Failure before Start

The second round of US sanctions, targeting Iran's oil sector, was re-imposed on November 5 after weeks of bombastic rhetoric about the impacts of restrictions which are aimed to reduce Iran's oil exports. The legality of these sanctions was called into question by many nations even before their entry into force and some countries had demanded waiver.

The impossibility of full embargo on Iran's oil and the futility of the Trump administration's attempts in forcing other countries to follow an illogical and illegal policy was clear from the very beginning.

Trump's excuses for quitting the 2015 Iran nuclear deal and his dismissal of the International Court of Justice (ICJ)'s ruling against the US sanctions were not accepted by any influential state. Despite political pressure and economic threats, most buyers of Iran's oil and its trading partners including European countries, Russia, India and China insisted on the continuation of economic and business cooperation with Iran, demanding waiver from the oil sanctions.

A review of the history of US sanctions against Iran, which have been in effect for four decades now, shows that such campaigns may cause problems for Iran's oil exports in the short-term and slow down Iran's development plans, but they will fail in the long term for two reasons:

First and foremost, it is impossible to eliminate Iran's oil from the market. Iran is among the largest holders of oil and it could not be driven out of energy markets. There is no country to replace Iran as a major oil producer and exporter. Therefore, even non-diplomatic intransigence by President Donald Trump could not affect Iran's oil.

Second Iran has become capable enough to manage its petroleum industry and become self-sufficient. Forty years of US sanctions played into Iran's hands as an opportunity for the country to become dynamic and self-reliant in order to be able to overcome all problems in development, production and exports.

The oil market has kept in mind how fast Iran's oil production exceeded 4 mb/d immediately after Iran struck the historic 2015 nuclear deal with world powers and raised eyebrows by taking back its oil share.

Iran's oil diplomacy relies on interaction with producers and consumers with a view to safeguarding the security of supply and demand for both oil and gas. In addition to remaining committed to these principles, Iran expects every other nation to oppose the Trump administration's unreasonable unilateralism and help protect the strategic energy market against the consequences of politically motivated decisions.

Global peace, stability and calm depend on interaction and cooperation between governments and friendship and solidarity between nations. That is exactly what the Trump administration pretends to not recognize.

ExplorationResearchProjectsProgressingWell

The director of exploration atNational Iranian Oil Company
(NIOC) has announced satisfactoryprogress in research contractspertaining to exploration projectsoperated by the state-run firm.“Of a total five contracts signed
with universities, the first phaseof at least three contracts will befinalized and completed” by nextMarch, Saleh Hendi said.He added that the first phase
of research projects involvesworking out roadmap, notingthat universities involved in thecontracts have had satisfactoryperformance.
Last March, NIOC signed 10-year research agreementswith five universities – ShahidBeheshti University, FerdowsiUniversity, KhawrazmiUniversity, Shahroud Universityof Technology and ShahidChamran University, with aview to developing scientificand technological infrastructurefor exploring hydrocarbon
resources.Hendi said Ferdowsi Universityin Mashhad had shown good
performance in implementinga research project titled“development of technology forimproving subsurface imagingin exploring hydrocarbonresources in Kappeh Daghsedimentary basin”.He reaffirmed NIOC’s focuson the creation of innovation
and technology network,saying: “Universities have hiredcompetent consultants in themanagement of technologyand they have developed goodcooperation with domestic andforeign universities, which wehope that such efforts wouldproduce good results for thecountry’s petroleum industry.”Euro-4 GasoilOutput Up 50%
The head of National Iranian Oil Refiningand Distribution Company (NIORDC) hassaid that Euro-4 gasoil production hasincreased 50% in Iran. Ali-Reza Sadeq-
Abadi, who is also deputy minister ofpetroleum, said the current Iranian year
is the year the quality of oil products andfuel, in general, would improve. He said
that Euro-4 gasoil production at the BandarAbbas oil refinery had reached 14 ml/d.“Implementing projects to improve thequality of oil products at the ten refineriesof Iran is a policy pursued by the Ministry ofPetroleum,” he added.
Sadeq-Abadi said the sulfur content ofgasoil produced at the Bandar Abbas
refinery had dropped from 10,000 ppmto 50 ppm, which he said, was a big
achievement for Iran in terms of reducing1bcm/d GasOutput Eyed

National Iranian Gas Company (NIGC) hopes
to bring Iran’s gas production to 363 bcm/yin three years time, CEO of Gas Engineeringand Development Company Hassan MontazerTorbati said. “Iran’s rich gas productioncurrently stands at 250 bcm/y, which shouldincrease to 363 bcm/y” by 2021,” he said.“Currently, 230 bcm/y of sweet gas isinjected into gas trunkline, which shouldincrease to 340 bcm/y by 2021,” he addd.Montazer Torbati said gas makes up 70% ofIran’s energy mix, adding: “The bulk of gas
consumption is in the household and businesssectors. It is noteworthy that it is possible tocut up to 30% energy consumption in thesesectors.” He also said the demand elasticity ofhouseholds and power plants would increaseby18 bcm in coming years.Montazer Torbati said that demand elasticityin 2021 would be 416 bcm.Fifth Rankin Gas StorageIran is standing in the 5th rank inunderground gas storage after the launchof Shourijeh gas storage site, CEO of theIran Central Oil Fields Company RaminHatami said. He said that gas is injected intoShourijeh natural gas storage reservoir duringeight months of the year when it is hot.
The Shourijeh storage facility is plannedto receive 10 mcm/d of light gas from the
compressor station of Natural Gas StorageCompany during eight months of year andcarry 20 mcm/d to gathering centers duringfour cold months of the year. In the secondphase, it would gather 20 mcm/d of gasduring hot months to be able to distribute 40mcm/d during the four cold months of theyear. Hatami separately said that the East Oiland Gas Production Company (EOGPC) hadproduced gas and condensate according toplans.

SP13 RefineryConnected to Gas Grid

The manager of South Pars Phase 13development project has announced the
connection of this phase to two trunklinesin Iran. Payam Motamed said the Iran GasTrunkline 6 (IGAT6) and Iran Gas Trunkline9 (IGAT9) had been connected to the SP13refinery. Pointing to the simultaneity ofcohesive and integrated implementation ofthe refinery and offshore sector of SP13, hesaid: “Thanks to efforts by staff from differentsectors, including contractor and client,connection of a gas pipeline carrying gasfrom SP13 refinery to a line on site 1 and 2of South Pars was done successfully.” He saidthat drilling, clearing, cutting, fit-up, welding
and testing had been done by the SP13 projectgroup. All these operations, he said, werecarried out in four days.Motamed said theSP13 refinery is now able to carry sweet gas toIGAT6 and IGAT9Iran Oil Production to Continue UnabatedIran’s Minister of PetroleumBijan Zangeneh said that theglobal economy would be
affected by any oil price hike.“Any increase in oil pricewill firmly impact the globaleconomy,” he said.Zangeneh also said that failureby Saudi Arabia and Russia toreplace Iran in the oil marketafter US sanctions take effectwould worry the market.“The market’s acknowledgeof such failure has driven up
oil prices. The West TexasIntermediate (WTI) andthe North Sea Brent prices
increased respectively from$67 and $77 in May to $74 and$84 a barrel in October,” theminister said.“Such increase in oil prices hasslowed down economic growthin many consumer nationsand this issue is influentialon the global economy,” saidZangeneh.“As I said time and again, thereis no alternative to Iran’s oil inthe market. Saudi Arabia andRussia have already broughttheir oil production to historichighs and these two countrieslack any spare capacity toproduce more oil and replaceIran’s oil,” he said.Zangeneh said Saudi Arabiadipped into its stocks andmanaged to supply only anextra 500,000 b/d of oil fromMay to September.
“The total production of otherOPEC members increasedonly 105,000 b/d over the
same period. It means thatOPEC members are not ableto produce oil more than theircurrent output,” he said.Asked about Russia’s oilproduction, Zangeneh said:
“Oil production in this countrywas up 388,000 b/d inSeptember compared to that
of May, which is all-time high.Therefore, without investmentin its upstream industries,Russia is not able to increaseits production more than this
in the short term.”Asked why Saudi Arabia hadincreased its oil production in
violation of its commitment tofreeze its output, he said: “Inmy view, such violation hastaken place under US pressureon the Saudi ruling regime.”
Zangeneh said that non-OPECoil producers “are not able” tosupply more oil on the market.“Oil production from thesecountries, Russia excluded,increased only 66,000 b/dfrom May to September,” headded.Zangeneh once morereaffirmed that Iran’s oilwould be irreplaceable,calling on US PresidentDonald Trump to lift
sanctions on Iran’s oil.He also dismissed speculationabout Russia’s involvement inselling Iran’s oil.

South Pars PlatformsOverhaul DoneThe head of overhaul at Pars Oil and Gas
Company (POGC) has announced the conclusionof overhaul of platforms at the giant South Parsgas field.“The overhaul of platforms at South Pars gas
field ended in order to boost gas productionreliability in winter,” Hadi Fakhrzadeh said.Referring to the conclusion of the overhaul of23 platforms, he said: “The overhaul of theseplatforms was done in six months, involving70,000 persons-hours of accident-free work.”He said that six platforms had been added to
platforms controlled by POGC in one year. Headded that the number of platforms overhauledannually had increased from 17 to 23, while thetime needed for a platform overhaul had declinedfrom 179 to 173 days.He referred to the domestic manufacturingof items and replacing tips of high-pressureand low-pressure flares as one of the mostsensitive overhaul activities at the South Parsplatforms, saying other activities includedremoving defects of storage tanks, calibration of
wellhead safety valves, updating platform controlsystems, calibration of big size valves, upgradingsafety systems and platform instruments andrenovating defective piping. Overhaul of SouthPars platforms takes place every year in order toensure gas supply sustainability in cold monthsof the year.Petchem Pollutant
Gas AnnihilationThe annihilation of pollutant gasproduced at the Tabriz Petrochemical Plantis set to become operational. “The RTOenvironmental project, whose objective isto recover and annihilate contaminant gasproduced at the ABS unit of this refineryis becoming operational for the first timein the country,” said Siavosh Darafshi,CEO of Tabriz Petrochemical Plant. “Afternecessary studies were conducted andtechnical and expert surveys were done,RTO was chosen to help reduce or removegas contaminants in a principled manner.Necessary arrangements have beenmade for the purchase, installation andactivation of RTO at Tabriz PetrochemicalPlant,” he said. A regenerative thermaloxidizer (RTO) is a piece of industrialequipment used for the treatment ofexhaust air. The system is some sortof thermal oxidizer that uses a bed ofceramic material to absorb heat from theexhaust gas and destroy air pollutantsemitted from process exhaust streams attemperatures ranging from 815 °C (1,500F) to 980 °C (1,800 F). “According toschedule, the RTO system was expectedto be carried out over a 12-month periodin partnership with an Italian company.However, it was done in ten months,” saidDarafshi. He said that Iranian companiesinstalled and executed RTO, built arelated chimney and designed pipingfor the ABS site.National Euro-4
Gasoil by MarchNational Oil Products DistributionCompany (NIOPDC) is set to startdistributing Euro-4 gasoil across thecountry by March 2019, CEO of NIOPDCMohammad Reza Mousavikhah said.“According to projections, Euro-4 gasoilwould have been distributed across thecountry” by March, he said. Mousavikhahsaid that nine new provinces had beenadded to the spectrum of Euro-4 gasoildistribution. “As Euro-4 gasoil productionincreases at the Bandar Abbas refinery,all fuel stations in the provinces ofHormuzgan, Bushehr, Kerman, Yazd andFars will be covered with the Euro-4gasoil distribution,” he said. He said thatfollowing the startup of the Bandar Abbasrefinery quality upgrade project, all fuelstations located on roads stretching fromChabahar to inside the country would becovered by gasoil distribution. Upgradingthe quality of Tabriz refinery would
provide Euro-4 gasoil to the provinces ofArdebil, East Azarbaijan, West Azarbaijanand Zanjan. Mousavikhah said a total of230 fuel stations would receive Euro-4gasoil.“NIODPC embarked on developmentplans at refineries across the country inorder to standardize products and supplyhigh-quality products,” he said, addingthat implementation of these projectswould soon lead to the distribution
of fuel across the countryConsortium key toMethanol ProductionThe CEO of National Petrochemical Company(NPC) has underlined the necessity of
establishment of consortium for methanolproduction. “The future horizon for Iran’smethanol industry is bright and establishmentof consortium in the methanol sector is a must,”Reza Norrouzzadeh said. “Given the startup ofnew methanol units in Iran, I announce my alloutsupport for feedstock supply to these plants
owing to our rich gas resources,” he said. CitingUS unilateral sanctions on Iran, he said everyother sector of petrochemical industry neededto establish consortiums. Norourzzadeh saidcompanies were required to show convergence
under the present and future conditions, callingon projects under construction to use cuttingedge technology. He expressed hope that Iran’spetrochemical industry would reach the standingit deserves by relying on domestic engineering
potentialities. Ahmad Mahdavi, secretary generalof the Association of Petrochemical IndustryEmployers, underlined the need for developinga comprehensive roadmap and application ofsupportive policies. He underlined the need forthe establishment of unions of petrochemicalcompanies, saying: “Under conditions whereproducers focus on the market, the commercialpolicies of manufacturing companies are requiredto be coordinated and suitable to various
conditionsCondensate Refinery Euro-5 Gasoline UpThe CEO of a condensate
refinery in southern Iran hassaid that Euro-5 gasolineproduction at the treatment
facility would soon reach 40million liters a day.Mohammad Ali Dadvar, CEOof Persian Gulf Star refinery,said that the current Euro-5gasoline production at the
facility was 30 ml/d.“The furnace and reactorsat the gasoline production
unit have dried out andare receiving catalyst,” hesaid, adding that gasoline
production would go to 44ml/d by the end of the currentcalendar year in March 2019.He said that Euro-5 standardrequires gasoline to havesulfur content of below 10ppm, aromatic content ofbelow 35, benzene content ofbelow one percent and octaneof 91-95.“The gasoline produced at thePersian Gulf Star refinery has a
sulfur content of 0.5 to 1 ppm,aromatic content of 29 to 30percent, benzene of 0.4 to 0.5percent and octane numberwithin the required range,”said Dadvar.
“In cases where we need moregasoline without changingenvironmental elements wesimply change the octanenumber in order to have moregasoline,” he said.
Dadvar also pointed to the12 ml/d of Euro-4 gasoilproduction and 1,200 tonnes/
day of liquefied petroleumgas supplied by the refinery,adding that the refiner’s gasoilproduction would reach 14 to16 ml/d by next March.The Persian Gulf Star refineryhas three phases, each havingcapacity to produce 12 ml/d
Petchem PollutantGas AnnihilationThe annihilation of pollutant gas
produced at the Tabriz Petrochemical Plantis set to become operational. “The RTOenvironmental project, whose objective isto recover and annihilate contaminant gasproduced at the ABS unit of this refineryis becoming operational for the first timein the country,” said Siavosh Darafshi,CEO of Tabriz Petrochemical Plant. “Afternecessary studies were conducted andtechnical and expert surveys were done,RTO was chosen to help reduce or removegas contaminants in a principled manner.Necessary arrangements have been
made for the purchase, installation andactivation of RTO at Tabriz Petrochemical
Plant,” he said. A regenerative thermaloxidizer (RTO) is a piece of industrial
equipment used for the treatment ofexhaust air. The system is some sortof thermal oxidizer that uses a bed ofceramic material to absorb heat from theexhaust gas and destroy air pollutantsemitted from process exhaust streams attemperatures ranging from 815 °C (1,500F) to 980 °C (1,800 F). “According toschedule, the RTO system was expectedto be carried out over a 12-month period
in partnership with an Italian company.However, it was done in ten months,” said
Darafshi. He said that Iranian companiesinstalled and executed RTO, built a
related chimney and designed pipingfor the ABS site.South Pars Platforms
Overhaul DoneThe head of overhaul at Pars Oil and Gasompany (POGC) has announced the conclusionof overhaul of platforms at the giant South Pars
gas field.“The overhaul of platforms at South Pars gasfield ended in order to boost gas productionreliability in winter,” Hadi Fakhrzadeh said.Referring to the conclusion of the overhaul of23 platforms, he said: “The overhaul of these
platforms was done in six months, involving70,000 persons-hours of accident-free work.”He said that six platforms had been added toplatforms controlled by POGC in one year. Headded that the number of platforms overhauledannually had increased from 17 to 23, while thetime needed for a platform overhaul had declinedfrom 179 to 173 days.He referred to the domestic manufacturing
of items and replacing tips of high-pressureand low-pressure flares as one of the mostsensitive overhaul activities at the South Parsplatforms, saying other activities includedremoving defects of storage tanks, calibration of
wellhead safety valves, updating platform controlsystems, calibration of big size valves, upgradingsafety systems and platform instruments andrenovating defective piping. Overhaul of SouthPars platforms takes place every year in order toensure gas supply sustainability in cold monthsof the year.
of gasoline in compliance withEuropean Union standards.The startup of the first twophases brought productionfrom the facility to 24 ml/d,which would increase to 60ml/d after Phase 3 comesonline.In case of correctmanagement of fuel
consumption in Iran, Phase 3of the refinery could strike apositive balance to gasolineproduction and consumption,allowing the country toexport gasoline.
The Persian Gulf Star refineryremains the largest gascondensate refinery in the
world and is the first of itskind in the Middle East. Morethan 70% of equipment usedin this facility is domesticallymade. Furthermore, owing tothe quality of its product, theenvironment is not polluted

destination may be chosen byprivate entities. “The privatesector has long been seekingan effective role in oil sales.Well mindful of this issue, NIOC
considered facilities for oiltrading on the exchange so thatthe private sector would beengaged in oil sales under morefavorable conditions,” he added.
No DiscountOn the day of trading, theprice of oil was initially varyingbetween $61 and $68 per barrel.It was finally sold for $74.85 perbarrel, which was $4.3 lowerthan NIOC base price. Does itimply granting discount to the
private sector?
Khoshroo dismisses speculationabout discount, saying: “In light
of oil price decline in the pasttwo weeks, the oil base price
dropped, too. It doesn’t meandiscount.”He said the North Sea Brent
crude reached its four-year highsduring the week leading to the
oil trading on IRENEX prior totaking a downward trend. “Thisissue is the main reason for thedecline in the oil base price,” headded. Khoshroo also said that
the identity of private buyersof oil was not authorized. Hesaid that NIOC would not namethem, warning that any mediarevelation of names wouldamount to offense. “[Even]in future offering.” Hosseini saidthat IRENEX had provided the
private sector with a chance.“In big transactions, risks areshared. Buyers try their best tobenefit from the capability offinancial institutes, as well asdomestic and foreign banks,” hesaid. He added: “Some domesticcompanies are highly capable
and they will undoubtedly try tobenefit from the [domestic andforeign] financing and creditservices to purchase crude oil.”No More GraftTalking about oil purchaseby the private sector is oftenreminiscent of so-calledsanctions buster Babak Zanjaniand his nearly €3 billion debt toNIOC. The adventure strikes fears
into everyone’s heart. The pre-JCPOA scenario is now feared tobe repeated.
But Hosseini is convincedthat no graft would happenthroughout this procedure. “NIOChas adopted all precautionarymeasures. Potential buyers arerequired to deposit 10% of thetotal sum in Iranian currencywith the Central
Securities Depository of Iran.In case the deal is finalized, itwould be deducted from the 20%portion which should be clearedin rials.” As long as potential
buyers have not honoredcommitments incorporatedin the NIOC notice, they wouldnot be authorized to load thecargo, said Hosseini. HosseinAbdo Tabrizi, the former headof Tehran Stock Exchange, said:“The possibility of irregularity in
in stock markets is very low andis like money-laundering.” “Lackof competitiveness and overturefor natural persons and legalentities may facilitate fraud inthe exchange markets. However,IRENEX has to monitor thecleanness of sums injected intomarket,” he said.oading on Dec. 28The oil sold on the IRENEX floorwill be delivered to buyers duringthe "December 28- November28" period. The buyers will thenhave ten days to prepare theirvessels to load oil.
Theirvessels need to be declared to theCrude Oil Operations Division
of NIOC. The cases are reviewedover a two-day period before thefinal conclusion is announcedto the buyers. However, in casethe vessels are not cleared by
NIOC, another 10-day deadlinewill be given to them to replacethe vessel. The new vessel isalso required to comply withrequirements set forth by NIOC
Directorate of InternationalAffairs. Asked about changes inconditions of supply, Khoshroosaid: “The conditions for theoffering of one million barrels
of crude oil on the internationalfloor of IRENEX will continuein the same way. If need be, theconditions will change in thefollowing stages.”The second offering of oilon the floor of IRENEX by therivate sector was carried out on
November 11.The secondffering ofoil on thefloor ofIRENEXby theprivate
sector wascarriedout onNovember11NIOC hasadopted allprecautionarymeasures.
Potentialbuyers arerequiredto deposit10% of thetotal sumin Iraniancurrency with
the CentralSecuritiesDepository ofIranIranOilTradedonExchangeFloor On October 28 and just one week before theUnited States re-imposed oil sanctions on Iran,National Iranian Oil Company (NIOC) offeredone million barrels of crude oil on the floor of the IranEnergy Exchange (IRENEX), 280,000 barrels of which was
sold at $74.85 a barrel. Expectations were, however, muchhigher.
Roya KhAfter President DonaldTrump pulled the USout of the Iran nuclear
deal, formally known as theJoint Comprehensive Plan ofAction (JCPOA), in May therewas talk of crude oil trade on theenergy exchange. NIOC agreed
to the proposal after holdinghours of expert meetings. In anotice published on October15 on IRENEX website, NIOCset $79.15 as asking price foreach barrel of crude. Underconditions set, the oil trade onthe energy exchange, 80% oftransactions were required tobe cleared in foreign currencyand only the remaining 20% inIranian currency. Analysts gavea positive assessment of NIOC
notice. Saeed Khoshroo, directorof NIOC international affairs,said the state-run company hadfacilitated conditions for theprivate sector to purchase crude
oil. “In order to facilitate oilpurchase by the private sectoron IRENEX, NIOC scrappedsuch conditions as ownershipof refinery, valid contract withrefiners, predefined destination,etc., and the only requirementwas for potential buyers to payin advance 10% of the value ofoil into an account belonging tothe Central Securities Depositoryof Iran,” he said. Khoshroo saidexcept for the traditional buyersof Iran’s crude oil, every otherdestination may be chosen byprivate entities. “The privatesector has long been seekingan effective role in oil sales.
Well mindful of this issue, NIOCconsidered facilities for oiltrading on the exchange so thatthe private sector would beengaged in oil sales under more
favorable conditions,” he added.No DiscountOn the day of trading, theprice of oil was initially varyingbetween $61 and $68 per barrel.It was finally sold for $74.85 perbarrel, which was $4.3 lowerthan NIOC base price. Does itimply granting discount to theprivate sector?Khoshroo dismisses speculationabout discount, saying: “In lightof oil price decline in the pasttwo weeks, the oil base price
dropped, too. It doesn’t meandiscount.”He said the North Sea Brentcrude reached its four-year highsduring the week leading to theoil trading on IRENEX prior to
taking a downward trend. “Thisissue is the main reason for thedecline in the oil base price,” headded. Khoshroo also said thatthe identity of private buyers
of oil was not authorized. Hesaid that NIOC would not namethem, warning that any mediarevelation of names wouldamount to offense. “[Even]we (NIOC), as the supplier, willbe informed of companies’particulars in the later stages,” he
said. Ali Hosseini, CEO of IRENEX,said: “At IRENEX, it’s a principleto keep buyers’ data confidential.his legal obligation does not
apply merely to IRENEX; it is alsoapplied to other exchanges in
the country. Therefore, divulgingbuyers' particulars carriespenalty.”Private Sector AffordabilityThe private sector’s interest inselling oil and calling on NIOC
to offer oil as soon as possible,created the impression thatone million barrels of crudeoil would be sold in the firsthours. But it did not happen.Many experts were asking whichprivate sector would buy oil. Fora 35,000-barrel consignment,
the private sector has to paymore than $2.5 million. “Due toNIOC flexibility, we expected theprivate sector to purchase theentire one-million-barrel cargo
in the first minutes of offering.However, companies hadlittle time to create necessaryinfrastructure and analyzethe market,” Khoshroo said.“Therefore, it seems that suchproblems would not existany longer

in future offering.” Hosseini saidthat IRENEX had provided theprivate sector with a chance.“In big transactions, risks areshared. Buyers try their best tobenefit from the capability offinancial institutes, as well asdomestic and foreign banks,” he
said. He added: “Some domesticcompanies are highly capableand they will undoubtedly try to benefit from the [domestic and foreign] financing and credit
services to purchase crude oil.” No More Graft Talking about oil purchase
by the private sector is often reminiscent of so-called sanctions buster Babak Zanjani and his nearly €3 billion debt to NIOC. The adventure strikes fears
into everyone’s heart. The pre- JCPOA scenario is now feared to be repeated.
But Hosseini is convinced that no graft would happen throughout this procedure. “NIOC has adopted all precautionary measures. Potential buyers are required to deposit 10% of the  total sum in Iranian currency with the Central Securities Depository of Iran.
In case the deal is finalized, it  would be deducted from the 20% portion which should be cleared in rials.” As long as potential buyers have not honored
commitments incorporated in the NIOC notice, they would not be authorized to load the cargo, said Hosseini. Hossein Abdo Tabrizi, the former head of Tehran Stock Exchange, said: “The possibility of irregularity in in stock markets is very low and is like money-laundering.” “Lack of competitiveness and overture
for natural persons and legal entities may facilitate fraud in the exchange markets. However, IRENEX has to monitor the cleanness of sums injected into market,” he said. Loading on Dec. 28 The oil sold on the IRENEX floor will be delivered to buyers during the "December 28- November 28" period. The buyers will then
have ten days to prepare their vessels to load oil. Their vessels need to be declared to the Crude Oil Operations Division of NIOC. The cases are reviewed over a two-day period before the final conclusion is announced to the buyers. However, in case the vessels are not cleared by NIOC, another 10-day deadline will be given to them to replace the vessel. The new vessel is also required to comply with
requirements set forth by NIOC Directorate of International Affairs. Asked about changes in conditions of supply, Khoshroo said: “The conditions for the offering of one million barrels of crude oil on the international floor of IRENEX will continue in the same way. If need be, the conditions will change in the
following stages.”
The second offering of oil on the floor of IRENEX by the private sector was carried out on November 11.

Sarbisheh-Nehbandan Gas Pipe Operational

Gas supply to the three cities of Nehbandan, Shousf and Darh as well as ten villages in South Khorasan Province has become operational.

The project, which has cost IRR 1,950 billion, allows for gas supply to about 5,000 households in Nehbandan.

The CEO of South Khorasan Provincial Gas Company said that operations were under way for gas supply to 388 more villages in the province.

Siri Recovery Enhanced

Persian Gulf Oil Output Set to Increase

An agreement has been signed between the Iranian Offshore Oil Company (IOOC) and Petroiran Development Company (PEDCO) for enhanced recovery from the Sivand, Esfand and Dana oil fields.

Under the agreement, oil production from these oil fields is expected to increase at least 16,000 b/d over 20 months.

The EPD-style package involves eight contracts worth totally €105 million. The main objective is drilling, workover and completion of 13 wells in the three fields; four new wells would be drilled, six wells would be completed and three new wells would undergo workover.

The topside of Platform F18 in the Forouzan oil field has been loaded out in the Qeshm Island, where it was under construction by the Iran General Contracting Company (IGC).

Sea fastening operations are to be carried out over coming two months for the installation of the structure which weighs 940 tonnes.

Parliament Energy Commission to Debate Fuel Card

The head of Energy Commission in Iran’s parliament has announced a plan for the resumption of deliberations on the revival of smart fuel cards in Iran.

The objective is to help reduce fuel consumption and promote energy efficiency.

During the deliberations in the parliament, ways of combating fuel smuggling, introducing the proper paradigm of fuel consumption, would be reviewed.

The MP also dismissed rumors of fuel price hikes, saying no decision had been taken to that effect.

Condensate Refinery Petrol Output to Hit 40ml/d

Gasoline production from a gas condensate refinery in southern Iran is expected to reach 40 ml/d, the head of National Iranian Oil Refining and Distribution Company (NIORDC) said.

Ali-Reza Sadeq-Abadi said the increased gasoline production at the Bandar Abbas Gas Condensate Refinery would bring Iran’s gasoline output to 107 ml/d.

He said that the refinery’s Euro-4 gasoline output currently stood at 30 ml/d.

He also touched on gasoil output, saying: “Currently 7 ml/d of gasoil is being produced at this refinery, which will increase to 10-12 ml/d in the near future.”

A gravity separator and a steam recovery pool with a capacity of 15,000 cubic meters has been built and launched in the Nar/Kangan area with a view to reducing environmental pollution.

The pool was built to prevent the spread of waste and gas to surrounding areas and to implement ISO 14001 standards certificate.

Financial Corruption Suspects Arrested

Police and security forces have arrested the prime suspect in the financial corruption case at the Bushehr zone of National Iranian Oil Products Distribution Company (NIOPDC).

Bushehr chief prosecutor Ali Hassanpour said two more suspects were also arrested in connection with the corruption case.

Gas recovery from Phases 22-24 of the giant South Pars gas field is expected to increase to 28 mcm/d in order to meet growing demand in winter.

The second platform of SP22-24 is expected to be loaded out in November for installation in place.

The offshore section of SP22-24 is projected to be completed by next July.

South Pars is jointly owned by Iran and Qatar.

The director of commodity supply at the Iran Oil Pipeline and Telecommunications Company (IOPTC) has said that domestic manufacturing of 203 items has saved Iran $18 million.

Abolqasem Zamani said IOPTC has handled the domestic manufacturing of more than 2,000 items from 2003 till now, saving $27 million in costs.

Gas Supply to Villages

Ten villages in Sistan Baluchestan Province are to be connected to gas trunkline, the provincial gas department chief said.

Reza Panjabi said that the villages are in the suburb of Iranshahr.

“So far, the two cities of Zahedan and Iranshahr have been connected to gas trunkline in Sistan Baluchestan Province,” he said. He added that only 7% of urban households in the province enjoy gas supply.

The CEO of Guilan Provincial Gas Company has said that gas supply has been restored to 620 households after it was cut due to heavy downpour.

Those disconnected from the gas grid were mainly living in Fooman.

He said that more work was needed to restore gas flow to the remaining households which are still disconnected.

The head of tariffs and contracts affairs at the National Iranian Gas Company (NIGC) has said that all subscribers of gas network would be insured by the end of the current calendar year.

Jalal Nour Mousavi said the insurance was agreed upon in a contract between NIGC and Razi Insurance Company.

The insurance premium for business and household subscribers would be IRR 2,000 per month in cities and IRR 1,000 per month in villages.

The resumption of U.S. sanctions on Iran will add "significant uncertainty" to price forecasts for crude oil and gasoline in 2019, the U.S. Energy Information Administration said.

The agency expects international oil prices to increase to an average of $81 a barrel in the fourth quarter before falling to an average of $75 a barrel in 2019. But it noted that the impact of the sanctions, set to resume Nov. 4, could have substantial impacts on prices for both oil and gasoline if the oil market tightens as a result.

However, the agency noted that it remains uncertain how other producers will compensate for lower supplies from Iran.

The Narendra Modi government has conveyed to the Trump administration that India is a fit case for a presidential waiver from the provisions of Countering America’s Adversaries Through Sanctions Act (CATSA) on Russia and the sanctions on trade with Iran due to the legacy military relationship between New Delhi and Moscow, and a possible $6 per barrel rise in India’s oil import basket if the country cuts supplies from Tehran without compensation.

“We hope our major strategic ally US will appreciate India’s concerns and make an exception when it comes to the acquisition of S-400 missile system from Russia and oil supplies from Iran,” said a senior Indian government official who has been talking to the Americans. India and Russia are expected to sign the deal for five units of S-400 missile system during official talks on Friday with a Russian team headed by President Vladimir Putin.

completed. In the last quarterof 2016, National Iranian OilCompany (NIOC) decided tochange management at SP14 ina bid to accelerate work. Hamid-
Reza Masoudi was appointedto lead SP14 development. Hehad already served as managerof SP19 development projectwhich came on-stream during the
presidency of Hassan Rouhani.SP19 has now reached the stageof profitability. SP14 developmentwas aimed at producing 56.6mcm/d of sour gs, 75,000 b/d
of gas condensate, 1 mt/y ofliquefied petroleum gas, 1 mt/y ofethane for petrochemical plantsand 400 t/d of sulfur. Masoudiwas faced with a tough job in
this project; no subsea pipelinehad been laid, drilling at fourlocations had not been completed(at least 44 wells needed to havebeen drilled for gas production
from SP14) and some strategiccommodities had yet to betransported into this phase.Apart from that, the platformswhich SADRA had promised to
deliver had been completed only30%. Add to this the slow paceof onshore work. “Due to theplurality of contractors in theSP14 development, we had firstto set a schedule for all phases.In the first step, we upgradedthe consortium leader. Then weintroduced order and disciplinein offshore, onshore and drilling
sectors. We also revamped thehuman resources structurein order to hire qualified andspecialized manpower in theproject,” Masoudi said.Owing to aforesaid changes, pipelayingoperations at SP14 beganin March 2017. Several months
later, all subsea pipes had beenlaid. Construction of platforms atSADRA yard picked up speed.Record Set in PlatformConstructionMasoudi said completion of
SADRA platforms in SP14 “is oneof our sources of pride and honor”.
“In light of our experience in theconstruction and installation ofplatforms it can be argued withcertainty that the progress inthe construction of platforms at
SADRA yard is one of our honorsat South Pars,” he said. “Themaximum rate of progress in theconstruction of platforms at SouthPars is between 1.8% and 2% per
month, but on Platform 14C ourmonthly progress reached 3.5%,”
Masoudi said. Masoudi has so farmanaged the construction andinstallation of five platforms forSouth Pars. The platform at SP19and Platform 14C are the latest
under his management. Referringto his experience in constructingplatforms for SP19, he said itwas good experience for theconstruction of SP14 platforms.
“First of all, we estimatedour resources and credit line.
In order to accelerate work,we decided to put client andcontractor alongside each otheron the construction yard so thatin case any problem arises itwould be resolved immediatelywithout having to resort tocorrespondence,” he said. “We
also hired competent contractors

whose qualification had beenproven in construction, loading,installation and operation ofplatforms,” he added.Masoudi said: “Thanks to ourexperience in the project systemwe were quick to identify theroute to early production at
platforms and allocated financialresources, manpower andcommodities to it.” He touchedon the issue of manufacturing ofcommodities, saying: “In any case,
the process of manufacturing ofcommodities largely affects thequality of work. In addition toregular inspection of the processof manufacturing of commodities,
we increased the number andsteps of quality control andinspection and enhanced theprecision of inspection stationsin a bid to expedite our job.”
“Imagine that the inspection ofmanufactured commodities is not
taken seriously and during theinstallation of platform an itemturns out to be defective. Thistiny problem may cause severalweeks of delay in the project,
which would mean lagging behindschedule in the installation ofplatform and production of gas,”he said. Masoudi gave an upbeatassessment of SP14 developmentproject, saying: “The job is noteasy to perform. Coordinating
this team and allocatingresources on time, boosting thecontractor financially and someother minor work in this projectare very important. In fact, issufficient attention is not paidto them, it will directly impactthe implementation of project.
That is where management andexperience prove to be helpful inmegaprojects.”
Which One More Difficult:Platform or Refinery?When asked to compare the
construction a refinery and aplatform, Masoudi hesitatedbefore saying: “The most
important thing a project manageris required to do is to bring aboutintegrity in different stages of theproject.” “For instance, for eachphase of South Pars, about sixprojects are envisioned. Here weare talking about megaprojectsand we cannot say which one ismore difficult,” he said. Masoudisaid: “Working in the offshore
sector is highly complicated,add to this the very high volumeof work in the onshore sector.”He added: “For instance, in theoffshore sector you go to war
with nature, you go to the depthof 75 to 80 meters under seabedto reach the reservoir and drill upto 4,000 meters in order to reachpoisonous sour gas along withcondensate and salty water underhigh pressure. You need to contain
everything on the platform, i.e.control pressure, temperatureand condensate before carryingthem to refinery. Of course, thatis a very complex process.” “The
volume of work in offshoreprojects is much less than inonshore or refinery sector. But thematerials, alloys and techniquesused in the offshore sector aremuch more complicated thanthose used in the onshore sector,”said Masoudi. “Furthermore,” headded, “Onshore work is safer,and we have access to everythingwhile it is not such in the seawhere we work shoulder-toshoulderwith hazards.” “As
soon as weather conditions getturbulent any project managerwill be struck with fear. Anythingmight happen. You are locatedon a sour gas reservoir and
wavelengths of several meterslong, and wind blowing at20 knots is indicative of theunpredictability of conditions,” hesaid. “The least error may cause
a life-threatening or financialaccident. Due to the proximity ofdangers, not only the manager butalso each and every one of serviceworkers are faced with growing
psychological pressure,” he said,warning that without safety,any accident is likely to happen.Weather condition is a key factorin the installation of platforms.
On many occasions, when everypreparation had been made forthe installation of jackets andplatforms, the programs werecanceled due to bad weather. That
happened on SP19 when it wasunder management of Masoudi.Even worse was when a platformat SP19 was in the process ofinstallation and at the same time
news was heard of worseningweather conditions. Structuresweighing several thousand tonneswere being installed at theirlocations in the Persian Gulf. The
client and the contractors were concentrating on the installation of platforms and arranging vessels’ movements, but they were concerned with weather
conditions. Any change in weather could have caused deadly hazards
while access to facilities was very limited. Every stage of work had
to go ahead with precision and in respect of schedule. It may apparently seem very simple,  but the difficulty of job emerges when someone is faced with
real conditions: while powerful  sea waves are active the vessels  carrying heavy structures to be installed 80 meters deep into the sea are likely to flip over. Under
such conditions, one has to brace for any accident. Hazards are very close. Management of projects, experience and specialty are the most useful tools which could be of help under such conditions.
“Another point is that when we are on the platform we have to coordinate all our affairs. The simultaneity of some affairs in offshore projects causes problems
in some cases, while that is not case in onshore projects,”said Masoudi. Simultaneity in  offshore projects means some  activities like startup of platforms,
connection of pipelines to jacket   or drilling need to be done concurrently. Therefore, planning to draw up an interface matrix  and allocation of resources and setting timeframe are the vital factors in such projects.
Incomparable Projects Masoudi said: “What I said does not imply the facility of job in refinery construction. The volume of activity in the onshore sector is
much higher than in the offshore sector.” “For instance, in a platform
we have 35,000-inch welding, which reaches 2.7 million inches in the onshore sector. The volume of activity in the onshore and offshore sectors is by no means
comparable,” he added. “But you need to note that you have a 20x25-meter space of work in a platform while in onshore projects you have open space and
many facilities. Your feet are on the ground, which means safety and security. That is not so in the sea,” he said. Balanced Development Masoudi went on to say: “However, we have to take into account the fact that the offshore and onshore sectors need to go ahead in a balanced way. In other words, as soon as we receive gas from this platform we should be able to transfer it to the refinery to be distributed to consumers.”
It’s easier in words than in deeds.
When asked if megaprojects in South Pars were easy, Masoudi said: “Not at all!” “We are talkingabout megaprojects. That istough. But we are now competent
enough to handle such projects.
We did so in SP19 and did the same in SP14. In my view, we have been able to respect balance because error margin stands very low in our work and we don’t
need foreign companies in such sectors as the construction of
platforms, installation and their operation. We don’t even need to build refineries. It may sound easy on the surface level,” he said. Offshore Sector Faring Better
Masoudi maintains that  the consortium tasked with developing the onshore sector
of SP14 has had a better performance than in offshore sector. “Our focus is upon theoffshore sector, but we haven’t forgotten the onshore sector,” he said. Platform 14A came onlinelast May and is now supplying 14.1 mcm/d of gas. Gas recovery
from Platform 14C started in November. Now, the two platforms are supplying a total of 28.2 mcm/d of gas. Since the refinery of this phase has not been completed yet, it is impossible to process gas there. For this reason,
gas is being transferred from SP14 to the refinery of SP12.
Orders for commodities have been placed since 2016 for the development of refineries and the commodities are being moved in. In parallel, contractors were
upgraded and planning and supervision on the process of work have been boosted.
Subcontractors Organized Masoudi said: “We managed to arrange subcontractors in this project. We have now four qualified subcontractors, who are on par with the main contractor.”
“With planning made so far, the utility sections of the refinery are expected to come online early next year,” he said, adding that by next March the first
train of refinery would become operational to process gas supplied by SP14 platforms.
Sanctions continue haunting Iran’s petroleum industry. Oil is the main
target of US sanctions. However, South Pars will go its tough way ahead. Development of South Pars phases will never be halted. The
work may be slowed down, but it does not imply any halt.

The area is proven
to contain huge oil
reserves. Thanks to
relentless efforts by Iranian
petroleum industry experts
and Iranian firms, all mines
dating from the imposed war
have been cleared.
Most oil fields located in
West Karoun are jointly
owned by Iran and Iraq, but
luckily Jofair is independent
and is belonged to Iran.
Several years ago, National
Iranian Oil Company (NIOC)
devised a development plan
for the oil field as par t of the
country’s strategic plan to
boost oil output. According to
NIOC, more than $500 million
in investment is needed to
increase oil recovery from the
Jofair field.
Over the past years, further
attention has been paid to
this field. Iran intends to have
developed Jofair by 2021
under the country’s longterm
petroleum industry
development plan.
The Jofair field has also
several gas layers, which can
produce a significant volume
of natural gas.
Jofair is run by the Arvandan
Oil and Gas Production
Company. Development of
this field has been awarded
to an Iranian company.
Therefore, foreign companies
willing to work in this field
are required under IPC to
hire an Iranian partner.
From 1975 to 1978, four
exploration wells were drilled
in the Jofair field, leading
to the discovery of three
reservoirs known as Ilam,
Sarvak and Gadvan.
Jofair field is located near
the Azadegan, Yadavaran
and Ab Teimour oil fields.
Preliminary development
operations are under way and
early production has become
operational.
Heavy crude makes up 96%
of Jofair’s content with the
remaining 5% being light
crude oil. The API gravity of
Jofair’s oil stands at 23, w hich
is relatively high.
Jofair field is planned to be
developed in three phases;
early production with
production capacity of 6,000
b/d, Phase 1 with 15,000 b/d
output, Phase 2 with 25,000
b/d output and Phase 3 with
50,000 b/d output.
Analysis of 3D seismic data,
comprehensive reservoir
studies, drilling and
completion of two wells and
workover of two fields as

well as construction of 40
kilometers of pipeline and
installation of crude oil gauge
systems are among major
activities for early production
from Jofair field.
The Iranian company tasked
with developing this field
will formulate the master
development plan and
workover wells with the
help of downhole pumps.
That would help increase
production from this field
without having to drill any
new wells. The contract for
development of Jofair field
had been previously awarded
to Belarus’s state oil firm
for development under a
$500 million buyback deal
in September 2007. But the
agreement was cancelled
due to the Belarusian
Company’s failure to honor
its obligations; oil recovery
from Jofair was expected to
reach 3,500 b/d, but after
four years it had managed
only to extract 2,800 b/d
of oil. The contract was
fifty-fifty between Iran and
Belarus. The Belarusian
Company was expelled
and the Iranian
firm on its own
continued the
development of
Jofair.

Foreign Investors
Eye Balal Gas Layer
Balal oil field has in recent decades managed to have a good share
in Iran’s oil production. However, the discovery of gas layers in this
field, which are geologically similar to the giant South Pars gas field,
has given rise to a new priority for Iran’s petroleum industry in the
offshore sec

The gas layer of this0 field was introduced to foreign investors as a lucrative project in Iran.
Balal produces both oil and gas. Balal field is located in the Lavan area in the Persian Gulf in the southern Hormuzgan Province. Balal oil field has
two reservoirs, known as Arab and Khatya. A buyback deal was signed in 1999 with foreign companies for the development of Balal field.
The project came online in  early 2003. The field started producing 20,000 b/d of oil.
The oil recovered from Balal is of high quality and is much better than the North Sea Brent. Development of the Khatya oil layer is one of the important projects operated by the Iranian Offshore Oil Company (IOOC). Five wells drilled in this oil layer are producing oil and another well is expected to be drilled  soon. France’s Total, which developed Balal in 2000 and 2001, failed to extract any
oil from Khatya. Now the oil extracted from this layer is carried to Lavan Island via a 100-kilometer-long pipeline.
The oil extracted from Balal is blended with the oil produced by Salman field before being processed and prepared for export. The development of Balal had been signed in 1999 between National Iranian Oil Company (NIOC) and an
international firm. According to estimates, the gas layers
of Balal field can produce 500 mcf/d of gas. The field is estimated to hold 6 tcf of gas in place.
Balal is located in the easternmost part of South Pars, and its main reservoir is
Kangan-Dalan.
According to NIOC officials, H2S of gas produced in Balal is below 100 ppm.
Balal is once more open to
foreign investment. Owing
to its valuable potential,
foreign companies have
shown willingness to invest
in this project. The CEO of
IOOC has said that renowned
international companies have
shown willingness to develop
this field which requires
cutting edge technology as
is the case with all offshore
projects of IOOC. Negotiations
are under way with foreign
companies which hope to
cooperate with IOOC in
investment, development
and provision of technical
services. To that effect, the
technical section of IOOC has
been examining bottlenecks
and drawn up technical and
investment packages.

Official data indicates that petrochemical exports constitute a significant
share in Iran’s non-oil exports. Iran’s Petroleum Ministry has over recent years
operated numerous petrochemical projects in a bid to complete petrochemical
supply chain besides seeking to increase Iran’s share of global petrochemical
trade. Currently, Iran accounts for 5% of global petrochemical trade and 24%
of the Middle East petrochemical trade. Petrochemical plants in Iran produced
about 27.5 million tonnes by September 2018.

Iran has in recent years invested heavily in
its petrochemical sector for development and
completion of the value chain in this industry.
Do you think you will be able to broaden your
business markets on par with such investment?
Petrochemical industry is among industries that
could expand and replace other industries. Over
recent years it has been among the most dynamic
industries in the world in terms of production
capacity and quality of new products. In short, it
could be argued that this industry has gradually
replaced many materials and alloys in the world.
We are not worried at all for losing our consumers
of petrochemicals. For instance, petrochemicals are
used in home appliances or related equipment or
in some instruments used in vehicles. We are trying
our best to use petrochemical materials further in
car manufacturing. Japanese car manufacturers
have recently developed a car, 70% of which is
made of petrochemicals and remaining 30% nonpetrochemicals.
That indicates the promising future
of this industry at the global level. In the meantime,
supply of feedstock for petrochemical production is
an important issue. Naturally, Iran which sits atop
the world’s largest hydrocarbon reserves may take
advantage of this opportunity in the best possible
manner. That is why we have taken measures
to develop petrochemical industries in Iran.
Currently about 8% of gas production and 15% of
liquid hydrocarbons like crude oil is used in the
petrochemical industry. According to projections,
by 2050, nearly 50% of world’s total gas and 50%
of world’s total liquid hydrocarbon would be
used in the petrochemical sector. Development of
petrochemical industry requires raw materials,
which are gas feedstock and liquid hydrocarbons,
besides technology. Technology applications for
petrochemical industry are expanding. Earlier, only
American companies had access to technologies
of petrochemical industry development. But now,
Europe, Far Asia and even the Middle East are
applying such technologies for development. Since
petrochemical products are used in all countries,
there are always applicants and such demand
is on the rise. Based on such principle, Iran has
moved to develop its petrochemical industry. Of
course I should highlight the point that we need
a high level of investment in order to complete
the value chain in this industry, in which case we
have taken effective measures. Furthermore, we
need to have further coordination with countries
making progress in this sector in a bid to be able to
benefit from their potential in terms of cutting edge
technologies.
Do you think you have been successful?
As I mentioned, we have taken effective steps
in light of the necessity of applying foreign
investment and technology. As far as investment by
foreign companies in Iran’s petrochemical sector
is concerned, we have always eyed transfer of
technology. Earlier, more than 80% of technology
used in Iran’s petrochemical industry was owned
by foreign companies, but now a significant
number of licenses are offered domestically and
this trend is growing.
What have you done with regard to
attracting foreign investment?
We have mainly sought to take loans from other
countries. We aimed to make foreign companies
stakeholders in our petrochemical plants. That is
not new and it existed before the 1979 Revolution;
Shiraz Petrochemical Plant was built with France’s
technology and money and Razi Petrochemical
Plant was half owned by US companies. The same
trend continued after the Islamic Revolution.
Arya Sasol is supplying products in partnership
with Iranian firms; Mehr Petrochemical Company
is 60% owned by Japanese and Thai companies
and 40% by Iranians. Even when it comes to the
privatization of petrochemical companies we have
had this issue on mind. For instance, 96% of Razi
petrochemical plant is owned by Turkish private
sectors and only 4% belongs to Iranian entities.
Foreign companies don’t face restrictions
for investment in Iran’s petrochemical industry,
do they?
No, they don’t. We have always welcomed the
presence of foreign companies in the petrochemical
industry. We believe that the petrochemical
industry is among industries enjoying potential
for facilitating partnership between Iranian and
foreign companies in financing and transfer of
technology. Fortunately some of our projects have
been 40-60 or 50-50 partnership deals. In any case,
Iran enjoys abundant advantages for investment
in the petrochemical industry. We are near Persian
Gulf waters, we have access to feedstock and raw
materials, our domestic market is big enough and
we are near consumer markets, too. These are
all reasons which encourage foreign investors to
consider investment in this industry. Of course,
transfer of technology is highly important for Iran.
How many projects do you have under
Official data indicates that petrochemical exports constitute a significant
share in Iran’s non-oil exports. Iran’s Petroleum Ministry has over recent years
operated numerous petrochemical projects in a bid to complete petrochemical
supply chain besides seeking to increase Iran’s share of global petrochemical
trade. Currently, Iran accounts for 5% of global petrochemical trade and 24%
of the Middle East petrochemical trade. Petrochemical plants in Iran produced
about 27.5 million tonnes by September 2018.
Fortunately
some of our
projects have
been 40-60
or 50-50
partnership
deals. In
any case,
Iran enjoys
abundant
advantages
for investment
in the
petrochemical
industry
Bosaqzadeh
Interview
Iran to Diversify
Petchem
Portfolio
We are trying
our best to use
petrochemical
materials
further in car
manufacturing.
Japanese car
manufacturers
have recently
developed a car,
70% of which
is made of
petrochemicals
and remaining
30% nonpetrochemicals
Ali-Mohammad
Bosaqzadeh, director of projects
at National Petrochemical Company
(NPC), tells that nearly 30 projects
would be implemented in Iran in line
with the completion of supply chain and
diversification of petrochemical products.
Here is the full text of the interview he gave to
“Iran Petroleum

construction in light of
completing the value chain
and diversifying the portfolio
of petrochemical products?
Nearly 30 projects are under
way in line with value chain
completion and diversification
of petrochemical industry
products portfolio. In line with
such policy, we hope to see more
diversity in products in new
projects so that final products
would be in the form of chain.
We have worked out 18 GTX
projects for converting gas to
propylene, located primarily
in Chabahar and Qeshm.
Furthermore, there are 10 PDH
(propane dehydrogenation)
units converting propane to
polypropylene, located in
Assaluyeh and Mahshahr with
a view to optimal
use of
gas feedstock to complete the
value chain of petrochemical
production. Several more
projects are also planned
to come online before next
March. We hope to see new
projects come online every year.
Hopefully, the projects under
construction have had more than
90% progress. Some of them are
Lordegan petrochemical project,
Ilam olefin project, Miandoab
petrochemical project, Kaveh
methanol project and Phase I of
Bushehr project.
Once these projects have
become operational, how much
will Iran’s share increase in the
global petrochemical market?
Compared with the global
average, Iran accounts
for half of
petrochemical per capita
consumption. To that effect,
we have to direct our domestic
industrial production so as to
increase per capita consumption.
As far as Iran’s standing in the
global petrochemical trading is
concerned, the country’s share is
about 5% internationally, which
reaches 24% in the Middle East.
In light of our variety of plans,
we intend to claim the top spot
in the Middle East in terms of
value of petrochemicals by 2025.
As you know, the Iranian
government does not directly
invest in the petrochemical
industry and the priority is for
domestic and foreign private
companies. Therefore, the
government has to provide
conditions to facilitate the
presence of potential investors
with full ownership on their
capitals. Of course, in future
petrochemical development
projects we focus on the
completion of value
chain. Given the
$80 to $90 billion in investment
we need for the development
of petrochemical industry we
envisage the following policies:
first, projects are required to be
based on the completion of the
value chain and higher valueadded;
second, products which
have not yet been manufactured
should be produced; and
third, we must have transfer of
technology. We have based our
projects on such policy and we
forecast that most of them would
be developed via Iranian-foreign
partnership. We have also held
talks with big foreign companies
for investment, which will be
announced after finalization
of agreements. Of course
companies willing to finance
projects are more diverse than
direct investors.
Iranian private
companies were planned
to implement a number of
projects in the Makran area
in partnership with foreign
firms. Have any projects been
envisaged?
A mission assigned to the NPC
was to study development of
petrochemical industry in the
Makran area. The advantages
of industrial development in
this area include proximity to
feedstock and raw materials,
$3-5 reduction in loading
costs, diversity of Iran’s export
market stretching from the
Persian Gulf to the Sea of Oman,
and proximity to consumer
markets like Pakistan and India.
Another advantage with the
development of the Makran
area is deep waters which
facilitate loading of products.
In Assaluyeh, very large vessels
can handle 50,000 to 60,000
tonnes, while in the Sea of Oman
there is capacity for 100,000
tonnes of products.
Given the readiness of a number
of Iranian and foreign companies
for investment in this area,
infrastructure is being prepared
for Phase 1 development.
We expect that with the
implementation of these projects
in the Makran area, this zone will
turn, like the Persian Gulf, into a
strategic destination of exports
to help Iran boost its share of
energy trade.

PGPICC Operates $8bn
Projects The Persian Gulf Petrochemical
Industry Commercial Company
(PGPICC) is operating $8.5 billion
worth of projects, the company’s
chief has said. “PGPICC’s annual sales amount
to $10.5 billion, $1.5 to $2 billion of which
is net profit,” Jafar Rabiei, CEO of PGPICC,
told a news briefing. “Furthermore, we are
depositing $7 billion to $8 billion per annum
in feedstock costs with the National Iranian
Oil Company (NIOC),” he added. “Over the
coming fiscal year, such projects as Lordegan,
Ilam olefin and Bid Boland 2 refinery, which
have been constructed with more than $4
billion in investment, will come on-str

Mideast 2nd Rank
Rabiei said the Independent Chemical
Information Service (ICIS) had upgraded
PGPICC’s international ranking in its 2017
update. He said that PGPICC had jumped
six notches to the 38th place among 100
companies. According to ICIS report, which
is released every September, PGPICC comes
second in the Middle East.
He said that PGPICC was the largest exchange
company in Iran.
“This company’s capital has increased from IRR
50 billion to more than IRR 90 billion. In recent
months, market arrangements by PGPICC and
its subsidiaries have improved on the floor of
exchange markets, and the holding company’s
shares have experienced growth in value,”
Rabiei said. “The buyers of PGPICC’s shares
have received dividends. For instance, PGPICC’s
largest profit-maker – Pars Petrochemical – was
listed on the stock market in July and those who
purchased the shares have seen 100% rate of
return,” he added. Rabiei said that the Nouri, Bu
Ali and Bandar Imam petrochemical plants were
waiting to be listed, adding that the Nouri plant
would be listed within months.
Export Revenues
Rabiei said PGPICC’s last year output equaled
85% of its rated capacity, which has now
reached 87%. He added that the target for the
current year is 90%.
“In parallel with increased oil prices on
the global scale, our export revenues have
increased,” he said.
Asked about cooperation with foreign
companies for petrochemical projects in Iran,
Rabiei said that two MOUs had been signed with
two leading European companies in the wake of
the 2015 signature of Iran’s nuclear agreement
with six world powers.
“Currently, we are facing no restrictions
in operating joint projects with foreign
companies,” he added.
Petchem Sector and Forex Market Stability
Rabiei said petrochemical revenues were
instrumental in stabilizing hard currency
market in Iran.
He said that PGPICC had supplied $15 million a
day on the market during the first seven months
of the current calendar year. Iran’s calendar year
begins on March 21.
“We have been transparent with the Central
Bank of Iran foreign currency system and we
have deposited the currency we have received
for exports,” he added. PGPICC was established
as the first holding in Iran’s petrochemical
sector in accordance with Article 44 of Iran’s
Constitution on privatization of key sectors.
PGPICC comprises 15 petrochemical companies:
Bandar Imam Petrochemical Plant, Arvand
Petrochemical Plant, Shahid Tondguyan
Petrochemical Plant, Bu Ali Sina Petrochemical
Plant, Fajr Petrochemical Plant, Khuzestan
Petrochemical Plant, Petrochemical Non-
Industrial Operations Company, Rah Avaran
Fonoun Jonoub Company, Nouri Petrochemical
Company, Pars Petrochemical Plant, Mobin
Petrochemical Plant, Pazargard Non-Industrial
Operations Company, Petrochemical Industry
Development Management Company,
Petrochemical Commercial Company and
National Petrochemical Company International.
In the Iranian calendar year to March 2018,
PGPICC made up 42% of Iran’s total exports.
PGPICC’s subsidiaries account for 38% of
petrochemical production in Iran. PGPICC has
50 target markets.

Ali-Reza Attar, manager of the Persian Gulf
zone of IOPTC, says: “This area accounts
for transmission of 50% of oil products
in Iran that is why we have always been running
at full capacity.”
In Iran, nine oil refineries are processing crude
oil to supply oil products. On behalf of National
Iranian Oil Refining and Distribution Company
(NIORDC), IOPTC is responsible for sustainable
and safe supply of petroleum products on a
massive scale. Iran is the world’s 16th largest
consumer of crude oil and oil products.
IOPTC manages 14,000 kilometers of pipeline
to transmit crude oil and oil products round the
clock.
The Persian Gulf zone of IOPTC was established
in 2014 after commissioning of Bandar Abbas
gas condensate refinery and concomitant
increase in the transmission of oil products
from southeastern Iran.
The 12th zone of IOPTC started work in 2014
after a pipeline was laid out for the transmission
of gas condensate from Assaluyeh to the
Bandar Abbas Gas Condensate Refinery and the
maintenance of pipelines carrying oil products.
The headquarters of this new area is in Bandar
Abbas and covers a region extending from
Assaluyeh in Bushehr Province to the northern
border of Kerman Province.
Record Smashed
A major pipeline in the new area is the one
extending from Bandar Abbas to Rafsanjan (in
Kerman Province), Isfahan (center) and Tabriz
in northwestern Iran. Another task assigned to
this new zone of IOPTC is to transmit feedstock
to the gas condensate refinery of Bandar Abbas.
That is why as new phases of the treatment
facility come online technical modifications
have been made in the pipelines and turbines
in order to boost the capacity of transmission of
products.
Ali-Reza Attar, head of the Persian Gulf zone,
says: “Of course once the [gas condensate]
refinery becomes fully operational, we will need
to implement new projects in order to carry
refined products.”
“We are currently handling nearly 50% of oil
products transmission,” he said, adding that
the record of transmission of oil products to
northern and central Iran was broken last
September.
Sustainable and Secure Transmission of
Products
Oil pipelines make up 70% of IOPTC assets.
Any minor disruption on these pipelines would
disturb transmission of oil products.
“The equipment used in this area is secure.
Even if we need to overhaul the apparatuses,
Iranian specialists can handle the job easily
without having to resort to foreign companies
for help or technical knowhow,” said Attar.
He referred to the sustainable supply of oil
products from there, noting that safety and
environmental concerns are always taken into
consideration.
“Safety is our top motto. In light of Petroleum
Ministry instructions on workforce safety and
compliance with environmental obligations,
we will try to avoid polluting environment in
all of our activities,” said Attar. “Furthermore,
training human resources and continuous
inspection have resulted in sustainable and safe
transmission of oil products at this center.”
Almas Cheraghdar, deputy head of the Bandar
Abbas zone for telecommunications, said:
“IOPTC has 296 telecommunications stations,
12 of which are located in the Persian Gulf
region. More than 90% of knowhow used in

FOCUS
Safety is our top motto.
In light of Petroleum
Ministry instructions
on workforce safety
and compliance
with environmental
obligations, we will
try to avoid polluting
environment in all of
our activities,” said
Attar

The Persian
Gulf zone of
IOPTC was
established
in 2014 after
commissioning
of Bandar
Abbas gas
condensate
refinery and
concomitant
increase in the
transmission
of oil
products from
southeastern
Iran

this sector is national and there is no need
for foreign companies in instrumentation and
mechanical affairs.”
Nader Salahshoor, deputy head for operations,
said: “This center is tasked with transmitting
gasoline, gasoil, kerosene and naphtha from the
Bandar Abbas oil and condensate refineries to
consumption points.”
Touching on the growing demand for gasoline
in Iran, he said: “Since this pipeline
carries 505 types of oil products in
the country we worked at maximum
capacity during the first six months
of the current [calendar] year
and managed to set a record by
carrying 1.3 billion liters of
products.”
“Our maintenance units
are active round the clock
in order to prevent a long
halt in activity in case of
incidence of fortuitous events,” Salahshoor said.
He highlighted the sensitive status of the
pipeline, saying: “For instance, due to a problem
in one of these lines, we had a 24-hour halt, but
since we had to carry products at maximum
capacity our halt lasted 22 hours and within 24
hours the line was reactivated.”
Mohammad Mehdi Jame’ei, deputy head of
technical affairs, said the Persian Gulf area was
one of the most important and most strategic
zones. “High temperature, humid weather
and the construction of more than 80% of the
pipeline in the mountain expose us to pipes’
corrosion,” he said. He added that 40% of highrisk
pipes had been repaired in 2017 after smart
pig running operations.
Operation at Full Capacity
The Persian Gulf area has three oil transport
centers – Bandar Abbas, Qotbabad and Mehr
Aran. The Bandar Abbas oil transport center
is located 25 kilometers from the provincial
capital of Hormuzgan Province, 20 meters
above the seal level. It carries imported
products, as well as products supplied by
Bandar Abbas oil refinery to Qotbabad via a
134-kilometer pipeline. It covers 76,000 square
meters. Kayvan Heydari, director of the Bandar
Abbas oil transport center, said this center is
the largest pumping station in Iran. “We are
currently running at more than 80% of our
capacity,” he said. Tough and rugged routes,
daily inspection of pipeline routes, round the
clock activity, sustainable transportation of oil
products and monitoring activities are among
difficulties of working at IOPTC.
“Due to the special location of the Persian
Gulf area, we have to work at full capacity. In
case this pipeline is halted for several hours,
we will definitely witness disruption in the
transportation of products,” Heydari said.
The Qotbabad center is located 132 kilometers
from the Bandar Abbas center and along
the Bandar Abbas-Sirjan transit route. It is
surrounded by desert and arid land, which add
to difficulties of work. The Qotbabad center
receives oil products from Bandar Abbas center
to be pumped to the Mehr Aran center through
three turbines. The Mehr Aran oil transport
center is located in the north of Hormuzgan
Province. It is located 1,426 meters above
the sea level. Mehdi Kayvan-Mehr, director of
this center, said a total of six solar
turbines are carrying oil products
from Qotbabad to Rafsanjan
oil transportation center.
The capacity of transport is
320,000 b/d.
The Mehr Aran center
is the last station in
the Persian Gulf area
for transporting oil
products. It carries
oil products to the
Rafsanjan oil transport
center.
That is where the
mission assigned to the
Persian Gulf zone of IOPTC
for safe and sustainable
transport of oil products
ends.

IOOC in $800mn No Flaring Deal

October 2018 Issue No. 76

IOOC
Iran’s petroleum industry
is determined to cut its
associated petroleum
gas flaring to zero in coming
years. Iran’s Minister of
Petroleum Bijan Zangeneh
recently said the objective
is to be achieved before
the current administration
bows out in 2021. Initially,
Mobile Oil Treatment (MOT)
is planned to be utilized
to handle the job, but in
upcoming years there would
be comprehensive plans to
prevent full flaring of flare gas
in Iran in a bid to help reduce
air pollution.
In recent years a large
number of contracts
and agreements
have been signed
with Iranian
and foreign
companies for
no flaring.
Between 200
and 300
no flaring
projects have
got under
way, which
are expected to come onstream
within years.
The HSE director of Iran’s
Ministry of Petroleum has
said preventing air pollution
in operational areas through
reducing gas flaring and
removing its concomitant
contaminants are two serious
approaches pursued by Iran’s
petroleum industry.
Iran has worked out plans
to implement no flaring in
three periods which would
respectively last four, five and
seven years. To that end, the
Ministry of Petroleum has
even set up a working group
to deal with no flaring in
the petroleum industry.
National Iranian South Oil
Company (NISOC), which
runs Iran’s major oil fields,
has signed memorandums of
understanding with several
foreign companies to reduce
flaring of associated gas. The
last in date was signed with
a European firm to prevent
the flaring of 720 mcf/d of
associated gas and renovate
ageing equipment and
facilities. NISOC is operating
projects in five provinces. It
accounts for 83% of Iran’s
total oil and 16% of its gas
production. The company also
feeds all petrochemical plants
in Khuzestan Province.
Kharg NGL
Notwithstanding the
return of US sanctions,
Iran’s petroleum
industry will proceed
with internationally
required measures,
incorporated in
the Paris climate
agreement
and other
environmental
obligations, to
reduce associated gas flaring
to zero. The Iranian Offshore
Oil Company (IOOC) recently
signed an €800 million
agreement with an Iranian
company for the completion
of an NGL project in
Kharg Island, desalting
and separating associated
petroleum gas in Kharg
and Bahregan and selling
products which are denser
than ethane. This agreement
is the first of public-private
partnership (PPP) type. No
foreign financer is involved
in this agreement.
A major class of agreement
categorized under PPP is
build-operate-transfer (BOT).
Under the deal with IOOC, the
company will complete Kharg
NGL in three years. After that,
it will pay monthly sums to
National Iranian Oil Company
for renting installations and
purchasing gas. The NGL
project is expected to have an
output equaling 300 mcf/d. In
order to recoup its capital by
2051, the Iranian party to the
contract will keep recovering
products heavier than ethane.
Implementing this
agreement will have major
advantages for the country
and its petroleum
industry, including
recovery of associated
gas in Kharg and
Bahregan (particularly
Forouzan field), preventing
the flaring of this national
asset, generating revenue
for the country, creating
jobs and preventing
environmental pollution.
The implementation of
this project by an Iranian
company will result in the
transfer and upgrade of
technology. The framework
of this agreement has been
designed jointly by IOOC
and NIOC Directorate of
Investment. According to
latest data released by the
World Bank in 2016, about
154 bcm of gas is flared
every year in the world.
In compliance with
international
obligations,
Iran’s
petroleum industry
is required to cut its
greenhouse gases by 2030.
To that end, Iran could
benefit from opportunities
provided by the Paris
Agreement which focuses
on making finance flows
consistent with a pathway
towards low greenhouse
gas emissions and climateresilient
development. A
measure Iran can undertake
with regard to climate
changes is to reduce gas
flaring. Under the country’s
6th Five-Year Economic
Development Plan, Iran has
set a schedule for the full
elimination of gas
flaring.

Politicized Oil a Double-Edged Sword

ver recent decades,
various nations have
used energy as a
political tool to achieve their
objectives and they have been
successful on many occasions.
A prime example was the Arab
nations’ oil embargo in the
1970s for politically motivated
objectives. Over recent years
too, the issue of political use of
energy by both producers and
consumers has been on the
agenda. For instance, amid its
simmering row with Ukraine
and the European Union, Russia
halted its gas supply to Ukraine
in winter.
Any political exploitation of
energy may prove effective
in the short-term; however,
it will give rise to mistrust
and pessimism in the longterm.
Russia’s behavior
forced European nations to
diversify their energy sources
away from Russia. Due to the
consequences of political issue
of energy, governments are
often careful when it comes to
this option.
However, over recent years,
the United States and Saudi
Arabia have done their utmost
in using oil as a political, tool.
That is while using the energy
weapon in political ties is like
a double-edged sword which
may fire back. Politicization of
trade markets, particularly in
the energy sector, has always
been threatening the oil and
gas industry, and has harmed
producers and consumers alike.
However, there are still some
oil producers and consumers
keep using oil for political
purposes. Logically speaking,
energy is expected to be used by
producers against consumers.
However, on some occasions,
political benefits have led to
convergence between suppliers
and consumers. A clear example
is the convergence and cohesion
between the US and Saudi
Arabia to use oil for political
purposes. This tactic has largely
been used in recent years
against Iran and Russia.
In the aftermath of the Ukraine
crisis and Russia’s direct
involvement with military
developments in Syria, the US
and Saudi Arabia drove down
oil prices in an attempt to
ratchet up pressure on Russia.
Furthermore, they sought to
pile up economic pressure on
Tehran in a bid to force the
Islamic Republic to reconsider
its regional policy.
Adoption of such policies may
seem to be successful, but it will
finally harm the same nations
that have politicized oil. Saudi
Politicized Oil
a Double-Edged Sword
Arabia ran into severe budget
deficit and had to agree to oil
production decline and freeze in
a bid to plug its deficit.
Saudi Plight
The Saudi regime and the US
are now trying to use oil as a
political tool for pressuring Iran.
Washington is making every
effort to restrict Iran’s oil export
while Saudi Arabia is trying to
compensate for Iran’s share of
market.
Amid such imbroglio, the
murder of Saudi dissident
journalist Jamal Khashoggi at
the Saudi Consulate in Istanbul
and ensuing pressure by the
Western government on Riyadh
forced Saudi Minister of Energy
Khalid Al-Falih to make a U-turn
and announce that his country
would not be able to provide
sufficient crude oil in case Iran
is driven out of the market.
In fact, Saudi Arabia is trying
to highlight the issue of oil
exports in order to alleviate
pressure from the murder case.
Nonetheless, any decline in
output on the part of the Saudi
government would infuriate the
Trump administration because
the US president has counted
on Saudi oil as alternative to
Iran’s as part of his political and
economic crackdown campaign
against Tehran.
Saudi Arabia is snared in a
calamity which keeps it from
moving forth or back. Any oil
output hike would undermine
its political influence on the
West on the issue of Khashoggi,
while any cut in production
would draw the ire of Donald
Trump.
In the meantime, any increase
in oil production by Riyadh
would imply drop in energy
prices on global markets,
in which case Saudi Arabia
would not gain anything. Apart
from that, any decline in oil
production would push prices
up, to the dismay of the US.
Add to this the fact that any
political use of oil would weaken
the standing of Saudi Arabia as a
country responsible for energy
security and would make the
West distance itself from Saudi
Arabia, which had been viewed
as a reliable partner.
There is only one way out of
this crisis for Saudi Arabia. The
Saudi regime had better let
economic issues and energy
sector be decided on the market.
Any political meddling with the
energy sector would adversely
affect oil pricing and snowball
into a political challenge for
every country using oil as a
weapon.
White House Error
Besides Saudi Arabia’s wrong
policy, the US government’s
policy of pressuring Iran
through restricting its oil
exports is a big mistake which
would finally fire back on the
Trump administration and its
allies.
US National Security Advisor
John Bolton has claimed that the
US is targeting Iran’s oil exports
in order to contain Tehran
without harming US allies
dependent on Iran’s oil. But in
practice, the US and every other
consumer and even producer of
oil would be affected by the US
policy. Iran is a leading producer
of oil in the world and any strain
on its production would directly
impact global markets and
subsequently drive up prices.
Furthermore, other producers
of oil in the world are not able to
fill the vacuum which would be
left by the absence of Iran’s oil
in the market. In the meantime,
some nations like Libya and
Venezuela are grappling with
their own domestic challenges,
which would lead to supply
shortage in the oil market
and render impossible any
compensation of Iran’s oil
absence.
That may explain why the
US has stepped back from its
previous claims for cutting
Iran’s oil exports to zero and
considered waivers to some
buyers of Iran’s oil. Such
backdown by the US indicates
that although the White House’s
pressures on some countries
has reduced Iran’s oil exports,
any political use of the oil
weapon would finally inflict
harm on Washington. Any
decline in oil production would
push prices up, which would
mean increased fuel prices
and inflation in the US. Under
the current circumstances,
many energy analysts attribute
the current oil price hike to
the Trump administration’s
anti-Iran policy, particularly
withdrawal from the 2015 Iran
nuclear deal.
Under such conditions, the
US’s political use of energy,
which would drive prices to
skyrocketed levels, would fire
back and may throw major
challenges to President Trump
in his management of the
economy. That would also make
many of US allies unhappy.
Last but not least, any
politically-motivated use of oil
would finally fire back.
Shuaib

Mexico Development Project to
Pick Up Speed
Mexico’s National Hydrocarbon
Commission (CNH) has approved Eni’s
development plan for the Amoca, Miztón
and Tecoalli discoveries, located in Area
1, in the Campeche Bay. The approval
comes 32 months after Eni signed the
Area 1 production-sharing contract,
won in an international bid round, and
17 months after the drilling of the first
well. Area 1 is estimated to hold 2.1 Bboe
in place (90% oil). The development
will be phased, initially with an early
production phase with startup planned
in 1H 2019, through a wellhead platform
on the Miztón field. Production will be
sent onshore through a 10-in. multiphase
line and then treated at an existing
PEMEX facility. Early production plateau
is expected to be 8,000 b/d of oil.

Eni, Total to
Explore Deepwater
Offshore Algeria
Eni and Total have signed two
agreements with Sonatrach which
include a partnership for exploration
offshore Algeria.
In parallel, Eni and Total will look to
obtain exploration permits to speed
up completion of their assessment
of the hydrocarbon potential.
Mexico
Norway
Norway Troll B Module Extends Oil Supply
A new gas module has come onstream
at the Troll B platform in the Norwegian
Sea, boosting the field’s oil production and
processing capacity. Oil production from
the Troll field is in the tail-end phase due to
declining reservoir pressure and thinning
of the oil column after decades of complex
drainage. Output has been restricted by
the gas treatment capacity on Troll B, but
the new module should raise capacity by
25%, in the process delivering a further
4.7 MMbbl. After a few years, Troll will
produce solely from its large remaining gas
reserves. The increased capacity will allow
more wells to remain onstream also when
the oil wells are producing simultaneously
with a rising percentage of gas during the
tail-end phase.
China
Australia Ichthys Makes 1st
LNG Shipment
The first cargo of liquefied
natural gas (LNG) from the INPEXoperated
Ichthys LNG project
has left Darwin in the Northern
Territory of Australia.
The LNG carrier Pacific Breeze has
departed the onshore liquefaction
plant en route to the INPEXoperated
Naoetsu LNG Terminal in
Niigata Prefecture, Japan. Ichthys
LNG will develop reserves of more
than 3 Bboe offshore Western
Australia, including around 500
MMbbl of condensate.
VIEW VIEW Australia
VIEW
Two CNOOC Gas
Projects Nearing First
Production
CNOOC achieved a total net production
of 113.8 MMboe during 3Q 2018, a decrease
of 2.1% year over year (YoY). Offshore
China production reached 73.7 MMboe,
while overseas production decreased 5.4%
YoY to 40.1 MMboe, mainly due to the lower
production efficiency in the UK North Sea as
a result of the preparation work for infill
drilling program. During the period, the
company made four new discoveries
and drilled fourteen successful
appraisal wells.

Colombia’s Ecopetrol Profit Nearly Triples

Ecopetrol, Colombia’s state-run
oil company, said its thirdquarter
net profit rose to 2.77
trillion pesos ($866.5 million),
up 177 percent from the same
period last year, thanks to
higher global crude prices and
increased output. The company
plans to invest between $3
billion and $3.5 billion during
2018 to boost production and
explore for more oil to replenish
dwindling reserves, drilling 620
wells and doubling the number
of rigs in operation from last
year. Consolidated oil and gas
production in the third quarter
rose to 724,000 barrels per
day (bpd), Ecopetrol said in a
regulatory filing. That is the
highest figure of the last ten
quarters. Protests in the first
quarter closed three fields and
lowered production to 701,000
bpd, before it rebounded to
721,000 bpd in the second.
Ecopetrol is targeting output of
725,000 bpd of crude and gas
equivalent by the end of 2018,
up from 715,000 bpd last year.
Strong performance across
the company “has allowed an
increase in the production of
crude and gas, a reduction in
crude imports for our refinery
sector and in products for the
local market and additionally,
allowed us to enjoy the benefits
of higher international prices,”
Chief Executive Felipe Bayon
said in the statement. The
company spent $789 million in
investment in the third quarter,
the statement said,
concentrating on exploration
and production, where spending
was up 57 percent over the
same period in 2017. It has
spent $1.79 billion through
September, meaning investment
during the fourth quarter will
need to be substantive to meet
the predicted total spending for
the year.

Permian NGL Pipeline Conversion to Crude Mulled

Enterprise Products Partners
LP said it could convert one of
its natural gas liquids (NGL)
pipelines to crude oil out of the
Permian basin as early as the
second quarter of 2019, ahead of
an earlier timeline of 2020.
The startup of the Shin Oak
pipeline, expected in the second
quarter of 2019, would provide
Enterprise the option to divert
NGL volumes from one of its
existing NGL pipelines onto Shin
Oak and repurpose the vacated
NGL pipeline to crude oil service.
“We’re not through building
takeaway out of the Permian,
and we are putting ourselves in
a position to be able to convert
a pipeline, but the earliest that
would be is when Shin Oak
comes on, and that’s not until
the second quarter of next year,”
Chief Executive Jim Teague said
on the company’s third-quarter
earnings call.
A production surge in the
Permian basin, the biggest oil
patch in the United States, has
outpaced pipeline takeaway
capacity, causing bottlenecks
and depressing prices in the
region. Midstream companies
have raced to add takeaway
capacity and provide links to the
Gulf Coast refining and export
hub. Enterprise has said it has
three existing NGL pipelines
that run from the Permian
Basin to the Gulf Coast - the
Seminole Blue, Seminole Red
and Chaparral. Separately, the
company has expanded capacity
on the Seaway pipeline
using drag reducing agents
this month. The Seaway system
hauls crude from Cushing,
Oklahoma, the delivery point
for U.S. oil futures, to Gulf Coast
refineries. Last quarter, the
company said it would expand
capacity on the Seaway system
capacity to about 950,000
barrels per day from 850,000

Texas LNG Casts Doubt
Over Rival Projects
The chief executive of Texas LNG, a U.S.
liquefied natural gas (LNG) project, has cast
doubts over his rivals’ plans to build export
terminals because their proposed capacities
would require a Chinese, or equally large,
committed buyer.
However, Chinese LNG buyers are seen as
unlikely to want to commit to U.S. LNG supplies
after Beijing set a 10 percent tariff on the
super-chilled fuel as part of an ongoing trade
war between it and U.S. President Donald
Trump. Vivek Chandra said an anticipated push
to make Final Investment Decisions (FIDs) on
U.S. projects next year may also falter because
buyers, whose commitments help
finance projects, are still shy of coming
forward in a fast-changing market.

Petrobras to Sell Stake in
Africa Unit
Brazil’s Petroleo Brasileiro SA will sell its
50 percent stake in a Nigerian oil and gas
exploration venture to a consortium led by
top oil trader Vitol for $1.53 billion, the latest
step in the state-controlled oil company’s debt
reduction drive, according to a securities filing.
The other 50 percent stake in Petrobras Oil
and Gas BV, also known as Petrobras Africa,
is owned by Brazilian investment bank BTG
Pactual, which in a filing confirmed a Reuters
report that it would likely hang on to its portion
after previously mulling a sale.
Petrobras, one of the world’s most indebted oil
majors, had targeted $21 billion in asset sales
for 2017 and 2018, but only succeeded
in unloading $9.5 billion worth by the
end of the first half.

Libya Oil Output Up
10,000 b/d
Libya has reopened three small eastern oilfields
closed since June due to fighting, adding some
10,000 barrels a day (bpd) of crude production, a
spokesman for state oil firm NOC said. The fields
were closed in June when an armed group attacked
the eastern ports of Es Sider and Ras Lanuf, forcing
NOC to declare force majeure for several weeks, a
contractual waiver to clients. Engineers restarted
the al-Bayda oilfield, one of them told Reuters,
sending pictures of jubilant workers busy at work.
The field has a capacity of around 12,400 bpd
but due to power supply issues NOC expects to
pump only 6,000 bpd from the field for now, a NOC
source said. NOC also gave instructions
to recommence operations at the Tibesti
and Dor Marada fields located in the same
south eastern area, the spokesman said

Argentina Restarts
Natural Gas
Exports to Chile
Argentina has begun exporting natural gas
to Chile after a 12 year interlude, Chilean
President Sebastian Pinera said, as the two
South American neighbors seek to increasingly
integrate their energy supply and electricity
grids. The unconventional gas is being piped
from Argentina’s oil- and gas-rich Vaca Muerta
shale field in the Neuquen basin, then sent
over the Andes mountain range to Chile’s
southern province of Biobio. “We are working
enthusiastically with (Argentine) President
Mauricio Macri to integrate our energy supply,”
Pinera said in a speech. The exports mark a
turning point in energy trade in the region.
Argentina, which sits atop the world’s No.

Austria’s OMV Targeting Downstream Assets

Brazil’s Cosan Eying Refining Partnership With Petrobras
Brazil’s Cosan SA Indústria e
Comércio, a leading ethanol
producer and fuel distributor,
is interested in refining
partnerships with staterun
oil company Petroleo
Brasileiro SA, its chairman
Rubens Ometto said. The
company is “looking at”
potential partnerships, but it
will depend on the model that
Petrobras, as the company is
known, sets for selling stakes
in its Brazilian refineries,
Ometto said.
Cosan has a partnership
with Royal Dutch Shell
Plc in the 50-50 joint
venture Raí􀆴zen, the world’s
largest sugar producer and
Brazil’s second-largest fuel
distributor. Ometto did not
make clear if a move to join
forces with Petrobras would
be made by Cosan itself or
by the venture. Advisers to
Brazil’s President-elect Jair
Bolsonaro have pledged to sell
several state companies as a
way to raise cash and reduce
the country’s debt. Even before
the election, Petrobras had
announced its intention to sell
shares in refineries.
Ometto said the possible
privatization process “will be
good for the country and good
for Petrobras.” “We are focused
on energy and logistics,” he
said, adding that Cosan could
take part in Petrobras’ sale of
stakes in refineries “depending
on the model, on the details
of the operation.” “We already
have refining assets in
Argentina, and here it could be
a way to continue that trend,”
the executive told reporters
on the sidelines of Datagro
international sugar conference
in Sao Paulo.
Raí􀆴zen bought Shell’s fuel
distribution and refining assets
in Argentina in April.
NEWS
9
Austria’s oil and gas group
OMV is on the lookout for
attractive buys to strengthen
its downstream business
in line with its strategy to
grow in low-cost regions,
its chief executive said. The
downstream business includes
the refining of crude oil and
the transportation, storage and
distribution of natural gas. The
group earmarked a 10 billion
euro ($11.32 billion) budget
for acquisitions in March, of
which it has so far spent $2.1
billion for production and
exploration, or upstream, assets
in New Zealand and Abu Dhabi.
The planned takeover of a 50
percent stake in Malaysian
Sapura Energy Bhd’s upstream
business is expected to cost less
than $1 billion, according to
analysts. “We will continue to
be very active, if there are good
deals available in the market,
OMV will look at it,” Rainer
Seele said in an investor call
when asked about acquisitions.
In the upstream sector, the
window of opportunity was
progressively closing as the
high oil price lifted the price
tag for upstream assets. “We
will focus on more downstream
assets,” the CEO said.
Responding to the e-mobility
drive in Europe, OMV is
adjusting the product portfolio
of its refining business and
reducing its diesel and gasoline
production. Instead it is shifting
the focus to aviation fuel and
petrochemicals,
banking on an ever
rising appetite for air travel
and plastic products. The partly
state-owned company, which
operates refineries in Austria,
Germany and Romania, has
said it aims to grow in regions
outside Europe such as Asia
where it expects demand to
increase most.

Oil Refiners Face Rollercoaster Ride
Oil product margins have been tossed around on a wild rollercoaster ride in October, as factors
like impending Iran sanctions, the China-U.S. trade war and upcoming shipping
regulations yank fuel profits up, down and back again.
Some profit margins, known as crack spreads in the industry, including for Asian fuel oil
and gasoil have boomed, while others, such as Asian
and European gasoline cracks, have plunged. Crack spreads are the difference between the price of
crude oil and the price of the products such as diesel and gasoline refined from it.
The term is derived from the

cracking process sometimes used in petroleum refining to produce the fuels. Asia’s cracks for
gasoil and fuel oil
have gained 16.3 percent and a whopping 124.3 percent, respectively, since the start of
the year - with most of the jump happening this month. “These cracks are extraordinary,” said
Sukrit Vijayakar, director of Indian energy consultancy

NEWS

Trifecta. Vijayakar, a veteran of India’s refining industry, said such high gasoil and fuel oil
cracks should move a refiner to maximise these products. “Keenly aware that these
cracks are extraordinary, he (the refiner) should protect such production decisions by hedging the
cracks ... as an insurance to protect windfall

gains,” Vijayakar said.
The margin on fuel oil - a residue from crude processing
- is typically negative. In the last week of October, however, it stood at around $1 per barrel,
pushed up in part by tightening supply ahead of sanctions against Iran, a major supplier of fuel
oil, which the United States will impose from next week.

PetroChina Third Quarter Results Hit 4-Year Highs

Third-quarter net profit for PetroChina, Asia’s largest oil and gas producer, surged to their
highest since September 2014, boosted by higher global oil and gas prices, the company said. Net
profit for the July to September quarter was 21.04 billion yuan ($3.02 billion), according to a
company filing
with Hong Kong stock exchange. That was up 350 percent from
4.69 billion yuan in the same period a year earlier, the company said.
For the first three quarters of 2018, net income climbed 177

percent from the same period a year earlier to 48.12 billion yuan, the state oil firm said.
Petrochina said it “grasped the favorable opportunities offered by the rising oil prices and the
increasing market demand
for natural gas.” Third-quarter revenue rose 24.8 percent from the same time a year ago to
601.1 billion yuan. Revenue for the first nine months of 2018 was 1.71 trillion yuan, up 17.3
percent from a year ago. PetroChina’s crude oil production over the period rose to 663.3 million
barrels, up 0.5 percent from the same

period in 2017. Meanwhile gas output was up 4.8 percent year-on-year to 2,662 billion cubic feet.
Natural gas sales volumes were robust during
the first nine months of the year but the company recorded net losses of 19.96 billion yuan on
imports of both piped supplies and liquefied natural gas (LNG), widening from 13.4 billion yuan
during the first six months of the year, the company said.
While PetroChina enjoys decent margins for its domestic gas, sales of imported gas are often booked
at a discount due to a regulated domestic prices.

GlobalOilandAsianProduct Market,October
Core OPEC members and Russia are hiking production to offset declining exports from Iran. Over Q4,
there are around 1.1 million b/d more y-o-y supply from these countries that goes a long way to
keeping crude balances
range-bound for the next year. US crude and condensate supply continues to surprise to the upside,
and despite local infrastructure constraints, we see supply increasing substantially y-o-y in 2019.

Middle Distillates (Gasoil, Jet Fuel)
Gas oil/diesel cracks in the East of Suez have been strengthening over the last few weeks amid
similar developments in the West
of Suez. Seasonally stronger demand, refinerymaintenance and overall global market tightness have
been providing ample support. Inthe near term, these factors are likely to keep cracks close to
current highs. However, recent demand indicators have been disappointing with Indian demand growth
losingmomentum amid high retail prices and an economic downturn in Pakistan leading to weak
readings in August. Incoming refining capacity and weak demand growth couldeasily slow some of the
momentum in middle distillates going forward. Jet/kero cracks also performed strongly

Fuel Oil
The Asian fuel oil market remains tight as is reflected in the wide open arbitrage window; it is at
its widest level of the year, thereby compensating for higher freight rates. Cracks and time
spreads indicate that this pull has strengthened the West of Suez fuel market as well.
In terms of balances, we expect the Asian market to tighten by around 200,000 b/d over the next
four months, although these volumes will be offset by an expected lengthening in Middle Eastern
balances of 190,000 b/d. the expectation is a tight forward cover to increase volatility and lead
to spikes in cracks in the event of unexpected demand—for instance from a return in Pakistani
purchases.

sharp spike in VLCC rates have been seen in recent weeks, driven by a surge in spot fixing activity
out of the Persian
Gulf. While that is certainly an indicator of a reshuffling  in trade flows in light of reduced
Iranian outflows, the lack of an uptick in key crude differentials to go alongside this - e.g. in
Urals NWE which is trending at multi-month lows vs Brent - suggests there is currently no real
shortage of medium-sour crude in Europe at this time.

Light Distillates (Gasoline, Naphtha) Global naphtha cracks have extended their declines amid firm
pressure from gasoline. Incoming data for Europe point towards an improving situation for naphtha
demand
asturnarounds ease, with Italian naphtha demand having
bounced back to last year’s levelsover August and

September after a lackluster Q2. Pressure on LSR/V naphtha also appearsto be easing in the
Americas, with US and Brazilian demand posting a rebound.Strengthening aromatics
prices are likely supporting this. Nevertheless, any significantupside to naphtha cracks will
require the pressure from gasoline to ease.
The same largely rings true for Asia. Seasonally strengthening demand should continueto support as
we move through Q4, with the weight of turnarounds now behind us. Ourbase case sees naphtha demand
bouncing back,
and exceeding 2017’s level as we movefurther through the year. There is steady support for growth
coming out of China in particular.Prices for paraxylene have also remained supportive, mitigating
some of the marginal rom gasoline,but similar to the Atlantic Basin, any strong upside is curtailed
by an overall ecess of light ends.

in the past few weeks, but regrades seesawed,remaining firmly in negative territory. Very strong
yields during peak crude intake overthe summer months has likely provided some pressure. However,
jet/kero demand hasbeen growing more strongly than gas oil/ diesel over the last few months and we
see thiscontinuing in the near term. Additionally, maintenance at Nayara’s 400,000 b/d
Vadinarrefinery in India from mid-November should contribute some short-term strength as it isa
major exporter of jet fuel.

The uptake in scrubbers is increasing strongly according to recent reports from DNV GL.
Their figures show that scrubber installations and orders have risen by 1,000 vessels in the past
six months,  bringing the orderbook
to around 1,850. If orders continue at this speed we may start 2020 with considerably higher demand
for HSFO
than many had previously thought.

How E&P CompaniesBenefit from Investment

The latest data released bythe International Energy
Agency (IEA) indicate that
global investment in the
upstream oil and gas sector
dropped from about $800
billion in 2014 to below $500
billion in 2016. Since then,
it has been varying between
$400 and $500 billion.
National Oil Companies
(NOCs) account for half that
investment as the bulk of
contribution comes from
private firms, including
International Oil Companies
(IOCs). In order to benefit
from their investment,
Exploration and Production
(E&P) companies are
required to bring together
their potentialities in various
sectors including project
management, underground
engineering, operation, HSE,
research and technology
(R&D), risk, financing
and legal issues. Strategic
decision-making, model of
operation and finally the
success of E&P companies
in investment are linked
to aforesaid aspects. At the
end of the day, companies
make self-assessment based
on their strategic goals by
measuring such indices as
hydrocarbon production,
amount of investment, capital
structure and oil deposits.
Now, one can review Iran
case and highlight necessities
which require paradigm shift
in the country’s upstream oil
and gas industry.
In terms of combined oil,
gas condensate and natural
gas liquid (NGL), Russia,
Saudi Arabia, Iraq and Iran
respectively account for 6%,
16%, 9% and 9.5% of global
oil and gas reserves. But
when it comes to production,
the percentages stand
respectively at 12%, 13%,
5% and 5.5% (2017 data).
These figures show that
Iran and Iraq have failed to
make maximum gain from
their reserves. However, Iraq
has been rapidly shifting its
strategy and has increased
its production 100% in
the past decade, and is
currently ahead of Iran in oil
production.
In order to have a clearer
image of Iran’s situation in
exploration and production,
we should take a look at
the future. According to
the OPEC’s latest crude
oil output report, share of
Iran in the Organization’s
32.5 mb/d production in
2017 stood at less than 3.9
mb/d. The Organization of
the Petroleum Exporting
Countries (OPEC) has
forecast its member states’
total output to reach 40
mb/d by 2040. In case Iran
intends to preserve its quota,
it has to bring its production
to at least 4.7 mb/d by that
time. In the meantime,
some countries are set to
experience a sharp decline in
oil production in 2040, which
would give Iran a chance
to raise its share through
investment attraction in
coming years.
That, along with highlevel
documents including
national development plans
and resilient economy
obligations, led to shift in
paradigm in Iran’s petroleum
industry. The first step to that
effect was the introduction
of a new model of oil
contracts, known as the Iran
Petroleum Contract (IPC),
and the qualification of E&P
companies. Dana Energy
was the first Iranian private
company to be recognized by
the Ministry of Petroleum as
an E&P company. It has so far
signed more than 20 heads of
agreements, three of which
have led to final contracts.
One of them is a contract
signed between National
Iranian Oil Company (NIOC)
and a consortium of Russia’s
Zarubezhneft and Dana
Energy.
E&P companies will
continue to develop their
potentialities before stepping
into international markets.
Companies are required
to take key decisions for
growth, including choice
of strategy and model of
operation.
There are a variety of
concepts for such decisionmaking,
including those
developed by Boston
Consulting Group for strategy
and by McKinsey & Company
for model of operation and
filling orders.
In the strategy sector,
companies are required
to answer questions about
business model, portfolio
structure, partnership goal,
risk appetite and financing
approach. Operation
models involve human
resources, procedures and
organizational structure.
We, at Dana Energy, seek to
benefit from the experience
of consultants and experts,
while following successful
models. Two examples are
as follows: As an Iranian
E&P company, our strategic
decision-making process has
brought up questions about
oil assets like hydrocarbon
production, geographical
zone, greenfield or
brownfield, risks, proximity
to infrastructure and
possible need for enhanced
recovery projects. That,
along with targets set for
the operatorship model,
requirements of would-be
partner and financing modes,
was summarized within a
framework for decisionmaking.
The output of this
structure has been the
formation and management
of five cases of partnership
with international entities.
In order to implement
suitable strategies, we had
to make decisions with
regard to human resources,
procedures as well as the
structure. Therefore, we
developed a plan based on
qualifications and skills to
grow specialized manpower
in order to facilitate
the implementation of
strategies in a dynamic and
participative environment.
Furthermore, we opted
for enterprise resource
planning (ERP) approaches
and constantly improved our
decision-making procedures
for a better outcome. In
parallel, the structure of
governance in the company
was reformed all across the
organization in line with
the best instructions, and
shared service center (SSC)
was developed within the
organization. The immediate
result of such measures
in recent years has been
the signature of contract
for the development of the
Aban and West Paydar oil
fields last March. Both fields
have progressed to a stage
of declining output due to
maturity and shared status.
They represent a suitable
model for the application of
improved oil recovery (IOR)
technologies. In both of them,
downhole pumps are to be
used.
Owning to the
implementation of such
technologies alongside other
planned activities, combined
oil production from the two
fields will increase 67 million
barrels, earning the country
about $5 billion if each barrel
of oil is set at $75. In their
course towards growth and
development, E&P companies
are in contact with a group
of key stakeholders. The
growth and development
of these companies largely
depends on the government’s
cooperation, financial
markets, suppliers and
technology ecosystem.
Therefore, the partnership
of these key players could
contribute to the growth and
development of Iranian E&P
firms much more easily and
at a higher pace. Last but
not the least; I would like to
highlight some key points to
be taken into consideration
by potential stakeholders:
Further development
of IPC can set the stage
for maximum attraction
of domestic and foreign
investment.
Markets and financial
entities should develop
closer ties with E&P
companies by providing the
necessary infrastructure for
the financing of projects.
All these issues are tied
to effective and efficient
decision-making by state-run
bodies.
Integrity in the ecosystem of
energy sector technologies
constitutes another
important step for the
development of technology
and growth of domestic
capabilities.
How E&P Companies
Benefit from Investment Mohammad Iravani

BB2 Refinery to EndGas Flaring

Recovery and
management
of associated
petroleum gas can
give rise to a major
development in the
economic aspect of Iran’s
petrochemical sector. This
objective has long been
pursued in Iran. So far,
several billion dollars has
been spent on recovering
associated gas, also known
as flare gas.
Flare gas recovery, noflaring
in oil fields and
completion of value
chain by using flare
gas as feedstock for
petrochemical plants
represent a prioritized
objective of Iran’s
petroleum industry.
To that end, nine natural
gas liquid (NGL) projects
are being implemented
with a totally capacity
of recovering over 5.1
bcf/d of associated gas.
These projects include
Bid Boland II (BB2) gas
refinery (which includes
four NGL projects),
Persian Gulf Yadavaran
Gas Refinery (NGL 3200),
Hengam Gas Refinery
(Qeshm Island flare gas),
Dehloran field’s NGL 3100,
Maroun field’s NGL 2300
and Kharg Island’s NGL.
These green refining
projects would put an end
to more than a quartercentury
gas flaring in
Iranian oil fields.
Lack of investment in
such projects is the major
reason for no-end to gas
flaring in recent decades.
But today, leading
petrochemical companies
like the Persian Gulf
Petrochemical Industry
Commercial Company
(PGPICC) have realized
the economic value of
flare gas and have moved
to sign agreements with
National Iranian Oil
Company (NIOC) for
flare gas recovery. PGPICC
is currently running more
than 60 petrochemical
companies exporting $8
billion to $9 billion worth
of exports a year. By
stepping into associated
petroleum gas recovery
sector, PGPICC intends to
guarantee petrochemical
feedstock supply to its
plants for three decades.
The BB2 project is one of
leading investment projects
operated by PGPICC. It is
under construction to halt
the waste of flare gas in
oil wells and to produce
1 mt/y of ethane to feed
petrochemical plants.
The startup of the BB2
facility will provide
feedstock for four to five
petrochemical plants
located on the Dena
ethylene line, starting from
Gachsaran Petrochemical
Plant to Dehdasht and
Mamasani. In practice,
petrochemical plants
located in Mahshahr will
find a source of feedstock
supply after two decades.
The BB2 refinery is now
90% complete and is
expected to be launched
next year to start
commercial production.
Other projects that would
benefit from feedstock
supplied by BB2 are
Kazeroun linear highdensity
polyethylene
(LHDP) and linear lowdensity
polyethylene
(LLDP) plant and Boroujen
LHDP plant.
High Value-Added at BB2
Currently, each tonne of
ethane is valued between
$240 and $260. When it
is converted to ethylene,
the value will jump to
$800 to $850 per tonne.
And transformation into
polyethylene will increase
the value to $1,100
to $1,200 per tonne.
Therefore, in order to
complete the value chain,
the propane produced at
the BB2 refinery will be
transformed to polymer
products. A PDH (propane
dehydrogenation) project
is under study to transform
propane to polypropylene.
Preliminary talks have
been held with licensor and
investment companies for
the implementation of this
project.
The share
of domestic
manufacturers

in this project has
increased to 64%. Plans
are envisaged to make
maximum use of Iranian
manufacturers and
contractors for completing
the refinery.
The BB2 refinery would
be fed by gas feedstock
which NGL 900, NGL 1000,
NGL 1200 and NGL 1300
would supply. The total
rich gas projected to be
supplied to the treatment
facility would be 56.6
mcm/d, 75% of which
will be converted into
methane, and returned to
the national gas trunkline.
The remaining 25% will
be by-products. More
precisely, about 48 mcm/d
of methane would be
injected into national grid
and the remaining would
be 1.5 mt/y of ethane, 1.5
mt/y of liquefied petroleum
gas (propane and butane)
and 500,000 tonnes/y of
pentane plus for gasoline
production.
The BB2 refinery is
under construction in the
southwestern Khuzestan
Province with a $3 billion
credit line. This investment
will be recouped in less
than two years after startup
as the plant would be
yielding approximately $1.4
billion in annual revenue.
Therefore, timely financing
of the project would be
instrumental in achieving
the aforesaid objective.
The BB2 facility would be
connected to facilities
in the provinces
of Khuzestan,
Kohguiluyeh Boyer Ahmad
and Bushehr. It would also
require the construction of
a 300-km pipeline to carry
gas to the refinery and
another 300 kilometers of
pipeline to carry refined
products to a storage
facility in Mahshahr Port.
The positive cultural
and social effects of the
project should be also
taken into account. The
BB2 facility is being built
on 244 ha of land in the
city of Behbahan, while the
storage facility in Mahshahr
is being constructed on a
60ha piece of land. PGPICC
and National Development
Fund of Iran (NDFI) are
providing the necessary
investment with an Iranian
bank serving as agent.
A turning point in this
national megaproject is
the employment of Iranian
engineers and service
workers. No foreigner is
involved in this project.
More than 4,200 people,
aged 35 to 40, are working
on the site of the BB2
facility.
Government Action
The ownership of the BB2
refinery was transferred
to PGPICC in 2015 owing
to a decision made by the
administration of President
Hassan Rouhani. Over 14
years before such transfer
of ownership, the project
had progressed only 18%.
But it has since progressed
to 90%.
The BB2 refinery project is
a national strategy because
it would supply feedstock to
national industries. In case
the BB2 project and related
downstream projects are
not launched, Iran would
be suffering $15 million in
losses per day.
Iran’s largest oil producer
– National Iranian South Oil
Company (NISOC) – recently
signed two agreements
worth $1.2 billion with
PGPICC to prevent the flaring
of about 22 mcm/d of
gas in the eastern bank
of Karoun River. Once
operational, these
two projects would
supply 510 mcf/d of
feedstock to the BB2
facility and 250 mcf/d
of feedstock to the
Maroun Petrochemical
Plan. The recovery of
gas would help NISOC
lift its NGL production
by about 38,000 b/d,
which would in turn
provide further
feedstock to the Bandar
Imam Petrochemical Plant.
Therefore, petrochemical
plants in Iran would be
receiving an extra 1.6 mt/y
of ethane and higher-density
gas products, as well as
14 million barrels of NGL.
That would be a big step
towards making up for
feedstock shortages in the
petrochemical plants
across the country.
This amount of
feedstock is valued at
$1.3 billion for NIOC,
while petrochemical
products
manufactured due to
extra feedstock would
be valued at $2.6
billion a year. These
projects will also put
about 16 mcm/d of
light natural gas at
the disposal of NIOC.

Foreign Investment, Sole Challengeto Iran Upstream Oil Sector

The head of the
Institute for
International
Energy Studies (IIES) has
said the only problem
Iran’s upstream oil sector
is currently faced with is
manner of attracting foreign
investment.
Ali Mobini Dehkordi
said the US imposition of
unilateral sanctions on Iran
has restricted attracting
foreign investment.
“This issue will be
resolved to some extent
through arrangements the
government is making with
European nations,” he added.
Mobini Dehkordi said
selling oil on the Iran Energy
Exchange (IRENEX) would
provide a good platform for
attracting money stock to
finance oil projects.
“Energy consumption in
the transport sector grew
4.8% year-on-year, while
petrochemical feedstock
was up 14.26% on a yearly
basis,” said Mobini Dehkordi,
noting that the growth
proved that Iran’s economic
prosperity was dependent
on the sectors with high oil
and gas value-added.
Referring to US sanctions
against Iran, he said: “Today,
many Western nations,
particularly the US, are
targeting the energy sector
in a bid to disturb financial
transactions, knowledge and
energy sector data.”
“Therefore, the sanctions
need to be viewed based
on principles, i.e. national
potentialities have to
be first identified and
in the following stages
threats would turn into a
constructive opportunity,” he
added.
“All economic, technical
and technological elements,
particularly in the energy
security sector, are in special
conditions. They should be
viewed collectively. Even
countries and multinational
companies which possess
big oil and gas reserves
are seeking to own energy
market in the world. All
of these countries hold
an integrated and targetoriented
approach vis-à-vis
the oil market,” said Mobini
Dehkordi.
“Under the current
circumstances, the energy
phenomenon could not be
viewed from a single aspect
because air pollution across
the globe, global treaties,
economic issues and
economic growth of different
nations, as well as the level
of knowledge in the energy
sector have joined hands to
create special complexities
in the energy sector,” he said.
Data Mining
Mobini Dehkordi touched
on the issue of data mining
in oil and gas reservoirs,
saying: “The issue which
has recently emerged in the
world is data mining from
oil and gas reservoirs in
the country. It means that
reservoirs are managed by
updated data.”
He noted that the new
phenomena in the energy
sector may not be contained
based on a centralized
power.
“In the new era, which is
the era of networks and
links and communications,
all activities in the energy
sector may no longer be
pursued in a centralized
manner,” he said.
805,000 boe/d Wasted at
Power Plants
Hamed Houri Jafari,
head of IIES Technology
Research Center, said energy
efficiency, sustainability,
environmental issues,
energy security as well as
social equality and justice
were among indicators
taken into consideration by
many countries sitting atop
large oil and gas reserves.
“Iran’s total energy
production equals 9.32
million barrels of oil
equivalent a day (mboe/d),
8.45 mboe/d of which
enters the energy network
in the country, and after
wastes at power plants
due to processing, 3.68
mboe/d ends in the hand of
consumer,” he said.
“In the energy system,
totally we waste 2.14
mboe/d, of which 805,000
boe/d is wasted at power
plants,” he added

NIGC, LeadingTechnomart Firm

demo for gas industry
was held to introduce
startups to potential investors.
Saeed Pakseresht, director
of research and technology at
National Iranian Gas Company
(NIGC), said business in Iran
was experiencing a new
atmosphere. “Gas industry
technomart creates suitable
conditions for the recruitment
of graduates,” he said. “Gas
industry technomart is the
first of kind in Iran and we feel
proud to have facilitated such a
system,” he added. Pakseresht
said that the gas industry
startup demo was a venue for
startup companies to present
their achievements. He added:
“Thanks to good planning, we
are making efforts to bring
them closer to real
results. Business
is experiencing
a new
atmosphere in the country and
requires fulfilment of tasks by
new players in this arena.”
“As its name suggests,
technomart is a technology
market which tries to create
a good atmosphere for the
recruitment of graduates in
the country. We are trying to
put major players and other
stakeholders in this market
along one another. This is an
obligation for the government,”
said Pakseresht. “Startups are
part of our regulatory and
facilitative efforts,” he added.
“By organizing technological
tours we have prepared the
conditions for small-sized
and innovative companies
(knowledge-based
companies and parks
of science and
technology) to get
familiar with
various sections
of the gas
industry so that they would
be able to bring prosperity
into the new business
environment,” Pakseresht said.
“Two official commissioners
have started work in the gas
industry technomart, whose
job is to effectively link supply
and demand. Of course other
stakeholders are required to
join this system, one of whom
is investor,” he added.
Gas Technomart
Hossein Saberi, deputy head
of the Park of Science and
Technology for technological
development, said: “Among
different sectors of Iran’s
petroleum industry, NIGC
has shown the highest interest
in the establishment of a
specialized technomart.”
“Our cooperation with NIGC
is nearing the end of its first
decade, whose outcome
has been the creation of
new spaces in the business
environment,” he said.
“Currently in the world,
the gas industry is moving
ahead, and given our huge
gas reserves, we are enjoying
a big advantage in the gas
industry technomart.” “This
technomart relies on the gas
industry needs, in which
a highly motivated and
dynamic group is active,”
said Saberi. He said that
technological needs
have been taken into
consideration in various
sectors of petroleum
industry in recent
years. “NIGC has shown the
most interest in establishing
a technomart,” he added.
Saberi said filing new demand
with suppliers would open a
new way in the gas industry
technomart.
7 New Technology Projects
Pakseresht recently said that
the gas industry technomart
had started work in March
2017 in cooperation with the
Pardis technology market and
national technomart.
The first gas industry
technomart was held on the
sidelines of the
latest Iran Oil
Show in Tehran,
during which
stakeholders
and
administrators of gas industry
exchanged views and shared
experience. Regarding the
second technomart, he said
that 32 projects had been
submitted, 17 of which were
cleared by the arbitration
committee. “They include 14
knowledge-based companies
and 3 others,” he said. He
added that six to seven
projects would be submitted
for the gas industry to end
in finalization of contracts.
Pakseresht added: “Although
knowledge-based companies
are often enjoying academic
support, we faced certain
challenges in creating links
between suppliers and
applicants, the most important
of which has been the risk
of using new innovative
products.” “In order to
reduce risks and allay
concerns, we have to
find a way to make
sure about the efficacy
of the products,” said
Pakseresht.
NIGC, Leading
Technomart

National Petroleum; From Beginning to End
company struck a deadly blow
to Britain’s four-decade-old supremacy in the region. That led Iranians to think of a higher share
of their own wealth in their deal with Britain.
For the first time, an
Senate also moved to endorse
the decision for fear of not giving cause to the recurrence of deadly incidents like those
committed by the “Fadaian-e Eslam” group. On the final day of that calendar year, the law
Masjed Soleyman, Aghajari,
Naft Sefid and other oil-rich areas joined the industrial action. By April 1951, most of the
45,000-strong staff
of AIOC were on strike. Oil production rate fell drastically,

orn in 1908, Iran’s petroleum industry went through ups and
downs during the first four decades of its life. Throughout a forty-year period, oil-rich areas had
been discovered
n southwestern Iran, oil activities had expanded throughout World War
I (WWI) and Iran had experienced a new monarchy system. In the wake of the outbreak of WWII, Iran
saw transition of power from father to son. During those
years, Iran’s oil production had exceeded 32 million tonnes a year. Oil-rich areas had turned nto
developed cities, which were envied by people living in other parts of the country.

In Abadan, Gachsaran,
Haftkal, Naft Sefid, Lali, Masjed Soleyman and new oil-rich areas, new living facilities ranging
from recreational centers and sport clubs to healthcare and education centers, had emerged.
For instance, in Abadan alone, such buildings and facilities as hospital, Taj Cinema, Armenian
Church, German bathroom, Iran club, shopping center,
Pakistani café where spicy food was served and a famous café were built. That indicated industrial
development and prosperity, marking 40 years of discovery of oil in Iran. The end of deadly WWII
led to the development of petroleum industry as well as political

openness. Iranian politicians had time to think of national rights.
When Iran was occupied by Allied troops in September 1941, Iranians realized the nature of foreign
governments, particularly the British.
Political overture following WWII gave political groups and parties a good chance to flex muscles
with their talks mainly focused on oil.
Another point was the presence of US companies in oil-rich countries in the Middle East region.
Iran was hearing news of signature of lucrative deals between US companies and Arab petrostates.
The
50-50 deal signed between Saudi Aramco and a US

MP in the 15th National Consultative Assembly, Abbas Eskandari, suggested the
idea of nationalization of the petroleum industry on August 20, 1948. On January 19, 1949, when the
government was facing a censure motion,
Eskandari submitted a plan for revising Iran’s oil concession. Eskandari’s efforts proved futile,
but MPs in the next Assembly embarked on renewed efforts under the leadership of Mohammad Mossadeq.
The advantage for them was the support offered by religious groups led by Ayatollah AbolQasem
Kashani. Mossadeq and his allies in the Assembly finally managed to win approval for the motion
on the nationalization of
the petroleum industry. The

was approved and Iranians received their New Year gift on March 22, 1951.
But the Anglo-Iranian Oil Company (AIOC) did not sit idle. Under the pretext of low rentals and
foodstuff prices, the company moved to cut wages and housing allowances.

National Riots
AIOC’s unexpected move, which coincided with the time oil service workers were expecting to receive
their bonuses, snowballed into a massive crisis. General strikes were declared across the country.
The “Tudeh” party was involved in the organization of the strikes. The strikes began in Mahshahr,
but spread very quickly to all oil-rich areas.

drawing angry reaction from Britain. Add to this expulsion of AIOC engineers from
Iran. The key point is that Ayatollah Kashani had thrown his support behind political activists.
Such unity continued for some time, but due to
some misunderstandings and emergence of differences, which were quickly exploited by the government
and foreigners, the movement
for the nationalization of petroleum industry ended in failure.

Kashani’s Letter
An unpublished letter from Ayatollah Kashani indicates clearly the religious groups’ support for
politicians in the establishment of National Iranian Oil Company (NIOC).

In a letter dated May 24, 1951
nd addressed to a leader f the oil nationalization
ovement, Ayatollah Kashani rote:
“Dear Sir, I hope you are ll well. I am worried and
tressed at an unlimited level. hope that everything will
nd soon so that I would take sigh of relief. What comes to
my mind is that if they refuse o compromise, the wells have o be closed by force. Before hat the
company’s managers ave to be expelled, their esidence permits withdrawn nd ordered to leave Iran
ithin 48 hours.
Please give my regards to all riends, in particular Dr Amir alali and Mr. Bazargan. During he
meeting which you must
have heard about we decided
to confirm it. If possible please give me call and let me know of the result.” The content
of the letter shows that the British had firmly resisted the expropriation decision and their
resistance continued for more than two years. Over this time, Iran’s petroleum industry was
entangled in political disputes instead of being involved in production and development.
After Mossadeq succeeded Prime Minister Hossein Ala following his resignation, Ayatollah Kashani
repeatedly voiced his support for Mossadeq. Britain was angry at the unity of Iranians on the issue
of nationalization
of petroleum industry.
To counter such unity,
Britain filed a complaint with the International Court of Justice (ICJ). In the complaint, the
British government claimed that
the Iranian government’s oil nationalization scheme had squandered Britain’s capital and technical
knowhow. It also accused Iran of having been ungrateful and noted that an agreement signed between
the two sides had been violated.
The ICJ called on the parties to hold talks. In the meantime, the US sought to play a mediatory
role between Iran and Britain with a view to winning concessions and guaranteeing its future
interests.
Americano-British
Diplomacy
Veteran American diplomat William Averell Harriman was sent to Iran to hold talks and leave for
London. He
recommended that the British government enter talks with Iran in order to minimize loss. Britain’s
then prime minister Lord Stokes travelled to Tehran in a bid to settle the dispute, but he failed.
After holding talks with the government of Iran, he met with the “Shah”
of Iran. He warned the “Shah” that Iran would face embargo as Britain was powerful enough to remove
Iran from global oil markets. The “Shah” explained to him that the situation had spun out of
control and that Iranians were
by no means ready to give up
their cause. Iran’s petroleum industry was in purgatory conditions. Iran’s oil crisis sharply
raised oil prices in the world. Arab states in the
Persian Gulf and Saudi Arabia made maximum gains from the price hike to accumulate their currency
reserves.
Britain then resorted to the UN Security Council in an attempt to prove its allegations, but Iran’s
prime minister turned up at the Security Council and pleaded Iran’s cause.  Winston Churchill was
reelected prime minister in England, vowing
to work for the collapse of Iran’s government in a bid to resolve the oil crisis. Iran’s economy
was in distress and the government’s plan to issue
bonds could no longer offer a
solution to growing poverty. Mossadeq sought to take a loan from the World Bank, but Britain
intervened to block the move. The last wave of pro- Mossadeq demonstration was seen on July 20,
1952.
Mossadeq gradually lost his popular base due to discrepancies between oil nationalization movement
leaders. And owing to US-
Britain joint plotting, Iranians experienced their most tragic days in the summer of 1953. The
August 18, 1953 coup was the culmination of a chapter that had opened to nationalize Iran’s oil
industry. The attempt for a better use of oil wealth, taken from AIOC, finally played into the
hands of Consortium.
 

Petrochimi Bandar Imam WinsAsia Basketball Championship

Petrochimi Bandar Imam
Basketball Club claimed
the top rank in the Asian
games. That was achieved
without any training or hiring
of foreign players. On the first
day of matches, it had only
seven basketballers, which rose
to eight in the following days.
The matches were hosted by
Thailand. Trained by Mehran
Hatami, the Petrochimi Bandar
Imam team made history
thanks to their remarkable
performance. Confronted by
ambitious billionaires, they won
games one after another until
they reached the championship
title in the Asia. It was the sixth
win by an Iranian basketball
club across Asia. Before that,
Saba Batri (twice), Mahram
(twice) and Foolad Mahan
Esfahan (once) had won
the Asian title. It was now
Petrochimi Bandar Imam’s turn
to become known in Asia. This
club had already won titles in
the Pro League and West Asia.
But now it had to win the Asian
title to perfect its honors. That
was finally achieved.
From Start to Finale
Petrochimi Bandar Imam
went first face-to-face with
South Korea’s Sky Nights and
won with 77-62. Their second
match was with China-Taipei,
which ended in 96-63 in favor
of the Iranian team. The third
match was between Petrochimi
Bandar Imam and China’s
team. The Chinese side was
eliminated after falling 69-
108 to Petrochimi Bandar
Imam. In the semi-finales,
Petrochimi Bandar Imam and
the Philippines settled squares
and the match finally ended
79-74 for Petrochimi Bandar
Imam to go into the finale.
Representing Iran, Petrochimi
Bandar Imam went to Asia
with eight basketballers and
returned with a championship
title. The victory was achieved
after two years of failure.
The Iranian side had no
foreign basketballers, but
overpowered Japan in the final
match with 66-64 result.
Meysam Mirzaei was selected
the best basketballer for
gaining 28 points, 7 rebounds
and 33 assists. Arsalan Kazemi,
who was also awarded, gained
9 points, 14 rebounds and 26
assists.

Interview with Petrochimi Bandar Imam Coach:
Self-Confidence, Motivation Key
to Asia Title

The Petrochimi Bandar Imam Basketball team had been sent to the Asian matches in
Thailand in the 11th hour, but it raised eyebrows thanks to its brilliant performance.
Nobody expected such achievement from the Petrochimi Bandar Imam team, but
Mehran Hatami made their wishes come true. Now everyone in the basketball circles
speaks about Petrochimi Bandar Imam. Here is an interview with Hatami:

Would you please tell us about championship in Asia?
The championship title won by Petrochimi Band Imam was the product of efforts by the players. T
eight basketballers in the Petrochimi Bandar Ima team did their best throughout matches and assi
the team in achieving its main objective. The play were great and they did their best.

Did you ever think of championship in lig
of conditions you were in?
It would be exaggeration if I say yes, but as soon a the matches started and we won the first and
the second one I was convinced that we will make hist We continued the same trend we had started
and finally managed to win the championship title. We were not numerous, but we were highly
motivated.

You said you were eight. How did you manage to cause motivation in the team?
The special conditions of the Petrochimi Bandar Imam team and the low number of basketballers had
automatically motivated us to win better res But when you have fewer players you fear more. But you
should always keep in mind that a single combatant is much better than 100,000 extras. I happy to
have had eight genuine combatants. We not have players to fill some posts, but others hel make up
for shortages. My basketballers did thei utmost on the basketball court and the only reas for such
relentless efforts was their high motivati

What was your tactic in defeating famous Asian rivals?
As you know our team was not complete and

under such circumstances tactical plans cannot
prove effective. You have to work on the mental
and psychological aspects of your players. My
basketballers are all professional. I had to work on
mental issues so that they would play better. I reiterate
that the championship title in Asia was the product of
a group work, and regarding my team I have to say that
mutual trust between me and my young basketballers
as well as mutual trust among the players themselves
helped us win the championship title in Asia.
So everything was the result of confidence
and solidarity, wasn’t it?
Ever since I was selecting the basketball players,
I had constantly insisted that we had to remain
alongside each other throughout the matches
because I believe that would be the only way to
achieve better results. My basketballers were
technically qualified and the issue of ethics was
the more important point. In the matches, the
basketballers were supporting one another. That is
why I had a homogenous team.
Would you please tell us about your rivals
and their standing? How much did you know
them?
All teams taking part in the Asian clubs matches
were in ideal conditions. That a team participates
in such matches without previous training may
sound unimaginable. The teams from South Korea
and Lebanon were the only ones with a single
foreign player each. Other teams like Thailand and
China-Taipei had at least two foreign members. The
Philippines’ team had three American basketballers
in its composition and the Japanese side had
four, two of whom were on the bench. That is
while our team had not had even 12 players. The
only option for us was to motivate players into
playing better. What our team did was a big job. It
becomes especially important when we take into
consideration the conditions they were in.
Do you have any plans for the League?
We will start training very quickly and we plan to
attract several new players in order to prepare for
the League matches and win the championship title.
In the last season, we lost the title and we are now
determined to win in.

Ilam, Beauty of Zagros

Ilam Province is located west of Zagros Mountains. It neighbors Khuzestan Province to the south, Lorestan Province

Bahram Choubin Ravine
The Bahram Choubin ravine is a natural
beauty in Ilam Province. It houses monuments
which are unique. The ravine is wide and
located in a strategic place in Kabir Kouh. Along
with remnants of military towers attributed to
Bahram Choubin (a Sassanid-era warlord), it is
a recreational area for tourists. Some stories say
Bahram was holed up there during revolt against
Khosrow Parviz

Siah Gav Twin
Lakes
Siah Gav twin lakes are
known as Ilam’s natural
aquarium. Surrounded by
deserts and tall mountains,
it is among the rarest
natural phenomena in Iran.
The lakes offer attractive
and fascinating perspectives
in spring and autumn.
A major feature of this
aquarium is its transparent
water, which may be seen up
to the depth of 30 meters.
One of the lakes is
upstream and the other
one downstream, each with
dept of 20 meters. They are
connected together via a
10-meter river canal.

Chahar Taqi
Fire Temple
Chahar Taqi Fire Temple
is among pre-Islamic
monuments in Darreshahr.
It is 1,400 years old and
dates from the Sassanid era.
It used to serve as a venue
for rituals and worshipping
sacred fire. It enjoys a
special architecture. One of
the lakes is upstream and
the other one downstream,
each with dept of 20 meters.
They are connected together
via a 10-meter river canal.

Kafarin Ravine
This ravine is located in Badreh city in Ilam
Province. Widespread acorn trees and such animals
as Iranian squirrels are among tourist attractions
there. The River Zamzam is one kilometer into the
ravine. Jaber pilgrimage site is another place for
visitors.

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