Iran and Norway to boost oil and gas trade 

Iran and Norway inked a Memorandum of Understanding in Tehran on 27th May. The MOU is setting the framework for a bilateral oil and gas cooperation between the two states.

Addressing the signing ceremony, Iranian Petroleum Minister Bijan Zangeneh said that the MOU is the second of its kind inked by the two countries over the past 2½ years. The move, he added, shows progress in Tehran-Oslo bilateral cooperation. 

Describing his talks with the visiting Norwegian Minister of Petroleum and Energy, Enra Steensnaes as “fruitful and constructive,”. He urged Norwegian companies to avail of the ample opportunities for cooperation with the Iranian petroleum sector.

The Norwegian minister of oil and energy for his part, pointed to the superior technology possessed by Norwegian companies, and expressed satisfaction with the signing of the MOU which he referred to as “very important.”He also referred to the two countries' abundance of natural resources, and stressed the need to expand bilateral cooperation in the interest of both sides. 

The Norwegian oil minister further lauded the accord as a factor that would strengthen the longstanding, friendly relations between the two countries. 

Responding to a question on whether the U.S. embargo may have any impact on other agreements that may be concluded between the two countries, he said that Oslo pursues a policy of cooperation with different countries and that his country believes it is in its interest to upgrade bilateral cooperation with the Islamic Republic. 

Steensnaes arrived in Tehran on 27 May accompanied by an economic delegation to discuss new avenues for Iran-Norway cooperation in the field of oil.

Norway, with a daily production of 3.3 million barrels per day (bpd), is considered a major European producer of oil. It is also one of the world's leading exporters of oil. 

Statoil, Norway's national oil corporation, has been participating in Iran's oil and gas exploration and research projects in recent years.

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Signing MOU : a platform for enhanced cooperation 

Norwegian Oil Minster, HE Einar Steensnes, visited Iran late May. During his flight to Assalouyeh and visiting different phases of South Pars gas field, we had an opportunity to have his views about cooperation between the two countries, oil market situation and cooperation between OPEC and Non-OPEC countries. The following is an account of the short interview: 

Q: Did you sign an agreement or a memorandum of understanding in Tehran? 

A: Yes, I signed together with my colleague and friend, His Excellency Zangeneh a MOU. This is a so-called platform for enhancing cooperation between our two countries in the field of oil and gas. 

Q: Did you talk about the cooperation between OPEC and Non-OPEC countries; about the ways to promote stabilisation in the oil market? 

A: Yes we have very good experience with the cooperation with different OPEC countries. We are not a member of OPEC and there is no formal cooperation between OPEC and us. But with different OPEC members we have cooperation, and we are in contact informally, I should underscore. And I have very good cooperation with some of my colleagues inside OPEC. I also want to include the Iranian Petroleum Minister in this informal network contact. So we saw how OPEC was very important to stabilise the oil prices in the end of 2001, beginning 2002. I think it is very productive that whether you are outside or inside of OPEC, you should contribute to stabilise oil prices when it becomes too low or too high. 

Q: You have visited Assalouyeh today. Do you think you will participate more in this big project in future? 

A: We are very satisfied with the opportunity that statoil’s got in, South Pars 6, 7 and 8 Projects. As I understand there are further possibilities and opportunities for Statoil because this is a very big gas field, one of the worlds largest. I have learned today that there are possible also to have a future activity for Statoil in the field and that is very satisfying for me. 

Q: How do you see the future of prices in oil market after the new developments in Iraq? 

A: It is very hard to say. If there would be peace and reconciliation, Iraq would increase oil production in the coming months, but it will go slowly, so we will have no surprise in the coming months of course. But next year, we can expect Iraq to increase more to normal production, that is very dependent on the political developments, so it’s not that the production automatically coming back. But if there will be peace and reconciliation, we should expect an increase in oil production from Iraq. And then also we have to come to a balance between supply and demand, so we have the oil prices on the recent level. I think OPEC will take responsibility that there will be no over production and there should be a balance. 

Q: Is it the first time that you come to Iran? 

A: No, it’s the second time. I was here in 1999, when the embassy, reopened in Tehran and I was also in Isfahan. So, I am coming back and see traces of good developments and I also have to notice that there is substantial progress also in the economic field as well as politically. 

Q: How do you see the prospect of future cooperation between Norway and Iran in oil and gas sector? 

A: In oil and gas sector I am convinced that there will be a closer cooperation, because Iran is now opening for more international cooperation and we have very interesting competence and experience by Norwegian supply industry as well as Norwegian companies. I know that Iranian authorities and the ministry are very interested in investments. And the NIOC also stated that they were very much interested in participating with Norwegian enterprises in the Iranian oil and gas sector. On the other side I very much want to invite Iranian companies to be active in Norway. They are welcomed, if they are living up to some pre-qualification of course along with the other companies. But I am confident that they should also have enough opportunity in Norway. So, the extent of cooperation in the oil and gas sector I think will be substantial in the years to come. 

Q: You know that U.S. has warned against cooperation with Iran. Aren’t you worried about cooperation with Iran? 

A: No, I am not. Because I think there are different attitudes, different practices and policies on this. But Norway favours cooperation as a prerequisite for better understanding and we think trade and economic development are positive steps to a better understanding between countries. So we don’t favour embargo or sanctions. We favour open channels in the economic field as well as in culture. And we hope this will lead to a better understanding between our two countries. 

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Largest investment Opportunity in the History of Iran's Oil industry

Akbar Torkan, deputy petroleum minister for planning, says the ministry has now reached a new stage in industrial blossoming and is capable of executing very large-scale projects, and “this is a very significant issue”. Torkan also stressed the importance of expanding project management capacity in the country’s petroleum industry. 

According to a Shana report the deputy minister, addressing a press conference, while explaining the ministry’s policies and priorities in oil, gas and petrochemical sectors, stated that expansion of production activities in the joint oil fields at our borders is the ministry’s first priority. 

“It is in the same connection that expansion of production in the South-Pars Gas Field enjoys the second priority in our list of important projects”, he added.

The largest investment in the history of Iran and its oil industry, according to Torkan, is being made in the South Pars Gas Field and this will lead to an industrial development in the southern region of the country. He further noted that with the completion of operational activities concerning development projects and plans in the oil upstream industries in 2003, the daily oil output will reach 297 thousand barrels together with 105 thousand barrels of gas-based liquids and 71.5 million cubic meters of natural gas. 

“There will also be”, he went on to say, “some 33 projects, according to the plan, which will also come to the exploitation phase in 2004. This will add 394000 bbls /day oil, 138000 bbls /d of natural gas liquids and 68500,000 cubic meters of natural gas to the country’s out put. 

The deputy minister for planning also noted that the Petroleum Ministry’s 3rd significant policy line in the production sector is increasing production co-efficient in the existing oil fields by making use of novel and high technology and equipment. 

Explaining the 4th priority on the list of the ministry’s policies, Torkan referred to expansion of production activities in the existing and new oil fields. He added: “this policy line is already being executed in Azadegan and Darkhowein fields as well as in the projects known as 8-field and 16-field projects”. 

On the petrochemical side the deputy minister said the orientation in the petrochemical expansion projects is in a direction in which the maximum added value shall be created for country’s’ petroleum industry. 

“That is why”, he continued “the Ministry of Petroleum has the expansion of petrochemical units on its agenda. Expansion projects have already been launched in some of the petrochemical units and meanwhile two special petrochemical zones are already being prepared in the Bandar Imam and Assalouyeh ports. 

He also declared that 13 petrochemical projects have begun production while another 11 projects shall reach the commissioning stage in 2004. 

Regarding the planning carried out in the energy sector he reiterated that at present some 120 million tons of oil equivalent of energy is consumed in the country on an annual basis consisting of about 60 million tons of liquid hydrocarbons and gas making the other half. 

“In comparison with the past decade”, he said, “the increase in the domestic consumption has been met by shooting up the gas production”. 

“The total annual volume of oil exports is over 110 million tons and we have compensated the increase in domestic consumption of fuel by an increase in gas production. He later stressed that such figures were indicative of the significance of the materialization of our plans to increasing the country’s gas output. It is among our strategic plans in the Ministry to increase the share of gas in the domestic consumption basket in order to preserve the share of oil earmarked for export. 

The Petroleum Minister’s Planning Deputy, shedding light on the comprehensive expansion project of the South Pars Gas Field, said the ministry has prepared plans to increase the number of development phases to 28. In each phase, according to him, 25 million cubic meters of gas will be produced. 8 Phases will be allocated to export, 4 Phases to production of LNG and GTL, and 4 Phases for producing sweet gas, which shall be transferred through pipeline. Also the gas output from 5 Phases has been earmarked for injection to oil reserves and 15 Phases for meeting the country’s domestic consumption. Contracts have already been signed for 10 of the above-referred Phases. 

Torkan, pointing to the sizeable production of gas-based liquids in the South Pars Gas Field, said the plan for establishing a refinery in Assalouyeh provides the best opportunity for investors interested in such a ventures. 

Terming the investment as “low cost” he invited investors to make use of the opportunity. 

In another part of the interview Torkan stressed that growth and development of public contracting companies was one of the most significant achievements in the nation’s executive system. 

Concerning the trend of executive activities in the Forouzan Oil Field, Torkan stipulated that in the 1st Phase of the project by early 2004, an increasing of up to 65000 bpd in oil production is envisaged. 

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Special report 
Petrochemicals stand next to oil in gaining the highest share in foreign trade 

The 5th International Petrochemical Conference focused on issues such as increase in the petrochemical’s share in the market, encouraging and expanding international and regional cooperation in oil and petrochemicals, preparing suitable ground for attraction of domestic and foreign private capitals on the basis of approved laws and securing access to advanced technology through exchange of views with experts from various countries. 

This international gathering was held with the presence of the Minister of Petroleum, Islamic Consultative Assembly representatives, Foreign Ministry’s Economic Deputy, a group of foreign ambassadors, deputy ministers, university professors, managing directors and experts from foreign and Iranian companies, and domestic and foreign journalists in IRIB’s International Conference Hall for three days. 

The first speaker of the conference was Petroleum Minister Bijan Zangeneh who, in his inaugurating remarks, pointed out the objectives and policies of the Islamic Republic of Iran regarding importance of petrochemical industries. 

The Iranian Government’s policy he said is to rapidly expand the upstream and downstream activities of the nation’s petrochemical industry in both qualitative and quantitative aspects. This has been explicitly stated in the documents of the country’s Third Socio-economic and Cultural Development Plan and in this connection, the Petroleum Ministry is paying special attention to the expansion of the petrochemicals and their related down-stream industries. 

Zangeneh added that in order to materialise such objectives, important projects had been considered for the Iranian petrochemical industry and some of the projects are already in the process of implementation while some others would soon be executed. 

“These projects shall soon increase Iran’s production capacity of petrochemical products to 31 million tons a year and the industry’s added value ratio will rise to 2.1 % from 1.1 % in the base year”, he declared. The minister also noted that such advancement would also contribute to a remarkable increase of Iran’s share in the regional petrochemical output shooting it from 13 to 30 %. He added that along with such developments, the Iranian petrochemical exports too will be greatly expanded reaching to about $5 billion annually and as such, petrochemical exports will be standing next to oil in terms of value in the nation’s foreign trade. 

Later, on plans for increasing oil and natural gas products, specially transforming of associated gases and gas liquids into products of higher value through investment in the production of petrochemical products, he said enjoyed high priority and undeniable importance. 

He said his ministry planned to lay at the disposal of petrochemical units, both public and private, all the ethane gained from various phases of South Pars expansion projects.

 For ten of the development phase’s contracts have already been signed. He also said that the permit for exploitation of all the associated gases in the offshore oil fields has already been granted. While the ministry welcomes any kind of investments for an optimised exploitation of shore fields’ associated gases in the petrochemical industries. 

Announcing the sum total of investment in both Special Petrochemical Economic Zone and the Pars Energy Zone to be about $10 billion, Zangeneh said: “Iran’s polymer production capacity will see a 2-million-ton increase in the current year and the next through putting into operation the 6th and 7th Olefin complexes as well as the first PET/PTA and an engineering polymer unit. During the same period the 3rd Aromatic project with a capacity of 600 thousand tons and the 3rd Methanol unit, having a one-million-ton capacity, will also commence production. Meanwhile another million tons of chemical products and a million tons of Urea Fertiliser will be added to the said capacities, and other projects will also come to the production stage by 2005”. 

The minister concluded that the Ministry of Petroleum needed to implement all standard methods and those being under development process for gas transformations such as GTL, LNG and DME, and was actively following up the matter and “invites all parties interested in the field to step in for cooperation”. 

The next speaker was Dr. M.H. Adeli, economic deputy to the foreign minister, who referred to the second ranking of the Iranian petrochemical industries standing in the region (next to Saudi Arabia), stressed that Iran, benefiting from vast energy resources, enjoyed valuable comparative advantages in the region. 

He noted that causes of tension in the western and eastern sides of Iran had now been ceased and “this resumption of security across the region would have a positive impact on the Iranian economy. 

The foreign minister’s economic deputy added that in the past 14 years, Iran has had remarkable economic successes in such a way that the country registered a 5.6% GDP growth in the past 3 years while it was only 3.8 % in the 2nd Economic-Social Development Plan. 

He stated that Iran’s inflation rate in 2002 was 15.8 % while the country had $17 billion in hard currency reserves, and $8 billion in foreign debts. 

Dr. Adeli, describing Iran’s efforts to globalise its economy as ‘continuous’, noted that in order for the country to achieve its objectives in the petrochemical industry, it needed to follow up an international strategy, equip itself with updated science and technology and leave behind the existing challenges in this connection. 

He also stressed that new measures with regard to the new investment act, tax reforms, decreasing tariffs and bureaucratic rules, will undoubtedly lead to encouraging investment and expansion of petrochemical industry. 

The next speaker was Nematzadeh; managing director of National Petrochemical Company (NPC) who said the last few years had been one of the industry’s hardest periods because of the low profit rate of petrochemical activities. But he hoped that in the second half of the current year the world would witness an improvement in the economic conditions and a gradual progress in these conditions. 

Nematzadeh predicted that investment in the industry would have a sharp decrease in the first decade of the 21st century as compared to the 1990s. He also mentioned the industry’s performance in the last two years as an indicator of the soundness of his prediction. 

The NPC’s Managing Director later spoke about the hard blows dealt to manufactures in the Northern American Countries and Europe because of the high price of petrochemical feeds and gas, and said Asian countries were not immune to such blows either. 

“Regarding the Middle Eastern Nations”, he continued, “it should be noted that they are in relatively better conditions because they benefit from gas as their main feed and from a rather stable price of feed.” 

On the expansion projects of the Iranian petrochemical industry, Nematzadeh said his company had invested about $10 billion in 20 projects and that, a number of these projects had already come to the completion and commissioning stage and others will be completed and commissioned during the current year. 

Nematzadeh who is also a deputy to the Minister of Petroleum predicted that with commissioning of the units which are in the process of completion, the petrochemical company will have a 16-million-ton annual production in the current year thus registering a 20% growth in comparison to the previous year while the volume of its marketable products would range from 8.1 to 10 million tons. 

Stressing that investment in hardware and manpower training were the main priorities of his company Nematzadeh said: “Absorbing and training of about 4000 engineers and technicians in the past 4 years, establishing two management and technical training, convening degree courses for 100 of the company’s first class experts in collaboration with Sharif and (the Canadian) Calgary universities, and holding other specialised educational courses are all indeed real supports for an optimised exploitation of newly made investments. 

Nematzadeh said, “Regarding environmental issues I declared here that paying close attention to these issues has always been among consistent policies and plans of the NPC and its affiliated manufacturing complexes, which have all obtained ISO-4000 certificates from international bodies.”

Referring to his company’s exports during Iranian fiscal year (March 2002-March 2003) period, Nematzadeh said the value of the exported products had reached $940 million showing a 20% increase as compared to the previous year. He predicted for the figure to rise to $1.2 billion in the current year. 

He further noted that over the past year, the company had selected two exclusive sales agents in 15 countries and another 10 new agents will be appointed in other nation in the current year. “Our commercial offices have also been opened in China and South Korea and our export office shall soon be inaugurated in Turkey. Also, in order to facilitate the export and import of petrochemical liquid and gas products, we will soon set up and operate a marine transport company in collaboration with two marine transport companies, “he announced. 

At the conclusion of his remarks, Nematzadeh said that within the time between the last and present conferences 5 joint ventures with foreign firms had been finalised and approved, with the share of foreign investments exceeding $600 million. He hoped that by the early 2004, several large-scale joint ventures would be finalised. 

Deputy Petroleum Minister for planning Akbar Torkan was the next official who addressed the gathering with his speech titled “Project Management; the New Challenge in the Iranian Economy” presenting at first a history of executed projects in the country since the first development plan. Torkan said Iran had a very good record with regard to small and medium scale projects, achieving commendable results along the line. “But”, he went on to say, “our country has had problems in implementing large-scale projects. These problems mainly arise from time and budget examples of which may be observed in projects such as Imam Khomeini airport, Bafgh-Bandar Abbas railroad, Tehran Highway, Rajaie Power Plant, Ahwaz Steel Mills and other projects of the same scale. 

“The main reasons for the country’s problems in executing large-scale projects are the cash flow, high-ranking government management and the conceptual designing of such projects. Another factor which should also be added is the failure of contractors to finish the projects in due time”. 

Referring to the investments planned to take place within the next seven years, Torkan stated that the Petroleum Ministry intended to invest $59.5 billion on the development of new oil fields such as Azadegan, and the expansion and optimisation of gas fields like South Pars and other sectors covered by the ministry such as petrochemical industries. 

Pointing to the impossibility of implementing large-scale projects such as South Pars by relying upon traditional management methods, he called on Iranian contractors who wished to participate in large-scale projects to improve their capabilities and performances. He expressed hope that Iranian contractors would achieve remarkable standards in executing large-scale projects if they collaborate with each other and their collaboration would help them gain a higher standing in winning the tenders for such projects. 

In the two-day Fifth International Petrochemical Conference, a number of experts session in which the following issues were reviewed: Petrochemical Industry and Future Challenges, Regional cooperation among Middle East Manufactures, Methanol and its applications: present and future trends, Natural Gas Impact on the Future of Petrochemical Industry, Supply and Demand Prospects for Aromatics, Propylene Shortage Crisis and New Production Methods, MTBE and Environmental concerns; Imaginary or Real, Recycling Technologies; Opportunities and Future Prospects, and Electronic Business: Expenditure Saving and Market Growth. 

Over 1300 participants attended the conference with 210 of them coming from 33 different countries. The participants were representatives of engineering and manufacturing petrochemical companies, and international banks and insurance companies. Also 236 Iranian firms and 157 foreign companies, along with 123 domestic and foreign journalists attended the gathering. 

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8 International Exhibition of Tehran from the PersPective of Companies 

The 8th International Exhibition of Oil, Gas and Petrochemicals was held in Tehran on 16 - 19th April 2003.
500 domestic and 300 foreign companies from 18 countries participated in the Exhibition (The report was published in the previous issue). The following is the statements of officials from different companies about the Exhibition and cooperation with Iran.
Gasprom :

Representative of Gasprom Russia stated that his country is interested to cooperate with Iran in the field of exports, sales, technical know-how and technology of petroleum industries.

Dr. Olg V. Papkov in his exclusive interview with Shana reporter at the Exhibition pointed out that Russia is interested in transferring technical knowledge to Iran.

The sales representative of the Russian company was hopeful of a very good future for Tehran-Moscow relations and remarked that no crisis in the region would hinder the cooperation between two countries.

On the subject of collaboration of Gasprom with Iran, Papkov said: “We collaborated with Iran in the implementation of phases 2 and 3 of the South Pars project. Presently we are engaged in a four-way negotiations for the construction of the Iran-Pakistan-India pipeline.”

Gasprom representative added: “We are more inclined towards the establishment of joint venture companies for the production of equipments, that would be jointly used, in Iran. We want that these companies to be established with the cooperation of the public sector companies. 

TotalFinaElf :

The managing director of the French company “TotalFinaElf” said that the 8th International Exhibition of Oil, Gas and Petrochemical provided a good opportunity for the introduction of new technology, study plans and new projects in the field of oil and gas.

Granceva Vatiah in his exclusive interview with Shana reporter said that companies active in the field of oil and gas also endeavored to actively participate in the exhibition because of importance of Iran’s oil and gas industries.
Talking about his company’s engagements in Iran, Vatiah pointed out that TotalFinaElf has been cooperating with Iranian oil and gas industries for many years and is proud of its successful participation in various projects.

Shell :

The managing director of the Dutch English company “Shell Development Iran” said that the Exhibition was an appropriate opportunity for expansion of ties in the field of petroleum.Robert Weener evaluating the 40-year presence of Shell company in the oil industry of Iran and its cooperation in oil, gas and petrochemical industries as successful. He stated that presently the Shell International Company is negotiating with the Iranian Ministry of Petroleum for implementation of two gas projects namely LNG and GTL.

Shell managing director named the Olefin-8 project as one of the projects now being negotiated with the Ministry of Petroleum for Shell’s participation in its petrochemical sector.

Olefin projects are some of the projects being implemented by National Petrochemical Company (NPC) for the production of petrochemical products such as ethane, ethylene and propylene.

Expressing hope for the development of cooperation with Iran in the field of transferring of technology, Weener made it known about the contract signed between the Iranian Petroleum Industry and Shell company’s research centers for jointly carrying out the research studies.

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Grounds have been paved for some $15 billion of new investments 

Mr. Zangeneh: We have invested some $20 billions and now there are opportunities for conclusion of new agreements worth $15 billion within the next two years. The positive impacts of the country’s hard currency reserves can easily be noticed in the economic and industrial sectors. 

The 6th Conference of Iranian Ministry of Petroleum Senior Executives was held at the Ministry Oil Club No.1 on the eve of commemoration of 26 May 1908, the anniversary for oil gushing out of the first oil well in Masjed Suleiman area of Iran.

The Iranian Petroleum Minister regarded good planning as absolutely indispensable under all circumstances and condition in his address at the confab. He said the conference should lead to strong resolves for accomplishing the anticipated objectives, which is the uninterrupted continuation of oil production in the country as their top agenda.

Zangeneh referred to oil as the window through which Iran conducts technical and economic interaction with the world.
Touching on the fact that the aforementioned statement has proved to be axiomatic during the past years, he went on to say that oil could act as the motor for economic development and industrial activities, as well as the base on which civilisation can be built.

Reminding the positive impacts of growing hard currency reserves of the country, Zangeneh also said that the said reserves have so far failed to be used in the direction of expanding the country’s petroleum industries. All the same, he added, the positive impacts of the said reserves can easily be noticed in the various economic and industrial sectors of the country.

Zangeneh then gave a rundown on the most important projects and programs undertaken by the Ministry and announced that four units out of South Pars phases 4 and 5 are expected to come on stream by the end of the next Iranian year (March 20, 2004). Upon the commissioning of the said units, he went on to add, some 130 to 140 million cubic meters of natural gas would be produced on daily basis, while the concomitant gas liquids would not be less than 200,000 bbls/day.

The Minister of Petroleum also stated that by taking advantage of productions made available by phases 1, 2 and 3 of South Pars Gas Project in tandem with Parsian, Amak, Maroun and Tang-e-Bijar projects by March 20, 2005, some additional 150 million cubic meters of natural gas would be added to the current production capacity of the country, while the gas liquids are expected to soar to 250,000 bbls/day. The latter only, he added, would translate into a daily extra $5 millions in revenue for the country and by the same token new opportunities would become available for expansion and investments in the petroleum industry. 

Status of agreements:

Mr. Zangeneh averred that the stable productive capacity for the country’s oil should be boosted to 4.5 million bbls/day by March 20, 2005 through the collective efforts of Iranian petroleum industries executives and employees.

He then started to enumerated the agreements, which are expected to be concluded within the next two years and said that the agreements related to projects in Ahvaz Bangestan, Azadegan, South Pars reserves and 8 other oil fields in the southern regions of the country, which are Koushk and Husseinieh, together with 8 phases of the project for developments anticipated for South Pars natural gas liquids that places the priority on the common fields, are expected to be concluded in the next two years.

In other parts of his statements, Zangeneh referred to the country’s gas exports in the forms of LNG and LPG and underlined the importance of pipelines. He expressed hope that the executive operation for the LNG unit could get under way during the current Iranian year (March 21, 2003-March 20, 2004). 

Quick pace of growth in petrochemical:

Providing a thorough explanation of the country’s current status of petrochemical industries, Zangeneh stated that the production in the aforementioned industry would reach $2.2 billion, of which $1.2 billion might well be in exports. He also said that according to recent estimates, the figure could rise to $3.1 billion in 2004 and subsequently top $5 billion in 2005.

The Minister also expressed hope that the first stage of the swap plan and the executive operation for laying Neka pipeline, as well as the establishment of the relevant pump stations be concluded by the end of March 20, 2004. This, he stated, would give rise to the opportunity for pumping 120,000 bbls/d of oil through the said pipeline just through the first stage of the project.

Zangeneh then considered the establishment of new refineries as imperative and vital. He went on to add that there were good opportunities for the establishment of a refinery at South Pars aimed at producing gasoline. He also disclosed that feasibility studies were under way for the establishment of new refineries. 

The Petroleum Minister then touched on the objectives for the above-mentioned projects of the National Iranian Gas Company (NIGC) and added that the company is expected to provide 90% of fuel gas required by the urban populations, which covers 43 million people. He also stressed the need for urgency for follow-up actions in the CNG development plan in order to facilitate the production of automobiles that use CNG as fuel. In this field, Zangeneh promised hefty investments to be undertaken by NIOC. 


Investments: 

The Iranian Petroleum Ministry has in the past 5 years invested more than $20 billion in the forms of financing and buy-back as well as taking advantage of other investments sources of the Ministry.
Stating the above, Zangeneh asserted that the results of the $ 20 billion investments, which had been made in the past 5 years, are most easily noticeable. He then went on to add that there are opportunities for at least some more investments to tune up to $15 billion within the next 2 years. 

Approaches to privatisations and bottlenecks:

There are 6 different approaches at the NIOC for privatisation. Nematzadeh, the Managing Director of the National Petrochemical Company (NPC) stated the followings in this regard:

At times, one may come to think that the NPC’s objectives for private sector’s participations in the industry are aimed at better financing, while NPC is trying to survive in a highly competitive market in order to find a niche for itself so as to promote its international position and image.

The second objective entertained by the NPC is multi-faceted modernisation and expansion of renovations in all directions, while trying to make production most cost effective as well as stepping up investments through new financial sources. This ambitious objective, he went on to add, can only come to be realized through the implementation of unanimously taken decisions and enforcement of policies within the organisation itself and can result in fruitful interactions with foreign investors. 

Approaches for luring investments:

According to Nematzadeh, the compilation of the regulations for foreign participations have been put into effect through 4 stages of holding forums and conferences, presentation of treatises and articles to foreign economic circles for their familiarization with the fundamental principles of the NIPC, projecting a reasonable image through honest and transparent organizational conducts based on mutual trust and last but not least, sponsoring visit programs for the petrochemical projects under implementation. 

The said policies, Nematzadeh mentioned, were among the approaches adopted by the NIPC for luring foreign investors to invest in the country’s petrochemical industries. 

As to plans for development and expansion of the natural gas industries in Iran, Mr. Malaki, the Managing Director of the NIGC stated that Bid Boland Gas Refinery No 2, with a capacity of 56 million cubic meters, Parsian Gas Refinery with 46 million cubic meter capacity, Masjed Soleiman Gas Refinery with one million cubic meter capacity and the South Gashouye Gas Refineryt, with a nominal capacity of 14 million cubic meters that is currently going through feasibility study are among the most significant projects undertaken for the development and expansion of the country’s natural gas industries, while the projects for the establishment of relevant pipelines for the transit of the produced gas are of similar importance. 

Natural gas industries at the end of country’s 3rd Economic Development Plan:

When the country’s 3rd Economic Development Plan comes to its end by March 20, 2004, the length of the gas transit pipelines is expected to increase by 2,000 kilometres and reach whopping 18,000 kilometres. The length of the distribution networks to subscribers is then expected to be more than 88,000 kilometres and the domestic natural gas consumers would be able to consume some 371 million cubic meters of natural gas on daily basis. 

The share of the natural gas as a primary fuel source of the country is expected to go over 54% in 2005 as in this year more than 41 million citizens in urban areas will benefit from the privileges of natural gas as household fuel. 

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The way for investments in petrochemicals smoothly evens    Minister of Petroleum: The law for the country’s 3rd Economic Development Plan has guaranteed to set no limits to exports of petrochemical products by the private sector. The Ministry enjoys no monopolistic privileges in the petrochemical industries and base petrochemical products. Having mentioned the above fact at the Confab for Investment Opportunities in downstream industries of petrochemical, Mr. Agene went on to add that the way for investments for the NPC, or any other producer that is interested in investing in the petrochemical industries, base products of petrochemical or downstream petrochemical products, is smoothly even. According to a report by the petrochemical correspondent, Shana, the Minister also stated that the Ministry of Petroleum sets priority on allocating raw material to the private sector. However, he went on to add, in view of heftily large investment requirements in the business, we have only witnessed a few cases of inspiring signs in this rapidly growing industry.The Minister also asserted that the law for the country’s 3rd Economic Development Plan provides guarantees for no limitations set on the exports of petrochemical products by the private sector. He then went on to say that the NPC is well disposed to expanding its products that are compatible with the requirements of the domestic downstream petrochemical industries.   Zangeneh also added that the ministry’s principle objective for expanding and developing the petrochemical industries not only focuses on promoting the value of the domestic products and industries but also stresses the ultimate needs for creating more job opportunities in the country.  Mr. Nematzadeh: the government policy focuses on protecting the expansion of investments in downstream petrochemical industries:  Stating the fact that the Iranian government, parliament, the NIOC and the NPC are immensely interested in providing support and protection to the private sector for investments in the aforementioned sector, Mr. Zangeneh went on to add that upon the strict recommendations made by the President of the country, some very concerted efforts have been undertaken in the said field. Mr. Zangeneh also added that in connection with these efforts, the bureau for the development of downstream petrochemical products and the company for expansion of downstream industries have been established in cooperation with the Industrial Development and Renovation Organization (IDRO) of Iran. He then stated that the above-mentioned bureau has, within the said period, conducted feasibility studies for the identification of more than one hundred downstream projects.  The Minister then continued by stating that the implementation of a few larger downstream projects have been anticipated in such areas as the Special Economic zone of Bandar Imam and Pars Energy Zone (Assalouyeh) because of the proximity of the required primary raw materials and the infra-structural facilities. The Minister of Petroleum then concluded by saying that the country’s hard currency reserves can help out by providing the needed financial support to the expansion of the downstream petrochemical industries in light of the fact that the said reserves enjoy good and favourable conditions. Based on this report, Nematzadeh, the Deputy Petroleum Minister and the Managing Director of the NPC also stated that the implementation of the above-mentioned policies and plans have been strongly recommended by the President of the country himself, the Petroleum Minister and the Minister of Industries. He then went on to add that in line with the said policies and plans, a company called “Downstream Petrochemical Industries Development” was established in the second half of 2001 in joint cooperation with IDRO. He also said that a bureau bearing the same title was also established at the NPC.

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Iran has the highest comparative advantage for petrochemical productions

A member of the board of directors of National Petrochemical Company (NPC) announced that Iran enjoys the most remarkable comparative advantage for producing petrochemical products at regional as well as global levels. 

Mohammad Hassan Peyvandi, the company’s planning and development director, in an interview with Shana, stressed that Iran has access to large volumes of gas and gas liquids at competitive prices. “Access to international waters and suitable coasts for constructing export terminals and sufficient experience for building related jetties was among such advantages”, he remarked. 

“Country’s suitable climate, the existence of gas resources to feed petrochemical units in the Persian Gulf coasts, and the country’s special geographical location in terms of its vicinity to large Asian markets such as China, India and also, its closeness to Europe via Turkey are among other advantages”, he said.

According to Peyvandi the Iranian population, with regard to it’s potential demand and low rate of consumption per capita of polymers as compared to global standards, may be cited as having a good prospects for growth of this industry in future.

“Our other special advantages in this connection includes: experienced, specialized low-waged, committed and faithful manpower, who are interested in the development of their country, the existence of a developed domestic engineering force, and domestic manufacturing workshops whose existence arise from the Iranians’ special talent and intelligence,” he added. 

NPC’s development and planning director also declared that in 2004 and 2005 the large-scale Marun Project with a production capacity of one million tons various kinds polymers, together with Borzouyeh, Jam and Zagros petrochemical complexes which shall produce aromatics, polymers and methanol respectively, will come to the production stage. 

In response to views on the impact of oil price fluctuations on plans for development of Iran’s petrochemical industry, he said the country’s share in the global petrochemical output was 0.75% while it ranked fifth among the world’s oil producers. We are second among countries having gas resources and stood on top of the list in terms of population across the Middle East. 

Regarding the company’s achievements in 2002, Peyvandi stated that last year had been a busy year for the industry within the framework of the Third Development Plan while in essence the petrochemical industry had not been obligated to execute any specific program within the Third Development Plan of the country. 

“Yet, the industry’s directors” he noted, “decided to follow up a special plan along-side the national plan.” 

“Putting to test operation of the MTBE unit in 2002 was indeed an achievement and honor for Iran’s petrochemical industry. The Iranian technical contribution to setting up this unit is greater as compared to any other industrial unit. Also in the same year the first phase of Fajr-Complex as the country’s largest centralized utility plant in the special petrochemical zone began production. Meanwhile other petrochemical units in the special zone are now lined up for work completion and production.” 

He also expressed hope that aromatic units at Bou Ali Sina Petrochemical Complex, various production lines of the first polyethylene terephthalate (PET) unit at Shahid Tondgouyan Petrochemical Complex, the Third Methanol Project at Fanavaran Petrochemical Complex, the Sixth Olefin at Amirkabir Complex, Polymer engineering units and Bisetoun Unit in Kermanshah would soon enter the production stage. 

On the petrochemical industry’s success in assigning manufacturing orders for accessories and equipment to domestic companies and workshops the NPC’s board member said the industry took pride in having achieved this goal. While it is also a legal obligation stipulated by the country’s High Council of Economy to all departments to make maximum use of domestic manufacture’s capability.

“However, our domestic engineering and industries involved in equipment manufacturing have a limited and specific capacity which falls short of our petrochemical demands. As such, it is only natural that the manufacture of petrochemical accessories and equipment be the top priority for these manufacturers and even petrochemical units themselves become involved in rivalry against one another in this connection”, he remarked. 

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Natural Gas AND National Security

Energy has a main role in the economic development of countries, therefore the accessibility to energy, as one of the strategic policies is very important in all countries at any time.

Resources security is one of the new aspects of national security and enables the countries to have the huge amount of hydrocarbon reserves, move easily and faster toward the economic development and growth plans.

Generally, the Middle East countries have been classified in several groups in terms of their hydrocarbon reserves mix. Iran and Qatar are the countries that their share of gas in hydrocarbon reserves is more than oil. 

Iran as the largest owner of gas reserves, producer and consumer in Middle East has developed its energy policy in framework of utilization of natural gas and has enhanced it’s situation in international gas market

Iran can enter into international gas market in different ways, because of being close to the gas consumer and supplier markets. Importing of gas (utilizing economic advantages due to avoiding gas transportation in long south-north route), swap, transit and export of gas could be considered as a more probable gas trade choice. Therefore geographical advantage of Iran opens a bright prospect for new investment. This could be improved by close cooperation of the Middle East countries, especially those active in the international gas market.

The Middle East is rich in hydrocarbon resources, holding about 50% of the global oil and gas reserves. The growth of the region's hydrocarbon reserves has been 3.6% in the last two decades, holding the highest growth rate after Central and South American regions in that period.

 A review of changes in global hydrocarbon reserves shows that additions to existing reserves has been close to 120 billion tons oil equivalent (bn toe), 71 bn toe (51% of the total addition) of which belongs to the Middle East region, and 28 bn toe (23% of the total addition) to the former Soviet Union (FSU) region (Fig1).

The tread of changes m oil and gas reserves, as two of the elements in the hydrocarbon resources' mix has never followed a single direction in the last two decades. The share of gas in-this mix has risen from 42.8% in 1980, to 48.8%, yet the share of oil reserves has fallen from 573% to 512%.

In the past two decades, the rate of increase of gas reserves has been greater and faster when compared to the rate for oil reserves. About 57% (68 bn toe) of the increase in hydrocarbon reserves is related to natural gas. And over 80% of the increase in natural gas reserves has been registered for the Middle East and FSU regions (28 bn toe each)-Fig2.
A comparative study of the ratio of natural gas consumption and reserve to production indicates that, in the future too, the Middle East will be one of the major potential gas suppliers to the world market.

 Despite the region's increasing demand for gas in the coming three decades, its huge natural gas reserves will pave the way for an increased supply which will outpace rising demand in the future (Figs 2&3).

Changes in the hydrocarbon reserves of the countries in the Middle East in the past two decades point to rising natural gas volumes. This development is more considerable in Oman, Qatar and United Arab Emirates (UAE) . Saudi Arabia and Iran are, holders of the largest hydrocarbon resources in the Middle East respectively. 

In the reserves basket of Saudi Arabia, the share of crude oil is 87%, and in Iran's reserves basket, natural gas has a share of 65% (the year 2000)-Fig5.

Based on the composition of oil and gas in their reserves baskets as estimated for the year 2000, countries in the Middle East region may be divided into three categories:

• The first group is made up of Kuwait, Saudi Arabia, Iraq and UAE, where the share of oil is greater then that of gas in their reserves. 

• The second group, -which includes Oman where in the reserves basket, oil and gas have equal shares;

• The third group comprised of Qatar and Iran wherein the share of gas is greater than that of oil.

In light of the special characteristics of gas reserves of the regional countries, Iran and Qatar are the second and third holders of gas reserves in the world, and largest owners of gas reserves in the Middle East, that will occupy a specific position in future international natural gas trade.

In most countries in the Middle East region, natural gas production has increased considerably during the last decade. The growth of gas production in Iran and Qatar has been highly significant in comparison to other regional countries. The two countries' production increase policies, however, are based in different objectives (Fig 6).

The average growth in Qatar's gas production has been registered at 16.3% / year, mainly based on that country's pursue of increased gas export, and not its domestic gas consumption, which has witnessed an 8.7% rise in the last decade.

With its limited territory and population, as compared to other countries in the Middle East, Qatar's long-term policy of its gas resources development is mainly directed at augmenting its trade exchanges with regional and other countries. Qatar's gas production potential was used to meet domestic requirements in the year 1990. 

In the 1990s, with the expansion of its gas supply potential to world markets, the country's production trend went beyond its domestic consumption level. As a result, in the year 2000, close to 50% of Qatar's gas production was allocated for exports.

A review of some of the energy economic indicators of the Middle Eastern countries point to the fact that their energy polices are influenced by their specific geographic and economic conditions.

The share of natural gas in the Middle East countries primary energy consumption mix is mainly high and in the year 2000, the indicator was 92% for Qatar, 68% for UAE, 52% for Kuwait, 49% for Iran, and 40% for Saudi Arabia (Fig 7).

In the year 2000, per capita oil and gas consumption in Qatar, was estimated at 1.5 and 1.8 toe respectively, with oil and gas intensity also being at 0.1 and 1.3 toe / $1000 GDP (Figs 8 & 9). Therefore, with 149 thousand tons of crude oil and 88 toe of natural gas per every square kilometer of its territory (oil and gas density), Qatar has been able to maintain the country's long-term energy security through the expansion of natural gas supply system, while also exercising its ultra-territorial policy based on promoting its status in the international gas markets (Fig 10).

Iran's geographical and population characteristics are different from those of Qatar. Iran is a vast country, which has 7.5 thousand tones of crude oil and 12.7 thousand toe of natural gas for every square kilometer of its area. Iran's population is also four times that of Qatar, per capita oil and gas consumption, as well oil and gas intensity per $1000 GDP, in Iran for the year 2000 was 0.9 toe respectively. In light of the country's economic and population specification, Iran's policy of utilizing hydrocarbon resources should ensure the country's energy security, economic security and national security through optimizing internal and external oil and gas supply mix.

The Role of Natural Gas in Ensuring National Security 

With the concept of "limitation" and "the rising demand over supply" in the energy market in the early 1970s, the issue of the security of resources as a new dimension of national security gained importance and the post cold war era approach was further concentrated on this problem (a change of goals from protecting ideologies to improving living standards).

Security of resources is closely correlated with geopolitical consideration of every country and region. Conditions, impediments and necessary means for utilizing existing situation, in fact, shape those considerations. A country's access to national resources, its geographical position and its situation in comparison to other nations, determine the degree of a country's national power, creating the vital opportunity for a nation's economic and political activities and functions.

Besides physical depletion and actual scarcity of resources, there are other factors such as preplanned scarcity of resources or impediments resulting from unintentional activities that seriously affect the security of resources of countries and regions.Natural resources have always been considerable sources of wealth for countries and will play an important role in ensuring the economic, energy and national security of nations. For its huge oil and gas resources, Iran has always been recognized as a resource rich country. Thus, there is potential to ensure its national security through the establishment of large-scale security of resources. Strategic approaches developed for the utilization of those potentials, however, will materialize the conditions and guarantee the economic security of the country.

Iran’s petroleum reserves consisting of about 90 billion barrels of proven crude oil reserves, and over 26 trillion cubic meters of natural gas, worth at least $4000 billion. Hence Iran is one of the richest countries in the world and an effective and appropriate resource management that would guarantee maximum national interests is highly imperative.

So far, the economy of Iran has been highly dependent on crude oil exports revenues. In the absence of fundamental developments in the future, the reliance will continue, and at least may not increase. The correlation between the natural gas industry and Iran's economy is more balanced. It is based on clearly defined economic criteria within framework of industrial sector inputs or energy consumption mix of final natural gas consumers. In other words, natural gas has been a major inputs factor alongside capital and manpower resources, in the economy of Iran. By creating resources and economic securities, natural gas, therefore, has strengthened the countries national security, by acting as a substitute for oil products and hence meeting a significant portion of the country's energy requirements. The first impact of that process is the reduced vulnerability of the country's economy versus international energy and crude oil market crisis (at least from the standpoint of meeting domestic energy needs, and not from the point of view of oil revenues that effect the whole economy).

Parallel of substitution policies, which will certainly entail economic, security and environmental benefits for Iran; technological considerations for the utilization of those energy carriers will also have a determining role. Those policies should act as the driving farce for the promotion of ways of energy utilization in all economic sectors of the country, because oil and gas are national assets, thus, those physical and national capacity should in the long-term be converted into other forms of financial, technological and industrial assets. In light of the principle of energy depletion, such an approach will result in the preservation and the security of recourses for future generations.

The security of resources for future generations does not imply that the use of raw materials as an inevitable fact in the development should be overlooked so that those resources are left for future generations. The issue implies that in light of obvious and opportunity costs resulting from the use of resources, those capitals are saved for future generations.

Proper utilization of opportunity revenues resulting from the substitution of technical know-how and technologies used in production and refining processes, the energy sector and other industries will enhance the real national wealth (know-how and technology) while preventing the unrelenting use of energy, ultimately leading to the increased potential of energy, hence keeping the resources for future generations.

The strategy of utilizing natural gas, and in general, hydrocarbon resources will have a decisive effect on the country’s national security. Because ''energy security" will be ensured by providing the country’s energy requirements, and “economic security” will be maintained through trade ties and energy trade with other nations, and the ensuing hard currency earnings, as major results of that strategy.

Iran is acting as a bridge between the Caspian Sea littoral countries to the north and the Persian Gulf and India and Pakistan subcontinent to the southeast, as well as Turkey and Europe to the northwest As a result of its huge natural gas reserves, the extensive domestic gas supply network, over 640 km of coastal boarder in the Caspian sea, and over 1200 km of coastal frontier on the Persian Gulf and the sea of Oman, Iran is a decisive factor in meeting a major of international demand for natural gas (via pipelines or tankers).

Iran is the shortest and economically most viable route for the CIS countries access to international markets. Alongside Russia, Iran is also a proper alternative for the transmission of central Asian gas to Europe, Persian Gulf countries and the Far East It is a fact that most gas consuming countries and even some of the gas producers do not approve of the full reliance of CIS gas export via Russia, from the standpoint of strategic and long-term interest (Fig11).

Iran's extensive domestic gas transmission network may complement that of Russia in transferring the region's gas to markets in the north and north eastern parts of the country. On the other hand, Iran may use its interconnected North-South transmission system, to transmit CIS states' gas to India and Pakistan (Fig 12).

Iran is capable of easing CIS gas export or transit to Europe via Armenia, Georgia and Turkey. Cooperation with countries in the Middle East in transferring their gas to Pakistan and India is another alternative for regional cooperation aimed at entering international markets (Fig13).

With its special geo-economic characteristics, Iran is capable of having long-term arrangements with neighboring countries to the north, as well as short term and seasonal contracts to expand trade exchanges with neighboring states, and improve economics of gas supply projects by utilizing unused transmission and refining capacities in seasons of low consumption. Despite its huge gas reserves, Iran can import gas from those countries improving the economics of supplying gas to certain gas consuming regions in the country.

This will result in close ties with this group of countries, and ultimately will encourage them to select Iran as the route for the transmission of gas to other parts of the world. Friendly relation in the framework of economic projects (even at small scale) with neighboring countries will pave the way for large scale and longer-term trade ties.

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A glance at the activities of Arak Refinery, Iran’s first lead-free gasoline producer 

Arak’s Shazand Refining Company is one of the subsidiary companies of National Iranian Oil Refining and Distribution Company (NIORDC). The refinery was designed with a capacity of 150,000 b/d and put into operation as the country’s largest single unit refinery in 1993. This refinery was installed and commissioned by JGC of Japan and TPL of Italy with the collaboration of Iranian experts. A large portion of the plant’s equipment was designed and installed by domestic factories and heavy industrial units. The present capacity of the refinery, which is Iran’s first post-revolution refinery, is 175,000 b/d. 

Arak Refinery is the country’s first lead-free gasoline producer and it benefits from the latest technology and refining system and that is the reason for high quality of its products. The pipeline from Ahwaz Asmari crude oil field running from south to north supplies the feed to refinery. Refinery products are distributed across the nation by pipelines, railroad and oil tankers of NIORDC. In addition to supplying the region’s needs the refinery also provides parts of the feed for Arak Petrochemical Complex. 

Also, because of its benefiting from catalytic hydrocracker unit, using the continuous reduction technology, the refinery, while producing lead-free gasoline, produces a considerable volume of platformate and dispatches it to Tehran Refinery for blending in order to reduce the lead content of the latter refinery’s gasoline. 

Arak’s Shazand Refinery, in addition to supplying the region with its products, has also taken effective steps within the domain of environmental quality management. Arak Refinery is the first of the country’s refineries, which was awarded with ISO 9002 in 1999, ISO 14001 in 2000, and ISO 18001 in 2001. 

The installation of desulphurisation units for kerosene and gas oil, and the isomerization unit for improving the gasoline’s quality with the world’s standards and environmental projects such as isolation of the floor and walls of the evaporation ponds of the PINCH project’s recycling unit, the projects for establishing facilities of the distilled water collection network, expanding the refinery’s green space, and decreasing carbon monoxide in the tar waste-burning unit, operations for flushing biological ooze in waste-digesting lakes, studies for improving the product’s quality, substituting destructive gases in the Ozone layer in fire-extinguishing units, and maintenance and ventilation operations are all among the plant’s significant programs at present. 

Among other characteristics of Arak Refinery is consistent production, the low average age of the employee and their high level of education, and having the minimum number of employees in proportion to capacity as compared with other refineries of the country. 

The refinery’s products include; LPG, lead-free super gasoline, kerosene, light and heavy naphtha, gas oil, heavy jet fuel, blown bitumen (60/70, 85/100), high purity granule solid sulphur (99%), high purity hydrogen gas (99.9%), gas and liquid nitrogen (99.999% purity, grade 5), white sprit, lube cut (feed for lubricant plants) and high octane platformate. All these products are produced in accordance with the NIOC specification standards. 

The operational units of Arak Refinery are composed of: 

- Atmosphere distillation unit
This unit has a nominal capacity of 150,000 b/d. However since 1994 the capacity has been increased to 175,000 b/d. It produces 12 end and semi-finished products and feeds for other units. 

-Vacuum distillation unit
Capacity of this unit is 71,000 b/d. It produces the feed for hydrocracker, visbreaker and Bitumen units 

-Visbreaker Unit 
In this unit, with a designed daily production capacity of 27300 barrels, the fuel oil’s density is decreased. 

-Liquid Gas Recovery Unit 
In this unit, by making use of gases produced in the units, 6695 b/d of LPG is produced 

- Unifiner and Catalytic Cracking Platformer Unit
The unit has been designed with a capacity of 21,600 b/d. It produces plantformate with octane number of 100 and LPG as side product. The unit is benefiting from continuous catalyst regeneration facility, producing lead free gasoline.

- Hydro-cracker Unit 
Midstream received from the vacuum distillation unit is cracked in the presence of a catalyst in an atmosphere of hydrogen at high pressure and temperature, hence producing more valuable lighter products.

- Sulphur Unit 
In this unit acid gases produced in other units become refined and the high quality sulphur is produced.

-Bitumen Production Unit 
In this unit, the vacuum bottom is oxidised to produce different grades of bitumen. The capacity of the unit is 5,500 b/d increasable to 10,000 b/d

-Tank farm 

The total storage capacity of Arak Refinery amounts to 6 million barrels of different components which are blended into finished products such as Regular and Super Motor Gasoline, LPG, Platformate, Naphtha, Kerosene, Jet Fuel, Gas Oil, Fuel Oil and Bitumen 

Utilities

Utilities include Demineralisation Unit, Steam Production Unit, Cooling Tower and Wastewater Treatment Unit Kazemi is the managing director of Arak’s Shazand Oil Refining Company Regarding the general features of management standards in Arak refinery Kazemi told us: 

“According to duties assigned to us by the general assembly of refining companies’ for setting up systems for management quality, environment quality and health and safety quality, our company pursued activities for establishing a management quality system, and was able to put the system into operation in Summer 1999, becoming the country’s first refinery to do so.” 

On the optimisation of the environment system and its future programs, Kazemi said since refineries have the greatest amount of interaction with environment, one of our refinery’s programs was the establishment of the Environment Management System on the basis of ISO 14001. “We took the initiative in this connection too and became the second refinery in the country to successfully set up the system in 2000. Arak Refinery introduced a number of definition and projects. For example, in previous years there was no mention of green space in the compounds of refineries. But we devised a plan according to which 100 hectares of green space would be created in the first phase”. 

“Fortunately, we have so far completed 75 hectares of that area and are hopeful to cover the entire 100 hectares by early 2004. As such, 20% of the refinery’s space has been transformed to green space and this policy will continue to the point that 30% of the refinery’s space shall be rendered ‘green’ by the end of 3rd development plan of the country”. 

He further noted that due to careful designing procedures the contaminated waters of the refinery have not been channelled to the outside environment. All waters polluted with oil, he said, are recycled in the ten-fold ponds of the refinery. The oil substances recovered will be used as fuel for heaters and the cleansed water returns back to the system as industrial water. Kazemi also referred to a 365-day monitoring of the refinery for air pollution in 1999. According to him the results were remarkably satisfactory and compatible with Europe’s 2005 Standards. “Let us not forget that environment protection regulations in Europe are very strict,” he said. 

Kazemi added that the refinery has been constantly under the inspection of the Central Province Environment Directorate General and the latter’s inspectors have declared the refinery’s green space to be at a satisfactory level. 

“We have created no environmental problem for our neighbours nor have we polluted any drop of water or marred the region’s weather in the past ten years,” he emphasised, adding that all related the Central Province’s Environment Organisation confirms data and statistics in this connection. 

Regarding measures taken to substitute a safer water resource for the refinery’s present water supply, the Shazand Refinery’s managing director, said a dam named ‘Kamal Saleh’ is to be constructed in a village of the same name located 50 km from Arak, and constructional activities have begun since February 2002. The objectives of the project are to supply water for Arak Industrial City and the Shazand Plain as well as to compensate for the city water used in industrial activities, he said. Arak Refinery is utilising 11% of the reserves water of this dam for its own consumption and pays the related expenses annually. It is predicted that the dam will be operational by 2008 and as such the refinery will no longer need underground water, which then may be consumed for agricultural purposes. 

“We are very seriously collaborating in the construction of this dam and have already paid our share of the related expenses in 2002. For the future years’ expenses too we have already earmarked a budget item for them and shall continue our collaboration with the project to the very end,” he remarked. 

On safety and hygiene, the managing director said safety was on top of significant issues and is in the focus of attention by the petroleum minister and the managing director of NIORDC. That is why, he noted, that Arak Refinery selected a safety model, for the first time in Iran on the basis of OHSAS-18001 standard and managed to set up the system in early 2000 as the first factory to do so in the country. He said numerous designs have been defined in the realm of safety and the refinery employees are constantly defining newer projects. 

Shazand Refinery was selected as the ‘safest refinery’ among 9 other refineries in 2001 and this reflects the significance attached to safety in this refinery. Speaking on self-sufficiency programs Kazemi said a high self-sufficiency council had been set up in the refineries, which has already launched rather commendable activities. Statistics indicate that the volume of fabricated parts in this refinery, from the viewpoint of hard currency saving and the local currency is quite remarkable. 

The committee is pursuing its activities and guides self-sufficiency activities with regard to expansion of domestic resources and transfer of services and Iranian industrial capabilities.  Arak Refinery managing director, talking about activities done for reducing the wastes and increasing the recycling activities, pointed out that the refinery’s waste rate had dropped from 2.5 to 1.3%, and it is predicted for the figure to come down to 1%. He also said that the recycling of distilled water too hard riser from 55 to 69% and numerous projects had also been proposed in this connection.  On a comprehensive quality improvement project for the refinery’s products Kazemi said studies about it had been completed in September 2002 and related fundamental operations had already been launched

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The largest technological training centre begins activity in Ahwaz    Mr. Mirmoezi, Deputy Minister of Petroleum and Managing Director of NIOC inaugurated the largest technological training centre of National Iranian Oil Company (NIOC) in Ahwaz. In the inauguration ceremony, Mirmoezi said the centre had been set up by the efforts of NIOC’s Administrative Affairs Department and the National Iranian South Oil Company (NISOC). He also noted that experiences gained in several international centre’s had been applied in establishing the Iranian centre, and as such, it was expected that it would continue interaction with advanced companies and benefit from the highest global standards in transfer of technology.  Mirmoezi, while explaining the choice of name for the centre, stated: “There are four components to technology which include machinery and installations, data and technical know-how, management and organization, and manpower. The latter is indeed the promoter of other components and as such, is viewed as the heart of technology. At the present juncture in time the significance of educating human resources is felt more than any other time. No organisation is able to meet all the educational and training needs of its personnel from the very beginning of their employment. Thus the issue of on-the-job training’s for updating specialised knowledge of the employees is essential.”  Mirmoezi later considered the rapid and incessant changes in technology and production of products and new commodities such as LNG and GTL, and new scientific discoveries with regard to revival of oil reserves, among the most important reasons for expanding the training sector. “Planning for technology transfer”, he continued, “and promoting the knowledge of the staff and employees with regard to the increase of rehabilitation of reservoirs, promoting the quality of crude oil, encountering the problem of salination process in the reservoirs, making manufacturing process compatible with new environmental regulations, and finally cutting down the expenses are all among the most significant duties of technological training centre. Achieving such objective, however, is possible through collaboration with advanced scientific and research centres in and out of the country.”  Pointing to the location of the centre in the vicinity of installations and factories, and the possibility of benefiting from the cooperation of experts working in those installations as well as the need for qualitative and quantitative promotion of education and training in the centre, Mirmoezi expressed hope the NIOC’s Technological centre will soon be able to provide training for the personnel of oil companies in the neighbouring countries. Later Sadrolsadat, the administration director of the NIOC, referring to the collaboration of the IFP in activating the upstream sector of the technological centre, stressed the necessity of benefiting from the experiences of reputable foreign firm and the collaboration of oil companies of the neighbouring countries in the centre’s academic planning. Meanwhile Head of the Technological Training Centre, Yaghoubi Nejad in a press interview said the centre’s structure had been organised in such a way as to be able to benefit from invited lecturers and service rendering forces in the centre’s administration beside its own official cadre.  On the issue of using foreign experts and transfer of advance technologies Mirmoezi noted that the matter had been referred to in the centre’s article of association and the centre is authorized to benefit from the cooperation and collaboration of the foreign centre’s institute for the promotion of its level of education and training. The centre is established in a 30.3-hectar lot and has a roofed area of 36000 sqm, with extensive educational training, workshop and laboratory facilities.

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1st International Oil Film Festival to be held in Abadan  To identify, select and encourage superior cinematic works (films and videos) of Iran and the world in the field of oil industry, and to boost cultural interaction between Iranian filmmakers and their foreign counterparts, the Public Relations Department of Ministry of Petroleum is holding the 1st International Oil Film Festival. The festival, which aims to encourage Iranian moviemakers to make films about the oil industry and use this subject to present new and innovative themes for future promotion of the industry, would be held for 4 days in Abadan, southern Iran, starting on 15th December, 2003. The festival will have two sections, competition and perspective and will present documentary or cinematic works. Entries in the competition will be presented in two categories of film and video in national and international subcategories.  Movies and videos related to the perspective section will be screened under 4 general titles of "oil and preliminary steps', 'oil and development', 'oil and the Holy Defence', and 'oil and fire'. The official in charge of the festival, Akbar Nematollahi, said recently that the long history of the oil industry and its activities in Iran are immensely important. He said that due to the role of oil in the domestic economy, lack of a cultural attitude toward the industry is considered a shortcoming. "The main goal of the festival is to identify, select and encourage the best cinematic works related to oil, he said. Nematollahi added that all movies produced within the last 5 years are eligible to participate in the competition section of the festival, and every moviemaker can present 3 of his/her works," he said. The official noted that a meeting between cultural officials of OPEC member states will be held on the fringes of the festival, adding: "We are trying to invite renowned moviemakers, experts and specialists in the field of oil to take part in the festival."    Nematollahi said the festival aims to familiarize the people with the oil industry and its activities. "The officials are doing their best to hold the festival with the best quality, and they intend to hold similar festivals in the coming years," he said. Nematollahi further noted that due to the long history of oil industry activities in Abadan and the presence of high-quality theatres and good facilities there, the city has been chosen to host the festival.

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Sirri Oil Terminal becomes operational as the oil tanker loaded 

As an oil tanker was loaded at Sirri Island crude oil terminal, the full operational employment of the terminal commenced.

According to a report by the public relations office of the Iranian Offshore Oil Company (IOOC), Sirri oil terminal had been severely damaged during the 8-year Iraqi-imposed war on Iran.  

Upon the completion of the required repair and reconstruction works, which took about a year, Iran Nabi oil tanker was loaded under normal conditions through the employment of two simultaneously operating pumps, the terminal was deemed to become fully operational again. 

The reconstruction of the terminal was put into effect through the conclusion of an agreement for cooperation between the IOOC and the German firm, GPC. 

All repair and rebuilding works were done through the employment of the latest technological achievements and the loading jetties, marine operational control tower and the high voltage electricity of the terminal were rebuilt and prepared for full commissioning.  According to a report by SHANA, Sirri Island oil terminal can accomodate tankers up to 350,000 dwt and has 4 loading arms, each arm is capable of transferring up to 25,000 barrels of oil per hour

Petroiran and Sadra-Saff cooperate in Salman Field development

 The contract for the execution of detailed engineering, fabrication, transport and installation of the offshore facilities of Salman field in the Persian Gulf was executed on 19th April 2003 between Petroiran Development Company and the joint venture of SADRA (Sherkate Sanaye Daryaee Iran) and SAFF (Sherkate Sanaye Farasahel). 

The contract has a value of $187million with a performance period of 24 months. The scope of the contract includes detailed engineering, fabrication of a series of offshore platforms and structures weighing approximately 22,000 tons. The structure includes a living platform, a production and process platform, two drilling rigs, a platform for gas gathering and finally an auxiliary platform and the load out, transportation and installation of the facilities mentioned. 

The fabrication of the platform will be carried out by SADRA and SAFF in their yard at Bushehr and Bandar Abbas. Iranian sea crafts / marine spread shall be employed for their transportation and installation. Selection of SADRA /SAFF for the execution of the said contract has come about as the result of a tender and thorough evaluation of the bids both from the technical as well as commercial and economical view points. 

Completion of the contract will render possible the operation of Dalan / Kangan (Khuff) gas layer at a rate of 500MM scf/d and condensate at a rate of 11,000 bbl/d. It also facilitates the development of gas gathering installations for the increase of Salman crude oil production. Thus an important objective of NIOC in the achievement of the desired operation of the common oil and gas fields in the Persian Gulf will be materialized.  Mr.

 Khoee Managing Director of the Petroiran Development Company declaring the contract as one of the most significant within buy-back arrangement for the execution of offshore projects. 

He added that the award to domestic companies of the contract signifies a turning point in reliance on the capabilities and industrial experiences and clear manifestation of such capabilities within the country. 

Mr. M.Khoee further added that with the award of this contract and the one for fabrication and installation of two well head jackets earlier signed with SAFF company, for the first time in the Persian Gulf, we are witnessing the execution of a complete offshore facilities under buy- back arrangement by Iranian companies.

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Drilling contract for South Pars gas field signed 

Drilling contract for South Pars gas field was signed between National Iranian Oil Company (NIOC) and Japan Drilling Corporation (JDC).

 Petroleum Minister, Bijan Zangeneh, several high-ranking Ministry officials and other domestic and foreign oil experts attended the signing ceremony. The JDC was the winner of the 5-year contact in a tender. The contract could be extended for another 5 years on the consent of both sides. Speaking at the ceremony, Zangeneh said the main objective of the agreement was to pave the way for transfer of foreign technology and services to Iran's project site.  

"This priority, which is seriously pursued by the Petroleum Ministry, precedes the development of oil and gas fields," he said. The minister said the deal stipulates drilling 50 wells in South Pars. He added 86 % of the gas exploited in South Pars would be delivered to refineries. "Household and commercial units will come next." He said. 

He also noted that phase 1 of South Pars will be completed soon, while phases 4 and 5 would become operational by March 2005. "Projects of such nature, due to their extended implementation period and high costs, provide the Iranian side with special incentives and facilities brought in by foreign companies," he added.  

South Pars gas field is particularly important for Iran noting its joint sharing and exploitation arrangement with the Persian Gulf state of Qatar.  

Exploitation of the abundant gas reserves is highly significant for Iran's domestic use as well as for exports. The value of contract is close to $182 million and the Japanese concern is bound to enter into a joint partnership with an Iranian company to implement the project. Any agreement should be registered in the Kish Free Trade Zone. The company is also required to use Japanese drilling equipment, which has already been used in phases 1, 2 and 3 of the South Pars gas field development.

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Accord on 3 phases of South Pars onshore refinery signed

An agreement was reached in Tehran on May 17th on the construction of an onshore refinery related to development phases 6,7, and 8 of the South Pars Project.

 The agreement is part of the development project of South Pars gas field signed by South Pars Company and a foreign consortium lead by Toyo Engineering Corporation of Japan. 

The contract is worth $1.207 billion. The whole project will become operational within 43 months, while the first phase of the project will be completed in 34 months. The total daily gas production of phases 6, 7, and 8 of the South Pars project will be 3 tcf. 

The phases 6,7, and 8 of the South Pars project includes marine installations and onshore pipelines.

The consortium, with which the accord has been signed, comprises of Japan Gasoline Company (JGC) and Toyo Engineering Corporation from Japan, Daelim from South Korea, and the Industrial Development and Renovation Organisation (IDRO) from Iran. The shares of Toyo and IDRO in the refinery project will be 28 %, while those of JGC and Daelim will be 22 % each. 

The consortium is committed to carry out at least 51 % of the activities of the project in Iran by making use of the facilities provided by domestic enterprises. Some 2.8 billion cubic feet of methane gas, 120,000 barrels of gas condensate and 3,700 tons liquefied gas make up the daily production of the refinery. 

The gas condensate and the liquefied natural gas will be exported via special jetties at Assalouyeh Port. The total exported products is expected to fetch some $ 1 billion a year.

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For The first Time in Iran: 3D Seismographic tests in Caspian Sea 

Three dimensional seismographic test are to be carried out in the Caspian Sea for the first time in Iran in order to identify hydrocarbon reserves under the sea-bed.

The above statement was made by Hassan Mohammadi Moghadam, an engineer and the Managing Director of Oil Exploration Services Company (OESC), who was talking in an exclusive interview with Shana. He then went on to add that in light of the recent policies adopted by the Iranian Ministry of Petroleum in connection with the implementation of exploration operations for all hydrocarbon reserves of the country and considering high costs of offshore drilling operations, the OESC has availed itself of the currently available technology on the worldwide scale in order to identify offshore reserves through the application of seismographic tests.

On the basis of this report, the extremely high costs of drillings in the absence of accurate and well calculated seismographic tests, immense losses may be incurred by the oil industry of the country. 

Touching on the strategic conditions of the Caspian Sea, Mohammadi Moghadam referred to the plan for explorations for reserves in this region as a national project and continued by saying, 3-D seismographic tests are among the most up-to-date technologies that the Iranian specialists of the OESC have employed in order to ensure accuracy in such tests for the purpose of identifying underground reserves.

As far as this new technology is concerned, the Managing Director of OESC also stated that up to sometime ago, only 2-D seismographic tests were made for identification of offshore reserves in the Persian Gulf region and the Sea of Oman. The technique, he added, is not in as accurate as the 3-D seismographic tests and this more modern technique is to be employed for the first time in the Caspian Sea in June 2003.

Mohammadi Moghadam then went on to say that the project is to be put into effect by Pezhvak, a ship belonging to OESC. The vessel, he added, is presently undergoing modification and equipment installation to make it ready for 3-D seismographic test operations. According to Shana, the upstream oil exploration operations of OESC have been comprised of planning and implementation of seismographic tests, magnetic gravity computations, decoding seismographic tests tapes, well depth calculations, various tests needed for oil wells, mathematical model makings and simulation feasibility studies for reserves, as well as mud engineering, geological studies, surveying operations through satellite equipment.

Similarly, OESC provides downstream services in connection with road-building and cellar for the position of the explored and developed wells, as well as camping facilities and other marginal services including communication, radio and road transportation.It should be mentioned that in spite of the aforementioned abilities of the OESC, the participation of foreign companies for the purpose of im