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I I r r a a n n E E c c o o n n o o m m y y U U p p d d a a t t e e
Issue 111/2016 – Tuesday October 18th Content
2nd Petroleum & Energy Club Congress & Exhibition kicked off in Tehran on Monday
Iran-EU joint railroad conference held in Tehran
2nd Petroleum & Energy Club Congress &
Exhibition kicked off in Tehran on Monday In an address to the 2nd Iranian Petroleum & Energy Club Congress & Exhibition held in Tehran on Monday, Vince President Eshagh Jahangiri said increasing oil production and exports in the best possible manner is necessary for protecting our national security and power. “For the development and progress of Iran, there is no issue more important than [boosting the] oil and gas [sectors],” Jahangiri was quoted as saying by the daily Shargh. Jahangiri expressed dissatisfaction with the low progress of the country’s petroleum sector under the former
administrations and said “it is embarrassing for me to declare that today, the recovery rate of some of our oil fields are about 5 percent1.
Jahangiri implicitly admitted that IPC may not be attractive enough but underscored that [instead], Iran's security and business climate is better than other neighboring countries. “Some countries are run by tribes, Iran is different than that," he was quoted by Reuters as saying. "Even if Iran's contracts are not as attractive as others signed in neighboring
countries, Iran has its own advantages." Reuters wrote that the conference is attended by
representatives of oil majors such as Total and BP.
Jahangir: Iran’s development wouldn’t be realized without oil
As another speaker to the event, Petroleum Minister Bijan Zangeneh said the first phase of the Persian
1Recovery rate of oil fields is usually said to be around 30% on a global basis
Gulf Star Refinery will come online this year and other phases will become operations next year, and explained that once becoming fully operations, this refinery would safeguard the country from importing gasoline and Iran would be self-sufficient in
producing this fuel from 2017.
Iran becomes self-sufficient in gasoline production once Persian Gulf Star Refinery comes online
On gas production, Zangeneh said by end of this year (March 20, 2017) and with five new phases of South Pars field becoming operational, Iran's gas extraction from the South Pars field will equal that of Qatar.
Thanks to boosted produced, Iran will soon catch up with Qatar in gas
production from shared South Pars field
Note 1: on April 28th, 2016, Managing-director of Pars Oil and Gas Company Ali-Akbar Sha’ban-Pour had stated on a TV talk that with extracting 177 billion cubic meters of gas annually, Qatar’s production of gas from the joint South Pars Gas field is 25% more than that of Iran. He had said that if Iran manages to bring the phases of 18-19, 20 and 21 of South Pars on stream, the country’s production will equal that of Qatar and will outpace this country next year.
Note 2: South Pars is part of a wider gas field shared between Iran and Qatar. The Iranian part of the field is called South Pars and the Qatari segment is
referred to as North Dome or North Field (see map
2 below). During the sanctions period when Iran was
facing lack of investment and technology, there were grave concerns that further delays and lower
production from the field by Iran would result in migration of gas to the Qatari part.
Source of the map: www.theenergylibrary.com
Zangeneh told the oil & energy conference on Monday that Iran’s production of crude oil
(condensate included) will increase to more than 4.5 million bpd by this yearend and that the coutnry’s production of condensates alone will reach 688,000 bpd by March 2017. Some of the information
Zangeneh provided regarding Iran’s petroleum sector have been summarized in the following three tables.
Table 1
Current and future gas production figures Current and future gas production figures Current gas production capacity 835 mcm/d Gas production by March 2017 900 mcm/d
Gas output target by March 2020 Above1000 mcm/d
Table 2
Current and future oil production figures
Current oil production 3.8 million bpd Oil production by March 2017 4 million bpd Oil production target for 2020 4.6 million bpd Condensate output by March 2017 688,000 bpd Condensate output by 2018 1 million bpd Source: NIGC website
Table 3
Required investment for petroleum sector Investment required for petroleum industry by 2020 Upstream oil and gas $134.7 billion
Refinery $15 billion
Petrochemical $52 billion
Total About $200 billion
Zangeneh also cited developing the South Pars oil layer, the joint oil fields in West of Karoon River, and increasing recovery rate of the oil fields as the three plans the ministry of Petroleum has given priority, and promised that the five phases of 17, 18, 19, 20, and 21 of South Pars will come on stream this year causing the Iranian gas production equal that of Qatar.
According to Mehr News Agency, Zangeneh also said [the much delayed] contract for developing South Pars phase 11 will be signed by March 2017 without specifying details. Among other petroleum sector contracts that Zangeneh promised being signed by March 2017 were one for developing the oil layer of South Pars and another one for increasing recovery rate of this oil layer.
On the sidelines of the oil & energy conference and addressing a question on if in the upcoming OPEC meeting in November, the country would cut its oil output, Zangeneh told reporters that there would be no discussion on production cap [for Iran]. Rather, he said, “the members will come up with individual quotas.” The minister said the country’s oil
production has reached close to the pre-sanctions levels.
Deputy Petroleum Minister and NIOC Managing Director Ali Kardor was another speaker at the 2nd Petroleum & Energy Club Congress who said three tenders will be launched this year for Natural Gas Liquid (NGL) construction projects and collecting oil associate gas, according to Mehr News Agency.
Kardor also said taking applications from international companies, which was opened on
3 October 17th will last for one month after which NIOC
will evaluate them and put the name of eligible companies for the first tender in November.
[According to an announcement put out on the MoP websites, international oil companies are supposed to submit their applications by November 19th and the successful ones will be announced on December 7th].
The Iranian giant Azadegan seems to be the first field that Iran will award to IOCs. Reuters quoted Kardor as saying on the sidelines of the Tehran conference on Monday that “Oil companies will be able to bid for a contract to develop the South Azadegan oil field as early as November 19, and NIOC will award the contract by early 2017.”
“After South Azadegan, NIOC will start tendering one field month by month, Kardor said. There are total 11 oil and gas fields available for tendering,” he said, according to Reuters.
While Iranian senior oil officials were busy in holding a domestic petroleum event, another key oil industry gathering was being held in London, where contrary to last year, no Iranian representative was attending.
In the 37th Oil & Money (Oct 18-20, 2016) Conference, executives from major oil and gas companies from across the world participated.
Bob Dudley, the British Petroleum Group’s chief executive told the conference today that “there is still no clarity on new contracts in Iran,” according to Reuters. Some reporters attending the conference have tweeted about the remarks of Dudley about Iran, where he said he hasn’t yet read Iran IPC and that “We do not have any agreement with them yet.
We’ve just met them.” Dudley also expressed
concerns about the remaining sanctions against Iran (terrorism and missile).
Dudley also told reporters that his company has not yet decided about any Iranian oil and gas field. “It’s
too early,” he was quoted as saying this morning London time.
Iran-EU joint railroad conference held in Tehran
The Iran-EU Joint conference on railroad policies was held on Monday in Tehran. According to Mehr News Agency, Mehrdad Taghi-Zadeh, the deputy minister of Road & Urban Development has told the audience that the four major rail policies pursued by the ministry are:
1- Implementing the comprehensive transportation plan (drafted ten years ago by a French company and being already revised by the ministry);
2- Integration of urban and suburban passenger transport systems;
3- Improving the logistic process of cargo transportation; and
4- rail-based urban development
Fars News quoted Ms. Sian Prout, Head of Unit, Single European Rail Area of European Commission as saying that a large-numbered group of European rail experts are visiting Tehran to attend this event and exchange experience in this area.
