership with foreign million. The agreement will addedHe said that PEDC young benefitted staff at this take effect in three months, company had helped provide and 30 months after its entry a realistic understanding of development.firms.” “We have Therefore, more than all into force, with the start of 100 oil and gas fields up for production the contractor to accomplish provided that will be remunerated. theZangeneh financial heaped aspects praise of the on theythese prove companies their technical, will have job project. 100% Local Content who brought this agreement Addressing the ceremony to tothe fruition NIOC and through PEDC empathy, experts, project management and sign the contract, Zangeneh saying: “Given the fact that financingZangeneh potential said IPC forterms this said intensive talks had an Iranian company is the requirepurpose,” foreign he added. companies Mojtaba Mohammad Qoli Photo:

8 9 IPC March 2018 Issue No. 69 monthly IPC

Currently, 14 Iranian the rate of companies recovery have been from Sepehr cleared to and Jofair operate would reach E&P 10 to 15% projects at the end of the term of the project

to hire Iranian partners. “I implementation, we need 126 wells in the Fahlyan and On this issue, Minster hope that alongside signing year and concurrently Ilam reservoir layers. “Although PEDC has a 100% Zangeneh said: “Foreign contracts with foreign not be learnt in classrooms. withthe final the daysanniversary of the calendar of This contract, he added, shareportion of ofimplementation profits. media became demonstrated companies we would sign Thereexperience. are some Such who things are could nationalization of petroleum mischief with regard to the agreements with Iranian industry we are signing a big 40,000 to 50,000 b/d water signature of agreement with andwould 80 also mcf/d envisage to 1 mcf/d injecting of in this project its share of Zarubezhneft saying the said that Iranian companies more experienced than us E&P company in order to gas. notingrevenue, that risks some excluded, media hadwill wouldcompanies.” work Thealongside minister and we can benefit from their facilitatecontract withimplementation a major Iranian of Manouchehri said the rate mistakenlybe more than confounded 3%,” he said, the share and Iranians 20%. That foreign companies in 3%experience.” Contractor Share of recovery from Sepehr and isRussian while underside had the an agreement 80% order to learn from them Jofair would reach 10 to 15% obligations with its revenue. deputy CEO of NIOC oil projects from the stage at the end of the term of the contractor’sHe referred partto the of project companies would have each forGholam-Reza development Manouchehri, and added.of exploration to production recent agreement signed 5%the Iranianshare of and revenue Russian over 20 and benefit from their engineering, said the revenue by“In an the Iranian contract company,” for the he wantexperiences Iranian in companies exploration to from the development of the development of the Sepehr transferproject. of technology to Iran, Zarubezhneft teaming up learnand production from foreign projects. companies “We Reiterating the need for the withbetween Iranian NIOC private and Russia’s entity Onyears.” Par with World would total $31 billion. “The target output will be achieved would hire international Dana Energy, saying the Business Models Sepehr and Jofair oil fields and Jofair oil fields, 50% of consultantshe expressed for hope this that purpose. PEDC Zarubezhneft-led consortium For his part, Mir-Moezzi said: truthbecause is that experience when it iscomes our would have a 5% portion of “I feel honored to sign on yardstick,” he said. “The contractor (PEDC) will have by implementing EOR that contractor’s share of behalf of an Iranian private designing and monitoring “Wea $97 feel million delighted (or 3%) that share in wouldprojects,” require he said. the drilling of Manouchehri explained contract would be 80%. operator the agreement for to implementing projects, of total revenue,” he said. Manouchehri said the project profits while its share of the 10 the project differed from its 11 IPC March 2018 Issue No. 69 monthly IPC

NIOC. He offered gratitude to Minister Zangeneh for having cleared the way for business activities in E&P sector for Iranian companies, saying: “On behalf of PEDC, I would also like to offer my gratitude to the NIOC professional

and technical talks and alsogroup Pasargad for their Bank financial for its

Mir-Moezzi said: “Hopefullyfinancial support.” constructive cooperation between the parties to the contract and other organizations and On behalf institutes involved in the of PEDC, I implementation of such contracts would open a would also new chapter for the Iranian like to offer nation to realize its dream of my gratitude empowering E&P companies and result in creating to the NIOC sustainable capacity in the professional country and paving the ground for Iranian companies group to step into international for their The new financial and February 2017, NIOC and model of oil PEDCoil and signed gas markets.” a memorandum In technical contracts talks conducting studies on the is also the of understanding (MOU) for and also product of a Pasargad new look at ledSepehr to the and development Jofair oil fields. of The findings of the studies Bank for its the Ministry financial of Petroleum oftechnical NIOC for and a contract. financial Thenmodel support talkswhich started won the between confirmation NIOC integrated development concentrate on development output and using cutting and PEDC to strike an IPC- and production at Jofair and “The new model of oil and production activities edge technologies along with recovery from the two style deal. contractsfields for production.is also the product and bring together necessary for maximum efficiency The Sepehr and Jofair oil new model of contracts with of a new look at the Ministry specialties so that under the He said the most aSepehr view to oil opening fields under a new the of Petroleum, which believes importantattracting investment.”element in the fromfields development over 20 years. of He these 1976 after the drilling of window to a brighter future in the necessity of creating by Pasargad Bank proper implementation of the added that the benefits onefields well were in Jofair.discovered They inare Iranian capacities within the groundsaegis of financial would be support prepared several decades following located in the northeastern He said the IPC framework framework of E&P companies was to drill horizontal wells thefields accomplishment would serve NIOC of the for section of the sedimentary wasin the the petroleum result of aindustry.” new for presence in the chain thatJofair would and Sepehr be deeper project than zone of Abadan Plain and look at affairs at the highest of activities pertaining to thefor thecountry technical and guaranteeand financial those currently available in “We hope that PEDC would 60 kilometers southwest level of the Ministry of development and operation development of oil fields in the country, fracking and project. of . The necessity of Petroleum in harmony with using downhole pumps for West Karoun area in the integrated development of global business models in “In harmony with such maximumMir-Moezzi profitability said: “The for the enhanced recovery. Mir- futureexpand and its activitiesaccomplish in itsthe order to require application fundamentalof fields,” he added. change, PEDC integratedfuture of the development country,” he said. Moezzi said water and gas they proved to constitute a of technology throughout established Pasargad Mir-Moezzi, a former CEO of petroleumthese two fields play. was felt after development of oil and gas needs of raising national oil mission alongside NIOC,” said of these fields could meet injection would be used 12 Exploration Company to 13 Interview March 2018 Issue No. 69 monthly Interview In March 2018, PEDC signed a contract to lead the development of the Sepehr In Interview with TOGY and Jofair fields in a project involving USD 2.4 billion in CAPEX. The 20-year development plan targets 110,000 b/d in total production from the two fields. PEDC Seeks companies have shown interest in being non- and also to send gas to the northwest of Iran. Overall, Effectiveness operating partners with us. the project progress has been satisfactory to NIGC What about your potential involvement in What is your With NIOC, South Pars phase 11? with When minimal will major the pump delays. stations be finalized? A: Total is now evaluating and doing due diligence outlook for we have and Efficiency PEDC? on companies. Fortunately, our companies in the at about 60% progress and we hope to have it also been upstream segment – drilling and services – have all completedA: As of January and delivered 2018, the by five mid-2018. pump stations are successful in A: We are very We are looking forward to beginning co-operation What are the company’s recent highlights in optimistic about been site visited, audited and prequalified by Total. presenting with Total very soon. the downstream sector? what the future proposals Mehdi Mir-Moezzi, CEO and A: PEDC has been active in three main downstream holds for us in the vice-president of Pasargad Energy Could you provide us with some details on years to come. for the Development Company (PEDC), has the Iran-Iraq gas pipeline project that PEDC has We are aiming to been involved in? areprojects completing over the the past procurement year. One is of Pars all the equipment talked to TOGY about the company’s development andBehinPalayesh starting construction Refinery in of Qeshm all of the Island, foundations where we level and, as part of Jofair efforts to digitalize operations across its and the underground piping. Hopefully, everything expandof this strategy; at every subsidiaries and its recent and prospective hasA: The kept 600-kilometre us very busy gasfor theexport past pipeline two years. to Iraq Since is will be done by March 2018. Moreover, we secured we have been and Sepehr activities in various sectors of Iran’s energy wean important started two project years inago, the we have constructed sector that 550 supporting start- oilfields industry. kilometers of the two different pipeline branches. to double its capacity from 35,000 bpd to 70,000 up companies One will send South Pars gas from Ahvaz to bpd.the approval We think for we the can second complete phase this of second the refinery phase in such as ESTD Shalamcheh for supplying the province of Basra in one and a half or two years. Furthermore, we have which has What was PEDC’s focus in 2017? What was your activity in the upstream the south of Iraq. The other is going from Ahwaz developed a A: Over the past year, we have designed and sector in the past year? to Naft Shahr, and will supply the Baghdad area. brilliant seismic implemented a strategy and governance model in Both branches are now in operation and they are achieved good progress in our petrochemical project and reservoir development for NISOC [National Iranian South transferring more than 10 mcm [353.1 mcf] of gas in Chabahar [Sina Petrochemical Complex]. We simulation and A: We have prepared several proposals for field effective in our business activities. One of the Oil Company] and NIOC; they have been assessed finally secured the financing needed for the project stimulation our holding to be more efficient; therefore, more as satisfactory by both clients. To NISOC, we have [build-operate-transfer] contract worth more than $ 2018.from Danish and Italian financiers, so we are very software called attention to risk management operational models presented the development plan for the 2per billion day to with Iraq. NIGC For [Nationalthis project, Iranian we signed Gas Company]. a BOT optimistic about the progress of this project during objectives is to become more agile and pay more through establishing an internal auditing system will catch up with in the holding and within all of our subsidiaries. planned. Upon completion of these stations, the As for our involvement in the Siraf Refineries RETINA,other similar which oilfield, which has been accepted and transferred So, we are going to modernize every level of our capacityAs part of of this this contract, pipeline fivewill pump increase stations to about are 50 Complex, the financing of this was signed with Korea products from to the list of approved prequalified companies. company from scratch, paying special attention to company have also been accepted, but we believe formalitiesEximbank and to be K-Sure, completed and a before smaller we part begin with work. a international The other proposals of a Russian and an Iranian the requirements of the digital adaptation process we are ahead of them and we are now waiting Chinese financier. We are now waiting for some companies such that all of our subsidiaries need. mcm [1.77 bcf] per day, both for exporting to Iraq as , also been successful in presenting proposals for and will lead the for NISOC’s final decision. With NIOC, we have How are you implementing this strategy? market within the Has your company been assisted by a third Apparently, NIOC is very happy with them as well, the development of Jofair and Sepehr oilfields. party? Overall, the future A: Yes, we have hired the services of an international plan to start negotiations with, so we are optimistic isnext promising five years. for and accordingly we are the first company which they that soon the relevant contracts will be awarded PEDC. very closely with us for more than a year. They assist to PEDC. [The contracts were awarded to PEDC in usfirm, in Arthurthis respect D. Little, and whichwe are has in very now goodbeen conditionsworking March 2018.] now. We see that in Iran, the strategic planning and Will you embark on these projects on your of design, but the problem lies in the implementation own? governance models are done absolutely fine in terms A: Following the IPC [Iran Petroleum Contract] implement this model and I am very optimistic that contractual model guidelines, negotiations with we,phase. as aPEDC leading is now energy using company, world-class will beexpertise successful to in restructuring and modernizing our organization. ventures are under way. Three international potential international partners to form joint 14 15 news March 2018 Issue No. 69 monthly news

Ali Mohammad Bosaqzadeh, and parts needed by Iran’s Iranian manufacturers in the industry in our country can equipment in petrochemical Domestic director of National petroleum industry can be development of petrochemical benefit from the latest savvy projects has had a rising trend. Petrochemical Company instrumental more than ever industry, he added: “In light in the world and become more Most petrochemical projects Manufacturers (NPC) projects, has stressed on the path of development of arrangements, the industry influential than before.” and facilities in our country the need for supporting of this industry by benefiting is entering a new phase of “Under construction in are looking for the utilization Key in Petchem domestic manufacturers from latest knowhow,” development. To that effect, different areas of the country, of capabilities of domestic of equipment. “Domestic he said. Touching on the manufacturers of equipment the use of domestically industrialists,” Bosaqzadeh Development manufacturers of equipment involvement of qualified and parts for petrochemical manufactured items and said.

8-Month Gas Storage Iran: Home to World Largest Shiraz Refinery to Supply Fresh Gas Production at Exceeded 2.5bcm Euro-5 Gasoline Supplier Euro-5 Gasoil South Pars The Iranian Central Oil Fields Company A deputy minister of petroleum has said that The second train of gas sweetening at the Iran is home to the world’s largest supplier development to supply Euro-5 gasoil, its CEO Shiraz is undergoing would become operational in April, CEO (ICOFC) stored 2.567 bcm of gas in the He said an agreement had been signed for ofrefinery Pars Oil of andPhase Gas 13 Company, of South MohammadPars gas field calendarShourijeh year and whichSarajeh ended underground on March gas 20, storage ICOFC of Euro-5 gasoline. Ali-Reza Sadeq-Abadi, theRahim purchase Shamsoddini of license said. and basic design sites during the first eight months of last Iranian CEO of National Iranian Oil Refining and for upgrading gasoil production. “Based on delivered 2.017 bcm of gas to national trunkline itsDistribution builder company Company Persian (NIORDC), Gulf Star said Oil Bandar Meshkinfam said. He said that the first row chief said. Rahim Hatami also said that ICOFC Co.,Abbas would Gas Condensatebe the world’s Refinery, largest known producer by supplying gasoil in compliance with the Euro- rowof sweetening of sweeting at inthe Phase refinery 13 came of Phases online in output of 277 mcm/d of gas, ICOFC supplies of Euro-5 gasoline. He said Phase 3 of the this agreement, the Shiraz refinery will be late22-24 March, would said come Meshkinfam, online in May. adding The that first during cold months of year. “With a maximum “With the purchase of license and basic completing the remaining phases of South the company met 96% of its obligations during design5 standards,” from Honeywell he added. UOP for gasoil Pars would be a propriety in the current the30% last of Iran’scalendar gas year. needs,” Hatami he said, added adding that that ICOFC whichrefinery began would on become March 21. operational He said Phase in the 2 production at 26,000 b/d, the quality of calendar year. Phase 13 is being developed produced 229,000 b/d of oil in the last Iranian offirst the half treatment of the current facility Iranian would supplycalendar an year to produce 56 mcm/d of sour gas from 38 calendar year, setting a record in production additional 12 ml/d of Euro-5 gasoline, which offshore wells, 50 mcm/d of sweet gas, 2,900 would end Iran’s dependence on gasoline gasoil supplied by the Shiraz refinery will be saw its production grow by 8,000 b/d. He also imports. Sadeq-Abadi said most Iranian upgraded to international standards,” said 2,750 tonnes a day of ethane, 75,000 b/d referredfrom shared to continued oil fields. productionHe said West from Paydar Azar field upgradeShamsoddini. the quality “The objective of gasoil behindthrough designing cutting oftonnes gas condensate a day of liquefied and 400 petroleum tonnes a gasday (LPG),of calendar year, adding that the Bandar Abbas sulfurthe gasoline compounds hydrogen to standard purification levels unit and is to sulfur. Meshkinfam said in the current Iranian refineries would be overhauled in the new also to minimize environmental impacts and calendar year, every two months one train of shortlyoil field infor the a year, last calendarsaying that year. recovery from gasoline shortages. Phases 22-24 would come online. this jointly owned field doubled to 30,000 b/d condensate refinery would make up for any consequences,” he said. Tehran, Baku Sign 8 Documents During President Hassan would mark a turning point in cooperation between the Tehran and Baku signed eight two countries in development be able to make big profits memorandumsRouhani’s visit to of Azerbaijan,cooperation, inthrough car manufacturing, cooperation,” he said. On the sidelines of the signing constructionHe said that jointof railroad, investment projects. cooperation in health sector, Caspianincluding Sea’s in the pharmaceuticals, energy resourcessector. Recovery has always from been the sharedceremony, interests President in the Rouhani Caspian and tourism is an indication on the agenda of littoral said Iran and Azerbaijan of the two countries’ firm states of the landlocked lake. economic, technical, trade, will to broaden prospective Sea. “Through scientific, cooperation. Azeri President cooperation we have to be Ilham Aliyev said Iranian Sardar-eThroughout Jangal its explorationin the southern shipping, fishing and tourism and Azeri heads of state had partactivities, of the Iran Caspian explored Sea; Caspian Sea potentialities. Our held 11 meetings over recent international domains are on were determined to develop during this visit will however, it has so far failed able to make maximum use of years. the path of implementation economic and trade ties undoubtedly broaden to recover from these proven Caspian Sea reserves indicates “Agreements and cooperation and we have good relations cooperation between the two reserves. The document signed thatdecision the two today nations for joint and use the of between the two countries in other littoral nations would different bilateral, regional and Aliyev said Tehran and Baku and“The push documents ahead with signed joint with each other,” he said. investment projects. nations and will be influential 16 between Iran and Azerbaijan on regional ties,” he added. 17 news March 2018 Issue No. 69 monthly news Refinery Processes Hi-Tech South 2.5bcm Gas in One Year Pars Oil Layer processed more than 2.5 bcm of gas in Development CEO of National Iranian Oil Company Tehran, Ashgabat Sign 13 the Sarkhoun Iranian andcalendar Qeshm year gas which refinery ended PRTC, Air Liquide Sign Documents MTP Deal The Iranian and Turkmen heads of state oversaw technology was used in the development of(NIOC) the South Ali Kardor Pars Oil said Layer. cutting edge the signature of 13 documents for cooperation locatedon March in 20,the CEO center of refineryof Sarkhoun Mohammad gas Hossein Norouzi said. “The refinery is Iran’s Petrochemical Research and Technology to Iran-Turkmenistan agreement in the energy, state-of-the-art technologies are among forCompany methanol-to-propylene (PRTC) and France’s process. Air Liquide Under this features“Production of the through process benefiting of development from transportbetween the and two transit countries. sectors, Rouhani and saying: referred “Iran fromfield, 20supplying wells drilled Iran’s in energy the Sarkhoun needs signed an agreement to develop a joint license and Turkmenistan are two energy-rich countries. partly. The refinery receives its feedstock and production in the South Pars Oil During the talks, it was decided that we upgrade agreement, PARS MTP brand products will be gas area,” he said. Norouzi said Sarkhoun supplied to customers. Esmaeil Qanbari, CEO of 267.158 bcm of which is estimated to Layer,” he said. Kardor said the process said that gas swap and cooperation in the energy gas field contained 318.42 bcm of gas, from the layer was being handled by a thePRTC, part said: of Air “In Liquide light of newlyof France created for a atmospherenew round be recoverable. “The Jahrom gas layer is of recovery, refining and export of oil sectorour cooperation in the Caspian more Sea than were ever among in this topics sector.” of He sour, while the Gouri layer gas is sweet. ofin cooperation,recent years andan agreement the expression has been of readiness signed on discussion between the two sides. “Cooperation Currently, 7 mcm/d of gas is being for awarding the license for the MTP process in different sectors including Caspian Sea oil and refining vessel for the first time in the gas could be a new step in economic ties between ofjointly upstream owned industries, South Pars singling gas field. out He Pars 500,000 b/d of sour gas and 6.5 mb/d of reiterated the significance of development recovered from this field, including buyerunder ofPARS this MTP license brand.” in order He said: to be “The able Nationalto award Turkmen President Gurbanguly Berdimuhamedov toPetrochemical other Iranian Company applicants. (NPC) Basic will engineering be the first is dispatched to consumer destinations Oil and Gas Company (POGC) as a major saidIran hisand country Turkmenistan,” was determined said Rouhani. to broaden For his its part, sweet gas,” he added. “The processed gas “Owing to its longtime record in the via two pipelines, measuring 22 and 24 contributor to development projects. relations with Tehran in all sectors. He underlined inches in diameter. The 22-inch pipe this company has turned out to be polypropylenedocuments will production be jointly drawn unit with up bya limited PRTC and supplies gas to facilities west of Bandar implementation of development projects, two sides, particularly in energy security sector. Abbas like steel industry, power plant and Air Liquide experts.” “PRTC has launched a pilot “Inthe economicsignificance cooperation of cooperation we have between to pursue the said, noting that plans are in place to raise the diversity in mechanisms and take advantage of all successful in steering EPC projects,” said output of 120,000 tons per annum,” Qanbari pipeline feeds Persian Gulf power plant Kardor. He touched on the significance potentialities and possibilities for development of Bandar Abbas oil refinery, and the 24-inch shares with neighboring countries, saying: “Hugeof development efforts have of oilbeen and made gas fields with regardIran relations in transportation, agriculture and energy Norouzi said. Liquide.production Air of Liquide the complex is an engineering, to 500,000 tonsconstruction per sectors. Berdimuhamedov described the Caspian and“With some the areas launch in of Kerman Iran Gas Province,” Trunkline andyear chemical in cooperation process with licensing energy company. majors, namely Since Air Sea as the sea of peace and security, saying: “Iran- acceleration in implementing upstream 2007, it has been part of Air Liquide S.A., a to the supply of financial resources and Turkmenistan cooperation on the coast and in the pipelines have been connected and gas multinational company that supplies industrial witnessing completion of development waters off the Caspian Sea and special economic 7 (IGAT7),shortages the are two made 24-inch up for and via 22-inch the oil industry projects. We are fortunately research and development arm of NPC. gases and services to industries. PRTC is the projects in South Pars.” zones must improve more than before.” main pipeline,” he said. Annual Oil Exports at 2.5 mb/d told ‘Bloomberg Daybreak: 2.6 mb/d of oil to Asian and Americas’. EuropeanIran averagely countries exported during the exports was about 40 percent. Commenting on the recent oil last calendar year which ended Total (France), Tubrash price rally that diverged from European(Turkey), Enicustomers. and Saras a general slump in equities, included 2.115 mb/d of crude (Italy)Michael are Cohen, among head Iran’s of majorenergy Cohen said that at the end oilon andMarch 428 20. tb/d The of exports condensate commodities research at of last week that oil prices during the one-year period. Barclays, told Bloomberg that were supported by the Energy China and India were the Iran could do a lot of different largest crude oil importers things to kind of skirt possible inventory that reported a from Iran; meanwhile South tighter sanctions on its oil declineInformation in crude Agency oil inventories (EIA)’s sector, such as sending oil to of 2.6 million barrels for the for the country’s condensate different places. week to March 16, and the Korea was the first destination “There are a lot of different appointment of John Bolton, to the Iranian nuclear deal as reduced Iranian supply, Cohen Over 60% of Iran’s crude oil things that Iran can do to an Iran hawk and a proponent of May 12, Cohen said. “I think There is some wiggle room said that “there is some wiggle exports in Asia. kind of skirt sanctions. In the of war, as National Security that the market pretty much andthat’s Iran the could case.” send oil to room at least in terms of other past, they’ve used more oil Advisor. assumes that there’s going to other places, according to OPEC suppliers, but they are theand same condensate year. exports were in their power sector, they’ve With Bolton’s appointment, be some kind of reduction in Cohen. Asked about if Saudi all committed to this OPEC ‎shippedShare of to the Asian European refineries in actually sent oil to different market participants are Arabia could increase its oil countries from Iran’s oil looking at pretty much an end added: “I’m not so sure that production in the event of Iranian supply,” he said, but deal and I don’t expect them to 18 places that can take it,” Cohen diverge from that either.” 19 Petchem March 2018 Issue No. 69 monthly Petchem

supply of 13 million tonnes of in the South Pars phases in additional petrochemicals. He said that feedstock shortages fertilizer,mainly methanol, which were liquefied priced of Assaluyeh would move Jump in Petchem Output, Exports petroleum gas (LPG) and urea coming years, the olefin units were responsible for 6 respectively at $370, $380 and to enhance their ethylene The removal of international sanctions on Iran in stood at around 10.8 million million tonnes and technical $210 per tonne. Nonetheless, production capacity through the aftermath of the implementation of Iran’s 2015 malfunctions for 7.4 million manufacturing more valuable nuclear deal with six world powers, dubbed the Joint to 18.3 million tonnes in 2006 products including polymers Fanavaran Petrochemical Comprehensive Plan of Action (JCPOA), once more tempted andtonnes 42.6 in million 1997, which tonnes jumped in restrictions needed to be (polyethylene at $1,400 Plantfilling hopes up their to vacantreach its capacities. rated international companies and foreign investors to step tonnes. Farajpour said such methanol production capacity into Iran which sits atop huge oil, gas and petrochemical production capacities would Petrochemical Plant’s products by improving its installations, deposits. reach2010. 53.4According million to tonnes projections, in beminimized used. Furthermore, so that existing Iran’s per tonne) and Karoun while Amir Kabir Petrochemical comingthe output years. is expected The NPC to data petrochemical storage capacity could boost the value of Plant plans to boost its rated he JCPOA allows Iran has already embarked on shows that petrochemical currently stands at three petrochemical(MDI at $2,800 sales. per tonne) The 2011- to forge a new alliance activities to that end. Iran production in Mahshahr, million tonnes. The value Takht-e Jamshid Petrochemical Twith the West, which is currently producing at Assaluyeh and other areas of of products depends on a sharp decline in petrochemical Plantolefin eyesproduction building capacity. its second least 60 million tonnes a Iran stood respectively at 19.5, variety of factors including 2017 period experienced a Such alliance would further day of petrochemicals. In 22.9 and 11 million tonnes supply, demand, oil price international sanctions Bandar Imam Petrochemical interactionwould benefit through both sides. trade, the meantime, more than 60 during the calendar year imposedexports in on 2013 Iran. due The to country tough PlantPBR production is investing unit in a while new investment and negotiations 1396 which ended on March average price for each tonne for the development of oil, gas 20. A total of 53.4 million ofand petrochemicals mix of products. is assumedIf the sharply fall from 17.8 million of Kaveh Petrochemical Plant, nationalpetrochemical development projects plans left tonnes of petrochemicals were at $543, Iran’s petrochemical tonnessaw its inpetrochemical 2011 to 12.8 exports million witholefin a unit. rated The capacity methanol of 2.3 unit Now that the way has been arefrom under the third, operation. fourth Once and fifththe supplied by 51 petrochemical tonnes in 2013. Thanks to million tonnes a year, is close clearedand petrochemical for investors projects. and plants operating in Iran. That from 2011 to 2017 due to the JCPOA, Iran’s annual to becoming operational. It proprietors of technology to Iran will see its petrochemical represents only 84% of Iran’s oilexports price were crash. on In the 2011, decline will start production this year step into Iran, everybody is outputforegoing double. projects A review come ofonline, rated petrochemical production reached 21.5 million tonnes. preoccupied with development petrochemical production in tonnes of petrochemicals for petrochemical exports have Iran in the past two decades acting manager of production $14Iran million,exported while 17 million in 2017, growth perspective and the Petrochemicalor next year. Furthermore, Plant, with a calm atmosphere. Iran’s indicates two periods of hike in controlcapacity. at Qodratollah NPC, said feedstock Farajpour, improvementIn Farajpour’s in view, the ratedthe ratedthe methanol production unit capacity of Marjan of Nationalin the shadow Petrochemical of the existing production in 2006 and 2010. shortages, technical and reached 21 million tonnes for 1.65 million tonnes a year, is processing malfunction onlyIran’s $11 petrochemical million. In terms exports of units indicate that due to the to come on-stream in coming of Iran’s Ministry of Petroleum, petrochemical production were to blame for the non- weight, the products included increasedproduction ethane capacity production of existing months. Company (NPC), a subsidiary According to official data, Iran’s

Iran is Iran saw its currently petrochemical producing exports sharply at least 60 fall from 17.8 million tonnes million tonnes a day of in 2011 to 12.8 petrochemicals million tonnes in 2013

20 21 Interview March 2018 Issue No. 69 monthly Interview Iran’s petrochemical industry potential is no secret to anyone. Petrochemical projects worth $75 billion are envisaged in Iran, most of which need foreign finance. There are currently 62 incomplete and new petrochemical projects in $80bn Iran, which are like 62 sources of attracting capital. Investment in regard to building new plants in order to catch the petrochemical industry. Of course, after remaining phases of South Pars come online, up with ongoing changes? Iran Petchem A: Following a roadmap worked out for this purpose and in light of the country’s huge gas become operational we will reach the nominal Farnaz production after the development of South Pars capacityNGL and ofother feedstock feedstock production supply projects in coming Alavi: Sector years. Furthermore, as new ethane and ethylene -fueled plants and perpetuating thegas productionfield, efforts chain, have beenparticularly put into the establishing polymer sector during the 6th Five-Year Development consuming projects come online by the private Following a roadmap worked Over recent years, Iran are focused on converting gas to propylene chain. For that purpose, the bulk of new projects Plan, which are dependent on sufficient out for this has introduced many changes into and polyethylene with a view to generating feedstock sector would be completed. In case financing, the production chain in the upstream purpose and its upstream petrochemical production more value-added and developing downstream the international atmosphere improves and the provisions of the JCPOA (Iran’s nuclear deal in light of the and it has been moving towards country’s huge Iran’s manufacturing products of higher value- gas production industries What arealong Iran’s with petrochemicalcreating jobs in productionthe country. valuable hydrocarbon resources including natural revenue from added. To learn more about planning for plans up to 2025? What is the source of gaswith and six ethane,world powers) in case regulatoryare implemented, petrochemical due to after the petrochemical petrochemical projects, “Iran Petroleum” has feedstock for them? development of South Pars industry conducted a short interview with Farnaz Alavi, A: We are currently facing shortages in than $80 billion in investment would be made in director of planning and development at the ethane, ethylene and propylene supply in projects become operational by the NPC, more increased National Petrochemical Company (NPC). have been put this industry over the coming six to seven years. intogas establishingfield, efforts from IRR natural gas- 32,000 fueled plants and What have been the achievements of Iran’s petrochemical sector. perpetuating the billion in the petrochemical industry in preventing crude achieveOver this significant period, all production ethane recovered capacity in in the the production chain, oil and creating value in the past decade? calendar year particularly the A: Over the past decade, Iran’s petrochemical South Pars zone along with the natural gas polymer chain 1386 (March production capacity has increased from produced there have served as the main feedstock 2007-March 38 million tonnes to more than 62 million for petrochemical units, leading to the creation 2008) to tonnes with production having gone from 24 million tonnes to over 50 million tonnes. In As a result, Iran’s revenue from petrochemical of significant value in the national economy. around IRR the same decade, the government has devised plans regarding designing and implementing 300,000 industry increased from IRR 32,000 billion in the billion by calendar year 1386 (March 2007-March 2008) the Assaluyeh zone while at the same time the end of major petrochemical projects, particularly in to around IRR 300,000 billion by the end of the calendar year 1395 (in March 2017). That is the calendar forecast to cross IRR 350,000 billion by the end of hasupstream led to feedstockthe blossoming supply of projects this industry. have become In Moreover, Iran’s foreign currency revenue from year 1395 (in the past calendar year (in March 2018). theoperational meantime, in themaking South arrangements Pars gas field. for That the petrochemical industry increased from $6.4 March 2017) removal of obstacles to production, monitoring billion in the calendar year 1386 to $10 billion in the year 1395, which is set to reach $11.5 National Petrochemical Company, management billion by the end of the calendar year 1396. It ofand optimal following allocation up on projects of feedstock under of way upstream by the is noteworthy that due to the fall in oil prices, petrochemical plants including ethane in light of startup of different phases of South Pars and decline in value across the globe in recent years. petrochemical products have experienced a supply of required ethane to the Assaluyeh zone, Therefore, petrochemical revenues have been management of optimal allocation of feedstock affected. to petrochemical production plants including ethylene and propylene, paying special attention Petrochemical market has seen major to safety and environment, and planning overhaul changes in recent years in the world. What has Iran’s petrochemical industry done with 22 have all led to the materialization of projects to 23 HSE March 2018 Issue No. 69 monthly HSE

Iran Determined to regulations. Renovate Equipment Senemaud said that the Paris an then seeking a solution.” o-Ir ian In her opening remarks, international companies O Reiterating that leading c Shahdaei described the have always sought effective its signatories to honor n petroleum industry as high- Agreement (COP21) required a il solutions to oil and gas environmental obligations. r orksh In risk everywhere in the world. industry accidents, Shahdaei “In addition to the HSE F W op “In all moments, working in obligations in all sectors we E d the oil industry is high-risk have to take into consideration S u due to the nature of work. ofsaid: these “Benefiting companies from through the training manpower and holdingknowledge workshops and experience and motivating them, because H s Iran’s petroleum industry due training courses for petroleum training is instrumental in this

t The risk is extremely high in

r said. Senemaud also referred to y to“When decrepit an accidentinstallations,” happens she industry experts and staff is a sector,” the top diplomat said. in the petroleum industry assessmentmust.” methods, she gas market in Iran and the a single factor will not be calledReferring for the to theadoption use of ofrisk Ministrythe significance of Petroleum’s of oil and to blame; rather we have to success in bringing dynamism pin the blame on a chain of make the workplace safer. to the industry, saying: “During factors including neglecting “tough regulations” in order to my visit to Assaluyeh and the instructions, disregarding of professional competence, regulations, mismanagement, trainingShahdaei manpower, specified vetting impressed by the development decrepit equipment, poor management of physical South Pars projects, I was assets, paying attention to He said that in the wake of the Shahdaei. environmental issues and liftingof infrastructure of sanctions, in Iranthis zone.”and education and so on,” said updating technologies in France have resumed oil and Ministry of Petroleum’s the petroleum industry as gas cooperation. Senemaud determinationShe reaffirmed to the renew Iranian important issues which must said France bought more than equipment now that sanctions be focused upon. €2 billion worth of oil from have been lifted due to the She said establishment of Iran in 2017. implementation of the Joint process safety management Comprehensive Plan of Action investment was being made In the aftermath of implementation of Iran’s workplace safety were among inThe the diplomat development said significant of Phase nuclear deal with six world powers and concomitant renewed She also underscored the the(PSM), most risk important assessment preventive and 11 of South Pars by the French interest by foreign companies for cooperation with Iran’s petroleum need(JCPOA). for preventive work to measures. industry, the Iranian Ministry of Petroleum was prompted minimize damage emanated partners. to benefit from the achievements of leading international from accidents, saying: “There Environmental Obligations energyNoting major that France Total andwould its companies in the health, safety and environment (HSE) are many approaches in this Binding continue to support the sector. The first HSE workshop was held in Tehran in The French ambassador development of activities cooperation with the French Embassy’s Business section in highlighted the necessity of in Iran’s oil and gas sector, Iran. The event was inaugurated by France’s Ambassador waitingsector and for wea crisis should to occurbenefit and respecting environmental Senemaud said: “I hope that Francois Senemaud and Iran’s top deputy minister from all experiences instead of of petroleum Marzieh Shahdaei. Paying attention to training manpower, prioritizing human resources in HSE issues and the significance of HSE in monitoring operation were among major points highlighted by speakers during the two-day event. Co-sponsored by the Office of Iran’s Deputy Minister of Petroleum for International Affairs and commerce, the HSE workshop was held February 27-28. The objectives sought throughout this event included familiarizing Iranian petroleum industry managers with the latest HSE achievements of top oil and gas companies and application of management and technical approaches to improve the HSE output. The issues discussed throughout the workshop mainly pertained to the HSE role in design, preventing damage, management of physical assets, promoting the HSE culture, behavior-based safety, oil and gas prevention and new environmental issues.The companies represented in the event were Total, Axens, Artelia, IFP, B.V., Kerdos Energy, Amethyste, Gas 24 Viewer, Path Control and GESIP among others. 25 HSE March 2018 Issue No. 69 monthly HSE

management should supervise “Accident would make sense this issue regularly in order to when a group of people work

He said that reforms were change the behavior of people partimprove of management. and see recycling.” somewhere. Our objective is to “We believe that management He said that “all accidents are does not mean letting affairs in order to prevent accidents.” go ahead on themselves. The more the management’s preventable.”Risk Reduction Level supervision the more effective manager at the HSE section of Philippe Reveau, project Boutin underscored the the outcome will be,” he said. Artelia, was the next speaker. HSE business, saying: “We have Artelia and its activities and He first presented data about tosignificance regularly monitorof responsibility accidents in staff. Artelia of France is and constantly supervise this issue because accidents do not in Europe, Africa, Asia and operating projects abroad: give any alert and they occur America. Artelia’s activities suddenly. Therefore, we should not ignore our responsibility said Artelia is mainly active inare risk mainly management, in Europe. adding Reveau be done only by constant that his company attached and imagine that our job will HSE policymaking must be compliance to laws and great significance to “full transparentsupervision.” and “Meantime, clear. That would help company chief He also highlighted “periodical, regulations in each country”. establish links between HSE regular and systematic reviews and industry standards he said. Boutin said HSE at workplaceand the structure included of allproject,” sectors compliance”. and was not bound to any often conduct environment studies“Before and starting assess a projectrisks like we “We have to require impacts on the environment contractorsspecific domain. to respect and seismic testing risks. Then, we study management and regularly report data so that Iran-France cooperation Pars facilities did not represent He called for the promotion He said that administrative wemaximum would seeHSE which obligations accidents and crisis management projects,” would go on in the oil and gas Iran’s petroleum industry. of culture of safety, saying: control and supervision, as happen in different sections. said Reveau. sector and we would be able “Therefore, the volume of “There is an approach well as training manpower conducted prior to the Referring to risk studies to cooperate in the revival of activities carried out in this according to which if we can were among tools of HSE out whether accidents have sector may not be the same predict accidents we will be observation. He added: “We That would help us find he said: “By risk assessment implementation of projects, in all sectors of petroleum able to reduce the number of know that workers must be Boutin also referred to Iran’sHSE, aoil Behavioral and gas sector.” Issue, accidents during work. But equipped, but we have to train communicationincreased or not,” between he added. impact of implementation of we will be able to examine the Not a Cultural One He said that Sofregaz could most of times many accidents them to behave properly on- contractors and operators, Dominique Boutin, from cooperateindustry.” with Iranian are rooted in our behavior. adding: “Operators are the project on the environment Sofregaz, had a presentation companies on reducing Therefore if we manage to “Of course, HSE training required to supply safety and examine problems and about reducing workplace workplace accidents during correct our behavior we will issite.” required to be alongside equipment to contractors. It find solutions to them.” accidents. be able to institutionalize the standardization. Furthermore, would be better if a third party Reveau echoed Boutin’s Boutin, who had visited well as in operating facilities. those who are chosen to train would be involved to adapt the remarks about the significance South Pars one day before implementationBoutin highlighted of projects, “behavior- as “In order to make sure about human resources are required requirements with what is on of manpower in projects, the conference, said the idea theculture outcome of safety.” of activities on a to be competent for this need to identify the path saying: “In the first step, we is to minimize the number of saying: “I believe observing real-time basis we will need He said that Europe had set we have to go through for accidents in workplaces. thatbased HSE safety” issues approaches, rather than HSE measurement indices to Boutin referred to the strategy instructionsthe ground.” to verify the the implementation of the “Iranian companies have done being a cultural issue is a measure the activities. That ofpurpose,” continuity he added.at work, adding: adaptation of activities and quite well with regard to HSE behavioral one. When a would help prevent accidents “We are required to carry responsibilities. consideration the fact that project. We have to take into behavior is not proper it has out corrective measures in manpower is always the top Boutin added that the South Boutin. the process of work. The of human factor, Boutin said: issues,” he said. and lower work risk,” said Highlighting the significance priority for us.” 26 nothing to do with culture.” 27 HSE March 2018 Issue No. 69 monthly HSE Reza Rostami Reza Photo:

He said every report drafted consecutive days without any viewed as a never-ending on risk assessment is required everyone while different Cooper. studied every year in order challenge, noting that a danger sectionshad to be had explained to be visited to to reach a Perfect Day,” said toHe calculate said major certain risks indices are is never thought to be over. our separate assessment of fatalHe said accidents he had in witnessed exploration a regularly. Of course, he added, Card initiative, saying: “Stop which would set the stage for Even if the probability of to specify objectives. “In largeand production number of projects. risks during all sections may not be visited. CardHe then is a explainedtool that gives the Stop planning and investment. accidents is reduced to zero, to make clear what would his visit to Phases 2 and 3 of Cooper said closed circuit all Total and contractor Cooper noted that investment the issue would be how to happenour own after objectives an accident we have takes cameras were of great help employees the authority to plans were not necessarily maintain the situation. place. In the meantime, we to inform staff of what is step in and stop ongoing work economical, adding that their Cooper said that contractor doneSouth in Pars Phase gas 2 field. of the He giant added happening in and around the if they feel that an action or economic aspect was taken employees must be viewed for countering accidents and offshorethat good reservoir. HSE job hadHighlighting been situation is unsafe or could into account because of budget as client’s manpower to be measureneed to examine the probability scenarios of Cooper said the cameras allocation to them. trained. occurrence of accidents in a in the implementation of wouldsite of theprovide project. “a clear Cooper said that the users He stressed the need for The important thing, he the significance of manpower understanding of the lead to an accident.” managers to feel more added, was to train them on had been told on the site of Total or contractor managers responsible and work out safety measures noting that bid to minimize them,” said Southprojects, Pars Cooper that accidents said he had the way instructions are given “evenwould in face the no event “sanctions” of improper by various scenarios in order to contractor employees are reachReveau. an acceptable level in declined and they were mainly environment”, help “improve predict possible accidents and engaged more than others in risk“One reduction. of our objectives Therefore, is to we emanated from human error. staff would “comply with the He said nobody was have to make predictions and Cooper said paying attention to the staff”, help ensure that authorizeduse” of the Stopto oppose Card. a Stop them. to HSE was “a strong Card user, because any use find solutions for countering the HSEjob. director of the rules”He said and that help Total “improve had our would be interpreted as highest level of the company. NationalMohammad Iranian Reza Gas Yousefipour, Company thenWorkplace design models,”Accidents he added. at Total. He added that safety on site”. having been at the discretion Annually“Major risks in a arededicated known at the For his part, Total’s Terry safety-relatedcommitment of behaviors management” are which required all staff to of the owner. Cooper also committee, the top risks and needed technical cooperation. Cooper outlined the French closely monitored by the declined a “Perfect Day” highlighted the issue of safety (NIGC),“In the meantimesaid Iran’s weHSE have sector to giant’s activities regarding management. design scenarios. take into account the fact that workplace safety, saying the He said everyone had to find answers to questions and stand for “Communication, presentedmajor risks to performance the Total’s E&P international cooperation in number of accidents had make efforts for safety to management to the teams on Urge,culture, Leadership, saying CULTURE Teamwork, could indicators of each affiliate are this sector is not limited to Iran be prioritized. Cooper said “Each actor (from the affiliate said Cooper. and it will have international noted that Total registered 925 regulations and instructions within his/her own activity, ExecutiveHe added Committee that risks are (CDEP),” significantly declined. He site), commits him/herself, Understanding, Recognition and Empowerment”. results too,” he said. 28 29 HSE March 2018 Issue No. 69 monthly HSE

Studies and Environmental and to be taken seriously, citing Social Impact Assessments: air, water and soil quality, noise, earthquake which may strike at local“So if content” there are in Iranian every country it HSE in Iran; biodiversity, for offshore, coastal the example of a devastating companiesoperated projects. that have the and on-shore environment. is able to help governments capability. we need to use those Emergency preparedness & toany adopt time. regulations Reveau said on that HSE Artelia Strengths and Weaknesses crisis management: preparation requirements. companies had to be helped Foreign speakers at the Franco-Iranian HSE workshop needed good service workers to succeed. “Good tool does not andfirst,” trained he said, to adding comply that with weaker the said Iran, a country with extended petroleum industry, still Prevent ‘Poor Cousin’ make a good worker. Technology Plans, Site Contingency Plans, required standards. “Based on the needed to undertake some essential measures in terms of of Emergency Response Terry Cooper. HSE manager of occupational safety. is important, but a beautiful car Oil Spill Contingency Plans, standard process that we have, organization of Large Scale Total, highlighted the necessity of occupational safety, saying: ominique Boutin, head said. and standards, and international of engineering at Sofren on the ground before taking does not make a driver good,” he management training sessions. bestwe design practice, new but projects that’s notto codes a Group, told Iran Petroleum theknow following exactly whatstep. existed“I need to Decrepit Installations Exercises, delivery of crisis guarantee that you know your D “Don’t let major risks and poor on the sidelines of the event that said a lot had to be done in Iran safety become the poor cousin.” Iranian service workers in the are. First of all we have to be inPhilippe terms Reveauof risk assessment. from Artelia He he gave a positive assessment of said Cooper. He added that Speaking to “Iran Petroleum”, clairvoyantknow exactly to the see things the things as they as andARTELIA consulting is an groupindependent that Total’srisks and risk how assessment to manage code them,” operatesengineering, in the project following management nine installations in Iran’s petroleum South Pars which he had visited made necessary calculations “occupational safety” measures at “Theregiant offshore are two South things Pars I have gas field markets: environment, industry, industrytold “Iran were Petroleum” outdated, that this most the day before the workshop. to see if there is any risk of seenwere there.not sufficiently I had the impressionequipped. “suggestionthey are,’” he on said, how adding to be andthat the building construction, water, point involve a potential risk “They seem to manage very well that the workers on the site next step would consist of giving energy, maritime, multi-site aggravation (occurrence and HSE matrices were key in risk changed and if they have met our Cooper, however, said the “weak assessment,fire or explosion. adding: Cooper “1,000 said to the occupational safety,” he said. with personal protection gear. finally to verify how they have moment, there is still too much to 2,000 scenarios [may be worked [Second],were not sufficientlyI’m not sure equipped if the staff providesprojects, transportationservices to private and do.severity The installations of accidents). in “For Iran the are was the lack of a “safety process out] and so we put all those point” with HSE at South Pars are trained to understand the expectations.” clientsurban development. (industrial groups, ARTELIA mostly ageing. And as far as risk He reaffirmed his views on developers, investors, building assessment is concerned that is management system”. He said ofthe culture significance may be of implicated personal contractors, banks, insurance scenarios in a risk matrix.” He that “elements” for such system qualityHSE instructions,” plan for Sofren he said. Group’s erroneously.“behavior” and “Culture that the does issue not risksaid ofthe accident, scenarios while in the those “green” in the already existed in the giant gas Boutin, who drafted the project prevent us from having good public clients (government commonstill a lot toregulatory do,” he said. framework be integrated. Cooper reiterated area of the matrix showed lower field, which he said needed to results in terms of safety. That’s departments,companies, etc.) local as authorities,well as to forReveau all operators recommends in terms defining of risk a immediately. Cooper said the Pars,Sofregaz said to he implement would meet its one- flare public bodies, international assessment. This may involve the “red” area had to be countered the significance of hiring local on-onegas gathering with Iranian project companies in South of behavior and not culture. was under control, while the manpower in projects. He said Behaviorthe first thing. in safety It’s aleads question us to Oil &Gas industry sector, Artelia and associated methodological danger“green” zonearea showedmay herald the asituation deadly that it was “essential” for Total to worksfunding in agencies, the following etc.). areas:In the framework.development A“methodological of regulatory texts accident with environmental “maximize involved in the project to “tell Safety Design Studies: process guide for development of risk spill. To reduce risks, he said: qualitythem his plan expectations which refers of HSE to all good results,” said Boutin. He safety studies (HAZOP and plan.” “I’ve drafted the project technologyalso underscored the significance disposal of service workers the risk can be eliminated. If and a document which is HSE of qualified manpower, saying preparation of regulatory wouldassessment” harmonize to be theput stepsat the taken you“We can’tshould eliminate see first them of all what if managementproject management plan. We documents safetyHAZID), reports preliminary / technological risk analysis, by operators in terms of measures could be put into place need to tell them our risk assessment. He to reduce the likelihood of that noted that even the risk assessments (TRA), risk “least probable thinking of solutions in the Boutin,expectations however, of HSE modellingEnvironmental (PHAST, Baselineetc.), event11th occurring.” hour for reducingHe warned a risk that saidplan,” that he added.the nautical QRA, QRA, etc. could cost operators dearly HSE system risks” had as they would lose “big installed in Phases 2 and 3 Cooper also said: of South Pars by money”.“We are not perfect France’s energy in Total. We have giant Total seems to that process be well operated, and lead in place, but we don’t do of occupational safety. it always Heto “excellent said to assess results” in terms as early as the quality of it should. HSE in Iran, But we are he had to 30 improving.” 31 Hengam March 2018 Issue No. 69 monthly Hengam

In the future, The startup with the of this development processing of other gas plant would fields in allow the the Qeshm desalting area, we and will be able dehydration to use the of 80 mcf/d processing of sour gas capacity of up to 3 ppm this plant of Hengam with the remaining Island, while in the onshore Two years later, it became 20% located in Omani sector; it incorporates an oil operational. The second territorial waters. Hengam is processing plant, oil pipelines Hengam Facility to estimated to hold around 700 carrying oil from land to October 2010 for processing million barrels of oil in place processing facilities and the associatedphase of the petroleum project started gas in with its natural gas reserves recovered from Hengam. But Process 80 mcf/d Sour Gas estimated at 2 tcf. The special features of the depreciation of Iran’s Iranian President Hassan Rouhani inaugurated in early trunk-line for distribution. Development of Hengam HengamBandar Abbas include oil its refinery. special national currency against the March the gas processing facility of the offshore Hengam is planned both offshore dollar, restrictions on money gas field, which Iran shares with Oman in the Persian Gulf in harmony with the and onshore by the Iranian well as its production of Iran’s transfer and the toughening of The project is implemented reservoir rock and fluid, as waters. The facility has capacity to process 80 mcf/d of gas. environmental policies of the lightest and the best crude oil. Iranian Ministry of Petroleum. In the offshore sector, the until its recent inauguration ith the startup of Offshore Oil Company (IOOC). Processing 80 mcf/d Gas bysanctions the Iranian delayed president. the project The this facility, which is longer burn off; gas will go to in the Strait of Hormuz, more three wellhead platforms, 10 startup of this processing plant Wthe complementary Hangman, flare gases will no Hangman oil field is located wellsdevelopment and a pipeline project carrying includes development of Hengam would allow the desalting and link of development of or will be fed into national The first phase of dehydration of 80 mcf/d of Qeshm Island for consumption specifically 45 kilometers from 32 Qeshm Island. Iran owns 80% oil as far away as Qeshm field started in January 2008. 33 Hengam March 2018 Issue No. 69 monthly Hengam Hassan Hosseini Hassan Photo:

sour gas up to 3 ppm. Before would bring about numerous converted into gas satisfying oil in place. “In the future, 130 MW. Petrochemical plants 3 Platforms Due Ready the implementation of this environmental achievements standards set by the National with the development of other Ali Hassani, manager of to the largest islands of also receive necessary feedstock. Around 70 mcf/d of associated we will be able to use the Therefore,located on Qeshmthe gas Islandprocessed could project, 14,000 boe/d of gas end of construction and gasIranian has Gassince Company been delivered (NIGC). to processinggas fields in capacity the Qeshm of this area, at Hengam processing facility companiesHengam development was an advantage project, Hamidwas flared Bovard, at Hengam. CEO of IOOC,Now installationthe Persian Gulf.”operations, After the the NIGC to feed industries and would supply the needs of ofsaid the maximum gas processing hiring facility.of Iranian saidgas flares implementation will be turned of this off. the pre-commissioning of power plants rather than being that it would reduce the cost He added that more than the gas processing facility priceplant,” of said development Paknejad, ofadding new water/electricity power plant in 70% of items needed in the than $700,000. started last December. Over Qeshm power plant and MAPNA facility had been supplied by project would save Iran more 70 days, all processing units, Qeshmflared off. Gas Fields said the crude oil processing Abbas power plant and Khamid Iranian companies. He said One-Year Capital Return infrastructure and utilities Development fields for production. Bovard cementQeshm Island,factory and outside even the Bandar the outstanding feature of this including desalting and more than 45,000 b/d, adding: island. CEO of the National Iranian sweetening units, pipelines, 17 offshore and onshore “Wecapacity can usein Qeshm such capacity Island was Before this gas processing as environment protection in Mohsen Paknejad, deputy storage tanks, boilers Qeshm Island, accommodating facility became operational, project was no-flaring, as well production affairs, said and compressors became Hormuz, Hengam, Tosan, Hengam power station would aroundOil Company $100 (NIOC)million forwas operational without any Gorzin,petroleum Salkh, fields Doustkouh including and to develop other oil fields only source to feed the power comeQeshm online Island. in Hassani less than said three that accidents in full compliance Taftan, has potential to become located on Qeshm Island with plantsGorzin and field’s the gas cement was the factory. months. He also said that three light of value-added generated with the pre-startup safety an energy island in the Persian Feedstockminimum costs.” for Industries “All stages of designing, wellhead platforms were under throughinvested processingin this project. and “In Gulf area and the Strait of Gathering associated petroleum manufacturing, installation, construction for Hengam, consumption of gas produced Hormuz. Studies conducted so gas, NIOC would be able to startup and operation of these outreview in February (PSSR) regulations. with the The supply fuel and feedstock to facilities have been handled Iranian calendar year. “This of investment is forecast to PSSR operation was carried various industries, particularly by Iranian contractors, expected to be ready in the new from this field, this amount far on the hydrocarbon fields power stations which have a he said. “Furthermore, it theinjection processing of sour facility gas (18,000 to be andof Qeshm 4 billion Island barrels are indicativeof crude power generation capacity of said Bovard. saidfield Hassani.is gradually switching return in less than one year,” ppm sulfur content) into of the existence of 40 tcf of gas manufacturers and consultants,” from oil to gas production,” 34 35 Analysis March 2018 Issue No. 69 monthly Analysis

US Oil Policy; Certain Objectives Amid efforts by both OPEC and non-OPEC oil producers to adopt certain initiatives like the production cuts and output freeze to shore up oil prices, the Trump administration is sparing no effort to sway global markets by supplying more oil.

Shuaib Bahman imports by 20% over a decade giant Aramco, which the Arab reforms. The heir to the throne opposition to the US shale oil and will reduce its dependence That will in turn result in kingdom is listing on stock in Saudi Arabia has practically production to pave the way for uch policy is pursued thewill developmentsee its exports of grow. energy market in a bid to plug its huge lost the support of princes lower oil price in the world by the US President production hike will help the transmission lines and related and Wahhabi scholars there markets. SDonald Trump against USon externalswitch from oil. Thea net forecasted importer that the Saudi stock market and he could not push ahead the backdrop of Washington’s opportunities and causing isbudget too small deficit. to accommodateGiven the fact with his ambitions plans Perspective desire for oil price hike in a bid of energy after 2022. An 11 economicfacilities, thereby prosperity creating in remote job a big company the size of without the support of foreign Although a decline in oil mb/dsince 1953 oil output to a net will exporter help the rural areas of the country. Aramco, its stocks are likely governments. What strengthen prices may adversely affect Therefore, a Oil price fall could by US disengage itself from the In addition to the aforesaid to be introduced to the New such speculation are recent the US revenues from shale oil deal is likely to justify its shale oil recovery. points, oil production hike remarks by Saudi Arabia’s commerciality of shale oil more freedom of action in its will reduce energy price is valued at over $2,500 billion, Energy Minister Khalid of would The US to be under productionno means justify in the the United States. foreign1970s-style policy. oil If crises materialized, and enjoy in the United States. Gasoil York Stock Exchange. Aramco al-Falih who, when asked beextraction, highly advantageous higher production for intends to way between The question to be answered such production hike will and gasoline prices, which bigger than the total value of whether Saudi Arabia was the Trump administration. five percent of which is still step into the Trump is why the US is proceeding strengthen the US role in global Britain’s BP and France’s Total worried about Trump’s pledge On one hand, Trump will be markets. peaks, would fall by 37%. – both energy giants in Europe. of energy independence, able to deliver on his election production administration Furthermore,experienced ever oil production high In its calculation of Aramco’s replied: “We have no problem campaign pledges while on and export and the Saudi thewith production an approach of shalein conflict oil. Certain Objectives hike could replace coal with stocks value, the Saudi with the growth of American the other, he will be able to Accordingwith its objective to the US of justifyingEnergy The Trump administration in the power stations government takes into account indigenous oil supply. I have in a bid to government, Information Administration is pursuing the following and allay the environmental the value of national oil and mentioned repeatedly, as markets. The US government spare the forecasts, by the end of 2019 concerns of opponents of gas reserves, which means long as they grow in line with isexercise no longer control willing over to world remain based on country which Riyadh US oil production will reach of its energy policy: Enhanced Trump by capping GHG global energy demand, we a mere consumer in the world, 11 mb/d. Such oil production oilobjectives production under in the pretextUS will emissions. Therefore, what the of Saudi oil and gas reserves as has been its case over the threats would drop its US is pursuing in oil and gas toRiyadh’s foreign plan parties. to sell Under ownership such added: “President Trump has past decades. The US intends of energy opposition to achieved due to the Trump and economic consequences circumstances, oil price decline policieswelcome which them.” are The good minister for the to step into production and administration’slevel, which is expected insistence to be insidegive rise the to country. influential That political can welfare and boost US role in could chip away at the value oil industries and I think we crises the US shale oil on shale oil production, help Trump make good on his worldsector markets,will create which jobs, could increase of Aramco stocks to prepare country threats of energy unfolding all production to will give rise to numerous election campaign pledges and be all assessed on the ground the ground for Trump to buy These remarks by the Saudi oil crisesexport unfolding in a bid to all spare across the have to acknowledge them.” across the pave the way consequences, the most pave the way for his reelection of materialization of Trump’s shares at low prices through the globe. That would also important of which are as election promises. his companies. Such deal would play into the US’s hands as a globe for lower oil follows: because more oil production be concluded while Saudi counterofficial come shale while oil production his country at tool for containing partners price in the in the next presidential race Crown Prince Mohammad leasthas not over hidden the past its objectivetwo years. to and rivals. For instance, by Production of 11 mb/d of oil particularly in rural areas. the Trump administration in bin Salman will have to grant Therefore, a deal is likely to winning a toehold in the oil world markets would help the US overtake will create job opportunities theOne oil of supply the covert increase objectives decision of be under way between the world’s largest oil producer 1.7 mb/d of crude oil plus 3.8 and concomitant oil price Americans in order to be able Trump administration and the bcf/dThe US of is natural currently gas. exporting When drop may be Washington’s tomajor succeed concessions his father to andthe Saudi government, based on export market, the US would in US oil production will cut its oil production rises, the US attempt to acquire Saudi oil push ahead with his so-called Chinainfluence and the Saudi energy Arabia. policies Russia. The projected increase of European countries, Russia, 36 which Riyadh would drop its 37 GSP to Drill Three Wells Offshore Greece ProductionIPF Energean Oil & Gas has awarded GSP includes drilling of three wells at the an EPCI and drilling contract for the Lamda platform location in the Aegean production expansion program at the Sea, with the jackup GSP Jupiter, and Prinos concession offshore western project management, construction, PEMEX Appraising Zama Discovery Greece. The newly launched Epsilon field transportation and installation Talos Energy, Premier Oil, and Sierra development will comprise an unmanned engineering, procurement, construction, Oil & Gas are in talks with PEMEX on wellhead platform (Lamda) and three installation, pre-commissioning and appraisal drilling of last year’s Zama inter-connecting pipelines to the existing start-up of the Lamda platform and oil discovery in the Sureste basin Prinos Delta platform. GSP’s work scope associated pipelines. offshore Mexico. The Zama-1 well in block 7 encountered a continuous oil-bearing interval of more than 335 Norway m (1,100 ft) with up to 200 m (656 ft) of net oil-bearing reservoir in upper Miocene sandstones with no water Senegal contact. Premier estimates 1.2-1.8 Subsea Studies Bbbl in-place, with recoverable Project Commissioned resources in the range of 400-800 Woodside has awarded Wood three MMbbl. This includes volumes that contracts to perform subsea and flow potentially extend into a neighboring assurance studies supporting the SNE field block operated by PEMEX. development in the Rufisque, Sangomar and Sangomar Deep Offshore blocks off Senegal. Bob MacDonald, CEO of Wood’s Specialist Technical Infill Drilling Solutions business, said: “We have significant Lifts Thailand Oil Output operational, design and verification experience Average oil production last year in West Africa and look forward to applying our flexible concept evaluation and design from the Wassana field in the G10/48 optimization solutions to support concession in the Gulf of Thailand Woodside in the development of was 4,377 b/d, according to operator this important deepwater KrisEnergy. In October, the facilities were project.” China shut down briefly to allow replacement of the produced water return line, a floating hose roughly 100 m (328 VIEW Mexico ft) long, between the CALM buoy Senegal and the floating storage and offloading vessel.

INPEX Awards Contract Offshore Australia INPEX has awarded Wood a five-year contract, with extension options, to perform brownfield VIEW VIEW engineering services for the Ichthys Australia project. This applied both to the offshore production facilities, 220 km (137 mi) offshore Western Australia, and the onshore LNG processing facilities in Darwin, Northern Territory. Wood’s Perth branch will manage the program and will support the execution of brownfield works, as well as providing technical assistance. The company also has a five-year contract, issued in September 2016, to provide subsea engineering services to support Ichthys LNG. news March 2018 Issue No. 69 monthly news Azeri Oil Fund to Boost State Transfers Aramco, Shell Sign LNG MoU signed various SOFAZ plans to transfer up to memoranda of understanding 50Azerbaijan’s percent more national money oil to fund the state budget this year than in CEO Forum in London. 2017, it said. The $36-billion (MoUs)This was at stagedlast week’s to promote UK-Saudi business and cooperation country’s proceeds from oil between the UK and Saudi contracts,fund holds oil the and ex-Soviet gas sales, Arabia, and to coincide with transit fees and other revenue. It transferred 6.1 billion Crown Prince Mohammed binan official Salman. visit Aramco to the and UK by budget in 2017; a sum it said wouldmanats rise ($3.6 to billion)up to 9.2 to billion the international gas business opportunities,Shell agreed to including jointly pursue economy was hit by the mid- upstream development, 2014manats slide this in year. the priceAzerbaijan’s of oil, which with gas accounts for parts of the gas value chain. about 75 percent of state liquefactionAnother MoU projects with Imperial and other revenues and 45 percent of College London should lead to gross domestic product. It stabilized last year, growing 0.1 targeting frontier technologies percent as oil prices rebounded investing directly in 2012, it said. The fund’s 1 andthe creation developments of joint in projects chemical operations. 2 and the service and agriculture towards a target allocation 2018 budget engineering, petroleum Centre, a partnership with Aramco president and of 10 percent of total assets and geoscience, mechanical variousStructural academic Integrity institutions, Research CEO Amin H. Nasser, speaking allocate this year’s additional under management. “So far billion manats and spending engineering, and advanced research centers, energy at the forum, pointed out that fundssectors to expanded. agriculture, SOFAZ health will and over half of this allocation has includingprojects revenues transfers at at 11.56 9.73 materials. A third MoU is with companies and composite his company had committed to education and infrastructure been invested and the plan is billion, based on an average oil Cambridge-based welding/ materials manufacturers. to continue the investments price of $45 per barrel. materials engineering Aramco staff also signed a answers to questions from Last year’s spending was specialist TWI. This should commercial agreement with includesa major investment a number of program large projects, it said in e-mailed the focus on property in 11.016 billion manats and lead to formation of the Non- Aberdeen-based Downhole over the next 10 years. “This to add to its holdings in real in 2018 and beyond,” with revenue 12.138 billion, beating Metallic Innovation Center Products, designed to British businesses can play a estate,Reuters. in SOFAZ which saidit began it planned European and the U.S cities, forecasts as oil prices rose. at TWI alongside National strengthen Aramco’s drilling world scale projects where major developed Asia Pacific, NEWS NEWS NEWS NEWS major role,” he said. to Open 200 Fuel Direct Energie Targets 3mn China’s Hires Crude, China’s Xinjiang Goldwind Stations in 2018 in Mexico Clients Gasoline Traders in Signs First Brazil Contract Direct Energie, France’s third-biggest power vendor, Singapore Brazilian fuel distribution company said it aims for 3 million client sites by the end of this Distribuidora SA forecast a drop in fuel imports this withSpanish plans oil to firm open Repsol a similar announced number it annually would in Hengyi Industries International Pte Ltd has hired year from 2017 partly due to a more aggressive comingopen 200 years gasoline to attain stations up to in 10 Mexico percent in market2018, by 2020. Last year, Direct Energie won 949,000 clients two oil traders who will start work in March and pricing policy by state-run Petroleo Brasileiro. onyear a grossand confirmed basis but lostits target more to than win half 4 million as many clients to April as the company bulks up its Singapore trade Speaking on a conference call to discuss quarterly competitors, winning 495,000 sites on a net basis. Its director,share in fivesaid years. at a news conference that the total client base grew 24 percent to 2.56 million sites. trade sources said. Crude oil trader Kirk Zhong margins for companies that typically import fuel. “The operations before its new refinery starts up, three companyMaria Victoria will invest Zingoni, a total Repsol’s 8 billion downstream pesos ($430 In 2016 - when regulated tariffs for corporate and differenceresults, Chief between Executive this Ivan year de and Sá last also is cited that gainsfalling from municipal clients ended at the start of the year - the while gasoline trader Gan Wan Dong, formerly will join Hengyi next week from ChemChina, new fuel stations and infrastructure, taking more hawkish stance by Petrobras, as the state-run oil advantagemillion) over of athe fuel coming sector years that is in opening building up after and saw its total client base grow 29.7 percent to 2.06 April, one of the sources said. Hengyi is building companyfuel imports is known, are a lot to lower,” market de its Sá products. said, mentioning He did not a with Japanese refiner JXTG Nippon, will join in millionfirm won sites, 782,000 from 1.59client million sites gross in 2015. and Direct472,000 Energie net, say by how much fuel imports would fall. Petrobras a country that is growing ... that is in the midst and other new entrants in the electricity in Brunei that could start trial runs by ofa sprawling the process energy of opening overhaul up duein 2013. to the “Mexico is retail market offer competitive power prices end-2018a $3.4 billion or earlyrefinery-petrochemical 2019. It opened its complex energy reform, and in which demand for 4 5 Distribuidora, which is majority-owned by 3 former monopoly EDF. grow its staff strength to 40 this year. slippingPetrobras, market beat fourth-quarter share. profit estimates, 6 to win market share mainly at the expense of Singapore trade office last year, aiming to as it maintained strong profit margins despite fuels is growing,” Zingoni said. 40 41 news March 2018 Issue No. 69 monthly news Argentina Free-Market Reforms Put to Test Oil Majors Give In to Investors After almost three barren years for investors who have poured Oil majors are evaluating bids millions into the U.S. oil sector, infor a offshore country explorationthat sent Spanish rights in Argentina, a major change shareproducers buybacks are finally that will opening return energy giant Repsol packing moneythe floodgates to shareholders to a wave this of year. decades.six years ago and has seen U.S. oil production topped 10 littleTo secure offshore bids, exploration Argentina for million barrels per day earlier will need to show it has this year, approaching a record moved beyond its historical set in 1970, but until recently many investors in the shale oil market policies and left-wing revolution were still waiting for populismfluctuations and between that it has free- made their payday. Since the beginning progress in lowering costs for of year, 11 companies have

Oil companies including Shell alone in the past three weeks energy firms. includingpromised Devonbuybacks, Energy, with Hess six are looking at bidding in the Corp and Noble Energy Inc. In all, auctions,and Statoil to told be held Reuters later they this companies have committed to buy back about $3.6 billion worth of 8 market reforms or revising long barred their 7 shares since February. The United than doubled, crossing $60 per commodity prices and returns year, and a government official also shown interest. contract terms to facilitate the entry or limited States’ second largest producer barrel. Back in Feb. 11, 2016, oil said Exxon and Chevron have entry of the world’s top energy opportunities. Chevron Corp also weighed in fell to $26.05, its lowest in 13 competition to attract companies. last week, hinting it would start years. “There was a time when takefrom a exploration downturn inand 2014, production energy The country faces fierce the billions of dollars of For , the potential President Cristina Fernandez buying back shares if it produced the consensus was that we’d be companiescompanies.” had Before spent oil billions started of to investment needed to access to Latin American Six years ago, former populist stuck at around $45 a barrel for develop deepwater reserves. energy reserves is in Argentina’s state-owned oil The payouts come courtesy of a oil, and obviously conditions stronger cash flow in 2018. unprecedented. In many companyexpropriated YPF Repsol’s SA. The movestake combination of higher and more $30,dollars producers in exploration in North and America new neighboring Uruguay will all countries now opening, sent chills through both the stable oil prices and pressure soughtprojects. to When raise cashoil fell by below selling Brazil, Ecuador, Mexico and auction offshore blocks in including Argentina, energy industry and the entire managerhave improved at ICON since Advisers. then,” “Theresaid more shares, pushing down stock 2018 after undertaking oil resource nationalism has private sector. isDerek a disconnection Rollingson, abetween portfolio prices. from investors. U.S. (WTI) has more NEWS NEWS U.S. Crude Stocks Up: EIA Report Wins UAE Offshore Oil Deal U.S. crude stocks rose, but a 47-year record in November. Eni has signed agreements b/d. Umm Shaif and Nasr are described these as “high risk “Commercial crude stocks in the maintenance. Gasoline stocks fell covering shares in two but potentially high reward. US have been recovering and byseason 6.3 million when refiners barrels, startcompared to do production concessions combined targeted production “To balance this, the ADNOC gasolinerefined product demand inventories rising to a are at their highest level since offshore Abu Dhabi. One is for of135 460,000 km (84 b/d. mi) Inoffshore, both cases, with deal provides low-risk, long- seven-monthfell more than high, expected, the Energy with December 2017. The trend will a 5% stake in the Lower Zakum state oil company ADNOC term barrels, and lays the Information Administration be supported by the country’s barrelwith analysts’ drop. Gasoline expectations demand in operates with a 60% interest. foundation for Eni’s Middle said. Crude inventories rose by persistently high oil output, hita Reuters its highest poll levelfor a since1.2 million- August other is for a 10% share in the 5 million barrels in the week to which in turn remains a worry 2017, the EIA said. Distillate offshore oil,oil field,condensate while the and analyst, Middle East Upstream, March 9, compared with analysts’ for countries participating in the stockpiles, which include diesel atTom Wood Quinn, Mackenzie, senior research said: East portfolio.” He added: and heating oil, fell by 4.4 million Nasr. Eni is paying $875 million “Eni is very strong in North Dhabi’s“This is theoffshore first awardconcession by million barrels. said Abhishek Kumar, senior ingas total fields for of these Umm positions. Shaif and In Africa, but has traditionally renewalADNOC to process], a major and [in Abushows it expectationsProduction rose for an as increasewell, with of 2 OPEC-led output-cut agreement,” a 1.5 million-barrel drop, the both cases, the duration is 40 U.S. output hitting 10.38 million Energy’s Global Gas Analytics barrels, versus expectations for years. Lower Zakum, 65 km Middle East when compared its strategic partners between barrels a day, a new inenergy London. analyst The atsharp Interfax fall in runs rose by 432,000 barrels per been under-exposed to the is looking to find a balance in weekly record; all-time products inventories comes EIA data showed. Refinery crude began production in company has entered frontier such as Japan and India, and daily output measured utilization rates rose by 2 1967.(40 mi) The offshore, targeted to its peers.” Recently, the IOCscompanies with technology from major and buyers, 9 on a monthly basis broke activity in what is typically the percentageday, EIA data points. showed. Refinery 10 output is 450,000 even as refineries ratcheted up exploration blocks offshore Oman and Lebanon – Quinn project delivery expertise.” 42 43 March 2018 Issue No. 69 Market monthly Market

by UAE’s state-owned Adnoc have barrels. Jet fuel margins firmed keep the Asian and global market Global Oil and Asian Product been lower than usual for March despite waning seasonal demand, notably tight. due to unspecified reasons, while on improved arbitrage flows Fuel Oil demand from northeast Asia has to the US west coast. Demand Asian HSFO cracks have crept up Market, March been firm. emerged from Taiwan and Kenya, slightly since the end of February Mehdi Moeini of State and replacement with strongly as far as y-o-y growth is which together sought almost but remain a firm $10/ton below CIA director Mike Pompeo and concerned. Middle Distillates (gasoil, jet 950,000 barrels of May-delivery last year, so far in March. Weaker il prices have somehow having new team member John fuel) jet. According to the latest weekly demand in the region has been pulled back compared Bolton as national security Asian Product Markets North Asian gasoil margins data, Japanese implied kerosene somewhat offset by weaker with the highs of over adviser herald a switch to a Light Distillates (gasoline, eased, as the seasonal strength demand fell substantially in the O naphtha) of the past few months waned. purchasing from key supply US$70/bbl seen earlier this more hawkish US foreign policy, second week of March, allowing regions such as Europe. This year, but this is of no surprise. particularly in terms of a possible Gasoline cracks have trended But a slew of upcoming refinery for inventories to recover to has seen the arbitrage spread February and March market discontinuation of waiving sideways over the past month. turnarounds in the region above the 2017 levels. Cracks to bring HSFO from Europe to have been influenced by bearish sanctions on Iran. Despite Refinery maintenance in Asia are expected to tighten spot are expected to stick close to or Asia continue weaker y-o-y. headwinds. March has also inventory built during first half peaked in March, with over 2 availability. Nonetheless, global above the 5-year average over the Significant lower demand y-o-y progressed as expected, with of March, US crude stocks fell million b/d of CDU capacity market tightness, particularly coming month as strong demand in Asia, the Middle East, and a heavy refinery maintenance during second half as refineries offline over the month, slightly in North America, is likely to growth and limited spare refining globally in Q2 is still expected. period weighing down on crude boosted output, while gasoline higher y-o-y before falling foster a strong pull from the West capacity to produce We see this continuing to keep demand, and seasonal nadirs and distillate stocks drew. The significantly m-o-m and y-o-y in of Suez region on Asian Arab additional middle cracks lower y-o-y. We continue in global products demand relative tightness in US oil stocks April. Alongside robust demand distillates should resulting in oil stocks in days has played a significant role in growth, this has pushed Asian to suppose that while lower cover creeping higher. price buoyancy over the last gasoline balances through power generation needs are However, despite these few months. This has occurred March to their tightest point in certainly a main factor in demand headwinds, a rumbling is being against a backdrop of hugely over five years, almost 100,000 declines this year, buying for heard in the not-so-distant future reduced net crude imports. b/d tighter y-o-y. Some price storage is also likely to be on the from a tidal wave of bullish news However, there are a couple of pressure should arrive through decline. Indeed a look at fuel oil that is about to hit the market. obstacles on the horizon to the Q2 with the commissioning of the forward curves continue to trend US President is pushing forward continuation of this trend . The 200,000 b/d Nghi Son refinery towards strong backwardation in with plans to impose tariffs on other bullish factor is refining in Vietnam and second phase H2-2019 and 2020, as based on steel and aluminum imports. margins which remained largely of Persian Gulf star refinery our expectations the IMO 2020 Potential retaliation from trade undeterred from changing crude 120,000 b/d , which is likely implementation will lead to a partners is creating a real risk prices, staying largely within a to cut Vietnamese and Iran’s plunge in demand for HSFO. for a trade war, which could $6 to $7 per barrel range. The gasoline imports substantially. have significant impacts on crude intake is expected to have Prompt naphtha rose to its economic growth. The ousting remained high overall, with highest against forward values in of Rex Tillerson as US Secretary available January figures posting more than two months . Exports

44 45 E&P March 2018 Issue No. 69 monthly E&P

domestic manufacturing of Second E&P Conference in Tehran items and equipment turns out to be impossible. “At all levels envisaged for domestic NIOC Finalizes 3 and foreign companies, the issue of transfer of technology Development Draft is highlighted by both the Iranian and foreign sides Agreements and this issue is among the The second international E&P conference and the first international drilling industry exhibition were held anothermajor considerations development ofplan these simultaneously in Tehran March 3-4. More than 170 bycontracts,” the Ministry he said. of Petroleum Bitaraf said Iranian and foreign speakers shared views through 24 was to renovate equipment panel discussions. for the upstream sector. odels of upstream saying: “The agreement in “Most of our equipment is petroleum industry effect is short-term, but a aged over 50, causing many Mcontracts, challenges longer-term plan is on the challenges to the preservation of the current level of output. He also announced plans for For this sector, we have geostrategicto investment aspects and financing of Iran’s agenda.” made necessary multi-phase Iran’s oil oilupstream gas industry, projects management and arrangements with focus upon production establishing a project fund utilizing domestic potential is not on optimization of drilling “Sellingto finance unit oil shares production and bonds and supporting and bolstering 30 projects operationsof oil and gas and projects bolstering and and preservation projects. worth part with drilling services were among National Development Fund of added. Bitaraf said conducting the level of main topics discussed by and financing by tapping the comprehensivedomestic potentialities,” on oil and he around $6 billion are its reserves, world. saidIran Kardor.(NDFI) are among options development plan by the which has expertsCEO of thefrom National all around Iranian the for“Ordinary financing people these can projects,” buy unit foreign investment are resolution would help the Ministry of Petroleum’s plans Iraniangas fields Ministry was another of Petroleum, envisaged politically Oil Company Ali Kardor, interdependent and Iran’s for developing oil and gas adding: “These studies have to be in opening remarks to the funds, while EPC and E&P private sector should become been assigned to ranked outsourced motivated companiesshares to invest may allocatein [project] fund active in terms of investment petroleum industry experience Procurement, and Construction companies and consultants to reasons tender bid was planned to be Irandynamism.” Oil Output Set to Rise fields under Engineering, handle the process of studying within the heldhigh-profile for the developmentevent, said a of added. Noting that Iran’s petroleum For his part, Deputy CEO “Using domestic potential framework toKardor buying referred unit shares,” to plans he industryin oil industry,” became he independent said. and(EPC) transfer contracts, of technology saying: for southwestern Iran. for selling bonds, saying: and made progress following Manouchehri said Iran’s oil the implementation of these newHe referred fields and to reservoirsassessment by of three North“Ten technical Azadegan groups oil field in “Arrangements have been productionof NIOC Gholam-Reza capacity would plans are underscored. To applying new technologies.” contracts have been involved in the made to fully hedge risks Zamani-Nia said: “Iran’s increase by 150,000 b/d for enhanced recovery worth $50 to negotiations about Iran’s oilthe production 1979 Islamic is notRevolution, on after the implementation of the services of domestic and withinmade by the qualified framework companies new oil contracts. We have part with the level of its the three draft agreements that end, we can benefit from of EPC contracts, saying: $300 million been slow in this regard, of foreign exchange rate reserves, which has politically referred to by Kardor. In the EPC contracts, the “Furthermore within the but we hope to sign several Iranfluctuations.” Petrodollars Paid Speaking on the sidelines of agreementforeign E&P is companies.” signed between agreements in the new Iran’s deputy minister of that the JCPOA resolved some the conference, Manouchehri, the NIOC on one side and calendar year which started on petroleum for international challengesmotivated reasons.”of Iran’s petroleumHe said who handles development and domestic and foreign $6framework billion are of envisagedthese projects, to affairs and commerce, Amir- engineering affairs at NIOC, companies on the other, be30 outsourcedprojects worth within around the He highlighted the NIOC’s Hossein Zamani-Nia, told crude oil. “We are now said: “The studies conducted Bitaraf said, adding that the framework of three contracts policyMarch of21”, outsourcing Kardor said. and the inaugural that Iran had industry, specifically selling share of each company in worth $50 to $300 million. monitoring role, saying: “Such managed to receive its oil he said, adding that another recovery from these reservoirs The two-day event was policies as the awarding of money in the aftermath of the achievementreceiving our ofoil the revenue,” JCPOA was on Iranian fields show that its capabilities. According to attended by representatives of NGL, electricity generation, implementation of its historic the facilitation of purchasing Bitaraf,the project Iranian would companies depend on prominent oil companies that and water desalination equipment for the petroleum Qualifiedcould be raised Companies by 10%.” and their foreign partners world powers, dubbed the industry. Zamani-Nia said Assessment would have to respect certain for investment in Iran’s Kardor revealed that the Jointnuclear Comprehensive agreement with Plan six of there were still some banking Iran’s deputy petroleum obligations with regard to petroleumare examining industry. opportunities tenderprojects bid will for continue.” the North problems which were not minister for research and the purchase of commodities In the following pages, the “Domestic investment in related to the JCPOA. “They are technology, Habibollah and equipment and domestic main panel discussions will be with the policy of outsourcing, petroleumAction (JCPOA). industry and related to other issues whose Bitaraf, touched on the manufacturing unless Azadegan field would be in line 46 briefly reviewed. 47 E&P March 2018 Issue No. 69 monthly E&P Approaches Changed to EOR/IOR in Iran Oil Industry Help Attract Investment government was suffering from bureaucracy challenges in awarding contracts to foreign companies, but it undertook efforts to cause fundamental changes in different sectors in order to facilitate conditions for the operation of foreign companies and attraction of

immediatelyinvestment.” Kalkmanafter introducing said changes,Mexico recorded adding that success signs of success emerged gradually as Iran will changes took effect. be able to needs. Emadi highlighted the drawing up an appropriate develop Boost Technical Potential various aspects of enhanced Various Mohammadi, who heads Twashe “EOR presided Solutions over forby good OIEC, said the IPC contracts MohammadIranian Ali Fields” Emadi, panel advisor challengeroadmap,” in he Iran’s said. petroleum methods cooperation he panel discussion international level. would eliminate restrictions to Deputy CEO of National saying:oil recovery “Various (EOR) methods and industryGermani was said neglecting a major of EOR on the model of Kalkman said some countries incorporated into buyback Iranian Oil Company for improved oil recovery (IOR), the principle of combining should be in the Tdevelopment contracts had changed their approach contracts. Development and Engineering with the needs of Iran’s theoretical and practical world for for Iran’s upstream oil and in a bid to be able to attract “In buyback deals, we were petroleumof EOR should industry; be adapted otherwise, research. adapted with gas industry was presided investment in their petroleum faced with such restrictions Manouchehri. application of such methods the needs developing AffairsCo-panelists Gholam-Reza included will be of no use for this recovery in Iran is low when its petroleum coordinator of upstream new model of oil contracts, master development plan and Mehran Sohrabi, professor at comparedRostami said: with “The the volumerate of oilof of Iran’s industry contractsover by Reza at the Dehqan, National chief knownsector. asReferring the Iran to Petroleum Iran’s theas lack impossibility of flexibility of inrevision, the challenge to decision-making the country’s deposits. If this petroleum short-term duration of Falahat, advisor to Nargan industry.” He said a significant rate is increased we may see industry Behzad Mohammadi, CEO of contract and the impossibility Amitis,Heriot-Watt Shahab University, Germai, Rezahead methods, adding: “We have OilIranian Industries Oil Company Engineering (NIOC). and modelContract of (IPC),contract, he said:Iran will“By of implementing enhanced tofor make EOR wasefforts uncertainty to reduce of bebenefiting able to developfrom this good new productionThe panel also from highlighted these fields cooperation in the world for CAPEX among others. Most of the Research Institute of absenceincrease ofsignificantly.” feeling of necessity Construction (OIEC), Navid developing its petroleum ofrecovery these restrictions projects, and have fixed KishEnhanced Petroleum Oil Recovery, Engineering Ali- uncertaintyFor his part, in Falahat the EOR and high costs as reasons why Kalkman,Rahbar, Managing head of the Director Energy of been removed in the new oil Company,Reza Bahmani-Nia, Mohammad CEO Baqer of underscoredmethods of fields.” the necessity &APP Utilities Dentons Global law Practicefirm, Jaap reconsideration of approaches Ghanizadeh, CEO of Tehran become common in Iran. at Arthur D. Little, Vasiliy A. toindustry.” petroleum He notedindustry that may “So far, 17 Iranian companies Energy Consultants, and Javad strategies. EOR and IOR methods have not Mozgovoy, Assistant to General face resistance in certain cases, contracts,” he said. for“A committeethe NIOC to comprising define EOR as oil production is low-cost Director of PJSC TATNEFT, and and Development at Iranian 18 companies has been inExperts Iran, companies maintain that are notas long Azamat F. Ismagilov, Deputy “Such changes have been have been identified as OffshoreRostami, Oilhead Company. of Research established and has so far willing to take steps towards General Director for Business citing Indonesia and Mexico. havecompanies already qualified been involved to work in The topics under discussion production by applying costly Development and Member in Indonesia due to pressure in E&P projects. Four of them of Management Board at JSC bysuperficial political andgroups. unsuccessful They Mohammadi called for order to enhance recovery andheld help two themeetings NIOC determineto examine The panel mainly focused Zarubezhneft. The panelists failed to cause transparency payingbuyback more projects,” attention he added. to included finding solutions in EOR challenges and needs EOR methods. and improve procedures; technical capabilities of Iranian the necessity of administration risk and noted that Iran, therefore, they resulted in the companies, saying: “Iranian infrom enhanced Iranian recovery,oil and gas fields, independentperspectives forissue, EOR,” adding he said. that beon alwaysthe point taken that into maximum relyingexamined on Iran’sits potential investment in failure of petroleum industry E&P companies are on the application of cutting edge itGermani must be said incorporated EOR was notinto an consideration.efficient recovery must the petroleum industry, can path towards favorable growth technologies, and adapting As new wells are becoming and it is necessary for these improved recovery and “In light of complaints about operational at much higher of oil contracts to develop development,” Kalkman said. companies to step onto this enhanced recovery methods the development of fields. goodbenefit cooperation from the new at the model As for Mexico, he said: “Like with Iran’s petroleum industry costs may be reduced by methods has become a must. Iran, this country enjoys oil the high cost of EOR, these costs, applying EOR and IOR path as soon as possible.” 48 potential and the Mexican 49 E&P March 2018 Issue No. 69 monthly E&P Capacity Building Oil Majors Keen on Investment in Iran industry, saying more than for 600,000 b/y Output $800,000financing inbillion the petroleum had been invested in oil and gas contractors, non-governmental and executive factors including in 2016. “It is pity to see Iranexploration has no shareand production of such big mainorganizations three players (NGOs) in goodand governance.financiers constituted “There is thestill a lot improvement in Iran’s ranking market,” he said. Molavi said an to do with regard to regulating would be key to attracting relations between these three foreign investment. “As long as this ranking has not improved,

pillars,” he said. Dehqan also foreign financing will be tough, governanceoffered explanation in the new about model added. Echoing Fierro’s remarks cumbersome and costly,” he ofthe oil exercise contracts of proceduresand underlined of the importance of attracting challenges are not limited he “Investment and about the fact that financing investment, increasing to Iran, he said: “Oil, gas and Total’s Financing; Fiscal be applied to the development petrochemical industry in the productivity and transferring Petroleum Contract (IPC) would agreement technology. T world is facing challenges due implementation of oil production to the growth of renewable and with Iran Regime in Upstream of upstream oil projects. “In the “In order Flexibility Mohammad Mostafavi, director he panel on “Good Projects” panel was attended by to develop Fabiani highlighted challenges of investment and business at the EPC framework, will various that small and medium-sized to become Governance in Iran Oil the National Iranian Oil Company and preservation projects within Phase 11 of T Economicto downstream,” Development he said. Plan Javadi and of attracting foreign investment, E&Pother companies sources of wereenergy.” using He said successful pointed to Iran’s sixth Five-Year saying: “Iran has to be more South Pars the goals incorporated therein Mostafavi.methods of financing including at the Javadi, &who Gas is Industry” Iran’s deputy was for the petroleum industry, (NIOC), Payman Molavi, advisor project fund be used,” said agreement have their own creative methods to finance their international within the ministerpresided ofover petroleum by Roknoddin for saying: “Achieving the targeted on finance and investment, Financing Challenge Grips flexible. Both parties to an vice-president of National capitalprojects. market. He said Molavi they often called get on framework supervision on hydrocarbon production capacity by the end DevelopmentAli-Reza Saeedi Fund Sarkhanlou, of Iran Oil Industry level, of the 6th Development Plan at Iranianaccess to E&P financing companies tools to through set up of a needs.” “Such congresses could domestic Dehqan, chief coordinator of 4.5 mb/d and preserving Iran’s challenges, but it would not be challenge was companies’ platforms outside the country enoughbe instrumental to say the in conditions exploring and adopt proper strategies. companies consortium upstreamreserves. Co-panelists oil and gas contracts were Reza oil production quota at the (NDFI) for foreign investment, lackFierro of fullsaid knowledge a major financing about will improve in the future. We manager at Dana Energy, and “In order to become successful at the National Iranian Oil Organization of the Petroleum Sadeq Shirazi, corporate finance potentialities. “That creates are required comprising have to take action today so James Fierro, CEO and Chairman at the international level, restrictions for the companies. to upgrade China’s light of natural decline rate in that conditions will improve in Therefore, by becoming aware domestic companies are Directorate,Company (NIOC), and Pierre Saleh Fabiani, Hendi, Exporting Countries (OPEC) in panel discussed challenges of required to upgrade their ties their ties CNPCI of ECO Capacity Exchange. This thehead Iran of the representative NIOC Exploration for served from 2004 to 2008 as the with foreign and Iran’s the French Association of lifecycleIranian oil would fields need production building and representativethe future,” said of Fabiani, Total Group who industry, absence of correct of these challenges we can find For his part, Saeedi Sarkhanlou financing in Iran’s petroleum with foreign brokers,” he said. Petropars is Companies and Professionals capacitymost fields to producebeing in theirat least second in Tehran. Noting that Iran was relationship between the NIOC thesolutions petroleum to financing,” industry he is notsaid. referred to the constitution of the brokers and the Iranian government, under way in the Oil, Gas and related sitting atop the world’s largest limited“The financing to Iran because challenge due in to NDFI, saying: “These resources industries. Javadi, a former He said Iran’s share of global gas reserves, he said: “Total’s should be kept to serve future oil600,000 production barrels was a year 4.3% of and oil.” its agreement with Iran to develop challenges for the petroleum many companies involved in oil generations and we cannot global nature of financing share of OPEC production was Phase 11 of South Pars within industry and the willingness andthe problems gas are faced of fiscal with system the same spend them fully on oil; however, betweenCEO of NIOC, the oil said: sector “Defining and a 13%, noting that the country the framework of a consortium we can earmark the bulk of theproper government financial willrelationship pave the faced an uphill task with regard comprising China’s CNPCI and our resources to oil and gas of major oil companies to ground for good governance. to oil industry development. Iran’s Petropars is under way. Mostafavi referred to obstacles arechallenge,” willing tohe cooperate added. Fierro with said: expand cooperation with Iran. Ambiguities need to be removed Javadi also underscored the It seems that Total has found a Iran“However, in implementing international oil majorsand about terms and conditions solution for the transfer of fund the petroleum industry, noting fund,projects.” adding: He said “The the petroleum NDFI was of investment through setting in decision-making procedures thatand challengesthe NIOC’s tomeager financing share in of not established to be a profitable forsignificance the petroleum of the industry.factor of time revenue and value-added which gas projects, and are looking for towards adopting various in the petroleum industry theto Iran.” world Fabiani and bleak referred prospects to gas it creates for the country was solutions to expand cooperation industry is expected to move needsframeworks.” proper “Goodpolicymaking governance and Parameters of Good ofreserves’ gas prices growing due to exploration tight in inEnhanced this sector.” Ties with Foreign it has to attract $200 billion supervision and it is not limited Governance competition, saying: “Iran has to that engineering, procurement, Brokers inmethods upstream of financing, and downstream because to upstream; rather it includes Hendi, for his part, said take into account such facts when one of major challenges. He said Molavi elucidated challenges sectors by the end of the 6th a chain varying from upstream government, people and society, the newly-developed Iran lying ahead on the way of and construction (EPC) and 50 it is in talks over LNG projects.” national development plan.” 51 E&P March 2018 Issue No. 69 monthly E&P Iran Open to Working with Foreign Oil Firms he panel titled and the [imposition of] US “International TCooperation; added. Zamani-Nia said Iran’s petroleumsanctions against industry Iran,” was he racing presided over by Iran’s deputy ahead by reliance on the public ministerGeostrategic of petroleum Aspects” wasfor and private sectors, Iranian international affairs and commerce, Amir-Hossein Zamani-Nia. Indonesia’s workers.engineers “This and sacrificesindustry is Ambassador to Tehran alwaysof officials ready and for oil multilateral service Ocatvino Alimudin, Chairman cooperation with international of Energy Committee of Iran companies at different levels, Chamber of Commerce Ali and they have time and again The Shams Ardakani and former The structure petroleum director for international of old industry affairs at the National Iranian added.expressed Zamani-Nia their interest said due[for to refineries absencecooperation of foreign with Iran],” investment he has since Arshi also sat at the panel. in Iran over recent years, Iran’s processing been faced Oil Company (NIOC) Ali-Reza petroleum industry is now Iran’s challenges Iran’s petroleum ready to attract investment. with the industryIn addition has to faced examining since the He added that Iran’s oil have challenge of victory in 1979 of the Islamic petroleum industry would limitations development need $200 billion in because they highlighted the necessity of after the investmentRevolution, tothe develop panelists this national development plan. can process victory industry in light of Iran’s investment under sixth heavy crude geopolitical conditions and the Indonesia Hopeful of Oil of the presence of new players in the Cooperation with Iran in 2016 after signing a deal supply enough oil to take Iran’s hopes to become a net oil oil, while US Revolution world energy market. Ambassador Alimudin production and even transport, market share. “It has been oil is lighter and the Zamani-Nia pointed to his country’s readiness for needincluding investment exploration and and claimed that US oil can replace most important issue in oil than Iran’s the development of Iran’s investmentwith the NIOC. in Iran’s He expressed oil sector. productionexporter by is2020. that global“The [imposition petroleum industry and betweenexpressed the hope two for countries the in the energy consumption sector, “Implementing such a policy economic growth will continue oil, and such of] US energy security in the country, oilexpansion and gas ofindustry. cooperation hope that Indonesia’s likeattention,” other sectors he said. of “Meantime, oil and gas, isIran’s,” faced he with said. challenges He added: both planned telling foreign companies that “Indonesia started its oil PertaminaThe top diplomat would win expressed oil developments up to 2050 as sanctions Iran would be always ready cooperation with Iran in late contracts in Iran. “This is the Ardakani said oil and gas were “The structure of old to be influenced by political replacement against Iran to cooperate with them to 2015 and early 2016 after bothneed capital-intensive,big investment.” Shams adding: economically and technically.” remain unchanged, and this will face a develop its oil industry. signing MOUs with Iran to with Iran’s petroleum “However, gas production costs oil have limitations because demand for oil is expected to challenge He said Iran’s petroleum industryfirst time and we areoil market cooperating and are higher than oil production theyrefineries can process processing heavy Iran’s crude Arshi said. He said that the industry has been slapped He added that studies on the we can gather information oil, while US oil is lighter than mainissue geopoliticalcan affect US earthquake plans,” with US oil embargo since study two oil fields,” he said. about how to continue our Iran’s oil, and such planned would be the US becoming an the victory of 1979 Islamic and that agreements were costsUS Oil in Dream many stages.” replacement will face a absolute gas power. “Supply of two fields had been concluded part, Shams Ardakani referred Uneconomical US’s surplus LNG will change industry has since been the near future. Alimudin activities,” he said. For his Arshi pointed to Iran’s He said that US President the rules of game because facedRevolution. with the “The challenge petroleum alsoexpected said thatto be his signed country in the development of oil and geopolitical conditions in the Donaldchallenge,” Trump’s said Arshi. energy plan this source of fuel is targeting of development after the gasto financial sector. “Allshortcomings procedures in energy sector and the United markets in Asia, Europe and pertaining to the energy sector, States’ allegations that it can under which Washington started importing liquefied was an “American dream” victory of the Revolution petroleum gas (LPG) from Iran America,” he added. 52 53 History March 2018 Issue No. 69 monthly History

History of Oil Products

production was a bit higher Abdullah and was connected and one in Darquain between Distribution Industry in Iran than one million gallons a day. Kut Abdullah and Abadan – Distribution, as a sector faithful to refining and exports, started work in Iran as the country’s first refinery was commissioned in Abadan. More than a century later, the At that time, Kut Abdullah was pipeline. were built. distribution sector goes ahead with its growth and blossoming. a green and captivating area to the Masjid Soleiman-Abadan These pipelines were active located between Ahvaz and carrying petroleum products for years in the transfer of s a result of the they had to regulate cables in proportion with these Abadan (13 kilometers from In 1939, the first pipeline crude oil and oil products. of welding machines so that pipelines. Later on, three more for a length of 121 kilometers. They were instrumental in the Aand increased oil the pipelines would be fused pumping stations were built It(mainly could carrykerosene) 100,000 was tonnesbuilt a history of oil industry. After production,expansion there wasof activities a together. The old decrepit in Molla Sani, located between TheAhvaz). main Today pumping Kut Abdullah station year of products. This pipeline years, they were no longer growing need for new pipeline was replaced. The use handledhas been oil annexed produced to Ahvaz. in carried oil products from effective. The Kut Abdullah oil pipelines. In 1914, a new steel of new and stronger alloys in Kut Abullah near Ahvaz, and in pumping station was totally pipeline, which was 10 inches the construction of pipelines DarquainAhvaz and between Masjid Soleiman, Ahvaz and in Haftgel and Lali areas. The oil In 1940, another pipeline, shut down. The Petroleum in diameter, was ordered. But had also helped pump oil at Abadan. Three pipelines – two pipelinesMasjid Soleiman, stretching Naft from Sefid, these whichAbadan was refinery 264 kilometers to Ahvaz. University of Technology the outbreak of World War I with diameters measuring areas were connected together long, was built between stands there today. delayed its construction up to pipeline could not stand such 10 inches and one with 12- in Kut Abdullah. Five powerful Gachsaran and Abadan. Molla Sani pumping station 1915. Meantime, the entrance pressure.a higher flow, while the older inch diameter – were tasked pumps pumped oil gathered A second pipeline for oil is today home to water supply of welding technology Due to increased oil with carrying crude oil and from pipelines to Abadan oil products was built in 1944 equipment at the Agriculture led to the elimination of production, more pipelines petroleum products from oil between Abadan and Ahvaz. It Department of Shahid previous manpower and were constructed after 1914. In 1930, when the Abadan was 121 kilometers long. Chamran University of Avhaz. their replacement with new The second pipeline was laid The second largest pumping refinery. As oil production increased, Darquain pumping station is laborers to construct pipelines. out on the same route, and the stationfields in after southern Tombi Iran. was Kut pump 5 million tonnes of oil, two more pumping stations – a mothballed building which The workers had no longer to capacity and the number of Abullah, which was built therefinery third had pipeline the power was built to one in Molla Sani and between will soon become a petroleum hold heavy spanners; rather, pumping stations increased in 1920. At that time, oil between Haftgel and Kut museum.

Ahvaz and Masjid Soleiman 54 55 Sports March 2018 Issue No. 69 monthly Sports Interview with Head Coach

made great contribution to the Iran to Take Pride in Its

recruitment. The team lineup Asia Representative isprocess at such of a identification stage that one and can say the recent championship Big titles for men at Naft va Gaz Gachsaran Club were title was achieved thanks to owing to efforts made by their head coach Mehdi Azad the combination of young and Manjiri. He is young; however, he has done a lot for veteran players.

Exclusive Interview Exclusive this team to bring the team to such a high status. Azad Iran Asian Representative Manjiri has experience of serving as assistant coach for Naft va Gaz Gachsaran Club the national team of adults. In an interview with “Iran used to represent Iran in Petroleum”, he speaks about the conditions of Naft va Gaz the Asian Clubs Cub. After Gachsaran Club and the good results the handball team of winning the handball league the club has achieved in recent years championship title in the Another championship to officials’ prudence. matches last December. The was recorded for Naft va Gaz previous round, it joined Asian Gachsaran Club. Would you Many believe that Naft va lineup; however, it was clear please tell us about it? Gaz Gachsaran Club is very rich fromclub had the qualifiedvery beginning players that in its A: I feel very delighted and that it faces no financial to have been able to win problems. But you are speaking winner in the face of costly the championship trophy otherwise. Naft va Gaz Gachsaran, teamsit had nofrom chance the Persian of finishing Gulf despite all obstacles. We did A: We are not rich at all. I Arab states. They suffered our outmost to reach this regret to say that economic three defeats in succession at important title. Nobody could problems exist all across Handball Champion the beginning of the matches ignore the round the clock the country and we are no Sport teams supported by the National Iranian Oil Company (NIOC) have been regularly efforts by the technical staff exception to the rule. We did with Uzbekistan for the and players. Everything went not spend a lot on the handball adding to their honors. Such teams are today present in many sport fields and have turned seventhand they rank. finally They competed trounced out to be successful. Thanks to NIOC investment in sport, the teams operating under its ahead smoothly so that we league and we managed our would experience good days. costs in order to win the authority have even managed to win championship titles. Handball is one of such fields. Since Naft va Gaz Gachsaran Naft va Gaz Gachsaran Club’s handball team has fared well. This team has both male and In the end you saw that our championship title at the end ClubUzbekistan will represent and finished Iran in7th. the success was recorded one week of the season. There are also female squads. In the men’s category, it won the championship title in the Iran League and Asian matches again due to the women squad finished runners-up in the pro league. The handball team represented before the end of matches financial problems which were Iran in Asian championship and we honorably held up the resolved thanks to the players’ achieve better results. trophy. prudence and club managers’ its last win, it is expected to efforts. Amir Sadeqi-Panah year which ended on March could not affect their win. Women Finish Runners-Up Could you shed light on the 20. Another important event obstacles that you mentioned? Your team recorded Naft va Gaz Gachsaran Club Young and Veteran Players which transpired the Naft va A: A major challenge for brilliant results in the Asian started its activity some Pro League Championship Naft va Gaz Gachsaran Gaz Gachsaran Club handball us during the season was Clubs matches. What was the 15 years ago. It has since The men’s handball squad Club’s handball team brought line up was the runner-up title injuries in rapid succession reason for such achievement? of Naft va Gaz Gachsaran together a congruous and won by female handballers. of our players. Two of our A: Technically speaking, we sport disciplines. The club is Club has been among The female players were main players, i.e. Kamran could never outdo rich teams currentlyexpanded activethe variety in such of sportsits famous teams in recent in the league championship. lucky even to win the league Nosrati and Reza Shojaei, of the Persian Gulf littoral as football, handball, and Havingqualified recruited lineup to some compete championship trophy; however, suffered posterior cruciate states. They had invested table tennis among others. and runner-up on several national handballers, the they were faced with bad luck ligament injuries and we did heavily in their teams before It has recorded remarkable occasionsyears. It finished in recent champion years. club was in fact safeguarding not have sufficient players to coming to these competitions results in the aforesaid sport They did take part again in these national assets of lost the championship title. supplant them. Due to financial and they finally reached disciplines. Nonetheless, the the league championship and in the final matches and they restrictions we could not hire their objectives. However, male and female handball focused their efforts from the from technical potential and Even this title is a big honor substitute players. However, we will try our best to be a squads of Naft va Gaz very beginning on winning handball while benefiting forThey Naft finished va Gaz runners-up. Gachsaran Club. we managed to emerge qualified representative for Gachsaran Club have fared the championship title. One Naft va Gaz Gachsaran Club Azam Samimi, the headcoach champion honorably. On the our country. Under the current better than other sport week before the end of the experience. Furthermore, of women squad of Naft va Gaz other hand, our team was circumstances, winning the teams of the club. They had a games they registered their to make a competent team. faced with serious financial Asian championship title is out brilliant performance in the championship status so that Underidentified such young circumstances, local players and she managed to record problems in certain periods, of reach, but we will do our the Academy of Oil and Gas suchGachsaran good resultsClub, is for experienced this team. but they were resolved thanks best to produce better results. 56 final days of the last calendar their defeat in the final week 57 Tourism March 2018 Issue No. 69 monthly Tourism

Stars Valley

west of Berkeh Khalaf village, lies a valley created two million years Qeshm Island, ago dueFive to thekilometers erosion offof soil the andsouthern stone coastunder of the the impact Qeshm of Island wind and upon a time a shooting star fell from the sky into the heart of this rainfall. Residents of this unique natural attraction believe that once

a Gem in Persian Gulf island, creating strange objects from soil, stone and sand. This place known as the Stars Valley. Due to its tourist attractions, the valley has Qeshm Island is the largest Iranian island in the is colloquially known as “fallen star”, but geologically speaking it is Persian Gulf. This island has turned into a major one of a kind in the Middle East. tourism destination in Iran over recent years. Major been placed on UNESCO heritage list under Qeshm’s geopark which is attractions in Qeshm Island are bazaars, mangrove forests, Chahkouh Valley, Persian Gulf dolphins, Stars Valley, Naaz Islands and Namakdan Cave. The history of Qeshm Island dates back to pre-Islamic era when the Elamites long stayed there. saman goodarzi Photo:

58 59 Photo: Behrouz Moradi Tourism March 2018 Issue No. 69 monthly Tourism

the Qeshm and Hengam islands and stay there is referred to as aquarium. Visitors can see a for eight months. So far, 13 species of some 40 variety of fish there. Due to the transparency WildlifeQeshm and its surrounding islands are unique species of dolphins living in Iranian waters, of water, fish and other sea creatures are easily in wildlife. Dolphins, sea birds and aquarium including in the Persian Gulf and the Sea of visible. fish are attractive to visitors. Oman, have been registered. Visitors riding on recreation boats wait minutes in the middle of Birds Dolphins sea until dolphins come to the surface of water. Qeshm and its surrounding islands host With the advent of autumn, the Persian Gulf migratory birds in different seasons of year, due waters host new guests. Dolphins trickle to Aquarium Fish to weather conditions which suit the taste of a An area near the Qeshm and Hengam islands variety of birds.

60 61 Tourism March 2018 Issue No. 69 monthly Tourism

Chahkouh Valley Chahkouh Valley, which is located in Shahab in Qeshm County, is a strange phenomenon created from the erosion of sedimentary stones. This valley is located in the heart of an integrated rocky mountain which is cross-shaped. Chahkouh is wide at the beginning and appears with high walls in the eyes of visitors, but it becomes less wide until it becomes unpassable. Even then the walls are high; therefore, there is little light inside the valley. There is a water reservoir in the bed of the valley. This water reservoir used to collect running water to supply to local residents.

62 63 March 2018 Issue No. 69 Tourism Fuel Supply to 14 Persian Gulf Islands

ormuzgan Province, calendar year to March 2017 located in southern and 574 million liters during HIran, is bound by the 11 months of the calendar Kerman, Fars, Bushehr and year to March 2018. He said Sistan Baluchestan Provinces. that more than 668 million

and the Sea of Oman. on 24 ships in the calendar ItHormuzgan also adjoins is the located Persian in an Gulf yearliters to of March gasoil 2017,was exported while 454

hot weather is an outstanding 13 ships in the following year. featureextremely of climatehot area. in Sweltering this “Meantime,million liters we was imported exported 3.245 on province. Bandar Abbas is branch of NIOPDC has become billion liters of gasoline on 94 the provincial capital of very active in petroleum ships in the calendar year to Hormuzgan. Bandar Abbas March 2017, down to 2.475 is among 20 big cities in last Iranian calendar year billion liters in the following Iran and is known to be a whichproduct ended exports. on March He said 20, that calendar year. This decline was was marked by fuel oil and due to the commencement activities and business. gas oil supply on a large scale of gasoline production at the Jalaluddinmajor center Morad, for economic director in that area. “On a daily basis, of the Hormuzgan branch of 2.3 million liters of gasoline said Morad. In the fuel oil National Iranian Oil Products and 4 million liters of gasoil sector,Persian more Gulf Starthan refinery,” 4.411 billion Distribution Company is distributed in Hormuzgan ships in the calendar year to was instrumental in supplying in the calendar year which Marchliters was 2017, exported down toon 3.249 126 national(NIOPDC), needs said owingBandar to Abbas its endedProvince,” in March said Morad. 2017, theHe saidlevel billion liters on 92 ships in the status as a leading point of of gasoline consumption in following calendar year. Hormuzgan Province topped Fuel supply to 14 islands, 32.4 million liters, while the including the Greater Tunb, the entry and exit. “The location Lesser Tunb, Abu Musa, Lavan andof two Persian big Iranian Gulf Star refineries, (Bandar million liters for the 11 months Abbasi.e. Bandar Gas CondensateAbbas [oil refinery] offigure the followingwas registered calendar at 33.3 year. located around the Hormuzgan “For the same periods of areaand Kish, of NIOPDC through has two added jetties to province to the statusThank of youtime, regular for and reading premium secondRefinery) largest has promoted supplier of this fuel gasoline consumption stood On some certain occasions, with a delivery of more than respectively at 784 million the Hormuzgansignificance areaof this of area. 150 million liters per day Iranof Petroleum NIOPDC has supplied fuel to he said. According to Morad, the provinces of Kerman, Fars, gasoilliters and consumption 789 million reached liters,” Bushehr, Yazd and Sistan- addedpetroleum Morad, products,” Hormuzgan he added. 1.498 billion liters in the Baluchestan. Owing to these two refineries, 64 LocalsQeshm and Traditional Island, Bazaars Behrouz Moradi Behrouz Photo: