12 May 2007 - 17:39
  • News Code: 104443
Oil Industry Is Breaking New Grounds

TEHRAN -- In an exclusive interview with daily Kayhan, Minister of Petroleum Seyed Kazem Vaziri Hamaneh, answered questions about the latest situation of Crescent Contract, oil mafia, oil contracts with Chinese companies as well as oil sales and rumors about his possible resignation.


Asked about the latest situation of Crescent contract, the minister said, “A paragraph of the contract has explained that if energy prices in the region changed suddenly, the contract should be reviewed. We have sent clear messages to Crescent that as long as gas price has not been corrected, we would export no gas.”

He said, “In a meeting with officials of Crescent Company, we clearly told them that they would be receiving no gas unless the terms of contract have been revised. This is an ultimatum and if they do not do anything, we will allocate our gas to other applications.”

Vaziri Hamaneh stressed on the need to prevent domination of the so-called oil mafia on the Ministry of Petroleum, saying, “At present, we have appointed new people to various posts and have eliminated unhealthy relations in the Ministry of Petroleum. Therefore, unhealthy ones have either left the ministry or we have stripped them of their posts.”

The official said that if there were collusions or unhealthy relations in the past, their relations have been cut and all of them have been isolated.

Vaziri Hamaneh also stated that if anybody knows about such relations at the Ministry of Petroleum, they should inform concerned officials and be sure that such cases will be addressed without lenience.

The minister said inspections at all levels of the Ministry of Petroleum have been strengthened and a young inspector is currently seeing into all details of oil contracts.

We have also reestablished inspections teams at four major subsidiary companies of the Ministry of Petroleum and such teams are very instrumental in fighting corruption. We are also open to inspections by the State Inspectorate, Supreme Audit Court, Article 90 Commission of Majlis, as well as the Presidential Office,” he said.

The minister stated that all cases of violations have been handled carefully and offenders have been either deposed or handed over to judicial officials and have been prosecuted or even arrested.

Auditing subsidiary companies had been already phase out, but we have restarted it,” he said.

Asked about reports in some Arabic news agencies about withdrawal of Chinese companies from an oil contract with Iran which is worth 100 billion dollars, Hamaneh noted that contracts with China will continue.

We had signed a contract with Chinese companies on Yadavaran oil field and negotiations are currently underway. We are very hopeful that negotiations will lead to a final agreement. Therefore, the Chinese companies have not withdrawn, but negotiations have also progressed. At present, a Chinese company is developing North Pars gas field to pave the way for production of liquefied natural gas. Fortunately, memorandum of understanding has been signed and negotiations are underway to make it a final contract. We are also negotiating about participation of Iran in building a refinery in China and a memorandum of understanding has been signed. We are also to build an oil terminal in China,” he noted.

The Iranian oil minister stated that the Chinese had purchased 3 million tons liquid gas from Iran, which later increased to 5 million tons. Delivery will take place in 2012 and there is no difference between the two sides. “We must first start producing LNG before signing a final contract.”

Asked about oil production capacity up to the end of the Fourth Economic Development Plan, the minister said, “Iran’s oil output will hit 4.35 million barrels per day by the end of the 4th plan and according to current plans, we will be producing 5.3 million barrels per day in 10 years from now.”

Hamaneh stated that his resignation from Ministry of Petroleum was just a rumor that appeared on some websites.

They have asked me and I said that I am neither tired, nor resigned. I am not sick and work with full force. If the Islamic system and Majlis reached the conclusion that is should serve in another post, I would go there. I firmly believe that the oil industry has been successful during the past 1.5 years and all indexes have been on the rise compared to the preceding years. All those indexes are positive and I am proud of them because they were the result of endeavors of my colleagues at the Ministry of Petroleum and I appreciate all of them,” he said.

Referring to daily consumption in gasoline production in the preceding year, which amounted to 74 million liters, the minister said, “If rationing does not happen and nothing else happens, gasoline consumption in the country will hit 81 million liters per day during the current Iranian year (started March 21, 2007). Therefore, we will have to import 36 million liters gasoline per day.”

At present, gasoline production by using MTBE method has reached 42 million liters per day and can be increased to a maximum of 44 million liters per day…. Since I took charge as minister of petroleum, my colleagues have been making plans to boost efficiency of refineries. Therefore, output of heavy products will decrease while production of light ones will increase. We have presented two plans for refinery development and are considering three projects for building new refineries,” he said.

Hamaneh stated that according to the said plans, Arak and Isfahan refineries will be developed first and a gas condensate refinery with daily capacity of 360,000 barrels per day will be built in Bandar Abbas. “Also, two refineries for treating heavy crude oil will be established in Bandar Abbas and Abadan.”

The oil minister pointed out that the private sector has volunteered to build a number of refineries in various parts of the country and Ministry of Petroleum has issued agreements in principle for them.

Other refineries that we hope to be made operational include a gas condensate refinery in Shiraz, which will have a capacity of 120,000 barrels per day. Its construction was approved during President Mahmoud Ahmadinejad’s visit to Fars province. The refinery will be constructed by the private sector,” he said.

He added that another refinery with the same capacity (120,000 barrels per day) will be built in Kermanshah in cooperation with Social Security Organization of Iran and the private sector. “Also another refinery will be built near the existing refinery of Tabriz, which is, in fact, extension of Tabriz refinery’s development plan.”

Agreements in principle have been issued for the above plans and they are currently under way. We have organized construction plans of new refineries in such a way that most of the job will be done by the private sector because according to a decree by the Supreme Leader on policies related to Article 44 of the Constitution, the government should transfer the refineries to the private sector after they are constructed. Therefore, we have given most of the job to domestic and foreign private sectors. Share of the Ministry of Petroleum in building new refineries is 20-50 percent and the rest of investment will be made by the private sector. There is no problem for funding the projects and permits for establishment of needed installations have been issued,” he said.

Hamaneh stated that a consolidated plan has been drawn up for production of light oil products such as gasoline and diesel in the country, adding, “We hope that the projects will be implemented up to (the Iranian years) 1390-94 (2011-2015) to increase domestic gasoline production to 160 million liters per day. Also, production of oil and diesel should reach about 150 million liters per day. Compared to current output, production of gasoline will increase four-fold while production of diesel fuel will increase 2.5 times.”

He added that an Indonesian company is taking part in the construction of gas condensate refinery while an Indian company has invested in construction of heavy oil refinery of Bandar Abbas.

The government has forwarded a bill to the Majlis to achieve two goals. Firstly, the public transportation should be developed adequately, so that people would not have to use personal cars for daily trips. Secondly, subsidy that is currently paid on gasoline price will be phased out in five years and the product will be sold at international price,” he said.

Referring to value of contracts signed for construction of refineries, the minister said that contracts worth about 8 billion dollars have been signed for investment in the sector. “Future refineries have been approved and if their contracts are signed, total investment in domestic refineries will be well over 15 billion dollars.”

Asked about injection of gas into oil fields to increase recovery factor, Hamaneh noted that, at present, about 100 million cu. m. gas is being injected into oil reservoir and the figure will increase in proportion to the need of the reservoirs.

At present, domestic gas consumption has been divided into four major groups: household, commercial, industrial, and power plants. Also, a portion of domestic gas is allocated to injection into oil reservoirs and exports. Our first priority is gas injection into oil reservoirs, but in winter and cold season, priority is given to household consumption. At the moment, 12.5 million families are consuming natural gas,” he said.

Explaining on oil sales in foreign currencies other than dollar, Hamaneh stated that, at present, 60 percent of Iran’s crude oil is sold in return for other foreign currencies, which is determined by the Central Bank of Iran.

Asked about building refineries in cooperation with other countries, he noted that Iran has signed contracts for construction of refineries in cooperation with China, Malaysia, Indonesia, and Singapore with Iran’s share totaling 30 percent.

Elaborating on measures taken to follow up the Supreme Leader’s viewpoints in the establishment of a gas OPEC, Hamaneh said the sixth forum of gas exporting countries was held in Qatar.

After the Supreme Leader expressed his viewpoints, reactions shown by Russia and other gas-rich countries led to new developments in this regard,” he noted.

The minister said that 14 countries had been invited to gas forum in Qatar and 12 countries sent their energy ministers, which was unprecedented.

Russia sent its minister and managing director of its gas company and the Russians volunteered to host the next meeting, which was welcomed by the participants,” he added.

Minister of petroleum said Iran proposed that a committee should be established to draw up articles of association of the gas OPEC.

This was also purported by the Supreme Leader. Fortunately, the proposal was approved and it was decided that countries should introduce representatives and follow up the issue under the auspices of the Russian representative in Moscow,” he said.

Asked about the latest situation of Iran-Pakistan-India gas pipeline, Vaziri Hamaneh said, “After about three years of negotiations between Iran, Pakistan and India a partial agreement on the gas price was reached before the beginning of the new Iranian year. The price was proposed for gas delivery at border with Pakistan. Now, Pakistan and India should continue negotiations on transfer of gas from Pakistan border to India and reach an agreement on that issue.”

News Code 104443

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