Sardar-e-Jangal Oil Field Belongs to Iran · Sardar-e-Jangal Oil Field Belongs to Iran ... Supreme Leader Ayatollah Seyed Ali Khamenei addressing oil industry staff: ... MOSLEM ABBASI

Iran Petroleum Issue No.9, January 2013

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Sardar-e-Jangal Oil Field Belongs to IranIran’s Petroleum Minister Rostam Qasemi has reaffirmed Iran’s sovereignty over Sardar-e Jangal oil field in northern Iran.

Iran Eyes Gas Delivery to Iraq & Syria Iran is planning to construct a pipeline to carry natural gas to Iraq and Syria, Oil Ministry spokesman has said.

Iran Launches ME’s Largest Gas Storage FacilityIranian President Mahmoud Ahmadinejad has officially inaugurated the first underground natural gas storage facility of the Middle East in the Qom province.

Supreme Leader Ayatollah Seyed Ali Khamenei addressing oil industry staff: “Gas is wealth, oil is wealth, but much more significant than these sources of wealth is talented and skilled manpower. We possess this wealth, and that is the principle. Any nation with committed manpower could gain other natural sources of wealth to serve the nation. If not, its natural wealth would serve others and would be beneficial to others rather than itself. Thanks to God, we own this wealth.”

No. 9

1July 2012 /

Managing Editor: Es’haq Royvar The triumph in February 1979 of

the Islamic Revolution of Iran set a turning point in a millennia-old history replete with twists and turns. Undoubtedly, precise

knowledge about this historic turning point and considering the ensuing changes would mark the path towards future.After shifting power in the country, Iran’s Islamic revolution relied on the pivotal slogan of “We Can” promoted by the late revolutionary leader Ayatollah Ruhollah Khomeini, and managed to open a new chapter in all political, economic and social sectors. Up to the 1979 revolution, the country’s industrial and economic sectors were administered by foreign experts who did not pay due attention to Iran’s national resources and long-term interests.Oil largely contributed to the developments leading to the victory of the Islamic revolution. It accelerated the revolutionary struggles and the Shah regime was unseated much sooner than expected. The revolution was officially declared victorious in February 1979, but oil had practically fomented revolution months before. Due to massive strikes, Iran’s oil exports had been disrupted and the country’s oil output had declined to its lifetime low. In December 1978 and January 1979, Iran’s oil export was halted and the country’s 700,000 b/d output could only meet domestic needs. Ayatollah Khomeini called at the time for the preservation of oil reservoirs in order to serve the future generations. In March 1979, Iran’s oil production stood at 3 mb/d, enough for domestic consumption. According to official figures released by OPEC, Iran could produce 6.99 mb/d.The implementation of revolutionary policies in Iran frustrated Western governments who had been expropriated. In reaction, they imposed an unequal war on Iran. They armed our neighbor and imposed tough embargos

on Iran in a bid to stop the country’s progress. But they failed due to the resistance and perseverance of the Iranian nation. Even today, foreign powers are attempting to hinder the Islamic Republic’s progress, but their plots and conspiracies would never pay off.Over these years, Iran has tapped its oil and gas reservoirs and developed them in compliance with international norms and conventions despite obstacles, and has played an effective role in the world’s energy supply security. Iran is a leading holder of oil and gas reserves in the world which would never be ignored in the future equations of energy markets.Iran’s oil industry plans to call a halt to crude oil sales. To that effect, it has a number of projects under way. The projects include construction of petrochemical plants to supply more than 100 million tons of products a year, construction of new oil and gas condensate refineries for a daily refining capacity of 3.3 million barrels, development of gas fields and construction of gas refineries to treat 1.4 bcm/d of gas.Removing obstacles to the flow of investment and technology into the oil industry as well as facilitating and guaranteeing presence in consumer markets balances long-term relationships between energy producers and consumers. Contributing to this state of equilibrium would be a positive point for consumers because Iran has already proven that it can meet its own needs without dependence on foreign countries.Relying on more than three decades of experience under difficult conditions and its experienced manpower, Iran’s oil industry is ready to exercise economy of resistance and easily counter sanctions. Therefore, the Western countries – which are energy consumers – would see that their sanctions against Iran’s energy sector would backfire in the long term.

“We Can” Comes True

No. 9

Iran Petroleum

Monthly Publisher:

Ministry of Petroleum of the Islamic Republic of Iran

Translation, Graphic Design and Printing:

Asia Financial NewsGraphic Designer: Ali Shams Amiri

Translator: Kianouche Amiri

Email: [email protected]

* The opinions expressed in this magazine do not

necessarily reflect the official positions of Petroleum

Ministry of the Islamic Republic of Iran.

Managing Editor: Es’haq Royvar, Public Relations Manager, Ministry of Petroleum

Deputy Managing Editor: Abolhassan Darvishi

Chief Editor: Articas Zerehgar

Editorial Board:Mohammadreza Nafari

Raheleh Khaleqi Mohammad Afshin

Setak Kakoei Arash Hajikhalili

Chief Photographer: Hassan Hosseini

Coordinator: Sara Yekrangi

Iran Petroleum Monthly

3January 2013

No. 9

Photo: ABDOLREZA MOHSENI

Norway Keen on MoreEnergy Ties with Iran 13

Oil Grandfather of Political Energy 14

Environment, Petroleum Ministry’s Top Priority 16Iranians Master Gas Refinery Savvy 20

Oil Contribution to Iran’s 1979 Revolution 22

ContentsIran OperatesLongest Ethylene Pipeline in WorldIran’s petrochemical industry has come closer to achieving its objectives set in the Fifth Five-Year Economic Develop-ment Plan (2010-2015) with the inauguration of the first phase of the longest ethylene pipeline in the world, the first phase of Kavian Petrochemi-cal Plant, as well as Kerman-shah Polymer Plant. 4

Iran’s Oil Industry Moving towards Technical Self-SufficiencyPolicymaking Council for Transfer and Development of Technology of Iran’s Oil Industry has been officially launched after appoint-ment of its 26 members by Petroleum Minister Rostam Qasemi. 8

CNG Share in Iran Transportation to Hit 25%Iran’s Petroleum Minister Rostam Qasemi has said that the share of compressed natu-ral gas (CNG) in the coun-try’s transportation sector is projected to rise to 25 percent from the current 22 percent. The target is set for 2015, when Iran’s Fifth Five-year Economic Development Plan ends. 10

Iran Eyes Gas Delivery to Iraq & SyriaIran is planning to con-struct a pipeline to carry natural gas to Iraq and Syria, Oil Ministry spokesman has said. 12

Iran’s Strides in Petchem Sector 26LNG Role in Iran Gas Exports 28

Petroleum Mulches for CombatingDesertification 30

South Pars, Manifestation of Iran’s Offshore Self-Sufficiency 42

Crude & Asian Products Markets, December Crude Markets 56

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Iran Petroleum Monthly No. 9

Iran’s petrochemical industry has come closer to achieving its objec-tives set in the Fifth Five-Year Economic Development Plan (2010-2015) with the inauguration of the

first phase of the longest ethylene pipeline in the world, the first phase of Kavian Pet-rochemical Plant, as well as Kermanshah Polymer Plant.The ethylene pipeline project was the most significant one which was launched in the presence of President Mahmoud Ahmadinejad, Petroleum Minister Rostam Qasmi and other senior oil officials. Known as West Ethylene Pipeline, it involves a group of petrochemical plants in the west, northwest and southwest of Iran. The pipeline is supposed to carry ethylene from Assaluyeh in southern Iran to the provinces of Khuzestan, Lorestan, Chahar Mahal va Bakhtiari, Kohguiluyeh Boyer Ahmad, Kermanshah, Kurdestan and West Azarbaijan. The 1,200-kilometer pipeline is supplied with ethylene by Ka-vian Petrochemical Plant in Bushehr and Arvand Petrochemical Plant in Khuzestan province. Officials have said the West Ethylene Pipeline would facilitate the country’s pet-

rochemical exports such that Iran would be exporting petrochemicals to Iraq, Turkey, Georgia and Armenia.The pipeline would transfer products from Kavian to western regions as part of petrochemical development plan. Most equipment used in this pipeline has been provided by domestic manufacturers. Pet-rochemical plants are under construction along the route the pipeline is extended. Kermanshah Petrochemical Plant is already operational, while Kurdestan Pet-rochemical Plant is 65 percent complete.The pipeline, which has so far cost 9.5 trillion rials, involves spatial planning of petrochemical industry. It will fairly dis-tribute God-given resources of Assalueyh among residents of western, southwestern and northwestern provinces. The pipeline would also dispense with the need for vessels carrying ethylene from Assaluyeh to Mahshahr.Addressing the inauguration of the pipe-line in Assaluyeh, Ahmadinejad heaped praise on all Iranians who have been instrumental in the construction of the pipeline which would cover 12 provinces.

Kaveh Petrochemical Plant

The project, managed by Iranian engi-neers, would supply feedstock to 14 pet-rochemical units through West Ethylene Pipeline. The initial investment for the petrochemical plant has been $ 8.5 billion.Qasemi said most equipment used in the plant is manufactured domestically. He said that reliance on domestic equipment has slashed $300 million of expenses. The second phase of the project would become operational next year if the necessary feedstock is provided by Phases 15, 16, 17 and 18 of South Pars. Kavian Petrochemical Plant is one of the largest producers of ethylene in the coun-try with an annual output of two million tons. Bushehr province accounts for half of the country’s petrochemical production. Kavian Petrochemical Plant and West Ethylene Pipeline would lay the ground-work for fair development of the west of the country.The ethylene produced in Kavian Petrochemical Plant would be piped to Andimeshk, Kermanshah, Kurdestan, Mahabad and Miandoab petrochemi-cal plants and the surplus output would

Iran OperatesLongest Ethylene Pipeline in World Mahnaz mohammadi

Photo: MOSLEM ABBASI


5January 2013

No. 9

Iran Launches ME’s Largest

Gas Storage Facility

Iranian President Mahmoud Ahmadinejad has officially inaugurated the

first underground natural gas storage facility of the Middle East in the Qom province.The first natural gas storage facility in Iran and the Middle East was officially inaugurated in the vicinity of holy city of Qom.The Sarajeh facility has the capacity to store 3.3 bcm of natural gas.There is the possibility to draw 9.8 million cubic meters of gas per day from the facility during the cold days. So far, more than 700 mcm of gas have been stored

in Sarajeh gas storage facility.The facility plays a strategic role in meeting gas needs of the country.By launching the first gas storage facility near Qom, Iran ranks 19 among the 34 countries possessing gas storage technology in the world but the country is expected to place the fifth in the world in 2015, the final year of Fifth Five-Year Economic Development Plan.Ahmadinejad reiterated Iran’s strategic gas reserves, saying gas distribution infrastructures need to be reinforced in the country to provide

inexpensive energy to all Iranians.The president said gas storage is a must in Iran as the country faces freezing temperature in the final months of the year.“Underground gas storage facility is an important idea based on which 40 spots have been located in the country,” he said.Minister of Petroleum Rostam Qasemi said gas storage is a strategic necessity in the country, promising that the second facility for storaging natural gas would become operational in Sarakhs before the government bows out in August.

be used at petrochemical plants located in Mahshahr Special Economic Zone. Kavian Petrochemical Plant and West Ethylene Pipeline have so far cost $ two billion. Kavian Plant would produce three m t/ y of ethylene which could sell for $550 million.

Iran’s 22% Share of ME Polymer Output

Several days after the inauguration of the first phase of Kavian Petrochemical Plant and West Ethylene Pipeline, Kerman-shah Polymer Petrochemical Plant came on-stream. The Kermanshah plant would raise Iran’s share of polymer production in the Middle East to 22 percent and its share of the world’s polymer output to 3.8 per-cent. Qasemi said the Kermnanshah plant would be fed with ethylene produced in Kavian. “It was an initiative of the government to launch the West Ethylene Pipeline so that residents of 12 provinces would benefit from the advantages of oil and gas. We could build more petrochemi-cal units in the south, but we decided to build them along the route.”The minister said the required investment for an industrial revolution in 12 prov-inces has already been made, adding 70 petrochemical projects are currently under way in the country.Iran’s rated petrochemical output has soared to 57 mt/y, while the country’s polymer production has reached 63 mil-lion mt/y – beyond the country’s need.Up to 1981, the country’s annual polymer production capacity was 110,000 tons, which would reach 12 million tons by 2015. Managing director of National Petro-chemical Company (NPC) Abdolhossein Bayat said the country’s polymer output is already beyond the country’s demand, expressing hope that Iran would export polymer to markets in the region. “With polymer production much higher than domestic needs, Iran would win a bigger share of Turkish and Iraqi mar-kets,” he said. Bayat added that two more development projects are under way at Kermanshah plant. The Kermanshah plant, with an annual output of 300,000 tons of ethylene, would be a strategic step in strengthening Iran’s position in the re-gion. The facility would supply more than 30 byproducts to feed the downstream sector.The plant is under way with a total investment of 4.25 trillion rials. It would bring about industrial development in the west of the country and create 700 job opportunities.

6


Iran’s Petroleum Minister Rostam Qasemi has reaffirmed Iran’s sovereignty over Sardar-e Jangal oil field in northern Iran. Azerbaijan has laid claim to the

newly discovered oil field. Qasemi said Azerbaijan’s claims are just allegations. “We are currently conducting drilling operations in Sardar-e-Jangal oil field,” the minister added.“Sardar-e-Jangal oil field is fully independent and is located in Iran’s territorial waters, and belongs to our country,” Qasemi noted.

Iran started spudding a second exploration-appraisal well in Sardar-e-Jangal oil field last October. The discovery of the field in the Caspian Sea was announced in December 2011. Some northern neighbors and international oil companies rushed to cast doubt on Iran’s ownership of the field;however, Iran proved its sovereignty on the field when it installed Iran Amir-Kabir Platform.Caspian littoral states began oil production many years ago, but neither have been able to discover and recover oil

without foreign help. In Iran, oil discovery in the Caspian Sea has been done by Iranian engineers and contractors. Sardar-e-Jangal oil field is located 700 meters deep under water. Masoud Jahdi, director of exploration at Khazar Exploration and Production Company (KEPCO) said the oil layer of Sardar-e-Jangal would add billions of barrels to the country’s oil reserves. “Block 6.2 alone is estimated to hold two billion barrels, 500 million barrels of which would be recoverable.”Ahmad Qalebani, managing director of

Sardar-e-JangalOil Field Belongs to Iran

Photo: MOHAMMAD GHADAMALI


7January 2013

No. 9

National Iranian Oil Company (NIOC), has highlighted 3-trillion-rial investment in oil discovery from the Caspian Sea, saying that one oil layer in the landlocked sea would be valued at $ 50 billion. Drilling 24 wells in Sardar-e-Jangal oil field would allow a daily production of 95,000 barrels and drilling 32 wells would result in 120,000 b/d of oil.Qasemi has said that the field contains light crude with zero sulfur content.Sardar-e-Jangal is also estimated to hold 50 tcf of natural gas – more than ten times Shah Deniz.

Member states of the Gas Exporting Countries Forum (GECF) appointed Iran’s Petroleum Minister Rostam Qasemi as President of the forum’s 2013 Ministerial Meetings. During the 14th Ministerial Meeting held in Equatorial Guinea’s capital, Malabo, on 21 November 2012, energy

ministers of GECF member states chose Iran as the venue of the organization’s 15th Ministerial Meeting in November 2013. The participants also discussed the changing nature of the gas market and the need to adopt new approaches. They highlighted the importance of natural gas as a clean, safe, green, and efficient energy carrier. GECF is an intergovernmental organization of the world’s leading natural gas producers comprising Algeria, Bolivia, Egypt, Equatorial Guinea, Iran,Oman, Libya, Nigeria, Qatar, Russia, Trinidad and Tobago ,Venezuela,and the United Arab Emirates. Three other countries, Iraq, Norway and Netherlands also attend the GECF meetings as observers.Being founder of the Forum, Iran holds the second largest natural gas reserves in the world and GECF. Iran’s estimated proven natural gas reserves stands at 33.6 trillion cubic meters. Over two-thirds of Iranian natural gas reserves are located in non-associated fields, and have not been developed. Major natural gas fields include: South and North Pars, Kish, and Kangan-Nar. Iran’s South Pars gas field contains 14 trillion cubic meters of natural gas, which accounts for about eight percent of the world’s reserves. 65% of the world’s gas reserves belong to 13 members of the Gas Exporting Countries Forum among which Russia, Iran and Qatar are the highest ranking respectivly.The First Miniosterrial Meeting of the Gas Exporting Countries Forum was held in May 2001 in Tehran. Since then 14Ministerial Meetings Have been held in member countries and Equatorial Guinea hosted the 14th Ministerial Meeting inMalabo,last November.On November 15th 2011 the first Summit Meeting of GECF heads of state and government was held in Doha ,Qatar, and the 14th Ministerial Meeting agreed that the second Summit would be held in 2013 in Moscow, Russia.

Iran ,President of the GECF Ministerial Meeting in 2013

8


Policymaking Council for Transfer and Development of Technology of Iran’s Oil Industry has been officially launched after appointment

of its 26 members by Petroleum Minis-ter Rostam Qasemi.The main objective pursued by this council, comprised of oil managers and engineers, is to regulate foreign tech-nologies purchased over the past years for the oil industry and make planning for the transfer and indigenization of technologies that Iran still lacks.Addressing the first meeting of the council, Qasemi said: “Iran’s oil in-dustry has to go through the one-way self-sufficiency road to master technolo-gies.”He underscored Iran’s strategic position, access to high seas and the existence of huge oil and gas reserves as the privi-leges that the country enjoys.“All other countries in the world are benefiting from their advantages. For instance, Singapore’s annual container traf-fic reaches 25 million TEU, but Iran

transits three to four million tons a year. That is the case, while Iran can become the transit hub of the region due to its geographical position.”

Breaking Bureaucratic Walls in Oil Sector

Qasemi said the first step towards mak-ing potential advantages practical would be to commercialize the technologies purchased from abroad.“The second step would be to in-digenize the new technical savvies required by the oil industry and for that purpose, the walls of bureaucracy in the oil industry need to be broken.”Qasemi said enhancing the level of cooperation with scientific centers and universities was a shortcut for Iran’s oil industry to acquire the state-of-the-art technology. In that way, he added, the science boundaries would be crossed over and these technologies could be commercialized.The minister called on the Petroleum Ministry subsidiaries to show more

flexibility in their collaboration with knowledge-based centers and commer-cialization companies.

Oil Industry Jumpstarts

Over the past years, Iran’s oil industry has witnessed developments which have bolstered the country’s national prowess in the region and across the globe. To that effect, Iran’s Supreme Leader Aya-tollah Seyed Ali Khamenei has said that the production of science in the country should end in the generation of wealth so that research activities would leave positive effects on everyday life.Being the main driver of Iran’s economy, the oil industry has made remarkable progress in indigenizing the manufacturing of equipment and com-modities. Mojtaba Khayyam Nekouei, director for technology and innovation in the presidential office, has expressed hope that Iran’s oil industry would real-ize its scientific objectives with the col-laboration of domestic scientific centers.He said establishment of Policymaking

Iran’s Oil Industry Moving towards Technical Self-Sufficiency

Javad Asghari



9January 2013

No. 9

Council for Transfer and Development of Technology of Iran’s Oil Industry was a positive achievement by Iran’s Petroleum Ministry, noting that paying special attention to such needs would accelerate technological growth in the oil sector.

85 Petchem Grades Eyed

Deputy Petroleum Minister for Petro-chemical Affairs Abdol-Hossein Bayat said 42 petrochemical plants are operat-ing in Iran. He regretted that some of them still depend on foreign technology.“Up to the end of the Fifth Five-year Economic Development Plan [in 2015], 74 new petrochemical projects would come on-stream. Each of the projects would need new technical knowhow due to the diversity of their products,” said Bayat, who is also managing direc-tor of National Petrochemical Company (NPC).He said Iran would be producing 85 petrochemical grades by 2015. “In this sector, we are currently applying a variety of technical knowhow. But the question is: “up to when are we going to import these technologies?”He said Iran Petrochemical Research and Technology Company (IPRTC) de-veloped two technologies in 2009, three in 2010, four in 2011 and three in 2012.Bayat said a major challenge to the petrochemical industry was the failure of the private sector to apply new tech-

nological savvies due to restrictions in Article 44 of the Constitution.“With their all-out support and offering legal incentives, the government and parliament will definitely facilitate com-mercialization and transfer of technical knowledge,” he said.Noting that production of catalysts would not need too much investment, Bayat said several private companies would be producing 10 tons a year of catalyst in two months.

Repurchase Halted

Deputy Petroleum Minister for Re-search and Technology Mohammad-Reza Moqaddam said the main strategy of the policymaking council was to develop Iran’s oil industry technology through using foreign technologies already purchased to avoid repurchase and duplication.“Undertaking fundamental measures in the country to wean the country off repeated purchases of technical knowl-edge and centralizing activities related to design methods are among the neces-sary points in the research sector,” he said.Stressing the need for identifying priori-tized technical savvies in the upstream and downstream oil sectors, Moqaddam laid emphasis on innovation on the ex-isting technologies with the objective of benefiting from potential capacities for scientific progress in the oil industry.

Proposals

Ali Akbar Shabanpour, managing direc-tor of South Pars Gas Plant, presented several suggestions for the transfer of technology based on his three decades of experience are as follows: - Identifying the necessary technolo-gies; - Choosing proper methods for transfer of technology; - Benefiting from buy-back deals for transfer of technology from France’s Total regarding strategic management of offshore facilities, subsea pipelines and gas refinery; - Effective interaction and commu-nications to motivate Total to transfer technology and experience; and - Training experts to upgrade the quali-tative level of companies and dispatch-ing 150 trained experts to visit different factories and refineries. Shabanpour said the implementation of CMMS, production platforms’ manage-ment and offshore pipeline operations were among examples of following Total’s model.He said defining strategies and for-mulating a roadmap for the transfer of technology and establishing a technol-ogy management center to accelerate indigenization of oil industry technical savvies were among the proper ap-proaches for reaching proper progress in the oil and gas technology fields.

10


Iran’s Petroleum Minister Rostam Qasemi has said that the share of compressed natural gas (CNG) in the country’s transportation sector

is projected to rise to 25 percent from the current 22 percent. The target is set for 2015, when Iran’s Fifth Five-year Economic Development Plan ends. During a visit to CNG Industry Show in Tehran, the minister said Iran currently ranks second just behind Pakistan in terms of the number of CNG stations.He said there are nearly 2,000 CNG stations in the country, adding that 500 more would be added by 2015.Qasemi presented strategic figures on

Iran’s oil industry and its achievements, and drew a parallel with the world. “Given the European Union’s slow or negative economic growth rate and the emerging economies’ demand, the world energy consumption is estimated to grow 1.5 to 2 percent in 2013 and 2014. Regardless of subsidies, hydrocarbon fuels would account for 80 percent of the world’s annual energy consumption in five decades and would become the least expensive source of energy in the world.Qasemi said Iran’s gas production currently stands at 620 mcm/d which would soar to 1.4 mcm/d by 2015. Out of 29 phases of the massive offshore

South Pars Gas Field, 19 phases are under construction and 10 phases are almost becoming operational, with more 800 mcm/d of gas, he added.In the fields shared with neighboring states, 360,000 barrels of condensate and gas derivative are being produced, the minister said. When the remaining 19 phases of South Pars come on stream, the country’s gas output would rise to 1.2 mb/d. Regarding Iran’s gas export to Pakistan, Qasemi said the deal has been finalized and that the required pipeline has been constructed as far as Pakistan’s border.The minister also briefly said that Iran-Iraq gas deal has been final-ized and an LNG project in Assaluyeh has progressed 50 percent and a plan is under way to enhance output from North Azadegan, South Azadegan, Yadavaran and Azar oil fields by 1.5 million barrels.Iran’s Petroleum Ministry is also deter-mined to become self-sufficient in all sectors under short-, mid- and long-term

Minister:

CNG Share in Iran Transportation to Hit 25%


11January 2013

No. 9

plans. CNG could be used in heavy vehicles, cargo trains and houses in the villages and cities to which access might be difficult. Iran’s daily-increasing prog-ress in CNG has promoted Iran’s status in this sector and the country is currently capable of exporting its achievements and technologies to neighboring states. CNG production in the country dates back to 1977. Institute of Standard and Industrial Research of Iran (ISIRI) keep taps on the safety of CNG stations across the country. The CNG exhibition, held in Tehran Dec 12-13, aimed to draw up a roadmap for CNG industry, call for more CNG stations, encourage further investment in this sector and underline environmen-tal factors.Up to 2005, nearly 78,000 vehicles ran on both gasoline and CNG in Iran. Since 2006, 300,000 have been added to them. In seven years, the number of cars running on CNG has seen 40-fold jump.Over the recent years, Iran has made remarkable progress in its gas sector, not to mention positive steps taken for the technology transfer. The CNG industry currently needs experi-enced and specialized manpower.Since Iran’s car manufacturing industry is moving towards dual-fuelled vehicles, the construction of CNG stations is becoming more and more economical. Designing gas engines would be of great help to this industry.Building chain stations and investment in this sector would cut costs, while minimizing stations in size and manu-facturing the necessary items for CNG industry would persuade the private sector to make investment.However, experts are of the view that electricity is much more economical than gas for remote villages and cities.The representative of Italy’s VGR, pres-ent in the exhibition, said CNG would halve fuel consumption. “According to statistics, CNG has seen a higher consumption growth than gasoline with different octane numbers, diesel fuel and natural gas supplied at gas stations in Italy,” he said.VGR put on display equipment used for fuel conservation. It has trained 800 technicians working in the CNG industry. The European Union (EU) obliges gas station owners to supply fuel in compliance with Euro-6 standards.

Iran made a pitch for the extension of gas pipeline with Pakistan to India with its secretary of Supreme National Security Council, Saeed Jalili, saying

that Tehran had the “best capacity” to provide security for the pipeline, Times of India has reported.Iran’s chief nuclear negotiator, Jalili was on a three -day visit to India during which he met his counterpart NSA Shivshankar Menon.India has repeatedly cited security as one of the concerns for not joining the pipeline known earlier as IPI (Iran-Pakistan-India) pipeline. Tehran has left open the option of India joining later. “Iran has the second largest gas reserves in the world and we will welcome any step which can be used for the benefit of people,” said Jalili.

He was replying to a query about whether Tehran was still trying to convince India to allow the pipeline to be extended from Pakistan to India. “Just like the way it has handled piracy in the Persian Gulf, Iran has the best capacity to provide security also,” he added.Indian External Affairs Minister Salman Khurshid said the two countries may discuss the Iran-Pakistan-India (IPI) gas pipeline at a joint commission meeting in the first quarter of the year.“Some issues about the relevant costs and all that still have to be sorted out. We will have a joint commission early this year sometime and in that joint commission, this issue will be taken up,” he told reporters.Iran is planning to start pumping 21.5 mcm/d of gas to Pakistan in 2014.

Iran Can Secure IPI

12


Photo: HASSAN HOSSEINI

Iran is planning to construct a pipeline to carry natural gas to Iraq and Syria, Oil Minis-try spokesman has said.“Based on agreements al-

ready reached, a 56-inch pipeline is to be laid out from Assaluyeh [near South Pars gas field in southern Iran] to the Iran-Iraq border to feed three Iraqi power plants running on gas,” Alireza Nikzad Rahbar told a news conference in Tehran. “In the near future, a trilateral meeting will be held in Baghdad between Iran, Syria and Iraq to devise the neces-sary plans for extending the pipe-line from Iraq to Syria,” he added.The official stated that Iraq has requested 30 mcm/d of natural gas from Iran in the first phase, which is scheduled to come on-stream by next summer. Nikzad Rahbar said Syria has requested 25-30 mcm/d of gas, but the route for the extension of the pipeline from Baghdad to the Syrian border and from there into the country has not been surveyed yet. He noted that the pipeline would be designed to deliver gas

to Muslim countries like Jordan and Lebanon and that, if neces-sary, it could be extended to reach European countries. Sitting atop the world’s second largest gas reserves, Iran is a leading player in the world energy sector. The existence of gas reservoirs grants Iran a high politi-cal and economic status.Nikzad Rahbar also said that Iran is ready to pump natural gas to neigh-boring Pakistan next year.He added that construction of a gas pipeline stretching from Iran to Pakistan is complete up to Iran’s border. The pipeline has a capacity of 50 mcm, which could reach 100 mcm if more pressure booster sta-tions are installed.Sitting atop the second largest gas reserves in the world, Iran is a key player in the world’s energy sector. The existence of these huge re-serves highlight Iran’s geopolitical and economic role in the world. Due to the growing need in other countries for Iran’s energy, export-ing natural gas would create numer-ous economic opportunities for the

Islamic Republic, not to mention strengthening of political and eco-nomic ties.Nikzad Rabhar also said that Iran’s Petroleum Ministry was the only body competent to release figures about production, consumption and exports of crude oil. “At present, Iran’s oil industry is running smoothly thanks to round-the-clock efforts made by our spe-cialists. A large number of countries in the world are demanding Iran’s oil,” he noted. Petroleum Ministry’s spokesman said Iran is discovering hydrocar-bon reserves in northern Iran. He also underscored Iran’s huge oil reserves, stating that the country could guarantee energy supply to Southeast Asia and BRICS (Brazil, Russia, India and China), which all are deemed to be at a similar stage of newly advanced economic devel-opment. “For the countries willing to experience proper economic growth, Iran would be the best choice to invest in,” Nikzad Rahbar said.

Gas Pipeline Extension to Include Jordan &Lebanon

Iran Eyes Gas Delivery to Iraq & Syria


13January 2013

No. 9

Norwegian Ambassador to Tehran Jens-Petter Kjem-prud has voiced his coun-try’s readiness to broaden scientific and technological

cooperation with Iran notably in the energy sector.In a meeting with Es’haq Royvar, the Public Relations general manager of the Petroleum Ministry of the Islamic Republic of Iran, Mr Kjemprud expressed hope that Iranian and Norwegian oil ministries would collaborate with each other in dissemina-tion of information.The Ambassador appre-ciated Iran Petroleum monthly, published in English by Iran’s Petroleum Ministry for its variety in covering oil and gas issues.Mr. Royvar in this meeting explained the latest achievements in local production of technical equipments, localization of patents and criticized illogical sanction imposed by some Western powers and considered them as a threat which has been turned to opportunities through Iranian experts’ experience and capabilities.He went on emphasizing on Iranian experts’ self sufficiency in designing and manufacturing of oil and gas refineries, petrochemical units ,as well as oil rigs manufacturing, catalysts production and executive management of mega industrial projects, reiterated the firm determina-tion of the Iranian authorities to extend technical , scientific , financial and indus-

trial bilateral ties with the international corporations and scientific institutions. In addition, he denounced the political sanc-tions imposed by Western powers targeting industrial and economic relation between other countries as an immoral and imma-ture practice.He invited Royvar and Iran Petroleum Edi-torial Board to meet with their Norwegian counterparts and visit Norway’s energy projects. For his part, Royvar invited the Norwegian ambassador to visit the giant offshore South Pars gas field to see devel-opments in Iran’s energy sector despite international sanctions.Kjemprud expressed surprise with Iran’s state-run companies’ progress in producing oil and petrochemical products over the past years, and heaped praise on Iranian engineers for their capabilities in different fields. He said the impact of international sanctions against Iran, seems to have short-term impacts on the development of the oil sector. He reiterated his country’s inclina-tion for close cooperation with Iran in the oil and gas industries in the future.The top Norwegian diplomat in Iran noted that media speculation about anti-Iran sanc-tions would psychologically raise oil prices. Referring to the history of oil coopera-tion between the two countries, Kjemprud expressed hope that oil and gas cooperation between Tehran and Oslo would clear the way for better relations in all sectors.

He said a number of Iranian engineers are currently working in the Norwegian Oil business. “Norwegian oil companies and institutions are currently benefiting from cooperation with a number of Iranian engineers in its oil and gas industries,” the Ambassador said.Norway is currently a leading producer of oil and gas in the world, and the largest pro-ducer of hydrocarbon materials in Europe. It ranks 4th in natural gas production in the world and is the fifth largest oil exporter in the world. Oil and gas make more than 45 percent of Norway’s exports and constitute 20 percent of its gross domestic product (GDP). In 2011, Norway produced more than 2mb/d of oil, 255170 barrels of which were used domestically and the rest was exported. Its gas output stands at 3.85 bcf/d; 194 mcf/d of which is for domestic consumption.Kjemprud said, thanks to advanced technol-ogy of enhanced oil recovery, Norway is able to produce 52 percent of the volume of oil existing in its reservoirs. He said Norway has nationalized much of its oil industry so that foreign companies would not pocket all profits from oil and gas recovery. The Ambassador also underlined Norwe-gian investment in China and Africa and expressed hope that his country would invest in Iran in the near future.

Norway Keen on More Energy Ties with Iran

14


Oil Grandfather of Political Energy

Iran is an influential country in the world energy market. Moreover, its certain geopolitical position is effective in energy production and supply security in the region. Located in the heart of energy oval in West Asia, Iran would play a significant role in energy supply security in the coming years.For Iran, which holds the largest hydrocarbon reserves in the world, energy diplomacy would be an instrument for maximizing achieve-ments from the politico-economic system of the world. In order to re-view the role of energy diplomacy in the oil industry, Iran Petroleum has interviewed Ahmad Qalebani, managing director of National Iranian Oil Company (NIOC).

By Amir-Hossein Hashemi Javid


15January 2013

No. 9

Q: How do you define energy diplomacy and what do you think of Iran’s posi-tion in development of diplomacy for its energy sector?

A: We are enjoying certain privileges and potentials to benefit from energy sources, particularly fossil energies like oil and gas. The Islamic Republic of Iran plays an influential and determining role in the world’s energy structure due to its shining background during eight years of imposed war (1980-1988), sanctions imposed in rapid succession and lack of cooperation on the part of international companies. At present, Iran is the center of gravity in the management of world’s energy resources and international energy transactions.Today, no clear definition could be offered for energy diplomacy because politics, economy and law are intermingled in such a way that a strategic and influential sector of energy could not be viewed exclusively, economical, political or legal.Energy is a significant talking point in the international community and countries are making efforts to guarantee their own en-ergy security. To that end, they do withhold even the option of war and many experts have attributed the conflicts and unrest in West Asia to huge energy resources, notably oil and gas, in this region.Anyway, the main role in the energy diplomacy is played by oil, which has been known as a strategic commodity since early last century. During the Cold War era, oil was a significant contributor to the growth of industrialized nations. After the end of the Cold War, oil gained more importance due to its effects on the global economy. The countries moving towards development further need this strategic fuel.

Q: Do you mean to say that energy diplo-macy is rooted in the political history of the past several decades?

A: Yes, that’s exactly what I mean. Oil is the grandfather of political energy in the world. What clarifies the path for energy diplo-macy in the world could be defined within the framework of production, supply and consumption of energy, particularly oil.

Q: What tools does this type of diplomacy dispose of to either expand or restrict diplomatic frontiers?

A: Given the significance of the issue of energy, countries resort to any tool to strengthen their energy diplomacy. These tools could be threats, sanctions, war, peace, etc. These factors are like instruments in the energy diplomacy, but only in the countries

which ignore moralities in their political system.The significant point I should highlight is that the energy diplomacy is playing the mediatory role in settling longstanding dis-putes and removing misunderstandings. It could also deepen affinities and strengthen ties between countries.Energy diplomacy is an interactive ap-proach between at least two countries inter-connected by different aspects of the energy sector like trade, investment, technology and transportation.In addition to economic and technological aspects, energy diplomacy also takes into account political and security dimensions.Basically, diplomacy eases tensions and heads off disputes. Today, energy is a prime necessity and many wars are triggered for having access to energy resources. But energy could be also a messenger of peace.

Q: Given the humanitarian and moral fundamentals of Iran’s foreign policy and human ideals like justice and develop-ment in energy use, how do you assess Iran’s status? Where does Iran stand in the energy diplomacy curve?

A: Iran is the center of world’s energy. Tak-ing into account the country’s oil and gas resources, it would be easily concluded that no spot on Earth is as rich as Iran in terms of God-given energy resources. Sitting atop huge oil and gas reserves, Iran is currently a leading supplier of energy in the world. Iran will maintain this position for at least one more century.Heavy dependence on the Persian Gulf oil resources has caused the United States to boost its military presence in the past three decades. A significant change which has transpired the oil market in the recent decades has been the growing demand in Asia-Pacific region. The growth of many economic powers in East Asia at the time of imposition of massive sanctions against the Islamic Republic has shifted Iran’s consumer market from Europe to East Asia. That has added to the significance of Iran’s role in energy supply. Geopolitically speaking, Iran enjoys a unique position in the world and serves as a bridge connecting West to East. This position grants Iran a sig-nificant decision-making role in its political and economic interactions.Over the past couple of years, we have signed agreements with many indepen-dent countries in exploration, refining and exports sectors. The point which Iran should take into account is that the country should be a seller of services and knowledge and not a vendor of crude oil. To that effect, we have expert plans for exporting knowledge,

oil products and technology.

Q: What priorities do Iran’s geopolitical position and its massive energy resources necessitate for the country to maintain its status?

A: Iran’s 2025 Vision Plan states that the Is-lamic Republic should preserve its position as the OPEC’s second crude oil producer by keeping its distance from other OPEC mem-bers. The document also obliges the country to develop oil and gas fields it shares with neighbors in order to become the second natural gas producer in the world. To that ef-fect, proper policies are required for finding new and reliable consumers and appropriate international interactions are needed in the energy sector. The general policies signed off on by Supreme Leader Ayatollah Seyed Ali Khamenei underscore benefiting from Iran’s regional and geographical position for oil and gas trade, processing, refining, swap and transmission to domestic and global markets. To that effect, the energy sector needs effective diplomacy.

Q: What are the requirements for Iran’s energy diplomacy for managers and decision-makers?

A: The response to this question could be found in the interpretations of the law. Strait of Hormuz is the key oil transit route for West Asian nations. Iran is monitoring this strategic strait and the navigation of oil vessels in this watercourse. This dominant geographical position allows Iran to transfer oil and gas from the region to the other countries in the region or outside the region.Financing the purchase of new technol-ogy and holding a positive view of the advantages of sanctions would resolve many problems in the sector of diplomacy. Furthermore, Iran should adopt proper energy diplomacy in its international rela-tions. Today, oil is being delivered to rich and industrialized countries, which in turn refine and transform it to more valuable products, sold back to oil producers, poor and undeveloped countries. That’s an unfair cycle and we intend to build more refineries by promoting Iran’s status in technological knowhow and abandoning crude oil sell-ing. Instead of selling oil to big economic powers and purchasing their commodities at high prices, we should be able to export our own products to the world countries. This modern standpoint would guarantee a balanced market and more just world.

16


Environment protection is becoming a particularly significant issue as industrialization takes root in the societies. Iran has

so far fared well to that effect and the country’s oil industry leans credence to health, safety and the environment (HSE). HSE director of Iranian Petroleum Ministry, Mohammad-Hossein Ardeshiri, said that the HSE system has been activated in all operational units of Iran’s oil industry. He said in an interview that Petroleum Ministry feels obliged to safeguard the environment, adding that air, water and soil are the important sectors to that effect. As far as air pollution is concerned, such projects as associated gases gathering have been implemented as countermeasures. No-flaring projects are currently under way in all petrochemical plants, as well as oil and gas refineries. Plans are under way to gather 99 percent of associated gases so that they would no longer be flared.Ardeshiri said more than $ 458 million have so far been invested in the oil industry’s environmental projects. “NGL projects in Kharg and Sirri islands are among the projects explained to the United Nations. Sirri NGL has already been completed and Kharg

NGL is 70 percent complete. With the implementation of these two projects, no pollution would be produced in the Persian Gulf due to flaring.”“A two-billion-dollar no-flaring project is under way in Kharg and Bahregan so that associated gases would be converted into liquefied gas or natural gas”, the official said.He added that refineries and petrochemical plants have switched to natural gas from liquefied gas and fuel oil, thereby saving the annual consumption of 225 million liters of gas oil. Replacing liquefied gas with natural gas would avoid the spread of more than half a million tons of carbon dioxide in the atmosphere.“An important factor contributing to air pollution is the sulfur content of gasoline. To resolve this problem, the necessary planning has been made at refineries to produce Euro-5 gasoline. Then, the sulfur content would fall below 10 ppm – the global standard.”By March 2014, all Iran’s refineries would be producing Euro-5 gasoline, Ardeshiri said. “Currently, Lavan, Tehran and Arak refineries are producing gasoline up to this new standard. Carmakers should also manufacture vehicles in compliance with the Euro-5 standards. According to a circular from the Department of the Environment (DOE), any car non-

compliant with Euro-5 would not be registered as of March 2012. Iran is currently producing enough Euro-5 gasoline to run new cars.”The official said nearly $14 billion would be invested in the production of Euro-5 gasoline, adding that more than $8 billion have so far been spent.Iran is producing more than 8 ml/d of Euro-5 gasoline which would soar to 23 ml/d in the first quarter of the next Iranian year which begins in March.More than 30 percent of Iran’s cars have been modified to run on both gasoline and compressed natural gas (CNG) as part of the government’s plan to reduce air pollution. Ardeshiri said the CNG use has cut gasoline consumption by more than 30 percent.He said Iran’s Petroleum Ministry has voluntarily gathered associated gases, regulated energy prices, conducted fuel conservation projects and rationed gasoline in order to respect HSE obligations. Ardeshiri added that Iran is among the eight countries capable of training other countries to cap their greenhouse gas emissions.Regarding treatment of industrial wastes, he said: “In Iran, all refineries and petrochemical plants are equipped with

Environment, Petroleum Ministry’s Top Priority



17January 2013

No. 9

industrial treatment facility. A project is under way to install a separator in the drilling rigs to gather wastes. It is 50 percent ready and will be installed in all drilling rigs next year. That would avoid sea pollution. Waste management studies have been conducted in all petrochemical units in Assaluyeh. In all production units of the oil industry, waste gathering systems have been installed so that wastewater could be used for irrigating green spaces.”Ardeshiri said two land fields have been prepared in oil-rich Mahshahr for collecting wastes. A similar facility is planned in Assaluyeh.The incinerators installed at refineries and petrochemical plants are up to international standards and have been endorsed by DOE.More than eight million mangrove trees have been planted in the coastal regions of Mahshahr and Bandar Imam to protect the environment. Mangroves are rich in carbon. Because of the limited fresh water available in salty intertidal soils, mangroves limit the amount of water they lose through their leaves. They can restrict the opening of their stomata (pores on the leaf surfaces, which exchange carbon dioxide gas and water vapor during photosynthesis). In some refineries and petrochemical plants, more than 80 percent of their area is green.

Ardeshiri said more than 80 percent of greenhouse gas emissions result from developed countries, underscoring the Kyoto Protocol which sets binding obligations on industrialized countries to reduce emissions of greenhouse gases.Ardeshiri said a project is under way entitled: “Improving Environmental Management of Oil Industry in the Persian Gulf and its Coasts”. “This project was submitted to the relevant international bodies for technical review and resulted in the signature of a memorandum between Iranian Petroleum Ministry’s HSE Department and Japan International Cooperation Agency (JICA). The project, estimated to last 28 months, is aimed at analyzing urgent reaction in the oil industry, management of the environment and submitting a plan for urgent reaction to oil spills.”Ardeshiri also said that Petroleum Ministry has projects under way to save 120 ml/year of gasoline and avoid its evaporation in storage facilities and tanks.He said wellhead separators recover more than 190,000 barrels of crude in southern oil-rich regions. These separators separate oil and water without causing any soil pollution.Noting that suspended particles destroy instruments in oil-rich southwestern Iran, Ardeshiri said the particles pollute the environment, cause respiratory

complications and reduce visibility. One reason behind haze is climatic changes in the region. Petroleum Ministry’s HSE Department has so far spent 4.78 trillion rials on anti-haze projects, chief among them plantation of trees in oil-rich regions to combat desertification. In some deserts, petroleum mulches have been used to stabilize quick sands. These mulches are compatible with the environment.

“Petroleum Ministry’s HSE director:HSE system has been activated

in all operational units of Iran’s oil industry. We must safeguard the environment; air, water and soil are the important sectors to that effect.

18


Q: Before talking about your R&D activities at NIOC, I would like to ask you about the establishment of R&D Directorate of NIOC. A: I joined the Research Institute of Petroleum Industry (RIPI) in 1984. I was named chief of upstream department. RIPI was the only research center in the oil sector. It was formerly known as Center for Scientific Services and served as a central laboratory for testing the octane number of gasoline and monitoring the quality of Tehran Refinery products. After the 1979 Islamic revolution, this laboratory became a center for scientific services. Before the revolution, our industries did not rely on domestic research and benefited from foreign sources. Dutch scientists were working in Iran in this laboratory and they did all upstream tasks. After the revolution, everything came to a halt and we could not even conduct simple tests on wells. It was natural for us not to be experienced in oil research. Anyway, young and specialized

manpower gradually joined the research center, and the former lab, located near Tehran Refinery, grew into RIPI in west of Tehran. RIPI focused its work on upstream, mid-stream, downstream, gas, refining and distribution, exploration and production.

Q: Given the effectiveness of RIPI, when did NIOC consider establishing R&D Directorate?A: The idea of establishing a committee at NIOC to deal with research and technology was raised in 2000. The focus was on technology. The first action by NIOC R&D Directorate was to centralize research capabilities of NIOC in view of improving the quality of commodities

and products, reduce risk and uncertainty, boost profits, cut costs and bolster technical capabilities for rivalry on the international scene. To that effect, the enhanced recovery unit was detached from NIOC Exploration Directorate and annexed to NIOC R&D Directorate. This unit was registered as Enhanced Recovery Research Center (ERRC) with the Higher Education Ministry. At present, nearly 60 experts, holding MSc or PhD degrees, are working mainly on recovery enhancement.

Q: Have you had any communications with RIPI and other academic centers in the country?A: We have not limited our activities

Mohammad-Ali Emadi, a graduate of University of Surrey in petroleum engineering, is director of research and technology at National Iranian Oil Company (NIOC). He has been instrumental in the oil industry research projects. In an interview with Iran Petroleum, he shares his views about research and its effects on the oil industry.

Iran Oil Industry Scales Up

Research


19January 2013

No. 9

to ERRC. In collaboration with foreign companies that operated in Iran in the past years, we have made an assessment of the capabilities of RIPI, Petroleum University of Technology and other universities. Then, we conducted projects to assess the country’s potentials for resolving technology problems of the oil industry. To that effect, we upgraded scientific and technological centers affiliated with Petroleum Ministry, universities and other centers.

Q: It seems that no organized action had been undertaken to that affect at NIOC before 2000.A: Yes, that’s true. Up to 2000, we did not have any R&D Directorate at NIOC to

be instrumental in decision-makings. Research did not play a prominent role in the technical decisions pertaining to research in the oil and gas sectors. We benefited from the capabilities of RIPI for knowledge-oriented projects. We have published a 500-page booklet explaining all activities carried out over the past years. For example, the Mud and Cement Group of RIPI carried out projects in which nanotechnology is used in drilling mud. In this project, the weight of mud and its effects on drilling operations like shortening the time and improving the quality and efficiency are focused upon. In the downstream sector, we have conducted projects on oils. Projects have been also conducted in the geochemical and geophysical sectors, petroleum engineering, environment, corrosion, refining

and distribution.

Q: Could you briefly tell us about activities at ERRC?A: Good projects have been conducted in Sirri Island, where problems related to injected water and use of bacteria had emerged. Other methods of enhanced recovery like using nitrogen and carbon dioxide are under way. Studies are also under way in the offshore section of South Pars gas field. They might not be tangible, but they do increase the production and enhancement rate from reservoirs. In the oil terminals, projects have been conducted to clean storage tanks of sludge. As far as manufacturing

drilling equipment is concerned, research projects have been carried out. One of these projects was the development of management and control system for drilling and manufacturing of 17,000 drilling equipment. In oil-rich regions, research projects have been conducted on corrosion and production. All these projects have proven to be fruitful. These are examples of projects ordered by NIOC offshoots and done by ERRC and other research centers.In general, enhanced recovery projects are categorized as follows: 1. Carbonic gas injection 2. Nitrogen injection 3. Enhanced recovery from heavy crude oil reservoirs 4. Intermittent oil and gas injection 5. Management of produced and injected water 6. Development and transfer of drilling technologies.

Q: Petroleum Ministry saw its research structure undergo change in 2010. Then, a comprehensive plan was adopted for steering research and technology. To what extent do you think this structural change has been effective in research projects?A: Any change would halt previous methods, while development of new approaches would slow down previous projects. But we needed these changes in order to work out new mechanisms for research.

Q: Why was this structural change needed?A: After the revolution, heavy investment was made in universities. Now such a plan was needed so that the country could benefit from the capabilities of universities. The government has earmarked three percent of the current budget to research. Moreover, one percent of capital budget has been also allocated to technology.

Q: How can research projects help the oil industry counter sanctions?A: In some specialties like high technology, our dependence on international collaboration was more. Fortunately, we have no problem with manufacturing and materials due to our post-revolutionary achievements. However, regarding high technology, we have to centralize our research projects. Our specialists have fared remarkably well about production of gasoline. We have to push ahead with our efforts to meet our own needs.

20


Iranian engineers have acquired the technological knowhow required for design, installation and operation of gas refineries.

Gas refineries are constructed to refine gas and optimize its features. Due to the existence of numerous and complicated technologies used in the design and construction of gas refineries, few countries have so far managed to master the necessary technology. Research Institute of Petroleum Industry (RIPI), as the center of fundamental and practical research in Iran’s oil and gas industries, has acquired the required technology for designing gas refineries.

Mohammad Khakpour, coordinator of national gas refinery project, told Iran Petroleum that a “national” refinery requires that all steps from design to construction be totally handled by Iranians. “The project has already been designed and located. It would be erected in Halekan and Sefid Yaghoun region in the south of Fars Province, in southern Iran. The executive structure of the project has been finalized and heads of agreement have been signed between National Iranian South Oil Company (NISOC) and Khatam al-Anbia Construction Headquarters to sign an engineering, procurement, construction and finance (EPCF) deal. The wells and oil regions to feed the refinery have been also decided upon,”

Khakpour said. He added that for each 20 mcm of sour gas supplied to the refinery, 20 mcm of sweet gas, 14,000 barrels of gas condensate and 50 tons of sulfur would be retrieved. The refinery consists of various units: gas input unit, gas condensate sweetening unit, dew point regulation unit and sulfur recovery unit. The feasibility of the project is being submitted to National Development Fund (NDF).Khakpour said the project also aims to indigenize technologies which would be required in the refining industry in the future. “A working group comprised of industry, university and RIPI elite have been set up. Tehran’s Polytechnic University has been selected by

Iranians Master Gas Refinery Savvy

Photo: ABDOLREZA MOHSENI


21January 2013

No. 9

By Arash Haji Khalili

National Iranian Gas Company (NIGC) as the center of excellence for research. A trilateral agreement has been signed among NIGC, RIPI and Polytechnic University.”“We have also started negotiations with the Association of Manufacturers of Oil Industry Equipment in a bid to indigenize the necessary equipment,” Khakpour said.He added: “The project has been designed so as to require all parties involved to move alongside one another. The designers of this big factory are going ahead step by step and they are supported by domestic manufacturers. The capacities of domestic manufacturers are constantly monitored and if domestic companies are incapable of developing an item, it

would be imported.”“When we talk about domestic capacities, it means that our first principle is to view oil production as a source for exports and not limit it to domestic needs. It means taking into consideration the global trade requirements in view of indigenizing equipment. The oil industry is worldwide and its standards are global. If for whatsoever reason low-quality and substandard equipment is manufactured domestically and supplied to the oil industry the manufacturer would be marginalized, because his bad job would inflict heavy damage on the country’s oil industry and economy. In the oil industry, everyone producer has to respect the standards

and manufacture high-quality products. Over the past century, we have paid exorbitant sums for the purchase of license and oil industry equipment. Now it is the right time to spend on national production.”“Our work has been defined in the hardware and software sectors. In the software sector, we have announced that RIPI is capable of mastering any knowhow that has once been imported into Iran. In the hardware sector, domestic companies have progressed remarkably in manufacturing the necessary equipment.”“Based on initial estimates, the design and construction of national gas refinery would cost $ one billion,” Khakpour concluded.

22


Barely could a development be found in Iran’s contemporary history to be unlinked to oil. The triumph in 1979

of the Islamic revolution in Iran is a turning point to which oil industry staff made great contribution.The correlation between oil and Iran’s Islamic revolution could be reviewed from two standpoints. The first point is the impact of oil price fluctuations in the years leading to the Islamic revo-lution on consumerism and inflation which triggered social unrest, particu-larly from middle-class families. The second point is the way oil industry staff participated in revolutionary protests against the Shah regime. Some analysts had described oil staff movement as the coup de grace against the former

regime. Pundits draw a parallel between Iran’s revolution and Russia’s 1917 and France 1789 revolutions, saying finan-cial crises were the main contributor to all these changes. In Iran, the crisis stemmed from a sharp decline in the oil prices following an unexpected price hike. However, Iran’s revolution needs to be differentiated from others in terms of ideals and ideological goals.Oil prices quadrupled in the global markets in October 1973 following the fourth Arab-Israeli conflict. Middle East, the main center of oil production in the world, had become unsecure and Arab governments were threatening to halt oil supply to the world. Oil produc-ers limited their exports and the United States boycotted Middle East oil. The

result was a spike in the oil prices.US media had reported at the time that frenzied purchase of oil by the United States, Japan and European companies have skyrocketed oil prices.Further afield in the Middle East, oil producers reacted differently to the explosive rise in the oil prices. Some of them focused on infrastructural projects and some of them rushed to spend their petrodollars in the society.Iran was pursuing the strategy of eco-nomic development, but in practice, it failed to put this strategy into practice. Growing import of foodstuff, sophis-ticated Western technology and equip-ment, as well as arms were among the measures the Iranian regime adopted to become the fifth world power. The significant point was Iran’s full depen-

“In 1976, a superpower and a major producer had colluded to lower the oil

prices. Their action was the be-ginning of a financial crisis for Iran, a crisis which destabilized the pillars of the Shah regime.

Oil Contribution to Iran’s 1979 Revolution

1979


23January 2013

No. 9

dence on oil revenues whose continuity was not guaranteed.The Shah of Iran was dreaming of the Great Civilization, but oil exports made up only two percent of the country’s total exports. Without oil revenues, Iran could purchase only three percent of its required commodities.The explosive rise in the oil revenues in 1973 had left no room for thinking. Iran was so flush with foreign currency to overtake growing imports.From 1973 to 1979, Iran’s capital ac-count was in deficit despite petrodollars. Oil was behind this unbridled money supply to Iran. Iran earned $ 550 million from oil exports in 1963, $ 958 million in 1968, $1.2 billion in 1971, $ five bil-lion in 1972 and $ 20 billion in 1976.But Iranian leaders were ignoring the flipside of the coin. Economic and social development due to the growing oil prices heavily affected the urban population. Iranian cities witnessed demographic explosion. In 1966, only 38 percent of the Iranian population lived in cities with more than 5,000

residents. Ten years later, the ratio rose to 48 percent. Similarly, only 21 percent lived in cities of more than 100,000 in 1966, while ten years later, it rose to 29 percent. Tehran’s population increased from 2,719,730 to 4,496,159 during this ten-year period.Oil was selling well those days and the country needed no agricultural produce. That, along with lack of attention to po-litical development pushed the middle-class urban strata to demand other social amenities like political freedom. In the meantime, low-income families and slum-dwellers that had religious inclina-tions felt they were oppressed and laid the blame on the Shah regime for its tendency towards the West and dictato-rial practice. The gap between social classes was widening and the society was becoming like a tinderbox.The most catastrophic consequence of oil price hikes was inflation, which in turn, provoked social unrest over unfair salaries. Amid such critical conditions, the main buyers of oil did not remain idle. The oil-rich Iranian regime, which

the US considered as the gendarme of the region, was flexing muscles; little knowing that it needed legitimacy and popular base. The Shah imagined that the petrodollars would make up for all its international humiliations. “There are individuals who imagine that I am a US plaything. Why should I accept to be a puppet? We have enough reasons to become stronger. Is there still any reason for us to be an instrument in the hand of others?” the Shah was quoted as saying in 1975. These slogans cost him dearly.In 1976, a superpower and a major

“From 1973 to 1979, Iran’s capital account was in deficit despite petrodollars. Oil was behind this

unbridled money supply to Iran

24


producer had colluded to lower the oil prices. Their action was the beginning of a financial crisis for Iran, a crisis which destabilized the pillars of the Shah regime.In the meantime, protests and gen-eral strikes gathered steam across the country. When oil industry staff joined the strikers, the Pahlavi regime felt the threat.In September 1978, 700 staffers from Tehran Refinery stopped working in protest to the martial law. Refineries in Isfahan, Shiraz, Abadan and Tabriz also halted operation. Amid social unrest, the Central Bank of Iran (CBI) named 177 individuals who had fled the country with more than $ two billion. One of them was a high ranking official of National Iranian Oil Company (NIOC) who had taken away $ 60 million.In November 1978, Abadan Refinery’s output fell to 150,000 b/d, one fourth of its normal production. Within weeks, kerosene distribution hits snags with people waiting in long queues at gas stations.The regime was panicked when the pro-tests spread to oil-rich regions. In De-cember 1978, Iran stopped oil exports and suffered international humiliation. That meant too much for a self-confi-

dent regime. Foreign engi-neers also left Iran. That was the beginning of an end for the Pahlavi regime.In the early days of 1979 when Iran was deep in anti-regime demonstra-tions, the leaders of four world powers came together in Guadeloupe to discuss the future of Iran. The US president, chancellor of West Germany, British Prime Minister and French president exchanged views about Iran. After this meeting ended, Shah Mohammad-Reza Pahlavi prepared to leave. The regime failed to bring back calm to oil-rich regions and losing control over those zones was the final shot to a regime that favored foreign governments over its own people.Oil and its related developments insti-gated the anti-regime revolt in Iran, but oil did not remain unaffected from the revolution. A new period began in Iran’s oil industry after foreign nationals who

were running the country’s oil sector left. Handling of upstream and downstream projects, recon-struction of war-torn regions during the 1980-1988 imposed war, industrial and technological self-sufficiency and thwarting embargos and restrictions are among the post-revolutionary develop-ments.Iran Petroleum invites its readers to follow the story of effects of the Islamic revolution on Iran’s oil industry in the next issue.


25January 2013

No. 9

A glance at the history of Iran’s oil industry, since the discovery of oil up to the 1979 Islamic revolution, indicates

quite well that the country’s political life has marvelously been intertwined with oil production and exports.Iran’s strategic position in terms of energy thanks to its huge oil and gas reserves and the complicated mechanism of management of this industrial sector at the national and international levels have significantly affected Iran’s political system. Western governments have always sought to explore new sources of hydrocarbon in view of development, generation of wealth and acceleration of their industrialization process, regardless of political, economic and social growth in the hydrocarbon-rich countries. To that effect, Iran’s pre-revolution was no exception.To identify Iran’s Islamic revolution from the perspective of economic and political developments, it would be necessary to analyze the role of general strikes by Iran’s oil staff in 1979.Iran’s strategic influence on the political and economic developments of the world originates from its huge oil reserves. When Iranian oil staff stopped working, big industrialized powers like the United States – the largest oil consumer in the world – faced serious challenges.The first oil strike dates back to

September 1978 when some 700 workers at Tehran Oil Refinery went on strike in protest to the Shah regime’s martial law and the killing of people on Black Friday. Two days after that event, Isfahan, Shiraz, Abadan and Tabriz refineries endorsed and joined the Tehran protest.The strikes grew nationwide in November, causing a sharp decline in the country’s oil production. Consequently, gas stations were packed with people queuing for gasoline and kerosene.The economic turmoil and the ensuing political crisis fanned the flames of revolution. In oil-rich zones, oil employees had become united calling for the overthrow of the monarchy and restoration of Islamic Republic.The extension of general strikes to oil-rich zones terrorized the ruling regime. Due to massive protests, Iran’s oil exports came to a halt in December and the refineries produced oil just for domestic needs. Notwithstanding winter’s freezing temperatures, Iranian people endured fuel shortage to reach their sacred objective.General strikes and street protests struck irreparable economic blow to

the Shah regime. The halt to oil exports discredited the Pahlavi regime across the world. The Shah suffered the most effective blow.The late revolutionary leader, Ayatollah Ruhollah Khomeini, while addressing the representatives of trade unions said: “Our movement owes to all classes of the nation. People from every walk of life joined the campaign; however, some of them were the most prominent. Oil industry staffs were in a vital position as they held the lifeline of the ominous regime. Their strike was important and their unity with the movement was more effective. Therefore, we appreciate them and heap praise on them. Observing strikes, you stood against the diabolic regime, pushed ahead the movement, and strengthened Islam, as well. I feel obliged to thank you. I pray for you.”Iran’s Islamic revolution was a firm response to a regime that spent petrodollars on its own rule but not on the nation’s welfare. Negligence of people’s religious convictions, crackdown on intellectuals, economic woes and growing slum dwelling were the factors that came together to unseat a monarchy that depended on oil revenues.

Oil Sector’s

Share in 1979

Revolution

26


Nouri Petrochemical Company, Largest Producer of Aromatics

Nouri (Borzouyeh) Petrochemical Com-pany, the largest producer of aromatics in the world, has an annual capacity of 5.4 million tons. Officially launched in 2007, this company was one of the strategic plans of NPC. Construction of the plant began in 2000.Sprawling on 61 ha of land, Nouri Pet-rochemical Plant is located in the north of Persian Gulf and is 280 km away from the southern city of Bushehr. More precisely, the plant is located in Pars Special Economic Energy Zone (PSEEZ) in Assaluyeh.Easy access to feedstock and fuel, new road and maritime transportation network, application of free trade zones’

law and Persian Gulf international air-port are among the reasons justifying the location of this petrochemical plant.Nouri Petrochemical Plant exports its products to Europe, East Asia, southern Persian Gulf and Indian Subcontinent.

Zagros Petrochemical Plant, Larg-est Producer of Methanol

The company was launched in 2001 within the framework of the country’s Third Five-Year Economic Development Plan (2000-2005). It was supposed to produce 1.65 million tons of methanol a year. In 2001, it signed an agreement with a consortium of German Lurgi and Petrochemical Industries Design and Engineering Company (PIDEC) for the country’s fourth methanol project.

The German company is the holder of license for this project; detailed engi-neering has been conducted jointly by Lurgi and PIDEC, while installation has been done by Iranian contractors.The fourth methanol project is expected to produce 5,000 tons of pure methanol a day at grade AA. It is fed by phases 1-3 of South Pars Gas Field after separating heavier hydrocarbons from ethane in Pars Petrochemical Plant. This unit has been designed so as to take maximum advantage of energy generated in syn-thesis reactors and retain energy from re-forming units. It exports nearly 205 tons per hour of steam at 40-bar pressure.Zagros Petrochemical Plant is currently the largest producer of methanol in the world. The second unit of the plant was launched due to an attractive market and

Iran’s Strides in Petchem Sector

A review of development plans in the country following the 1979 Islamic Revolution indicates that development of downstream industries, particularly petrochemical sector, has been one of the most outstanding programs. But eight years of war, industrial renovation in the 1990s and unilateral sanctions against Iran protracted petrochemical plans.Renovation of Bandar Imam and Abadan petrochemical plants in the 1990s topped the agenda of National Petro-chemical Company (NPC). After that, petrochemical development plans were launched and Iran’s petrochemical

sector experienced a big change. Until now, 46 billion dollars have been invested in the petrochemical sector and more than 40 petrochemical plants have been constructed across the country over the past 33 years. Iran is now a leading producer of aromatics, methanol, olefin and PVC in the world. It is enhancing its petrochemical output to overtake its competitors in West Europe and North America. Below is a review of Iran’s petrochemical giants:

Photo: MOHAMMAD REZA TAEB


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sufficient gas resources. This petrochem-ical unit is fed mainly by natural gas and oxygen. The necessary gas is supplied from phases 1 and 2 of South Pars at a rate of 188,000 cubic meters per hour, while Mobin Petrochemical Plant sup-plies 84,500 cubic meters of oxygen.The methanol produced in Zagros Pet-rochemical Plant is used in producing formalin for household consumption, producing resins in industrial industries, producing vessels and cameras, sock-ets, switches and industrial glues. It is also used in the production of tissues and fabrics for special purposes, methyl meta-carbonate for producing laminants and MTBE to replace lead in fuel, and producing DME as replacement to gasoil.

Jam Petrochemical Company, Largest Olefin Producer

The idea for establishment of Jam Petrochemical Plant was approved by government in 1998. It is now the largest producer of olefin in the world with an annual output of 1.32 million tons of ethylene and 306,000 tons of propylene. The project was launched to earn Iran extra revenues, upgrade the country’s scientific, technical, economic and social levels, raise oil, chemical and petro-chemical exports and win the country a bigger share of regional and global mar-

kets. The stockholders of this company are NPC at 49.7 percent, Social Security Investment Company (SSIC) with 25.8 percent and State Pensions Fund with 24.5 percent. In the olefin unit, low-consumption ethane is converted into higher-value and largely-consumed ethylene. Due to the simultaneous use of ethane and liquid feedstock, three basic products – ethylene, propylene and four-carbon compounds – are produced.The petrochemical plant became opera-tional in March 2008 and is currently op-erating above 70 percent of its capacity.Nearly 90 percent of the products of the company are exported. At the same time, it supplies the necessary polymer on domestic markets.The products of the company are used to power downstream units for producing carpets, rugs, paints and resins, textile products, cable and film, disposable ves-sels, industrial coatings and auto parts.After undergoing development in the coming years, this plant will see its out-put exceed 4.2 mt/y.State-of-the-art technology and global-scale capacities are among the criteria based on which this plant has been designed.

Arvand Petrochemical Plant, Larg-est Producer of PVC Chain

The outstanding feature of Arvand

Petrochemical Plant is its status as the largest PVC production chain in the world. Since late 2011, chloralkali unit was launched as the first stage of PVC chain at Arvand Petrochemical Plant. The engineering contractor in the project was German Ude that pulled out of the project in 2010. Therefore, Iranian en-gineers made the necessary preparations in the plant. This plant produces 2.834 mt/y of petrochemicals. A total of $ 1.6 billion have been invested in this plant located in Mahshahr Special Economic Petrochemical Zone. More than 50 mil-lion people hours have been registered for design, construction, installation and startup of Arvand Petrochemical Plant which has created 1,600 direct and more than 20,000 indirect jobs.Arvand Petrochemical Plant was estab-lished to produce 1.507 mt/y of chlor-alkali ,and PVC from its CA, S-PVC, E-PVC, VCM and EDC units.Arvand Petrochemical Plant is currently producing 240,000 t/y of PVC, making 25 to 30 percent of the world’s chemical market.The plant had awarded an engi-neering and procurement contract to a consortium of Ude and Iran Saze. Instal-lation of all equipment has been done by Iranian contractors. Arvand feeds on 252 tons of ethylene, 1,300 tons of salt and 50 tons of hydrochloric acid a year.

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Given Iran’s huge natural gas reserves, it would be important to sell gas and spend revenues on development projects. The most economical way

of exporting gas to markets across the globe would be its conversion into liquefied natural gas (LNG) and shipment in special carriers. Gas pipeline restrictions require LNG facilities in the country. A variety of technologies are applied for LNG production. Chief among them are refrigeration and thermal transformation. The main different between these two methods rests with the fluid applied for drying. Today, most LNG factories in the world use air and not water to avoid corrosion.Since 1980, PMR process has been commonly used in most LNG production plants. Philips, which has developed cascade technology, claims to have boosted liquefaction output. This method is currently applied in Trinidad. However, stud-ies indicate that the maintenance of “cascade” would cost higher than “PMR”. These two technologies are equally used. Germany’s Linde has presented a project benefiting from the ad-vantages of both methods for higher thermody-namic efficiency and lower costs. Its technology is known as MMFC, which is applied to LNG projects in Iran.These technologies are almost identical from a thermodynamic aspect, but the important point would be to manufacture fewer compressors.Various LNG production processes need to be applied to different projects because technolo-gies could not be applied without considering the location of the project, predicting the market and estimating the volume of gas. Other technologies like DMA and SMA are being updated. They are not widely used now.

LNG Projects Finance

Direct loans for LNG production could be obtained from the following sources:

- Development plans- International trade banks- Exports credit institutes- Iranian trade banks

FLNG Developments

The French Company, TOTAL announced in the annual GPA conference, held in Prague in

December 2011, that a technical challenge to floating LNG production was at the liquefac-tion stage. Over the past two years, the French company has been liquefying natural gas in an offshore floating unit.Shell of Britain is building the world’s largest vessel to facilitate gas production and transfer. This vessel is so large that aircraft carriers would look nothing in comparison.Shell believes that natural gas shipment in the form of LNG would be much easier because gas is compressed 600 times. However, the challenging point is that methane makes a high percentage of natural gas and preserving LNG would need special refrigeration facilities which are onshore. Some gas fields are far from the shore, making any pipeline construction difficult

or some of them are deep under sea with no con-nection to the shore. Operating some gas fields is not economical due to their certain features. To face this challenge, Shell Gas & Power Develop-ments B.V. (Shell) and the Technip Samsung Consortium (TSC) have signed an agreement to enhance collaboration on the design, engineer-ing, procurement, construction and installation of future innovative FLNG facilities. The agree-ment builds on the existing relationship, formed in 2009, to ensure that the parties can capital-ize on insights gleaned from the design and construction of Shell’s Prelude FLNG facility and expand the technology offering to the energy market. It will drive a culture of joint delivery,

continuous improvement and ensure greater value from the collaboration for all parties.Floating LNG enables the development of gas resources ranging from clusters of smaller more remote fields to potentially larger fields via multiple facilities where, for a range of reasons, an onshore development is not viable. This can mean faster, cheaper, more flexible development and deployment strategies for resources that were previously uneconomic, or constrained by technical or other risks, helping to supply more natural gas to the market.Vast Persian Gulf waters and huge gas resources require an FLNG unit to rival regional and inter-national LNG markets. In the long-term, LNG market would expand in the world and within twenty years it would engage Southeast Asia,

Oceania and even Europe.Due to Iran’s potentials, an LNG production line with an initial output of 10 mt/y is recommended to be established.It is necessary to build mini-LNG units in the country because natural gas could not be easily transported to all spots due to its geography and ecological diversity.Several foreign companies currently exercise a monopoly on LNG production technology. After conducting feasibility studies, the technologies owned by Linde could be used for LNG produc-tion and Russian Gazprom’s technology could serve mini LNG facilities. Reverse engineering is recommended for that purpose.

LNG Role in Iran Gas ExportsMonouchehr DavoudiSenior Commercial Expert


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Liquefied Natural Gas (LNG) is transparent, colorless, odorless, inedible and non-poisonous. Cooling natural gas to about minus 260°F at

normal pressure results in condensation of the gas into liquid form, known as LNG. Liquefaction has the advantage of removing oxygen, carbon dioxide, sulfur, and water from the natural gas, resulting in LNG that is almost pure methane.LNG is shipped in vessels whose stor-age facilities are double and designed for carrying gas in very low tempera-ture. LNG carriers measure 1,000 feet long. In 2004, at least 140 LNG carriers sailed across the world. After arriving in terminals, LNG is pumped straight into special storage tanks, placed either on the ground or underground, which would prevent evaporation. LNG is a cleaner fuel than diesel and its produc-tion costs less. LNG is a better replace-

ment to diesel fuel than compressed natural gas (CNG).LNG has become a valuable and highly consumed fuel in the world. Therefore, studying demand for LNG and its level of consumption is of great significance. The major countries rich in natural gas are as follows: Russia, Iran, Qatar, Algeria, Australia, Brunei, Indonesia, Libya, Malaysia, Nigeria, Oman, and Trinidad and Tobago.Iran enjoys geographical and strategic advantages which allow it to supply natural gas to European, Indian, Asian and even US markets. Iran faces hard rivals in supplying gas to these markets, but analysts are of the view that Iran could win a strong foothold in the in-ternational markets if it makes cohesive planning and teams up with influential and experienced partners.US Energy Information Administration (EIA) has forecast in its latest report about LNG markets that the global

demand for LNG would keep rising up to 2030. According to this report, the demand for LNG would grow 7.9 percent through 2010 to 2030. This growth comes against the backdrop of a paralyzing economic turmoil which has cut demand for natural gas in the world over the past two years and many consumers have had to contain their unbridled consumption.EIA forecasts that the demand for LNG would grow more in developed and industrialized countries than in develop-ing nations. Through 2015 to 2030, the demand for LNG would rise by more than 16 percent, versus 5 percent for 2012 to 2017. The reason for these figures stems from the negative consequences of an economic downturn transpiring the world in the past couple of years. In the first half of the current decade, demand for LNG has seen an annual growth of six percent, while in the second half the demand

has been on the decline. Energy market analysts predict that the main reason for growing global demand for natural gas should be attributed to the oil price hikes in the past two years and the efforts made by the international community to replace fossil fuels with less-polluting ones. They say lower investment in the oil sector in 2010 and instead more investment in the natural gas sector would force non-OPEC countries to cut their output thereby driv-ing the oil prices up. Oil price spike could slow down the recovery of the West’s crisis-stricken economy or even insti-gate a new recession. Given the growing consumption of LNG in the coming years, foreign investment in the production and refining of gas is inevitable. To that effect, the countries with access to high seas would enjoy more benefits than other producers and can broaden their maritime navigation fleet to generate more value-added from LNG units.

LNG Clears Way forEconomic Blossoming


30


Soil is an important natural resource in any country. Soil erosion and desertification are threatening human life and welfare. Natural resources are

being exploited due to mismanagement. Every year, 75 billion tons of soil is displaced due to erosion by wind and water which is five times faster than soil genesis. In 1984, Food and Agriculture

Organization (FAO) announced in a report that soil erosion and organic wastes in Ethiopia reduce agricultural produce by two percent a year.A common method in stabilizing quick sands and planting flora in dry sand regions to avoid soil erosion would be using oil mulches. This solution would be fruitful in Iran and some Persian Gulf countries.

History of Petroleum Mulches

In the final months of World War II, natural canals and waterways were coated with tar so that running water would be led into storage tanks with minimum loss. Dr Henri Robert focused on this operation and found that coating arid lands with tar leads to the growth of plants. In 1961, a chemist stabilized

Petroleum Mulches for Combating DesertificationBy Hooman BahmanpourDepartment of Environment Engineering, Islamic Azad University



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sand hills by using oil residues in oil-rich Libya. The residues were named mulch in 1967. Mulch is a layer of material applied to the surface of an area of soil. Its purpose is any or all of the following: to conserve moisture, tt improve the fertility and health of the soil, to reduce weed growth, to enhance the visual appeal of the area. It could be straw, hay, plant residues, plastic, resin, paper, etc. If oil and its products are

used, it would be known as petroleum mulch, which protects the outer surface of earth against different factors like rainfall and wind. That would increase humidity and reduce evaporation, protect soil destruction, reduce soil erosion and slow down quick sands, not to mention attracting thermal energy of the Sun to accelerate the growth of plants. Appropriate petroleum mulch should meet the following features:

- It should be free from materials harmful for plants and animals;- It should cause no healthcare damage on its users;- It should leave no harmful impact on soil;- It should be easily analyzed into organic materials appropriate for soil;- Air should penetrate into it;- It should accelerate the burgeoning of plants;- It should not have a bad odor; and- It should spread easily on the ground.

A study conducted by Moodstock Institute indicates that a 0.2-millimeter thick tar emulsion coating would quadruple the resistance of soil to erosion by wind. A wind tunnel test conducted in Africa indicated that naked sands move by winds blowing at 27 kilometers per hour, while mulch-coated sands could not be moved even by winds blowing at 110 kilometers per hour.

Classification

Petroleum mulches are divided into two groups:

1. Sand Stabilizing Petroleum Mulches: These mulches are aimed at protecting soils sensitive to erosion and stabilizing quick sands. It is done by tanks equipped with powerful pumps. In Iran, 10 to 20 ha of land could be covered with mulch a day. Mulches live 18 to 24 months and the best thickness is 2-4 millimeters.

2. Emulsion Petroleum Mulches: These mulches are mainly used to increase agricultural produce. To produce these mulches, tar is mixed with an inexpensive emulsifier like water and then tar becomes like suspended

particles. In order to save the stability of this suspension, fat acid soaps, resin soaps, chloride or brome salts are added.

The mulches produced in Iran are composed of the following materials:

• Heavy oil materials• Artificial rubber• Natural latex• Sandros oil• Oil solvents and• Resin.

In Iran, petroleum mulches are used in projects defined to combat desertification. Sarakhs anti-desertification project is one of them.During the ten years leading to the 1979 revolution, 67,300 ha of lands in Iran were coated with mulch. From 1980 to 1990, 140,609 ha of desert lands underwent mulching.In one of the latest national projects, 611 ha of lands in Karkheh were mulched. Under a five-year plan ending in 2013, up to 200,000 ha of lands in Khuzestan province are to be mulched.Mulches can protect the humidity of soil, but alternatives are always sought in order to reduce harmful impacts of oil derivatives on water and soil ecosystems in a bid to protect soil and slow down its erosion. Moreover, plants would grow in better conditions.

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Petrochemicals constitute a pillar of oil industry and are among the significant industries in Iran. Petrochemicals represent a significant source of non-oil income and contribute to national economic development, indigenization of technology and ex-pansion of downstream industries, engineering and research.

Petrochemical products have always a lion’s share in the exports basket. The petrochemical market faced losses following the 2008 economic tur-moil. The market continued to see decline in 2009 when petrochemical production fell 19.5 percent from a year before. In 2010, the world’s total revenues from the petrochemical sector amounted to $ three trillion. The recent economic crisis has to some extent left unfavorable impacts on the petrochemical market, but the market is expected to see growth but at a slower pace. Due to its easy access to inexpensive raw materials and proximity to international consumption markets, the Middle East enjoys special conditions.

Pricing and ProfitabilityThe pricing and profitability of petrochemicals are sensitive to supply and demand. In this sector, demand is influenced by the world’s economic conditions, while supply depends on investment and creation of new pro-duction capacities or suspension of old projects.The following diagram indicates the net prices in the petrochemical sec-tor. Raw materials constitute the most significant segment of net prices of petrochemical products. Middle East accounts for the lowest prices, providing the countries in this region with a good opportunity to develop their petrochemical sector and become competitive in this sector.

In Iran, both government and private sectors are paying special atten-tion to the petrochemical industry and a variety of plans are under way for the development of the petrochemical sector. Since the government started removing subsidies and raising energy prices, the net price of petrochemicals also increased. After surveying the domestic market, a 4% hike in the petrochemical prices was approved. Negotiations are also under way for the price of liquid feed stocks like naphtha to decline. The present circumstances herald a bright future for the petrochemical industry in Iran and the world. Iran is currently holding a 25 percent share in the Middle East’s petrochemical production and 2.4 percent in

Petrochemicals, a Profitable Arm of Oil Industry



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the world’s production. Petrochemicals make 2 percent of Gross Na-tional Product (GNP). Iran exports petrochemicals to over 60 countries. Middle Eastern countries and China purchase 37 percent of Iran’s pet-rochemicals; neighboring states buy 25 percent, Europeans 11 percent, India 18 percent, Southeast Asia and Oceania 7 percent and North Af-rica 1 percent. Nonetheless, Iran can still derive more products from oil and natural gas through advanced petrochemical technologies.Easy and inexpensive access to oil and gas resources and proximity to main consumption markets like China, India and Europe are among the special advantages of Iran’s petrochemical industry. Generally, petro-chemical plants are powered either by associated gases or naphtha. The main products of Iran’s petrochemical plants are: chemical fertilizers, urea, diammonium phosphate, ammonium nitrate fertilizers, plastic raw materials, PVC, sulfuric acid, hydrochloric acid, ammoniac and sulfur. Urea and ammoniac are the most important petrochemical products which we discus here in terms of production, consumption and pricing.

UreaUrea is mainly used for producing solid fertilizers. Urea fertilizer is the most famous form of solid nitrogen fertilizers notably in the countries with high consumption rates. Some countries use urea to produce nitro-gen solution and produce fertilizers. Other materials produced from urea are resin, melamine and animal food. In 2009, 90 percent of the world’s total urea production was used as fertilizer and the remaining 10 percent went to industrial sectors. Demographic growth, higher incomes and new eating habits justify the high demand for urea. Urea production has seen

an upward trend in the past 12 years with an average annual production growth at 3.2 percent. In 1999, the world produced 106 million tons of urea, which reached 150 million tons the following year.

AmmoniaAmmonia or Azane is a compound of nitrogen and hydrogen with the for-mula NH3. It is a colorless gas with a characteristic pungent smell. Am-monia contributes significantly to the nutritional needs of terrestrial or-ganisms by serving as a precursor to food and fertilizers. Ammonia, either directly or indirectly, is also a building-block for the synthesis of many pharmaceuticals, and is used in many commercial cleaning products. Al-though in wide use, ammonia is both caustic and hazardous. Since NH3 boils at −33.34 °C (−28.012 °F) at a pressure of 1 atmosphere, the liquid must be stored under high pressure or at low temperature.

Global MarketAmmoniac consumption has seen a 12 percent hike through 2005 to 2009. Its annual growth has been 2.3 percent on average. Through 2010 to 2015, ammoniac consumption is projected to register 2.7 percent growth. The African continent is forecasted to experience the fastest pace of consumption. The world’s 2010 ammoniac production totaled 157 mil-lion tons, up 1.9 percent from a year ago.

Photo: SAHAR MOKHTARI

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Iran is a leading producer of urea fertilizer in the world. One important reason for the development of Iran’s urea

production industry is the country’s richness in natural gas. Production of chemical fertilizers is economically justified for Iran’s petrochemical sector. Iran’s access to high seas facilitates export of chemical fertilizers. Moreover, the technical capacity of Iran’s refineries matches the technology required for producing chemical fertilizers. At present, Iran has over 95 percent of equipment and technology required for urea fertilizer production, and only rotary equipment is purchased from foreign companies.Technology transfer in the petrochemical sector includes purchase of license from energy companies. The required catalyst is sold to companies holding the license for relevant commodities. The important point is the high technological complexity in producing catalysts. Despite all complications and obstacles, Iran owns the technology to produce these products.Iran’s petrochemical sector is also capable of designing and manufacturing mechanical seals, which only American companies used to produce. Now, a large number of countries are willing to purchase mechanical seals from Iran.Up to 80 years after the establishment of National Iranian Oil Company (NIOC), valves were imported. But over the past two decades, up to 95 percent of these components are manufactured in the country.Foreign investment in the petrochemical sector is a vital issue. To that effect, National Petrochemical Company (NPC) has defined investment packages within Engineering, Procurement, Construction & Finance (EPCF), build-operate-transfer (BOT) and offtake frameworks. EPCF is offered to foreign investors without any legal restrictions. An important facility offered to private financiers and companies involved in the petrochemical industries is their full ownership of the projects by virtue of Article 44 of the Constitution. For example, Razi Petrochemical Plant was purchased by Turkish investors, Mehr Petrochemical Plant is in the hand of an Iranian-Thai consortium and Arya Sasol is run by an Iranian-South African

Iran Urea FertilizerGuarantees AgriculturalGrowth



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consortium.NPC has established a hub in Mahshahr and Assaluyeh. A hub set up in Chabahar has become attractive to India, Pakistan, Thailand and Indonesia for investment in urea fertilizers. Chabahar has the advantage of access to high seas and East Asia. That, along with skilled manpower has made Chabahar a good option for foreign investment. India needs more than 1.5 million tons of urea fertilizer a year. This figure will definitely soar to two million tons in ten years. Therefore, India can invest in Chabahar petrochemical hub to meet its need for chemical fertilizers. Some Indian financiers have voiced their readiness to invest in Chabahar.At present, Iran is one of the most attractive countries for investment in the petrochemical industries. Tax exemption, recruitment of local manpower and unlimited import of equipment and components are among the incentives offered by the Iranian government to investors. Moreover, National Development Fund (NDF) has promised attractive loans to potential investors. Iran is currently producing nearly four million tons of urea fertilizer at Kermanshah, Razi, Shiraz, Khorasan and Pardis petrochemical plants. Among Iran’s neighbors, Saudi Arabia is the top producer of chemical fertilizers. Uzbekistan is also a leading producer of chemical fertilizers. Iran’s proximity to Indian Ocean has reduced transportation costs for exports to South and East Asia. A major challenge to this industry is that the technology for manufacturing chemical fertilizers and similar products is not transferred. But the advantages of foreign investment like creating job opportunities and upgrading of the capabilities of domestic manufacturers cover up flaws. The recent foreign exchange fluctuations have also created numerous opportunities for investment in chemical fertilizers because the petrochemical industry’s money supply has increased due to higher exports and Iranian currency depreciation.

“NPC has established a hub in Mahshahr and Assaluyeh. A hub set up in Chabahar has become attractive to India, Pakistan, Thailand and

Indonesia for investment in urea fertilizers. Chabahar has the advantage of access to high seas and East Asia. That, along with skilled manpower has made Chabahar a good option for foreign investment.

36


The southwestern city of Ahwaz hosted an inter-national conference and exhibition on drilling industry December 20-22,

2012 coinciding with the 33rd anni-versary of establishment of National Iranian Drilling Company (NIDC). The event highlighted Iran’s growing drilling industry and its achievements. A sharp increase from 6 to 72 in the num-ber of drilling machines over the past 33 years is the main achievement of this industry following the 1979 Islamic revolution. Over the past ten years, Iran has conducted drilling operation beyond depth of 6,000 meters.Established in 1979, NIDC has so far gained experience and acquired techni-cal knowhow leading to remarkable progress in the drilling industry and subsequently enhanced recovery from the oil and gas fields.During the conference in Ahwaz, it was mentioned that nearly 330 oil and gas reservoirs exist in the country. After the revolution, 85 billion barrels of oil and gas have been added to the coun-try’s reserves. Iran’s nine refineries can now treat 1.9 million barrels. Nearly 250,000 kilometers of high-pressure and low-pressure gas pipeline have been constructed and 3,438 wells have been drilled in the country.

Iran’s Petroleum Ministry is reportedly determined to invest $180 billion in the upstream oil and gas sectors. Up to $70 billion of the sum is forecasted to be invested in the drilling sector.According to official figures released by the Organization of the Petroleum Exporting Countries (OPEC), Iran added the largest number of drilling rigs to its drilling equipment in the Middle East region through 2007 to 2011. Some experts believe that target-oriented investment in the drilling sector would boost Iran’s capacity to export technical and engineering services.Iran’s drilling industry currently needs to add to its own rigs and conduct more horizontal drilling. The private sector makes a 35% share in the drilling indus-try. On the sidelines of the conference, NIDC managing director Heydar Bah-mani said 20 percent of NIDC’s drilling equipment is active in the offshore and onshore fields.He said Iran has 72 drilling machines, adding that training 15,000 specialists, boosting safety, establishing a supreme council for research and 42 drilling companies are among the important events in this sector.Bahmani said Iranians have managed to drill 6,000 meters deep underground in Ahwaz and Maroun and conducted turnkey projects in the offshore North Azadegan, South Azadegan and Yada-varan oil fields. He added that Iranian drilling companies are currently rivaling leading foreign companies. NIDC has drilled 20 onshore and 4 off-shore wells in the shared oil fields.As far as safety is concerned, accident frequency rate (AFR) has fallen from 1.38 to 1.23. Iran has overtaken Dubai and Singapore in drilling rigs’ repair. Significant progress has been made in manufacturing equipment used in top drives and drilling mud pumping.Private companies’ owners underscored

Iran Shows Off DrillingAchievements

Iranian companies’ capability of design-ing and manufacturing drilling equip-ment and offering relevant services like transfer of derrick, construction of camp and storage facility and procurement of drilling mud and cement.Iran’s proximity to oil-rich neighbors provides the country with a good oppor-tunity to offer better and less expensive services than foreign rivals.One of the participants in the show was Shiraz Fajr Company specializing in cabling, cement job, mud logging and development of drilling engine. The company has managed to manufacture drilling pumps and conduct overhaul operations after 75 hours. The represen-tative of the company noted that imports of foreign products need to be halted due to the capability of Iranian compa-nies in manufacturing the equipment used in the drilling industry.


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Fat’h-86 drilling rig was installed near the southwestern city of Ahwaz more than 40 years ago. Professional laborers,

technicians and engineers have been active round the clock in this drilling project. A senior engineer there says the rig has been involved in exploration drilling, spudding work-out and appraisal wells.As far as exploration drilling in an oil or gas field is concerned, numerous engineering activities are done to extract the necessary data from under the ground. These activities include geophysical and petrophysical operations and seismic testing. After the field is discovered, appraisal wells are drilled. In the fields from which more recovery is expected, more wells would be drilled. The thickness of reservoir’s productive

zone directly depends on its pressure. The next step would be the development stage aimed at oil extraction. Fat’h-86 is currently at this stage. Repair drilling would be inevitable when such incidents as landslide, decline in the reservoir’s pressure or over-recovery reduce the output.Oil reservoirs in Iran have the advantage of high pressure. In most cases, the swept bends are needed to be installed on the wells to prevent their blowout.Iranian engineers are well experienced in drilling operations and Iran’s drilling industry has become one of the leading ones in the world. Iran’s drilling industry is now a century-old and it can offer technical and engineering services to all over the world. An important factor that Iran’s drilling industry benefits from is its young and experienced forces. The work forces active in deep drilling, casing operations

and mud pumping are excellent. The technicians and laborers active in this field do their assigned tasks on their own without requiring any monitoring. Drilling would be economically justified if it lasts one year up to the development stage. Then, oil revenues would cover all reparation and maintenance costs. Iranian engineers are currently capable of drilling at the depth of 4,000 to 5,000 meters. They have also experienced slant drilling up to 65 degrees. Drilling rigs have been slowed down and seen their safety and efficiency fall due to the few number of top drives. That necessitates accelerating manufacturing and assembly of these tools. Moreover, communications with scientific centers and learning from oil giants would be effective in updating Iran’s drilling industry.

Fat’h-86 Rig, Symbol of Indigenization


38


By Hamid BovardManaging Director of National Iranian

South Oil Company

NISOC Pioneering Oil & Gas Development


39January 2013

No. 9

Despite remarkable progress in science and technology, human life and economic development continue to

depend on hydrocarbon reservoirs. Oil and gas are the least expensive and most common sources of non-renewable energy in the world. They are used as feedstock to power industries.Currently, Iran is the second largest producer of oil among OPEC mem-ber states. It sits atop 10 percent of the world’s total oil and 18 percent of the world’s total gas reserves. Within two decades, Iran will be supply-ing nearly 12 percent of the world’s energy needs.Oil-rich regions in southern Iran hold more than 60 hydrocarbon fields. They cover more than 400,000 square kilo-meters in five provinces – Khuzestan, Kohguiluyeh Boyer Ahmad, Bushehr, Fars and Lorestan. With an output of 3 mb/d, they produce nearly 80 percent of the country’s total. That is why National Iranian South Oil Company (NISOC) is the main subsidiary of National Iranian Oil Company (NIOC) and the lead-ing crude oil producer in the country. NISOC produces 110 mcm/d of gas that is to say that 16 percent of the country’s gas output. Add to this the fact that oil-rich regions in southern Iran have al-ways contributed to national production. Since the discovery of oil in Iran, these regions have been the center of develop-ment of new technologies for oil and gas extraction and production. This role became more prominent after the 1979

revolution which led to the expropria-tion of foreign contractors and experts. Until 1979, southern oil-rich regions were run by two companies – Iran Oil Services Company and Non-Industrial Services Company. After the revolution, NISOC was established to administer oil production there.A brief look at the development activi-ties before and after the revolution indi-cates that southern oil-rich regions have always fared well in meeting domestic energy needs. NISOC faced a big test when the country was invaded in 1980. Scattered and unprotected installations built for peace time and location of exports’ facilities near the battlefront had made NISOC-run oil terminals and installations a strategic target for ground and air strikes. Eight years of savage at-tack on Iran’s oil facilities did not cause any halt in the country’s oil produc-tion and exports. During the war, most NISOC-run facilities were bombarded, ruined or badly damaged. But oil was the only source of income for the coun-try. To that effect, committed Iranian engineers did not let any hindrance of oil production. Throughout the conflict, oil and gas development projects were under way.Enemy warplanes launched more than 140 raids on the NISOC oil facilities, but oil production and export did not quit even a single day. It is a positive point in NISOC record.After the end of the war in 1988, the Oil-Rich Regions’ Management Com-pany was renamed Onshore Regions Production Management Company to

include the entire country. The country needed hard currency for reconstruction and NISOC made great contribution to the realization of oil and gas production projects. NISOC was officially estab-lished in 2000 with a central headquar-ters and nine subsidiaries.The main strategies and plans pursued by NISOC are: integrated management of hydrocarbon resources, preserv-ing the quality of crude oil, crude oil production and exports safety, recov-ery of gas liquids and production of ethane and gas needed in downstream units, planning for preserving strategic facilities, effective measures to avoid environmental pollution, drilling new oil and gas wells and repairing the current wells, optimizing processing facilities, gathering associated gases, making efforts for indigenization in order to break the country’s dependence on foreign countries. Oil industry is an international one and the technologies used in this sector have been developed by scientists and experts from across the globe. But paying attention to the gen-eration of science and indigenization of technology are requirements of rivalry in today’s world and the only solution to circumvent sanctions imposed on Iran by colonialist states. NISOC, in coor-dination with other Petroleum Ministry sections, focuses on industrial indepen-dence as its top research priority. This issue has already been manifested in the manufacturing of sophisticated equip-ment for the upstream oil sector, hinting the achievement of objectives set in the country’s 2025 vision plan.

40


Any organization facing restrictions and challenges in its activities has to find scientific and practical solutions to surmount them.

Iran’s Petroleum Ministry is no exception. Due to its background, it naturally faces some hurdles in its affairs.The best solution to the oil industry challenges is to invest in converting raw materials to products of higher value-added. To that effect, Iran’s Petroleum Ministry has development projects under way.The Islamic Republic of Iran holds huge oil and gas reserves. That, along with completion of upstream and downstream value chains would give the country an upper hand in the energy sector.Development of downstream sector, enhancing the country’s refining capacity and expanding petrochemical industries

would increase production in the production chain which would generate more value-added than selling crude oil. Petroleum Ministry is seriously and cohesively pursuing its objective of more value-added generation. That would bring about significant economic achievements for the country, promote Iran’s international status and strengthen the country’s energy diplomacy.Rivals of the Islamic Iran try their best to thwart the country’s success. In response to their ill intentions, we have to create opportunities for progress one after another. To that effect, the general policies of Article 44 of the Constitution need to be implemented precisely and the private sector should be activated in different industrial, mining and commercial sectors. Offering facilities to private sector activists by banks would accelerate the country’s economic development.

It is more than necessary to activate the private sector in the country. While interacting with the world, Iran has to wean itself off foreign investment and remove hurdles to economic development and industrial progress.There is sufficient financial credit in the country. It is necessary to adopt precise and proper financial and monetary policies to lead people’s capitals and the private sector on the path of industrial development. The private sector is not separate from people; therefore, people should be prioritized in economic, commercial and industrial activities. The private sector could prove cooperative in the development of oil industry activities and implementation of development projects.Issuance of bonds for the development of the giant offshore South Pars gas field has been an option by Petroleum Ministry to let people contribute to national projects. It is

Boosting Diplomacy through Downstream Oil SectorBy Habib Aqajari, MP

Photo: MOJTABA MOHSENI


41January 2013

No. 9

In order to further spend oil rev-enues on national development, the

country’s economy needs to be weaned off the petrodollars. In the meantime, the focus should be on more oil products and higher ef-ficiency in the upstream and downstream sectors so that the country would shift from crude oil sales to oil products trade.Selling crude oil would let a non-production approach dominate the country’s economy, while oil revenues would not serve the national economy but would be spent in refineries and pet-rochemical plants. However, investing oil

income in oil products production would have a high rate of return for the country. Selling crude oil would serve job creation, economic development, produc-tion enhancement and profitability in other countries.As Supreme Leader Ayatollah Seyed Ali Khamenei has stated, the top priority should be to convert crude oil into useful products to serve the country’s welfare and economic blossoming.The Islamic Republic of Iran has sketched out short-, mid- and long-term development plans to supply products to the entire world.The coincidence of the Year of National

Production with adop-tion of Economy of Resistance requires preparing the neces-sary infrastructures. To that effect, Iran has to activate more than ever its energy diplomacy in interaction with neigh-boring countries and play a pivotal role.Laying the groundwork for regional coopera-tion, setting up friend-ship energy groups, as well as upgrading oil products and their exports quantitatively and qualitatively would definitely strike the energy balance in Iran’s favor and the Islamic Republic would man-age in its struggle on economic monopoly in the world.

Energy Priorities;From Exportsto Diplomacy

By Arsalan Fathipour, head of Majlis Economic Committee

necessary to make precise financial plans in order to shift private investment into the oil sector so that the country would not lag behind other producers in developing oil and gas fields. As Supreme Leader Ayatollah Seyed Ali Khamenei has noted, planning and decision-making bodies have to make sure that the country’s dependence on petrodollars would decline. Ayatollah Khamenei has said that weaning the country’s economy off oil revenues would clear the way for the progress of the Islamic establishment and the Iranian nation.Oil revenues should be invested in productive industries. In the non-oil exports sector, the government should make exports-imports balance positive in favor of exports. Reducing dependence on oil revenues and instead investing petrodollars in industrial and agricultural development projects would give Iran a diplomatic bargaining chip.

42


Iran’s oil industry experienced a revolution in June 2010. Many consider it as renationalization of Iran’s oil industry, specifically in the offshore sector. At that

time, and more precisely on June 14, development of six phases of the giant offshore South Pars Gas Field were assigned to Iranian companies. National Iranian Oil Company (NIOC) signed agreements, worth $ 21 billion, with domestic contracts for the development of Phases 13, 14, 19, 22, 23 and 24 of the massive gas field. From the very beginning, some observers cast doubt on the capability of Iranian engineers and contractors and hinted at delays because they could not believe that Iranians would handle such heavy job.Almost two years later, development of South Pars phases is running smoothly. Fairly speaking, Iranians have managed to set records in the absence of foreign companies. Installation of jack-up rig in Phase 19 of South Pars was carried out in nine days in bad weather conditions. The same operation would have lasted two weeks by European companies. Iran also smashed the world record in constructing onshore refineries for Phases 22-24 of South Pars. The refineries progressed 55 percent in 20 months. These are only the tip of the iceberg.

South Pars, Manifestation of Iran’s Offshore Self-Sufficiency



43January 2013

No. 9

44


The fourth national seminar on “Ways of Upgrading Domestic Manufacturing through Circumventing Sanctions” was jointly or-

ganized by Ministry of Petroleum and Ministry of Energy at Sharif University of Technology.Addressing the seminar, Iran’s Petro-leum Minister Rostam Qasemi said the country enjoys myriads strong points including natural geography, as well as mineral and energy resources.He said the country is shifting attention from imports to domestic manufactur-ing, adding: “The quality of products offered by Iranian manufacturers for the oil industry is acceptable and Iranian manufacturers need to be further sup-ported.”“With the completion of the databank system, it would be possible for employ-ers and manufacturers to communicate. So far, 600 equipment and commodities used in the oil industry have been regis-tered in this databank,” said the minister.Qasemi said Petroleum Ministry was planning to set up a fund for supporting domestic manufacturers. “Establishment of this fund has been proposed to the parliament. We expect the lawmakers to approve establishment of this fund.”Regarding Western sanctions against Iran’s energy sector, the minister said: “Sanctions were the last important tool they applied to drive Iran out of global markets and damage Iran’s production chain and oil industry development. Thanks to endeavors of our elite, we managed to remove all obstacles.”“At present, nearly 640 mcm of natu-ral gas is produced in the country with 530 mcm going to household and com-mercial sectors. The rest either serves as feedstock in petrochemical units or is injected into oil fields,” said Qasemi.The minister put the country’s rated pet-

Oil Industry Backs Iranian Manufacturers

France’s Total progressed only 30 percent in developing Phases 2-5 of South Pars after nearly 33 months, but Iranian companies have registered 47% progress in Phases 13, 22, 23 and 24 after the same time span. Iranians have been twice quicker than foreigners.South Pars phases have been divided into two groups for development; leading phases and delayed phases.The adoption of tight international sanctions against Iran over the past three years has further pushed Iran towards self-reliance. Oil contractors have initiated closer interaction with domestic manufacturers, and Western sanctions against Iran’s energy sector have further encouraged Iranian engineers to acquire the necessary technical skills for operating oil projects. Currently, Iran’s oil industry is moving towards self-sufficiency and realization of the slogan of national production.Iran’s oil industry has been subject to international embargos since the victory in 1979 of the Islamic revolution, but never have they been as tough as now. At the beginning of 2012, the United States and the European Union (EU) imposed new sanctions on Iran’s oil and financial sectors.On October 15 last year, the EU foreign ministers agreed on another round of sanctions against Iran.

The tougher restrictions prompted Iran’s oil industry to turn to domestic manufacturers. In fact, the sanctions imposed on Iran’s oil industry have accelerated the country’s self-sufficiency campaign and resulted in trust in domestic manufacturers and contractors.Economists say confidence in domestic manufacturers of equipment would be the only way out for the oil industry to neutralize the current sanctions. They maintain that Iran’s oil industry would continue to witness further developments if domestic manufacturers’ hidden potentials are put into practice.International companies involved in the development of oil and gas fields never imagined that Iranian engineers would be in position to develop offshore oil and gas fields. But their imaginations proved not to be true. Over the recent years, private Iranian entities active in the offshore sector have upgraded their technical knowledge and gained experience to replace foreign companies in South Pars.Besides operating projects, these domestic companies have also improved their knowledge to be able to operate upstream and downstream oil and gas projects in other countries and win an international status.


45January 2013

No. 9

Oil Industry Backs Iranian Manufacturers

rochemical capacity at 56 mt/y. “We ben-efit from our huge gas resources to develop the petrochemical sector and we will offer the necessary incentives to pave the way for further investment in the petrochemical sector.”“Energy consumption is forecasted to see a two-percent growth in 2013 and we would have oil for 150 years,” he said. Minister of Industries, Mining and Trade Mehdi Ghazanfari, who was also attend-ing the seminar, said Iran has worked out “logic and smart” mechanisms to confront sanctions the Western governments have imposed against Iran. “We have managed to surmount the obstacles through relying on domestic experts. We have to trust Ira-nian scientists in finding solutions to defeat sanctions. Sanctions could be transformed into opportunities if the potentials hidden in the sanctions are properly used.”Ghazanfari also highlighted Iran’s exports capacity whose management would fur-ther improve the country’s economy. The minister said 22 technical and engineering associations have been formed in the coun-try to commercialize indigenized technolo-gies. “Exporting technical and engineering services would earn the country more than $ 2.4 billion.”Mohammad-Reza Moqaddam, deputy pe-troleum minister for research and technol-ogy, said 19 oil industry items would be indigenized by 2015 when the country’s Fifth Five-year Economic Development Plan ends. “Iran stands in a good position in terms of oil resources, and we have to boost our status in technological knowhow too because monoculture economy would discourage business. Therefore, oil’s role as the main driver of Iran’s economy should be defined and with development of technical knowledge, national products should be pushed forward.”Ahmad Qalebani, managing-director of National Iranian Oil Company (NIOC), said a modern structure needs to be de-

signed to elucidate the oil industry’s needs for equipment and commodities. “For in-stance, we have to see which equipment we need, when they should be procured and what price or quality we envisage. We should identify domestic manufacturers and assign them certain tasks.”Reza Rousta Azad, chancellor of Sharif University of Technology, said Iran has fared remarkably well in mastering tech-nical knowledge. Three panel discussions were held throughout the conference on the following subjects: Management and implementation of projects with an ap-proach towards indigenization of oil indus-try technologies, financial methods and in-struments during sanctions and pathology of oil industry supply chain.Abbas Ali-Abadi, managing-director of “State Power Plants Management Compa-ny”, said domestic manufacturers account for 60 percent of the country’s energy in-dustry, which amounts to $150 billion.Ramin Pashai-Fam, managing-director of Bank Sepah, said the country faces no hard currency restrictions, adding that oil bonds forwards would put all hard currency in circulation. He said the issuance of bonds was one of the best instruments for financing oil in-

dustry projects. However, he noted that modern manage-ment mechanisms need to be applied for better management of projects. The third panel discussion focused on supply chain management. Supply chain is often comprised of two or several or-ganizations which are officially separate, but linked with each other due to the flow of commodities, raw materials and data. These organizations could be enterprises either providing raw materials or offering distribution, storing, wholesale and retail-ing services. Even final consumer could be one of these organizations. A key issue dis-cussed in the panel discussion was to de-sign a comprehensive electronic system of commodity procurement for the oil indus-try. Such a system would register all prod-ucts required by the oil industry so that sellers could compete under equal condi-tions and buyers would have the chance to choose their desired products. This project could guarantee success and integration of oil industry projects like harmonization of distribution. Then, the challenge of mul-tiple classifications of products would be surmounted. Details of a system for assess-ment of oil industry suppliers were also discussed in the panel.

46


Iranian Offshore Engineering and Construction Company (IOEC) has 18 years of experience in defining and managing oil and gas projects, finance, construc-

tion, procurement, carrying and install-ing offshore platforms, laying subsea pipelines as well as onshore oil and gas projects.Quality improvement, timely implemen-tation of projects, highest value-added generation from projects, better project management as well as acquisition of tech-nical knowhow are among the main factors contributing to the promotion of IOEC into a leading private entity in the upstream oil and gas sectors.Today, IOEC has become an EPCI (Engi-neering, Procurement, Construction and Installation) contractor. EPCI is a common form of contracting arrangement within offshore construction. Under an EPCI con-tract, the contractor will design structures, procure the necessary materials, undertake construction and transportation, and set it up at the offshore site.In order to boost its capacities, IOEC has developed strategic ties with many compa-nies, and established satellite companies to become an international holding company.IOEC’s offshore activities are its strong point. With the help of international com-panies, IOEC is expanding its maritime fleet. The company is now capable of con-ducting all installation and pipe laying op-erations, and is determined to broaden its fleet of diving support vessels, surveillance vessels and remotely operated vehicles (ROV). Persian Gulf and Indian Ocean are the main target markets for IOEC, which also intends to capture markets in West Africa, Caspian Sea, South America and Southeast Asia.Ali Taheri, managing director of IOEC, says the company is concentrating on the upstream oil and gas sectors and plans to manufacture drilling equipment.He said in an interview that the necessary infrastructures are prepared in Khorram-shahr Yard, adding: “The preparations have been made and four offshore drilling rigs are to be constructed. Along with long-term plans to construct offshore drilling rigs with the collaboration of Petroleum Ministry, scientific centers as well as do-mestic manufacturers and industrialists, the company has short-term plans under way to procure drilling equipment.”Taheri said IOEC has benefited from the experience and expertise of Iranian engi-neers, as well as appropriate equipment to play a major role in the construction and installation of platforms and laying offshore and onshore pipelines in South

Pars Gas Field.He referred to the construction of over 120,000 tons of offshore structures and laying 2,200 kilometers of pipeline for the transfer of sour gas from offshore platforms to refineries as one of the main activities of IOEC. “Currently, 510 kilometers of hi-tech subsea pipeline are being laid,” he added. Taheri said IOEC can provide up to 80,000 tons of offshore structures for Khorramshahr Yard, noting that six big workshops are building 10 offshore platforms in the southwestern city of Khorramshahr. IOEC is also capable of loading skidways and 12,000-ton sea walls in Khorramshahr Yard. Emergency power supply stations with capacity of 5.2 mega-watts have been set up in the yard.Three more yards are under construction in Khorramshahr. They are equipped with two 6,000-ton skidways.IOEC has implemented quality manage-ment system (QMS) based on ISO 9001. Since 2006, the company has been com-mitted to integrated management system (IMS). The certificates awarded to IOEC are ISO 9001, OHSAS 18001, ISO 27001 and ISO 14000. In 2009, Business Initia-tive Directions (BID) awarded IOEC for quality management. Quality control tests are conducted regularly and IOEC has implemented the necessary instructions to guarantee and control the quality.

HR, Main Asset

IOEC considers human resources as its main asset. The recruitment center of the company has carried out a need analysis and held training courses for the employ-ees based on their job requirements.The engineering unit of IOEC provides services in basic engineering, detailed engineering, construction engineering as well as onshore and offshore installa-tion engineering. Other activities of the unit include front-end engineering design (FEED), pipe laying engineering and front-end loading (FEL). This job is done with the help of comprehensive databank of standards, methods and experiences, and international software.Pre Startup Safety Review (PSSR) and launching offshore platforms are also done by IOEC. Enjoying advanced offshore fleet which incorporates pipe laying vessels equipped with DP3 technology and derrick lay barge (DLB), IOEC is capable of conducting construction and installation operations, as well as surface and subsurface repair for the oil and gas industries. Offshore operations include transfer of platforms and pipes, installa-tion of offshore structures and clam buoy,

pipe laying, connection between platforms and hydro test. The maritime fleet consists of operational, procurement and carrying vessels. Offshore structures are installed by skilled engineers and employees. They in-volve such activities as maritime carrying, installation of jackets and decks bridges and other structures.IOEC has so far conducted several national and international projects, the last of which was contribution to D1-Development proj-ect in India. The projects currently handled by IOEC amount to $ 7.5 billion.Since 2002, IOEC has laid 2,250 kilome-ters of 4- to 48-inch pipes beneath the sea. Nearly 183 kilometers of pipe were laid in 2012 in Phases 17 and 18 of South Pars


47January 2013

No. 9

Gas Field by C-Master vessel.Moreover, IOEC has installed 59 jackets and 50 upper decks in different weights and dimensions. Out of them, 12 jackets and nine decks were installed in 2012.

Projects in the Persian Gulf

Other projects handled by IOEC are: Reconstruction and renovation of Abuzar Oil Plant which includes construction and installation of 11,500 tons of structures, development of the plant which includes construction and installation of 6,600 tons of structures like five wellhead platforms, India’s ONGC’s RSPPM project with 154.8 kilometers of pipeline and repara-

tion of 33 oil platforms, phases 9 and 10 of South Pars with nearly 15,600 tons of offshore structures, onshore and off-shore reconstruction in Bahregansar Oil Plant with nearly 7,900 tons of offshore structures, enhanced oil recovery from Forouzan Oil Field by constructing and installing a production and a residential platform, phases 15 and 16 of South Pars with 17,400 tons of offshore structures, phases 17 and 18 of South Pars with nearly 15,300 tons of offshore structures includ-ing two wellhead platforms, installing decks at Phase 12 of South Pars, Indian ONGV’s NHRC project involving the reconstruction of six platforms in Neelam-Heera oil field, ONGV’s D1-Development

project involving three wellhead platforms weighing 15,800 tons, Phase 20 of South Pars involving two wellhead platforms and three 3-leg platforms, Phase 14 of South Pars involving 260 kilometers of subsea pipeline and three wellhead platforms.There is strong proof that the only outcome of international sanctions against Iran’s energy sector has been their self-depri-vation of massive Iranian market. Due to the sanctions, Iranian manufacturers have improved a lot.The Western countries might have forgot-ten that Iranian civilization is an ancient one and Iranians have long contributed to founding engineering science and technol-ogy in the world.

IOEC From South Pars to Int’l Projects


48


Over the past years, the world’s oil industry has been facing numerous challenges such as price fluctuations, decline in light crude production, lower

possibility of new oil and gas reserves, environmental restrictions, obligation to cap gas emissions, national companies’ firm determination to increase production share and management of hydrocarbon resources.Analysts maintain that production from oil fields is facing growing complexities. Therefore, international companies can rely on their technological capacities and capital to stabilize their status in the world. To that effect, national oil companies have heavily invested in research and development in recent years to shorten their distance from international companies in terms of modern technologies.Iranian Central Oil Fields Company (ICOFC) affiliated to National Iranian Oil Company (NIOC) is one of the top five producers. In 2012, ICOFC assigned 10 research projects, worth 77.78 trillion rials, to research and academic centers. Five of them, valued at 39 billion rials, have been signed with the Research Institute of Petroleum Industry (RIPI). The projects are about production, reservoirs, nanotechnology in drilling and corrosion, geology and cleaning environmental pollutions. ICOFC has benefited from the technical specialties of its forces and updated technology to take maximum advantage of its oil and gas reserves and protect them. In order to cause the necessary changes to its scientific structure, ICOFC has in the past years conducted numerous research activities in collaboration with universities and scientific centers.

Downhole-Completion String with 10,000-Pound Pressure

Downhole-completion equipment is vital for drilling new wells and steady oil and gas production. Iran used to purchase this equipment from US companies, directly or indirectly. But sanctions bar any delivery of the equipment to Iranian companies. Then, Iranian oil industry experts decided to indigenize the equipment.An Iranian company has managed to indigenize and mass produce the equipment.

Fourteen companies were employed to construct a 5,000-pound downhole-completion string. Mass production of 10,000-pound strings will start soon. In that way, the main problem related to the development of high-pressure fields would be resolved.

Methane Sensor

Methane gas sensors are widely used in the oil and gas fields, refineries, gas booster stations and petrochemical industries. Until recently, Iran used to purchase them from foreign companies. But Iranian researchers have managed to develop methane sensors after two years of work and benefit from the experiences of ICOFC.“The intelligent system developed by Iranian specialists could be connected to sensors of different brands. In addition to identifying the senor, it can also measure the level of methane gas in the environment and alarm if necessary,” Mehdi Fakour, managing director of ICOFC, has said.He added that the system is mounted with four methane gas sensors and has already been successfully tested.“The technical savvy acquired by domestic specialists in this project is such that a similar system could be developed for other gases like H2S. So far, there has been no domestic manufacturing of these sensors which Iran used to import from several Western countries. Foreign companies develop their systems so that only their own sensors could be mounted on them. Gas sensors have limited longevity and they need to be replaced after some time,” Fakour said.The cost price for the Iranian version of this system is much lower than foreign ones. Its mass production would save the country plenty of hard currency.

KHI Indigenized

An important challenge which may inflict damage on pipelines and other gas industry equipment is the formation of hydrates in the pipelines. Hydrates stop the flow of fluid and mechanically damage the transfer of gas and gas condensate. To avoid this problem, it would be necessary to apply hydrate inhibitors to pipelines. To that

effect, methanol inhibitor is injected into gas pipelines in Iran, but is less economical than Kinetic Hydrate Inhibitors (KHI) and would cause lots of operational problems. Using KHI would make up for these shortcomings.ICOFC accounts for more than 65 percent of Iran’s gas production. Therefore, the company is one of the largest consumers of KHI in gas and gas condensate pipelines. The company has managed to master KHI production technology, thanks to Iranian researchers. KHI has been successfully tested in Tang-e Bijar gas field in western Iran.Regarding advantages of KHI, Fakour said: “With the production of this substance, we would see a 30 percent decline in the methanol consumption. Besides inhibiting the formation of hydrate, KHI would cut corrosion of pipelines by 50 percent.”The significance of acquisition of KHI technology by Iranian specialists would

Manufacturing Trend in Iran’s Oil Industry


49January 2013

No. 9

further come to the limelight when it is known that 230 l/d of methanol were injected into Tang-e Bijar field, while half that volume of KHI would be needed. Moreover, methanol injection cost 6 billion rials over nine months, much higher than 1.55 billion rials estimated for KHI injection.Currently, Iran spends $ 4.5 million every year to purchase 450 tons of KHI for the pipelines of Pars Oil and Gas Company (POGC) the second largest gas producer in Iran. By replacing the Iranian-made KHI, the country would be weaned off foreign companies, and hard currency would be saved. KHI production has been patented as an industrial invention in the country.

Towards Iranian Demulsifiers

Since the very beginning of production of

petroleum in Iran, oil/water emulsion has posed challenges to exploration, production and processing. In order to separate emulsions (water in oil or oil in water), powerful chemicals have been used. Since water and salt cause corrosion and formation of sediment in the tanks and pipelines, their volume needs to be cut to below 0.1 percent. Injection of emulsion breakers or demulsifiers is a commonly used method to that effect. It would cause smaller drops to join together and form larger drops that would settle faster. Demulsifier - Emulsion Breaker is a complex chemical which is removed water from the water in Oil (W/O) and oil in water (O/W) emulsion, which are generated or produce in crude oil, petroleum recovery and refinery process. As this Emulsion contains water, which causes many problems for oil and gas producer so the emulsion has to be break down or

demulsified to separate out the water.Iran heavily depends on emulsifiers to keep producing heavy crude oil. Over the recent years, Western governments have imposed restrictions on the exportation of emulsion breakers to Iran. That prompted Iranian researchers to work towards mastering technology for developing this substance. After three years of work and spending two billion rials, emulsifier production was nationalized with the cooperation of Shiraz University and an ICOFC research team.Importing demulsifiers cost too much for Iran. Over the past three years, ICOFC has mastered the technology for synthesizing chemical and biological demulsifiers, designing electrostatic desalting systems, semi-industrial crude desalting unit and ultrasonic and microwave-based desalting process.

50


Over the past half a century, membrane processes have been largely used for industrial purposes, specifically

in treatment of waste oil, which is produced in large quantity in refining processes and is needed to be disposed of for environmental concerns. Waste oil and oil-in-water/water-in-oil emulsions are the main environment pollutants. They may be produced in small quantities, but their power of pollution is high.A major challenge to the environment in the present century pertains to waste oil in refineries and oil products distribution centers. Experts say millions of tons of wastes are produced in the world every year. Among these wastes, oil emulsion is highly destructive due to its difficult biochemical analysis. Gathering oil emulsion and storing them in a tank would cause numerous problems for industries. Such substances should not be disposed of before undergoing treatment although they might be diluted enough. To resolve waste oil and stable emulsions, new methods like biological transformation of greases, physical methods like heating, centrifugal operations, filtration, fiber packages and electrochemical methods have been applied. But all these methods are costly and inefficient. Since common methods like gravity separation and stabilization plates are not highly efficient, new methods need to be applied.Membrane processes like microfiltration, ultra filtration, nano filtration and reverse osmosis are applied as modern methods for treatment of waste oil. Iran’s Research Institute of Petroleum Industry (RIPI) has managed to treat urban and industrial wastes through using polymer and ceramic membranes.For years, a group of distinguished Iranian researchers have been working to acquire the best and the most effective type of polymer and ceramic membrane. This research team is headed by Fateme Rekabdar, who is director of RIPI polymer synthesis section.She told Iran Petroleum that membrane technology is a new knowledge gradually growing into a strong rival to physical and chemical technologies applied to the oil industry, notably in the refining and distribution sectors. Energy consumption is very low in this process and additives are not needed for filtration. Therefore, it can substitute the common processes in oil and gas refineries and petrochemical plants.

Rekabdar said her group spends much time on research projects for Tehran Oil Refinery. “Under a five-year plan, the center has managed to modify the technologies used in the refinery, design an API unit to re-filter waste oil to be used in cooling towers and boilers of refineries,” she said, adding that this process has been indigenized by Iranian experts.RIPI’s Polymer Research Center is currently working on the fabrication of other additives for a better crude oil stream. They have already developed acrylate and hydrocarbon-based materials for that purpose. Pour point and viscosity are two factors influencing the quality of crude oil.RIPI recently managed to filter industrial wastes through using sunlight and polymer and ceramic membranes.“The world population is growing, while drinking water resources are declining,” said Rekabdar. “In view of many experts, the world would face serious water shortage. Today, water consumption is rising while providing clean water is a

major challenge across the globe. To that effect, water purification is a must.”For three decades, the World Health Organization (WHO) has been measuring the quality of air and water to keep a tab on food contamination under its Global Environment Monitoring System (GEMS).Sundew system is a new method used in water and wastewater treatment. The Sun supplies the necessary energy for the process. This system was first used for water desalination. RIPI researchers are now using this technology to recycle contaminated and salty wastewaters to get clean water. So far, the Netherland’s Solar Dew BV and Britain’s Shell have applied this technology. Canary Islands and Oman have so far experienced this technology. The salts and other contaminations in the waste are concentrated on the other side of the membrane. The concentrated waste flow moves slowly towards tanks for storage. In this way, the concentration of salt, metals and other contaminants increase in the membrane. In the filtration process, water crosses

Polymer TechnologyThe use of Polymer membranes process in waste oil purification


51January 2013

No. 9

the membrane wall to reach the surface before being evaporated by sunlight. Due to difference in salt concentration on the two sides of the membrane, pollutants return to the liquid phase and concentrate inside the membrane.Sundew system is a new method of water treatment operating based on the principle of per-evaporation, which is a membrane technical method for the separation of mixtures of liquids by partial vaporization through a non-porous or porous membrane.Salt waste is first stored in a tank before being led straight into the pipe-shaped membranes, placed in a transparent plastic chamber which provides the necessary medium for the condensation of vapors. The filtered waste is stored in a special tank to be used for irrigation and other agricultural purposes.Sundew system is economical and effective in the regions exposed to sunlight. Southern Iran meets the necessary conditions for sundew system.In 2008, the World Petroleum Congress in Madrid awarded the research project

on the application of sundew system in filtering industrial and refining wastes.At Sarkhoun Gas Refinery, water filtration project was conducted for the purpose of procuring pure water from wastes containing oil products, metals and mineral salts through using solar energy. This new technique can help acquire clean water. This method is recommended for regions in Iran benefiting from sunlight and high temperature.Researchers at the Polymer Research Center of RIPI concentrated their attention on the wastes flowing from desalting units. In collaboration with specialists from National Iranian South Oil Company (NISOC), RIPI managed to install a pilot filtration facility in an oil well in Ahwaz, southwestern Iran. Due to its success, this technology could be used in desalting processes. NISOC currently runs 19 desalting units whose wastes could be filtered before being injected into disposal wells. Currently, pumping untreated wastes is quite expensive because wells are often blocked and unblocking them would require acid job or down-hole pumps.When asked about the advantage of polymer membranes, as far as saving hard currency is concerned, Rekabdar said: “At present, RIPI Polymer Research Center is working on flat, as well as hollow thin membranes. After these membranes are fabricated, this project would be totally indigenized and membranes would be entirely designed and fabricated in Iran. The biggest challenge has been dependence on foreign countries for the membrane technology and its relevant equipment. But currently, the membrane knowledge is being mastered. Iran is still importing polymer and ceramic membranes; however the fabrication of ceramic membranes which would rival foreign ones would reduce costs. Each water desalination module, made in US, like reverse osmosis costs 20 million rials.”Currently, extraction of heavy crude oil is not cost-effective and it sells much lower than light crude in global markets because heavy crude is of high viscosity, contains sulfur as well as heavy metals and nitrogen. On the other hand, the growing consumption of light crude is leading to a decline in the light crude reserves and therefore heavy crude is becoming a major source of energy supply in the world. More than 70 countries have so far been registered as sources of heavy crude, whose total in-place reserves are estimated at 6 trillion barrels.

Therefore, it is necessary to upgrade the quality of heavy crude in order to reduce its molecular weight and remove contaminants. Rekabdar was asked to say if any action has been undertaken by RIPI to that effect.“Currently, tens of types of light and heavy crude are blended in Kharg Island Exports Terminal after being extracted from reservoirs. What is loaded on oil tankers is oil with API gravity around 32. Iranian petroleum engineers have long envisaged strategies to upgrade the quality of crude oil. RIPI Polymer Research Center is currently working on a project to enhance the quality of crude oil through using polymer systems for stabilization and controlling the asphaltic humidity of crude oil,” she said.“On the other hand, the quality of crude oil for processing and consumption should reach certain standards to be appropriate for refineries. For instance, removing heavy metals and contaminants from crude oil might affect its quality. Some materials like asphaltic sediments and waxes hinder pipeline transfer. To control this phenomenon, asphalt emulsifiers could be used and removers would not be needed.Removers are organic solvents which should be used in large quantities to wash inside the pipelines to ease crude transfer. In this process, polymer suspension materials should avoid accumulation of asphaltic particles.Iran intends to produce these materials at a pilot plan. Moreover, production of heavy crude has increased and therefore these materials should contribute to improving the quality of heavy crude.”“Acquiring the formulation for fabricating DRA polymer additives for crude oil evaporation at refineries and easier transfer is another project under way at RIPI. Crude oil is comprised of oil, water and gas phases and therefore DRA materials should be formulated so as to be pumped with minimum force. The materials are mainly comprised of oil carbon chloride and do not have harmful impacts like poisoning of catalysts. When crude oil is running into a pipeline, it wastes forward energy due to the creation of whirls. But using DRA would push oil forward without any energy waste. These materials are currently being mass produced in Iran and they can accelerate the crude oil flow by up to 80 percent after their injection into the pipeline after pressure booster stations. That is a revolution in Iran’s crude oil transportation industry.”

52


A major challenge which the world will sooner or later have to confront is fuel stock and decline in new hydrocarbon reserves discovery. Moreover,

the consumption of resources is rapidly increasing and the world will have to deal with energy shortage. Official reports indicate that the world would depend on crude oil for 80 percent of its energy needs within five decades. In the first half of their life, oil reservoirs behave in a way that oil recovery could be done naturally. But constant oil extraction would thin out the oil layer of the reservoir and the pressure inside the reservoir would decline. Then, only 20 to 35 percent of the reserves could be extracted through applying natural methods. For the rest, enhanced recovery methods would be needed. Implementation of modern methods would allow extraction of up to 60 percent of recoverable oil. Given Iran’s huge oil reserves and the necessity of better productivity, protecting these God-given resources would be a must. To that effect, some researchers say using microbes could help improve recovery. Microbes can push out commonly residual oil through different mechanisms including producing acid, reducing sulfur in anhydride composites and sulfated minerals, producing methane, carbon dioxide, hydrogen and nitrogen. Other ways of enhancing recovery are using solvents like ethanol, acetone and alcohol which inflate organic sediments to drive out oil, using materials to lower the surface stress and producing biopolymers.Using microbes, which oil industry experts describe as hidden gem, to enhance oil recovery is nothing new. The first case to that effect is registered under the name of J. B. David in 1913. The second case dates back to 1946 when C. A. ZoBell registered a process for secondary recovery by using anaerobic microbes and applying mechanism of solving sulfated minerals.Microbial Enhanced Oil Recovery (MEOR) is a biological based technology consisting in manipulating function or structure, or both, of microbial environments existing in oil reservoirs.It was in 1926 when Beckam proposed the utilization of microorganisms as agents for recovering the remnant oil entrapped in porous media. Since that time numerous investigations have been developed, and are extensively reviewed. In 1947, ZoBell and colleagues set the basis of petroleum

microbiology applied to oil recovery, whose contribution would be useful for the first MEOR patent granted to Updegraff and colleagues in 1957 concerning the in situ production of oil recovery agents such as gases, acids, solvents and bio-surfactants from microbial degradation of molasses. In 1954, the first field test was carried out in the Lisbon field in Arkansas, USA. During that time, Kuznetsov discovered the microbial gas production from oil. Since that year and until the 1970s there was intensive research in USA, USSR, Czechoslovakia, Hungary and Poland. The main type of field experiments developed in those countries consisted in injecting exogenous microbes. In 1958, selective plugging with microbial produced biomass was proposed by Heinningen and colleagues. The oil crisis of 1970 triggered a great interest in active MEOR research in more than 15 countries. From 1970 to 2000, basic MEOR research focused on microbial ecology and characterization of oil reservoirs. In 1983, Ivanov and colleagues developed the

strata microbial activation technology. By 1990, MEOR achieved an interdisciplinary technology status. In 1995, a survey of MEOR projects (322) in the USA indicated that 81% of the projects successfully increased oil production, and there was not a single case of reduced oil production.Over the past two decades, Iran’s oil industry has been envisioning other methods than gas and water injection into oil reservoirs to achieve its objective of raising its oil output to 5.1 mb/d in three years. Nearly 80 percent of Iran’s oil production comes from the fields in the second half of their life. For instance, oil production from Maroun Oil Field has fallen from 920,000 to 400,000 b/d. The giant Ahwaz Oil Field, which once accounted for nearly one-fourth of the country’s oil production, is currently giving 10,000 to 15,000 b/d. Due to the longevity of Iranian oil reservoirs, enhanced oil recovery remains an attractive talking point. MOER is an EOR method.

Today, biotechnology is a new and strategic knowledge in the oil industry. Years back, Iran Biotechnology Scientific Committee was established following the approval of Supreme Council of Cultural Revolution. Petroleum minister is a member of this committee, which has its own specialized working groups. For its part, RIPI has an Environment and Biotechnology Research Center. This research center is comprised of biotechnology, ecology, environmental pollutants, and water filtering and recycling groups.Iran Petroleum has interviewed three RIPI researchers involved in biotechnology.Jamal Alaei, head of RIPI Environment and Biotechnology Research Center, says the center pursues the strategies adopted by Iran Biotechnology Scientific Committee.He said an objective followed by RIPI is to draw up a strategic document for enhanced oil recovery. MEOR is one of issues included in this document. RIPI has been in interaction with Russia in a bid to benefit from their experiences to microbial enhanced oil recovery, which has yet to find its deserved status in the world.“As far as MEOR is concerned, we have first to know which reservoirs this technology could be applied to. For this purpose, we have to study the conditions of the reservoir which we intend to apply this technology to,” said Alaei. “This technology could be used in the reservoirs whose pressure and recovery have declined for whatsoever reason, or are blocked due to water injection, or are filled with sediments, or are totally abandoned.”“A microbe is needed for proliferation in the reservoir. First, studies are needed to be conducted on the microbe and microbial flora in the reservoir. To that effect, a comprehensive plan is under way with the cooperation of National Committee of Iran Biotechnology.”Moheb Ali, an MEOR expert, said: “Microorganisms or microbes are the basis of secondary oil recovery processes. Microbes have positive activities like enhanced oil recovery, as well as negative activities like corrosion of metals or creation of oil sludge in industrial waters. The activity of microbes in air fuels can produce sludge and damage filters.”“These tests and activities began in Iran in the 1990s in a small laboratory in RIPI. The laboratory also worked on examining drinking water. Currently, the activities

Biotechnology in Enhanced Recovery

“RIPI Environment and Biotechnology Research Center has been the discoverer

of proliferation and separation of anaerobic microbes with the objective of enhanced oil recovery.


53January 2013

No. 9

related to MEOR are under authority of RIPI Biotechnology Research Center, which has drawn up the Comprehensive Strategic Petroleum Document with the supervision of National Iran Genetic Research Center. The document lists priorities for the oil industry biotechnology. MEOR is a parameter included in this document.Over the past years, RIPI has focused on corrosion and has printed books and articles on that subject. The objective has been to promote MEOR because bio-corrosions account for 50 percent of the corrosions.In the meantime, it is possible to convert heavy crude to light crude by using this technology. This issue is still in the stage of technical savvy, and its practice would need huge investment. Since Iran has huge heavy and semi-heavy oil fields, investment in this sector would be a must.Environmental biotechnology is another scientific activity of the center. It contributes to cleaning water, soil and air and filtering industrial wastes. Removing sulfur and protecting the environment against sulfuric compounds are key issues in this respect.This technology is based on the activities of microbes; therefore they need to be cultured. For this purpose, RIPI set up a microbial and biological stocks bank in 2006. The bank joined the World Federation for Culture Collections (WFCC) in 2010. WFCC is an international body formed under the umbrella of the International Union of Biological Sciences and a Federation within the International Union of Microbiological Societies.Using microorganisms is necessary in the agricultural, industrial and medical sectors. To that effect, projects are under study in

the country. The main objective is to reach a comprehensive biotechnology bank in the region and the world.MEOR is a tertiary enhanced recovery used in the oil and gas sectors. Currently, only 30 percent of underground oil and gas reserves in Iran are produced naturally. Therefore, EOR methods are required.Another MEOR expert at RIPI says secondary recovery methods use chemical compounds like polymers or gas injection to enhance recovery. However, the bulk of oil remains trapped in the layers of the reservoirs that could be recovered if MEOR is applied. The necessary nutrients for microbes to grow have to be injected with water into the reservoirs. Microorganisms will become active and create new chemical compounds which will finally unblock bores inside the reservoir.Among other activities of RIPI is defining feasibility projects to study the technical and economic aspects of MEOR application in oil and gas fields. A major problem with the oil and gas reservoirs and wells is that sediments block them, and therefore MEOR technology would be required for unblocking them.RIPI Environment and Biotechnology Research Center has been the discoverer of proliferation and separation of anaerobic microbes with the objective of enhanced oil recovery. These microbes are produced in the laboratory and examined for being used in enhanced recovery. Removing sediments in Bahregan field was one of these activities which lasted two weeks.Currently, flooding and water injection are under way in Balal and Yadavaran fields as well as Sarvak reservoir. If their

microorganisms are identified, MEOR would be applied for further oil production.The microbial processes proceeding in MEOR can be classified according to the oil production problem in the field:- Wellbore clean up removes mud and other debris blocking the channels where oil flows through;- Well stimulation improves the flow of oil from the drainage area into the well bore; and- Enhanced water floods increase microbial activity by injecting selected microbes and sometimes nutrients. From the engineering point of view, MEOR is a system integrated by the reservoir, microbes, nutrients and protocol of well injection. MEOR is mainly applied in the countries located in cold regions like Russia and North America, where reservoirs are not deep. In Iran, everything is still in the lab stage, because temperature soars past 90 degrees Celsius in depths above 3,000 meters, while the optimal temperature for microorganisms to grow is 35 degrees. However, that would not mean Iran should not apply MEOR.Iranian oil wells are old now with first one having been drilled in 1908 and other enhanced recovery methods have already been implemented on them. Now, MEOR could be used. This method is mainly useful for the wells which are blocked due to mineral and organic compounds or submerged due to water injection.Even after water and gas injection, maximum recovery would be 40 percent. Even if MEOR could contribute to one percent more recovery, it would be excellent job.

“A microbe is needed for proliferation in the reservoir. First, studies are needed to be conducted on the microbe and microbial flora

in the reservoir. To that effect, a comprehensive plan is under way with the cooperation of National Committee of Iran Biotechnology.”

54


Since conventional energy resources like oil and gas are limited, it is necessary to identify and take benefit from little-known and

unconventional resources. Gas hydrates are one of them. Gas hydrate is defined as an ice-like crystalline solid formed from a mixture of water and natural gas, usually methane. Unconventional energy resources are considered a major source of fuel supply in the 21st century. For centuries, massive natural gas has been proven to be stored in gas hydrates whose discovery is at the center of attention.The United States, Japan, India and Canada have invested heavily in long-term research projects to discover gas hydrate resources. Iran is also planning to embark on widespread research for more familiarity with unconventional sources of energy. Research Institute of Petroleum Industry (RIPI) is currently working on a project that could provide massive scientific data about gas hydrates.Nasser Keshavarz, who heads gas hydrates exploration project at RIPI, said: new and renewable energies are viewed as alternatives to oil and gas; however, they cannot replace hydrocarbon resources totally because they could not feed petrochemical plants, nor could they produce fuel for vehicles. That is why it is necessary to use unconventional energy resources.The studies conducted recently have examined access to unconventional sources of energy in Iran’s deep waters. Unconventional hydrocarbon resources include shale oil and gas, ultra-heavy crude oil and gas hydrates. Gas hydrates incorporate hydrocarbon reserves 300 times much more than all conventional sources like oil, gas and coal in the world. It is significant to know that each cubic meter of gas stored in the gas hydrates has a thermal value of 164 cubic meters.Gas hydrates are often found in deep waters and arctic zones where temperature is very low, and therefore exploration and production are not economical for the time being. But conventional oil and gas resources are exhaustible, and unconventional resources need to be identified in the near future.Keshavarz said Exploration Directorate of National Iranian Oil Company (NIOC) assigned RIPI a project in March 2011 to explore gas hydrate resources in the Sea of Oman. RIPI teamed up with Iranian and foreign companies to launch the project in May 2011. The project, which is planned to last three years, involves seismic testing for evaluating gas hydrate reserves.Geological studies on the Oman coasts to explore relationship between offshore and

onshore sediments, drilling a 200-meter appraisal well near the Sea of Oman for further study of sediments and formation of gas hydrate resources in the sea, studying the conditions of production, exploration modeling and estimation of reserves are among the research activities conducted over 18 months. Besides US, Canada, Russia and Brazil, Keshavarz said China, India, Japan and New Zealand which have no unconventional resources of energy have launched studies on gas hydrates. Canada is the only country that has gained profits from one of its reservoirs, but Russia and Japan have suffered losses in their gas hydrate recovery projects.Production from gas hydrate resources costs much more than production from

conventional resources, but when the latter declines the former becomes economically justified.A method for examining gas hydrate sources is to drill well in deep waters. That would be costly and need high precision and advanced technology. Seismic testing and offshore electromagnetic data are another option known as indirect method. The second method is less costly, but also less precise, than the first one. If both methods are combined, precise data could be obtained to help have an accurate estimate of reserves.Keshavarz said technological gap between Iran and other countries is meager and it can push ahead with exploring unconventional sources. RIPI’s handling of the project would save the country hard currency.

Iran Eyes Gas Hydrate Resources



55January 2013

No. 9

The growing prices of energy carriers and limited energy resources in the world are the main two factors requiring paying further

attention to efficient energy use.Today, energy is a significant economic indicator and an influential political instrument in any country. Given the energy source restrictions and the high production and extraction costs, the energy consumption prices are on the constant rise. In the wake of the 1973 energy crisis, European and industrialized and developed countries moved to embark on activities to save energy and they adopted a law to that effect, because energy conservation would cut public spending, and would be of great help to entities facing financial shortages and budget deficit.The culture of proper energy use is now recognized as a principle in the developed countries and they have reached their objectives of controlling energy consumption and timely energy supply to a large extent through an appropriate management.As far as energy efficiency is concerned, numerous measures have so far been undertaken including energy label scheme, National Energy Conservation Laboratory, energy auditing in the buildings, energy conservation software and widespread dissemination of information about the concept of conservation.Due to the high energy consumption rate in Iran, oil industry administrators have always prioritized exploring options for energy efficiency. To that effect, Research Center for Development and Optimization of Energy Technologies affiliated with the Research Institute of Petroleum Industry (RIPI) has hitherto introduced solutions for lower fuel consumption and energy efficiency in the country.Mohammad Ayazi, head of the

research center, said recently: “We have implemented a variety of projects regarding water conservation. For instance, the flow of water from Karoun River to Fajr Petrochemical Plant has been slashed by 62,000 cubic meters per day; water consumption at Shahid Hasheminejad Gas Refinery has been reduced by 650 cubic meters per day, while water consumption at Razi Petrochemical Plant has been cut by 2,000 cubic meters per day.”“We have also made significant achievements in energy consumption like developing energy management software known as EPAT, designed for engineering calculations pertaining to energy management. The software, covering all main industrial factors, could be also used in other sectors than oil. The software which has already been used in power plants and has proven to be effective is up to the latest international standards.”Ayazi went on to talk about energy efficiency projects, saying: “We have managed to define three joint projects with Iran’s Fuel Conservation Organization (IFCO). One of them is to develop a CHP microscope based on the basic gas engine technology. This system has helped us boost the productivity by up to 80 percent, while greenhouse gas emissions have been remarkably capped.”He said that environmental issues have been taken into consideration in defining the project. The objectives envisaged by researchers is to design a gas engine-style system for simultaneous generation of electricity and heat, indigenize the manufacturing of products for electricity and heat generation and using gas-burning products in view of reducing pollution and fuel conservation. The system would reduce carbon emissions, cut energy costs and lower energy demand at peak times and could be easily installed.

The second project is on development of high-temperature diluted combustion technology in industrial furnaces. High-temperature combustion is defined as combustion in conditions above spontaneous combustion temperature with oxygen level below 10 percent. Ayazi said the technology has helped cut fuel consumption by 50 percent, not to mention the cut in CO2 and CO gas emissions. The project has been implemented in five phases, namely, feasibility studies, market analysis, technology modeling, sampling and development of technical knowhow. This technology is applicable in all industrial furnaces and boilers.The third project is to develop a modern technology based on density systems for fuel conservation in central heating rooms. “Throughout our studies, we have managed to acquire technology for designing and making central heating room package based on density technology. Unfortunately all studies conducted so far about fuel conservation in central heating rooms have been based on obsolete heating systems. But in new designs, all efforts are concentrated on applying modern technologies,” he said.Ayazi said the project would raise the efficiency of central heating rooms, reduce pollutant gas emissions, cut energy consumption costs, help acquire technology for density central heating rooms and contribute to indigenizing this technology to wean the country off foreign companies.

Energy Efficiency through Research

56


Crude price trends were mixed during the reporting month. Brent prices fell 39 cents, closing at 109.25 $/bl and the Persian Gulf

marker Dubai fell 99 cents to reach 106.27 $/bl, while WTI rose 1.54 dollars to reach 88.11 $/bl (see chart).

The last month of 2012 witnessed the Dubai and Brent crudes mostly unchanged. However, trading activities were not muted, with a good number of trades as refiners looked to wrap up their needs before holidays. The Dubai prices fell more relative to Brent prices. Therefore, the Brent/Dubai spread –differential between Brent and Dubai prices- widened. In other words, Dubai linked crudes may likely look more attractive to the buyers and will have effect on arbitrage inflows. There was a modest jump in WTI prices

after two months decrease. According to the JBC reports, the year of 2013 will see the completion of major infrastructure projects in the US as the expansion of 150,000 b/d Seaway pipeline to 400,000 b/d is expected to be finished on schedule for Q1 and perhaps as early as January.

These pipelines will help de-bottleneck the Cushing and Midland areas, something that should eventually lead to a narrower WTI/Brent discount. The recent strength in WTI market might emerge because of these expectations.

Asian Products MarketsDuring December, all of the Asian products improved M-O-M. As winter started, the demands for heating fuels were lifted. Therefore, fundamentals in the middle distillates and fuel oil were supported by seasonal demand.

However, the fuel oil outlook remained bleak. At the top of the barrel, there was a small uptick in gasoline market. The other light distillate product, naphtha was the luckiest product with the most strength (see chart).

• Light DistillatesThe mean of gasoline prices in Singapore was 123.42 $/bl, mostly unchanged relative to the November. Asian gasoline markets were seen relatively balanced (see chart). On the demand side, there was buying interest from Indonesia, Vietnam, Sri Lanka and Pakistan. Increasing Chinese gasoline exports was also on the supply side and counterbalanced the market. Over the reporting month, Singapore naphtha crack- the differential between Singapore naphtha and Dubai prices-

Crude & Asian Products Markets, DecemberCrude Markets



57January 2013

No. 9Singapore Products Stocks ( Thousands of Barrels)Light Distillate

(Gasoline, Naphtha)Middle Distillates

(Gasoil, Jet)Residual fuels

(Fuel Oil)29-August 8,283 9,600 17,32126-September 9,773 9,325 18,53231-October 9,180 9,370 20,47128-November 9,443 9,931 22,52127-December 9,369 10,525 19,465M-O-M Change -74 +594 -3,056

rose 1.54 $/bl to reach -3.08 $/bl (see chart). During December, naphtha prices was 103.19 $/bl on average. Demand from petrochemical sectors improved naphtha margins and more supports came from a rebound in LPG prices. The increased LPG prices was enough attractive to replace naphtha with LPG as a feedstock in crackers. On the supply side, the closed arbitrage for surplus naphtha cargoes to Asia-Pacific from Europe was notable and supported the market more.

• Middle DistillatesThe middle distillate products had the similar trends. They both strengthened slightly. The mean of Singapore jet fuel and gasoil prices were 124.72 and 123.42 $/bl, respectively. The cracks rose 50 cents per barrel in both markets. Low winter temperatures in South

Korea and Japan boosted the kerosene production in expense of jet fuel. In Japan, the nuclear power shortages supported the demand for heating fuels more which led to stop jet fuel exports. The upward trend in jet fuel market was limited as the arbitrage to Europe and the US continued to be closed.

• Fuel OilThe fuel oil 380 and 180 fell to $ 602.74 /mt and $ 611.88 /mt, respectively in Singapore market. Singapore fuel oil’s discount to Dubai crude improved slightly, after five continuous months of decrease and fuel oil market gained some ground after five month losses. However, the outlook is still poor. The story is expected to remain the same, with ample supplies and slowing demand. Singapore onshore fuel oil stocks fell after a three month rise, but it

is still above such figures we had in the last year (see table). According to JBC estimations, Western arbitrage inflows into Asia were almost, 4.4 million tons (+13.4% Y-O-Y) in December. During the reporting month, Low-sulfur fuel oil played an important role as a heating fuel for countries such as Japan and South Korea, which were facing with the harsh winter, while fuel oil demand as bunker fuel was still weak. According to Argus report, bunker fuel sales in Singapore fell to a nine-month low of 700,000 b/d in November. To confirm the weakness in Singapore bunker market, it was notable that bunker cargoes were trading just 1-2 $/mt above fuel oil spot price assessments in the Singapore market, which was well below the premiums of 6-7 $/mt in August.

58


International News Box

Statoil has made the investment decision to develop the Mariner oil

field development in the UK North Sea. The project entails investments of more than $ 7 billion and is the largest new offshore development in the UK within more than a decade. “The Mariner project is a good strategic fit for Statoil. We are the world’s largest offshore operator and have a portfolio of attractive projects in some of the most prolific basins in the world. The North Sea is a core area for Statoil, and we look forward to taking a leading role in further developing the UK part of this basin, as well”,

says Lars Christian Bacher, executive vice president for Development and Production International in Statoil.The Mariner Field is located on the East Shetland Platform of the UK North Sea approximately 150km east of the Shetland Isles. Statoil acquired 44.44% and operatorship for Mariner from Chevron in 2007. Statoil acquired a further 20.6667% of Mariner from Nautical Petroleum in 2010. JX Nippon Exploration and Production (U.K.) Ltd (28.89%) and Alba Resources Limited, (6%) are partners in Mariner.

Source: statoil’s website

An international energy research magazine has ranked the National Iranian Oil Company (NIOC) as the

world’s second largest oil firm. In a new report by Petroleum Intelligence Weekly (PIW), the NIOC was ranked the world’s second biggest oil company after Saudi Arabia’s Aramco in terms of the extent of operations as well as oil and gas reserves and products. The PIW report which examines world’s 50 top oil and gas companies in 2011 fiscal year, ranked China’s CNPC, UK’s British Petroleum, Russia’s Gazprom and Norway’s Statoil after the NIOC. Energy Compass magazine said in its latest edition the PIW ranking has been meaningful. PIW compares 50 top oil and gas companies in the world in terms of oil and gas reserves, production, refining capacity and volume of sales based on data gleaned from more than 30 international companies. source: PIW

Maysan Oil Company (MOC) finished the drilling of a multilateral well which is the first of its type in Iraq in the Halfaya oil field.

Petrochina Company via the Chinese Bohai Company, finished the drilling of a well in Halfaya oil field 35 kilometers southeast Omara governorate, and the well was in Mushrif reservoir & contain two laterals. And it is worthy to mention that, the technology of the directional & horizontal multilateral drilling is necessary to speed up the drilling process & increase the production as well as reduce the cost of drilling. Mr. Ali M. Swaydig the Director General of MOC said that the time and cost in the drilling process are necessary to raise the production and noted that the international oil companies started to depend on the new multilateral drilling technology. At the same time Mr. Swaydig said that the two Chinese companies (Daijen & Bohai) whom work as subcontractors for Petrochina finished the drilling of three wells which will be connected soon to the production system after the completion, in addition to 6 wells that are being drilled.The Chinese company which was awarded the contract of Halfaya field rehabilitation in the second licensing round accomplished 32 wells since 2012, in addition to the rehabilitation of 6 wells. And the staffs of MOC are working with the foreign companies to overcome the difficulties and solve the problems to speed up the work.

Source: MAYSAN oil Comapny

MOC Drills the First Multilateral Well in Iraq

Statoil Makes investment Decision for the Mariner Project

NIOC, World’s 2nd Largest Oil Company: PIW


59January 2013

No. 9

International News Box

Petrobras announces that the fifth well drilled following the execution of the Transfer of Rights Agreement discovered good quality oil in the area known as Sul de Tupi (Tupi

South), in the pre-salt of Santos Basin. Well 4-BRSA-1047-RJS (4-RJS-698), informally known as Sul de Tupi, is located south of Lula field, at a water depth of 2,188 meters and is 302 km off the coast of Rio de Janeiro state. The well confirmed the presence of reservoirs of excellent quality in carbonate rocks below the salt layer. Preliminary assessments indicate that there is communication between the Transfer of Rights reservoirs of Sul de Tupi and the Lula Field, where oil of approximately 28º API has been verified. The well continues to be drilled and its depth currently stands at 5,220 meters. Drilling will proceed to the stratigraphic level of approximately 5,600 meters as set out in the Transfer of Rights Agreement. According to the activities and investments laid out in the Mandatory Exploratory Program (MEO) of the Transfer of Rights Agreement, once drilling is complete, a formation test is scheduled to take place to assess the productivity of the reservoirs. As laid out in the agreement, the exploratory phase is expected to end by September 2014, and Petrobras may declare commerciality within this period. Source: Petrobras

The National Iranian Gas Company (NIGC) is planning to acquire Turkey’s main natural gas distributor, Baskent Gaz, currently put to a

privatization tender. Turkish energy officials were quoted by Zaman newspaper as saying that NIGC has demanded the preliminary documents for the tender. Baskent supplies gas to 1.4 million people in Ankara.The paper reported that NIGC’s successful bid for 100 percent of Baskent would further boost energy ties between Iran and Turkey, regardless of Western sanctions against the Islamic Republic’s energy sector. Iran is the second largest natural gas supplier to Turkey. In December 2012, NIGC chief Javad Owji said Iran’s daily natural gas exports to Turkey topped 31 million cubic meters (mcm). Turkey has said it will keep buying natural gas from Iran despite US-led sanctions against Tehran. Turkish Energy Minister Taner Yildiz said in December that Iran supplies 18-20 percent of the gas consumed by Turkey.

Pakistani Minister of Oil and Natural Resources Asim Hussain says Islamabad wants to complete Iran-Pakistan (IP) gas pipeline as soon as pos-

sible to deflect the emerging power and gas crises.“We are dependent on this project as there is no other substitute at present to meet the growing energy de-mand [in Pakistan],” Hussain said on January 19.The Iran-Pakistan gas pipeline, projected to cost USD1.2-1.5 billion, is aimed to export a daily amount of 21.5 million cubic meters of Iranian natural gas to Pakistan.Describing the project as beneficial for Iran and Paki-stan, Hussain said Islamabad started work on the IP project in December 2012.Hussain had said on September 4, 2012 that the gas pipeline project would become fully operational in 2014, adding that, “Surveys for the project are due to be completed before October 2012 and construction can start as early as December 2012.”

New Discovery of Good Quality Oil in Transfer of Rights Area

NIGC Bids for Turkey Gas Distributor

Islamabad Set to Finish Pipeline Soon

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I heap praise on the administrators of the country’s industries, notably oil and gas sectors, and ask all of them to prove through their endeavors to the world that they are capable of running the coun-try’s economic wheels by their thoughts and efforts. God willing, they will make people happy in the near future by implementation of oil, gas and petrochemical projects. Through your efforts, you will prove to the world that postwar economic pressures would not make us dependent on any country. Domestic and foreign counterrevolutionaries ,as well as left and right colonialists are spreading propaganda everywhere that the postwar economic embargoes would break the back of the fledg-ling Islamic establishment.

I don’t have to underscore the significance of oil in the global equations and international economy and the important role of oil industry and energy in the country and its politics. God willing, au-thorities should safeguard these God-given treasures and reserves and undertake further efforts for their development to meet the needs of the society with priority given to impoverished regions.May Almighty God bestow this spirit of sacrifice on all workers, employees and experts in the hope of full independence and self-sufficiency.

Ayatollah Khomeini’s speech to Iranian oil industry staff


61January 2013

No. 9

The historic visit of people with their Imam;Tehran February 1th 1979

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The history of Sanandaj, the capital city of Kurdestan province in western Iran, dates back to the Savafid Dynasty. But it took the shape of city during Qajar Dynasty. Sanandaj is one of the most beautiful cities in western Iran and could be referred to as the Bride of Kurdestan. The reason for title is that the city offers a white perspective when one views it from the top of Mount Abi-dar. Iran Petroleum offers its readers a one-day trip to the city.

When I was studying in Tehran, I remember some of my friends who came from Sanandaj

complained that they did not enjoy proper life standards. Having those chats in mind, I imagined that I would see an impoverished province with extremely poor people. I had a wrong image. I couldn’t believe what I was watching with my own eyes. Deep in frustration, I was looking around myself. I found out that it is a clean and big city with pleasant weather. To me Sanandaj is Kurdestan’s Tehran. If you travel in the city you will see similar names. The main parks in Sanandaj are named Mellat and Laleh, both famous parks in the capital. There are notable similarities in old urban architecture in the two cities. Chieftains in Sanandaj loved edifices of rich people in Tehran. Sanandaj is the city of edifices. Located in Mount Zagros, Sanandaj used to be a fortress with high walls. Due to its location in a mountainous region, rarely could a direct street and level cross-ing be found. The streets are uphill and downhill, similar to San Francisco. When I juxtaposed my friends’ descrip-tions with my own observations of Sanandaj I found that they had been so fair to their birthplace.

Rainbow in Bazaar

We begin our tour of the city from the

Kurdestan province is mountainous and experiences cold weather most of the year. In winter, the mercury falls below minus 30 degrees Celsius. In the past, villagers used to burn firewood to warm up their houses. But today, people are leading easier life in the villages

of Kurdestan and nobody hears firewood being chopped. Now, natural gas is being supplied to them. Gas supply to the villages located between treacherous mountains is smoothly under way. Most old villagers in Kurdestan say nobody imagined these inaccessible villages would have one day access to natural gas. Today, gas distribution in the province is no longer a dream. Mohammad-Mehdi Mahdavi, managing director of Kurdestan Province Gas Company, told Iran Pe-troleum that the company is expanding gas supply to villages in a bid to salvage the environment. “Gas supply to people would avoid environmental pollution with liquid fuels,” he said, adding that the gas company has been awarded by the Department of the Environment (DOE). Natural gas reached Sanandaj, the capital of Kurdestan province, in 1991 through a 20-inch pipeline 161 km long. Mahdavi said a major concern has been supply-ing gas to villages and cities located in mountainous regions. Kurdestan province is located among rugged mountains. Last year alone, nearly 980 kilometers of rural and urban gas distribution network was established in the province, according to Mahdavi. “Twenty years have passed since gas entered the Kurd-estan province. Over these years, nearly 6,000 km of rural and urban gas supply network has been set up in the province. Over the past two years, Kurdestan has ranked third in terms of the number of villages with access to natural gas. Last year, more than 48,000 new subscribers were added. Currently, 22 cities and 624 villages in the province have access to natural gas. In terms of percentage, more than 90 percent of cities and 64 percent of villages enjoy natural gas.”Mahdavi said 960 industrial units are running on gas now, Mahdavi said. “Gas consumption in the industrial sector in this province has already exceeded 800 mcm/d, or 60 percent of the province’s total consumption. There are 48 CNG stations in the province with each city with at least two stations across the prov-ince.”Mahdavi said the province consumes 12 mcm/d of natural gas in cold season and half that in other seasons, adding that 45 percent of that volume is consumed in power plants.

Gas Supply to KurdestanProvince Villages Sanandaj, a Gem in Western Iran


63January 2013

No. 9

Sanandaj, a Gem in Western Iran main bazaar of the city. In Iran, each city has a central bazaar indicative of its cultural identity. In the bazaar, one can get to know local people. Like in other Iranian cities, Sanandaj bazaar has an ancient architecture: dome roofs made of bricks with natural ventilation system and lighting. The only striking differ-ence in this market was its four-meter height. The bazaar was built during the Safavid Dynasty, based on a model from a bazaar in the central city of Isfahan.This bazaar was initially larger, but some sections had to be destroyed for road construction. Now the bazaar has been divided into two and one has to cross a street to enter the other sec-tion of the bazaar. Such destruction of cultural heritage had been done under the name of urban modernization dur-ing the first Pahlavi era. The main stuff dominating the market is traditionally woven fabric. When one enters the bazaar he sees a rainbow of fabrics due to their colorfulness. The colors used in traditional attire for women are very beautiful. One seller complained that his business is not as profitable as before due to high prices. Traditional Kurd-ish attire costs at least 1.5 million rials. Each Kurd has several traditional suits to wear in different official ceremonies, in marriages, mourning functions, etc.Outside the bazaar, fruit business is the main job. Tomatoes, bananas, pome-granates and apples are sold on carts. The fruits had been set so attractively that nobody liked to disrupt the arrange-ment.

Traditional Shoes

In the oldest street of Sanandaj, several shops sell traditional shoes, known as “guive”. I entered one of those shops. An old man sitting on a carpet in his shop was knitting guive. I entered and asked for a pair of guive. He said with a smile that he had to measure my feet and make me a new one. A pair of guive

fit both right and left feet. Guive is very simple and has no specific material in it. Guives hold feet cool in the summer and warm in the winter. Farmers wear guive and work on their lands. The main enemy of guive is water that could deform it. The price of a pair of guive varies between 500,000 and 2,000,000 rials.Unfortunately, I didn’t have enough time to sit there so that the old man could weave me a pair of guive. But next time, I will not miss it.

Salar Saeed Edifice

It was around noon and we had our lunch near the bazaar. After lunch, we went to visit other cities. In the after-noon, we had time only to visit Salar Saeed and Asef edifices. Salar Saeed is located in an ancient district of the city. Most houses are in this part of the city. We had to get tickets to enter the edi-fice, which has become a museum. Salar Saeed edifice is 150 years old and dates back to Nasser uddin Shah Qajar. A rich chieftain used to live in this edifice. We enter the edifice through a large and beautiful yard. The first attractive thing

is a traditionally built window with colorful glasses. The window is made of 42,000 parts pieced together without any glue or paint. They have been put together like a jigsaw puzzle. This is a masterpiece of Iranians. It is the second largest traditional window in Iran after a similar one in Golestan Palace in Tehran. When I looked at the window from inside the edifice, the upper part of the window looked like a colorfully adorned carpet.The building has a basement where water used to be stored for summertime. The water pond is built with marble with a dome roof. In ancient times, Mullah Lotfollah Sheikholislam, a mys-tic figure, used to host people there and served them with drinks and water pipe.All three stories of the building have been converted into museums. The basement showcases contemporary period. The first floor puts on exhibit ancient history and the second floor is reserved for Islamic period. Most artifacts on display have been brought there from different parts of Iran. Sev-eral millennia-old graves with skeleton unearthed near Sanadaj are on exhibit. Inside the yard, big pots were made dur-ing Ashkanian, who followed the Zo-roastrian faith which respects earth and obliged that the dead be buried far from earth. The dead were held in a high position so that their flesh was decom-posed. Then, their bones were collected and put with the belongings of the dead in the pots. Nearly one hour and a half was needed for visiting the edifice.

Kurd House

We leave Salar edifice and after a ten-minute walk we reach Asef edifice. An anthropology museum has been established in this edifice. The museum is known as Kurd House. The edifice was built initially during the Safavid Dynasty. It was then completed during the Qajar and Pahlavi dynasties. The

By Mohsen Qezeli

64


edifice, measuring 4,000 square meters, has four separate yards. Setting up a museum here has been a good choice. Everything pertaining to the Kurdish culture and lifestyle is available there.An old man was sitting in a chair in the yard. I was told that the man was a descendent of Asef, the owner of this edifice. I had a chat with him. He was proud of his ancestors who had built this edifice. His great grandfather had won permit from Shah Esmaeil Safavid to build the edifice. He said Isfahani ar-chitects had constructed the edifice. The northern side of the edifice was reserved for Asef family, while the southern and western sides were Asef’s office. Asef was the governor of the city and he had a secretary who received complaints from cities and villages. The old man talked to me about everything including unjust distribution of land.

As Patient As Abidar

Strange people live in Sanadaj. Rarely can one see cars in the city to honk their horns. Even when a car deviates from its direct path he offers apology and

waves hand. The city lives in a specific tranquility with calm people. Nobody is hasty and most Kurds put on a smile. They exchange words of greetings with everyone. Our guide says this warm ambiance is due to good climatic conditions. Then, we decide to go and visit Abidar, the mountain which I had heard about a lot. Abidar is the tallest mountain near Sanandaj. It is 2,400

meters high. A tree-lined road connects the foothill to the summit. The route is seven-minute car drive. As we stepped out of the car, we felt cold weather. But it was so clean that I inhaled and exhaled several times to clean up my lungs. People often visit this mountain for fun, and becomes overcrowded in the weekend. From the top of Abidar, Sanandaj was totally visible. It was autumn and leaves were falling. A teen-ager was selling grilled maize. I got one and had it. The teenager, whose name was Behrouz, told me that every sum-mer he comes there and makes money. He showed me a shelter used by hikers in the peak of the mountain. Hikers climb Abidar every weekend.When we were leaving the mountain we met a marriage caravan walking up the mountain. Our guide said all newlywed couples in Sanadaj are used to coming there. The sun was setting and the city was illuminated. I was thinking about the moralities of residents of Sanandaj and its connection with clean weather. Even the angriest people would have forgotten their fury in such a pleasant weather.


Sanandaj; Khan Traditional Bath

Iran Amirkabir Symbolizing Iranian Experts'Efforts in Deep Watersphoto: mohammad Ghadamali

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