11 August 2018 - 17:47
  • News Code: 284106
Flurry of Upstream Oil Activities in Iran despite US Threats

TEHRAN (Shana) -- The National Iranian Oil Company (NIOC)'s Director of Investment and Business says: "Despite Washington's desire, this year, activities in Iran's petroleum industry, especially in the upstream sector, will bolster."

Recently, National Iranian Oil Company (NIOC) signed two contracts with the Persian Gulf Petrochemical Industries Company (PGPIC) and Maroon Petrochemical Company with a total value of 1.2 billion dollars for preventing burning of 22 mcm/d of gas in East Karoon region. Along with these projects which will reach fruition after a two-year period, Bidboland II Petrochemical Project would come online next calendar year (which starts on March 21), three associated gas collection projects of Maroon III, Maroon VI and Mansouri would become operational by the end of the current Iranian calendar year to March 20 2019, and a project with Masjid Soleyman Petrochemical Plant for gathering 100 mcf/d of gas in the southwestern region, would be completed. These are only a fraction of upstream activities in Iran's oil-rich regions in the current year. According to Mohammad Mosatafavi, this year, there will be a flurry of activities despite US threats to restrict Tehran's oil business.  

In a question about why PGPIC and Maroon were chosen as parties to the two contracts for associate gas collection, Mostafavi said: Persian Gulf holding and Maroon Petrochemical Company were chosen due to the fact that they are the beneficiaries of NGL projects and can consume the gas as feedstock to feed their projects.

He also said these companies were economically interested in implementation of such projects because they are consumers of the gas as feedstock. They also have acceptable financial and technical capabilities.

The following is an excerpt from Shana's interview with Mr. Mostafavi:  

Shana: Has this approach received good feedback so far?

Yes. For example, the Bidblond 2 Petrochemical Project, which is being implemented by the Persian Gulf Holding, is well advanced and will be operational next year; furthermore, Parsian Refinery, which is being carried out by Setad, or the Ethan Recovery Unit of South Pars Phase 12 which is being executed by Kangan Petro-refinery is running well.

Shana: How has Khark NGL progressed given the fact that its contract was signed last year?

We are optimistic that this project will be transferred to its investor within the next month and that it progresses well given the reforms that are put in place in the project. Of course, it's a big project and may be affected by the sanctions in some areas. Khark NGL or Siri NGL, which are faced with shortages of feedstock, are among projects that began with a wrong design and unrealistic capacities, and therefore, they encountered difficulties.

Shana: How about NGL 3100 project?

The project is being carried out with the goal of collecting gas from the oil fields of Dehloran, Azar, Cheshmehkhosh and West Paydar and supplying feedstock for Dehloran Petrochemical Plant. It is being implemented by OIEC and has progressed well; it will be operational next year. Altogether, about 1.5 billion cubic feet of gas is being burned every day in the country.

Shana: Tell us a little bit about Iran LNG project?

The project is one of the megaprojects that has a thousand issues with multiple contractors and a flurry of demands. On the one hand, it's a massive project, and its completion requires billions of dollars in capital, and on the other hand, it cannot be diminished like Khark NGL Project, because it has the two main trains, and even if one of the trains is foregone, the volume of work would not be halved, and we would be still faced with a number of subprojects. Currently, Gazprom has signed a memorandum of understanding (MoU) on the project and is studying it.

Shana: Whispers of Iran's reduced oil exports have begun, and it seems that in such a situation, maintaining production will be a priority rather than an increase in output; this is while, with the implementation of production maintenance and enhancement packages, several hundred thousand barrels of oil will be added to the country's oil output. Given the status quo, will implementation of these packages pursued seriously?

Definitely, because maintaining the contracting capacity of the country is essential. Incidentally, if there is to be an escalation of stagnation in the country, implementation of such projects will be a double priority. The oil industry contracting capacity of the country has been formed over the years and should be appreciated and protected. Just as maintaining production capacity is important, maintaining the potentialities and capacity of the oil industry contracting sector is also crucial, and implementation of these 34 packages is precisely with this goal. Of course, the other side of the coin should also be considered; contractors are likely to be pressurized due to rising exchange rates, skyrocketing labor costs and other problems, and this will challenge implementation of the projects. But the National Iranian Oil Company will stay committed to these projects and is determined to bring back boom to the contracting sector of the industry.

Shana: What about Iran Petroleum Contracts (IPC)? How much have the three contracts that were signed in IPC framework last year progressed?

In all three contracts, subcontracts will be struck with contractors this year. For, Phase 11, licensing rounds have been held and the work is being pursued more quickly in that project.

Shana: Has the fate of Total's stake in the project been decided?

Yes, but no changes have so far been made in the terms of Iran's multi-billion-dollar agreement with a French energy major Total-led consortium developing Phase 11 of the South Pars gas field.

Shana: Are there any plans to sign a contract for the development of reserves this year?

The contract for the development of Azadegan Oilfield seems to be finalized, and of course, the amendment of the second phase of Yadavaran Oilfield.

Shana: How effective do you think CNPC will operate in South Pars Phase 11 project given the fact that it was the same company that was put aside in South Azadegan Project for foot-dragging?

Realistically speaking, CNPC is a good company; it is listed as one of the 5 largest oil companies in the world and is developing rapidly and is competing with the world's oil heavyweights. I believe that not only under sanctions, but also in all circumstances, we should work with the Chinese. China is the world's largest energy consumption market. Of course, I do not mean that the decisions made in the past about the company were not necessarily correct. As oil prices change over time, economic conditions and business opportunities change over time, and firms must decide based on the ongoing circumstances. But what's important is that China, as the world's largest energy market, which is experiencing the fastest growth, can certainly be a strategic partner for any energy-supplying country, including Iran, and cooperation with Chinese majors is of strategic importance for NIOC.


Interview by Haniyeh Movahed

News Code 284106

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