Potential Foreign Investors Briefed on Iran Oil Sector
With the implementation of Iran's nuclear agreement with six world powers in January and the ensuing removal of international sanctions on the country's oil sector, a new chapter opened in cooperation and interaction with foreign countries. As the agreement, dubbed the Joint Comprehensive Plan of Action (JCPOA) took effect, senior foreign officials and business delegations travelled to Tehran and international fora were held.
The first Iran Petroleum and Energy Congress (IPEC) was held in Tehran in October last year even before the JCPOA had come into force. Representatives of foreign companies attended the conference and positive results followed.
The significance of Iran's petroleum and energy industry and the existence of myriads of opportunities for investment in these two sectors prompted the Iranian Petroleum & Energy Club to hold a second IPEC. This year's conference was held on October 17 and 18. Iran's First Vice-President Es'haq Jahangiri, Minister of Petroleum Bijan Zangeneh and representatives of international majors like oil service provider Schlumberger, France's Total, Britain's BP, Russia's Rosneft, Germany's BASF and China's Petrochina were in attendance.
Addressing the inauguration, Jahangiri said Iran's Ministry of Petroleum was now ready to sign agreements with Iranian and foreign companies based on new-style contracts.
"I recommend foreign companies not to seek lobbies because transparent regulations have been drawn up by the Iranian Ministry of Petroleum in this sector and there is no need for extra costs," he said.
Jahangiri highlighted the necessity of technology transfer through these agreements for Iran, saying: "Therefore the companies that would outdo others in this regard will be prioritized for cooperation and signature of contract with us."
He also recommended foreign companies to benefit from Iran's domestic potentialities and capacities, saying: "Iran's petroleum industry enjoys high capacity in the country, particularly in the engineering and equipment manufacturing sectors. Foreign companies can benefit from these potentialities."
Noting that development of Iran is not possible without petrodollars, Jahangiri underscored the necessity of investment in the oil and gas sector. "Using new oil contracts is one of ways of investment in the oil sector."
He stressed the need for avoiding waste of time in the development of jointly owned fields and said neighboring countries which share these reservoirs with Iran, have been outperforming Iran over recent years. "For instance, Iraq is currently producing over 4.3 mb/d [of oil]."
Jahangiri said a contract is a bilateral and "win-win" issue and one side could not expect to impose all his desires on the other party, adding: "Of course, Iran enjoys a unique standing in the region and such advantages as security, young and educated manpower and political stability in our country provide sufficient attractions to [potential] foreign investors."
He referred to the recovery rate of some Iranian oil fields, which stands at around 5%, and stressed the need for investment in enhancing the recovery rate.
Asians in 21st Century
Jahangiri also said that the Iranian Ministry of Petroleum had defined the best plans in line with the objectives of Resilient Economy which was instructed by Supreme Leader Ayatollah Ali Khamenei.
"Implementing projects to avoid raw materials sales, building new refineries, producing more oil products, raising oil output and diversifying strategic customers for oil are among these activities," he said.
Jahangiri referred to the increase in Iran's oil output with the help of Iranian petroleum engineers immediately after the JCPOA took effect, saying: "Nobody imagined that Iran's oil production would increase at such a pace and in a short period of time; however, this important goal was achieved although there is need for investment and use of modern technologies for boosting oil production."
He said oil was not merely an economic issue for Iran and regional countries, adding: "Most political events in the region depend on energy and oil. I imagine that whatever happened on September 11 [2001] and after that in the Persian Gulf region was mainly related to oil."
Jahangiri also referred to daily increasing growth and development in the Asian region, saying: "Many international pundits believe that the 21st century development will be mainly in Asian countries and that these countries will be instrumental in international trade and economic growth."
Iran South Pars Output Reaches Qatar's
Iran's petroleum minister was also a keynote speaker in the inauguration ceremony. Zangeneh once more underlined the necessity of development of Iran's jointly owned oil and gas reservoirs throughout attracting investment.
He said that development of South Pars gas field, which Iran shares with Qatar, would continue to remain the country's top priority in the petroleum industry.
"With the startup of several South Pars phases by the end of the current [calendar] year [in March 2017], Iran's gas recovery from this joint gas field will equal Qatar's."
Zangeneh said phases 12, 15&16 and some sections of Phases 17&18 had already become operational, adding that Phases 17&18 would be completed this year. He also said that phases 19, 20 and 21 would also become operational this year and Iran would be reaching Qatar in terms of gas recovery from South Pars.
He expressed hope that an agreement would be signed for the Phase 11 development before the end of the current calendar year so that upstream plans at South Pars would be over by March 2018.
"This year we will have the first recovery from the oil layer of South Pars and we hope that we will be able to finalize the development of the second phase and enhanced recovery from this field within the framework of new oil contracts," said Zangeneh.
The minister said Iran's second upstream priority was to develop oil fields located in West Karoun area in southwest Iran.
"More than 200,000 b/d [of oil] is already being extracted from these fields. Enhancing the recovery rate in this area is of high significance," he added.
"As any delay in recovery from jointly owned fields could end in the other party's higher recovery, any delay in the implementation of enhanced recovery projects would lead to the loss of national assets," he said. "Furthermore, if no timely recovery is made from this field, parts of this field's reserves will become unusable or their recovery would need exorbitant costs."
Zangeneh noted that the issue of enhanced oil recovery had not been taken into consideration as it should have been, both before and after the 1979 Islamic Revolution.
"In the new format of oil contracts, the issue of enhanced recovery rate has been taken into consideration, which we hope will materialize," he said.
He said Iran's average oil production capacity stood at 3.8 mb/d in the first half of Iranian calendar year (started on 21 March 2016), which would exceed 4 mb/d by the end of 2016. Zangeneh also said that Iran's oil production would reach 4.6 mb/d by 2020.
Regarding gas condensate