Petroleum Self-Sufficiency
Ever since its exploration, oil has been tied to the fate of every single Iranian. A review of the political, economic and social history of Iran lays bare fateful periods of petroleum development over the past four decades when the Islamic Republic was established following the 1979 revolution. A comparison of petroleum industry before and after the Islamic Revolution shows that Iranian government’s oil policies were in conflict with national interests before the revolution. But following the revolution, the situation has drastically changed and Iran’s national interests are now prioritized. As Iran’s dependence on the West and the East has vanished, the country’s petroleum industry has emerged winner in all areas. In such context, by relying on domestic knowhow and capabilities, oil has become the main pillar of economy and life for the people. The following is a brief review of the journey, so far, we have gone through.Oil and Gas Finds in 40 YearsOffshore oil and gas discovery started in Iran a century ago. The bulk of these deposits have been discovered and used. The exploration of oil and gas was in fact the base of following activities in the oil and gas value chain. In the second decade of the Islamic Revolution and particularly following the end of the imposed war, the pace of oil exploration in Iran picked up speed.The discovery of the giant offshore South Pars gas field and the giant Azadegan and Yadavaran oil fields in post-revolution years are among the main achievements in the exploration sector.A review of major oil and gas exploration activities shows that the priority for oil and gas exploration has been given to the jointly-owned fields with neighboring states. The main activities including drilling and seismic testing have been done in those areas.Oil/Gas Fields DevelopmentConcurrently with exploration work and discovery of more oil and gas deposits in the years that followed the Islamic Revolution, hard work was put into the development of hydrocarbon fields with the main focus having been on the jointly owned ones. National Iranian Oil Company (NIOC) has so far applied a variety of contractual frameworks ranging from buyback to finance. As production maintenance projects have been carried out and oil field development has been under way, desalting plants have been built and “Maximum Efficient Recovery” projects have been implemented. Water and gas injection into oil fields have helped make up for the natural decline in the output of reservoirs.Development of gas fields for replacing natural gas with liquid fuels and injecting gas into oil fields for enhancing the final recovery rate are among the other achievements of the Ministry of Petroleum in the aftermath of the Islamic Revolution.H/C ProductionStudies show that prior to the Islamic Revolution, oil production in Iran was in the interest of major IOCs and for the purpose of providing low-cost fuel for industrialized nations.Such high volume of production is in total contrast with “Maximum Efficient Recovery” rules and would not justify production based on the principle of optimization and sustainable output.Until before the Islamic Revolution, Iran’s petroleum industry was under control of foreign companies. At that time, regardless of the properties of Iranian oil reservoirs, the foreign firms were applying substandard methods of recovery to plunder the Iranian nation. As a result, Iranian oil reservoirs matured day by day.Gas Injection to Oil FieldsGas injection into Iranian oil reservoirs was a must for the purpose of “Maximum Efficient Recovery” and enhancing their output. Gas injection to the oil fields in 2017 increased more than 30 times compared with that of 1978. Gas has already been injected into nine onshore oil fields – Bibi Hakimieh, Parsi, Aghajari, Koupal, Gachsaran, Maroun, Karanj, Narguesi and Haftgol – while operations are under way for bringing gas back into the Pazanan field and miscible gas injection into the Darquain oil field.Gas and CondensateIran’s natural gas production averaged 110 mcm/d in 1978, which soared past 846 mcm/d in 2018. That is indicative of the development of gas fields in the post-revolution years.Given the significance of natural gas production in the global energy supply, more production would give rise to strategic advantages in Iran’s foreign diplomacy.Subsequent to the increased natural gas production after the revolution, gas condensate production has also increased. Statistics show a 20-fold increase in the condensate output from 1978 to 2017.Joint Fields DevelopmentA major policy pursued by the Ministry of Petroleum with regard to Iran’s resilient economy has been concentration on the development of jointly owned oil fields, particularly those located in the West Karoun area along the border with Iraq. So far, production has started from Yadavaran (Phase 1) and North Azadegan (Phase 1). North Yaran is also under development, while South Yaran started production in 2017. South ParsSouth Pars is shared by Iran and Qatar in the Persian Gulf. It is located 100 kilometers from Iran’s southern coasts. Gas was proven to exist in South Pars in 1990 after the drilling of the first exploration well there and the analysis of seismic data. The field is 9,700 kilometers in total, 3,700 km of which belongs to Iran.According to the latest estimations, South Pars holds 14.2 tcm of gas, as well as 19 billion barrels of condensate in place.Given the vastness of this field, its development in different phases topped the agenda of the Ministry of Petroleum in compliance with Iran’s five-year economic development plan and with a view to supplying the growing domestic needs for domestic consumption and injection into oil fields, as well as gas exports.Natural gas production at South Pars started at the rate of 2 mcm/d in 2001. Now, Iran’s rich gas recovery from South Pars is equal to that of Qatar. Thanks to the capabilities of domestic companies, manufacturers and contractors to the development of most South Pars phases has been fulfilled. SP15 and SP16 were developed with more than 70% of domestic manufacturing. That is the highest ever share of domestic manufacturing in the South Pars development. SP12 development was the largest project in terms of natural gas refining capacity. The share of domestic manufacturing in the SP12 development was 67%.