1
Iran Economy Update
Issue 23/2017 SUNDAY FEBRUARY 19TH
Dust pollution in Khuzestan caused 760k bpd reduction in oil output
An Iranian weekly magazine wrote that the environmental woes of heavy dust and 100% humidity plaguing the Iranian southern province of Khuzestan in the past weeks have caused five power stations out of order and hence widespread blackouts.
This, according to the Seda Weekly, has inflicted a loss of 160 billion tomans1 in just 24 hours because the blackout led to a reduction of 768,000 barrels of crude oil on that day. Deputy Energy Minister Houshang Falahatian has said that the reason for the power blackout, which has take place in 11 cities of the Khuzestan Province, is that the heavy dust particles sitting on wires have mixed with the humidity and turned into mud and disrupts electricity transfer.
Bijan Aali-Pour, the managing director of the National Iranian South Oil Company (NISOC) has confirmed that the power blackout has affected oil production but said that we try not to allow this problem be spread to the other fields located in the West of the Karun River. “We have been facing a 768,000 bpd reduction in oil production produced from the country’s independent oil fields but we tried to prevent the occurrence of a 300-bpd reduction in the shared oil fields located in the West of the Karun River,” Aali-Pour was quoted as saying on Saturday.
Meanwhile, speaking at the crisis management extraordinary session held by the government to address the Khuzestan Province environment issue, President Rouhani said that addressing the issue of dust particle needs extensive extraterrestrial
1 $42 million at the market foreign exchange rate.
measures that should have been done several years ago. “I assure the dear people of Khuzestan that the government will muster all its efforts and resources to resolve this and has given priority to address environmental issues in this province and compensate for the losses the people have incurred...,” said Rouhani.
Vice President Eshagh Jahangiri who chaired a session held on Saturday afternoon said the whole of the coutnry’s equipment, including the armed forces and the Basij militias should be mobilized to address the problems of Khuzestan Province. “We are thankful to the patience and placidity of the people of Khuzestan [...]
Khuzestan is the beating heart of Iran’s development and if any problem impairs the functioning of it, the whole of the country will be hurt,” he was quoted by Tasnim news as saying. Jahangiri said that part of the dust particles in Iran are originated from Iraq and we’ve raised this issue with their officials.
“We will follow up on the issue through our Environment Protection Organization” he added.
Abbas Papi-Zadeh, the representative of the Dezful City (Khuzestan Province) in Parliament said that the problem of dust particles has been plaguing the province for several years and warned that “it is turning into a national crisis.” Papi-Zadeh criticized Energy ministry officials who’ve attributed the power blackout problem to the high humidity and said such remarks are not acceptable. Tasnim news agency wrote that almost all the schools and universities of the Khuzestan Province are closed on Sunday due to the continuous dust and related problems. The news agency wrote that with the entry of dust participles in the sky of
2 Andimeshk and Dezful, the amount of pollution in these cities of Khuzestan Province have reached seven times higher than the safe limit. The news agency has quoted the manager of the Andimeshk City Health Network as saying that the pre- hospital emergency medicine are prepared to provide services for the people injured by the pollution.
The Iranian Youth Journalist Club (affiliated with the State TV) wrote that due to the heavy dust pollution in this province the World Health Organization has ranked Ahwaz as the world’s most polluted city.
“According to the opinion of experts, the dust pollution phenomenon is the result of the combination of several factors, ranging from human to natural factors. Among the most important factors are the significant reduction in water resources, and the unprecedented spewing of poisonous materials into the Shadegan and Hoorolazim Lagoons and Karkheh and Karoon and Jarahi Rivers,” wrote the Youth Journalist Club news website. “It was previously said that dust storms in Iran are originated from outside of the country but the fact is that since 6 years ago, Iran has itself turned into a source of dust.”
In December 2013, the head of the Ahvaz University of Medical Science had said that the main reason for the recent high degree of air pollution in Ahvaz was burning several thousand tonnes of industrial waste. There are also other reasons for the abnormal air pollution in this city according to this academic figure, which included its exposure to the dust storms from Iraq and Saudi Arabia, the presence and activity of heavy industries (the Iran-Carbon and Khuzestan Steel Co, for example) and the presence of large numbers of oil wells, and desertification and lack of green spaces.
In June 2016, IRNA reported that five Iranian ministers, five governor generals, and Vice President and head of Environmental Protection Organization Ms.
Massume Ebtekar held an emergency meeting to find a solution for the problem of excessive dust in Ahvaz and ten other cities including Arak and Shazand in Central Province. Heshmatollah Falahat-Pisheh, a member of the parliament from Kermanshah Province warned on June 20th 2016 that the dust particles have caused the gradual death of 12 million Iranians living in western and northwestern Iran. “A large proportion of the country’s population are suffocating from dust particles, and such bizarre inattention on the part of the officials is not acceptable,” ISNA quoted him as saying.
An update on contracts Ministry of Road has signed/negotiated post-sanctions An official from the ministry of Road &
Urban Development said that in the past two years, the ministry has concluded 13 contracts with the domestic and foreign private sectors in the air, road, port, and rail sectors totally worth more than 12 trillion tomans2 and $33 billion, according to ILNA.
Some information he provided have been summarized in the following table
Plan Details
370 km Kerman- Bandar Abbas Freeway
worth 4100bn toman to be carried out by Iran private sector
Eastern Isfahan Freeway ramps
470bn tomans, construction operation to start in 2 years 1st phase of
Shahid-Beheshti Port at Chabahar
Signed with Arya Port Iranians, worth $330mn, aimed at increasing capacity to 5.8mn tons/year.
Tehran-Qom-Isfahan express train
1.7bn euros in finance procured in a contract with Chinese CREC renovating air fleet 100 Airbus worth $16.4 bn and 80
Boeing worth $16.6 bn In a separate development, Mehr news agency published a report on the contracts the ministry has signed in the air sector.
According to the news agency, the ministry has confirmed that final agreement has been reached with a leasing company for the purchase of 77 Airbus and Boeing.
“Additionally, the ministry has engaged in
2 About $3.1 billion at today’s open market rate
3 talks for financing the purchase of 17 Airbus, 6 Boeing and 8 ATR,” added the news agency without declaring more details.
The ministry is also negotiating with German MTU for maintenance of engine and parts of aircrafts according to which, the engines will be sent to the company for repair operations and then are returned back to the country, wrote the news agency.
Also, three sets of radars have been purchased worth $11 million from French Thales Company by the Iranian Airport &
Navigation Company. Also, agreements have been reached with French Vicini Company for developing the Mashhad and Isfahan Airports and invest in building the Tabriz new airport. An agreement has been reached with Dutch NACO Airport Consultancy & Engineering for implementing the Imam Khomeini International Airport City Projects.
Also, the Iranian Aseman Airliner has reached agreement with Rolls-Royce for purchasing 100 sets of Tay-650 engines and facilitating the provision of spare parts for Iranian aircraft engines. The finalization of the contract hinges upon elimination of money transaction issues. Aseman has also reached agreement with German Lufthansa Technik AG for sending Airbus 340 engines to undergo basic repair operations.
Preliminary studies show 2bn barrels of shale oil in Western Iranian province A senior official at the Petroleum ministry told Tasnim news that preliminary studies suggest the presence of shale oil reserves - -estimated to be about 2 billion barrels-- in the Ghali-Kooh region in West of Lorestan Province. Bahman Soleimani, the NIOC deputy directorate for exploration affairs said that the results of studies on finding shale oil resources conducted by this directorate office are complete and have been sent to the NIOC.
Soleimani also said that studies are being conducted on finding shale gas in this province, started from 2014, which are 80
percent complete and will be finished by November 2017.
It is not still certain if after confirmation of the discovery, NIOC is going to exploit the shale oil but given the country’s abundant conventional resources, some observers believe that the discovery of the resources will remain at the identification stage and won’t go beyond.
This is not the first time NIOC officials talk about the preliminary exploration that found sizeable shale oil resources in Iran. On 2 May 2016, Mohammad Reza Kamali, Director of the Center for Exploration &
Production in Iran’s Petroleum Ministry, announced a new discovery of shale oil in Lorestan Province. He said that the project on studying the shale reserves was carried out in tandem with German RWTH Aachen University. Earlier in July 2015, the ministry officials had disclosed the discovery of shale oil reserves in southeast Kerman and northern Semnan provinces without giving estimation about the volume.
Contrary to conventional oil which is extracted from wells, shale oil is unconditional oil produced from oil shale rock fragments. Compared to conventional oil, shale oil has low initial capital requirements (fixed costs) but high ongoing funding needs (variable costs)3. Shale oil requires continuous drilling.
3 Source: Energy Policy (click here)
4 On May 2, 2016, The OilPrice English Website published an article titled “Why Iran’s shale oil discovery won’t add to the [existing supply] glut.” In that article, the author argued that it is unlikely that Iran will extract shale oil in the near future due to its high production cost. “The production cost of conventional oil in Iran is under $10 per barrel, whereas the production cost of shale oil is anywhere between $40 and $80/b.
Hence, developing shale oil is a nonviable option at the current prices. Nevertheless, if crude oil prices rise above $70/b, Iran might consider producing shale oil,” wrote the author.
Petroleum ministry says negations are final with four IOCs to develop fields The deputy Petroleum minister rejected the assertions that Total has withdrawn the project for developing South Pars phase 11 and said representatives of the company had recently visited Tehran to continue technical issues and negotiate details of the contract, Mehr news reported today. Ali Kardor said that Total has as insisted that it will continue cooperation with Iran in the oil and gas sector. “This company has made plans to build the first platform of South Pars Phase 11,” he added. “Currently, we don’t see any indication of a step back from the company in the project,” said Kardor, adding that Total has even selected Petropars as its Iranian partner in this project.
Kardor also said final agreement has been achieved with four international oil companies for developing oil and gas fields, namely with Maersk Oil for developing the South Pars oil layer, Russian Lukoil for developing and increasing the recovery rate of Ab-Teymour and Mansour fields, German Wintershall for developing four oil fields in west of the country, and France Total for developing South Pars Phase 11 gas field.
.
