Following is the second installment of Alireza Daneshi’s exclusive interview with Shana, Mashal and Iran Petroleum.

What are your plans for attracting domestic and foreign capital?

Due to the problems of financing at the level of the National Iranian Oil Company, a number of policies are being pursued by NISOC, including establishing a balance and systematic relationship with petrochemical companies, as one of the main customers of our rich gas, liquids, condensate and naphtha. Negotiations have begun to allow petrochemical companies to finance joint projects to develop the fields that feed them. A $5.5 billion project is currently underway to develop 15 independent gas fields, while the Flare Gas Collection Project is an excellent source for petrochemicals. Two projects with an investment of $1.2 billion are being implemented by Bidboland and Maroon petrochemical companies, the results of which, God willing, will be seen in the near future.

The other matter is the policy of implementing projects and providing requirements in exchange for oil bartering, and fortunately this policy is also being well pursued, and I will underline some parts of it. In Pazenan, we are negotiating the development of a field for oil bartering worth about $200 million, to be implemented by local contractors, and we are waiting for its approval to be handed over to the contractor. In Maroon Bangestan, a principal agreement has been reached for the development of a field for oil bartering worth about $200 million, and a contract is being pursued. In Shadegan, the development of the field is being finalized with an investment of one billion dollars.

In reconstruction of the rig and the supply of equipment, good negotiations are underway in the form of oil bartering, which, God willing, will reach the contract stage soon. In other less developed and risky fields, development plans are being prepared to attract investors, and NISOC would welcome all investments with the priority of oil bartering.

What is the current recovery rate of reservoirs in the fields operated by NISOC?

The recovery factor of reservoirs varies. In some reservoirs such as Asmari and Ahvaz, it is excellent and above the global norm, and in others it is not suitable. We have to face the reality of reservoirs and try to improve it. For example, in the Ahvaz Bangestan reservoir, where the recovery rate is very low, due to the limited gas supply, we are trying to inject water into it, and the pilot project has had a good result.

Specifically, what are the current projects earmarked for enhanced recovery in the oil-rich southern regions?

Allow me to briefly elaborate on the four projects we are implementing in this sector. The pilot project of water injection in Bangestan reservoir of Ahvaz field, as the first project of water injection in oil-rich fields in the south, can open a new horizon in gas injection. The goal of this project is to achieve injection of 50,000 barrels of water per day. In the study phase, simulation and implementation stage, the injection molding tests stage, this project has been successfully completed, and by implementing it, we can see a recovery rate of 15 to 20%, which is a good figure. If water injection is successful, a wide range of Bangestan reservoirs can be candidates for water injection.

CO2 injection project in Asmari reservoir of Ramin Field, in addition to hydrocarbon gas injection projects that have been implemented in the region for more than four decades, non-hydrocarbon gas injection projects such as carbon dioxide are also in the study and feasibility study phases. The comprehensive study of Ramin Field is focused on efficiency of carbon dioxide injection and the laboratory phase of this project has just been fulfilled. The next step is the feasibility and design of the project’s surface facilities and the economic review of the project. If successful and economical, new capacity will be added to the production and reserves of the oil-rich southern regions.

Hydrocarbon gas injection project with the aim of increasing pressure has been performed for more than four decades in 12 fields of oil-rich areas. About half of the oil is in the areas affected by these projects, and about half of the company's output is from gas-injected fields. Due to the negative gas balance this year, as well as the shortage of gas for injection in previous years, regional gas injection projects have always been active with part of their capacity, and if the gas required for injection is not supplied, a significant part of the company's reserves will be a waste.

Smart water injection in Asmari reservoir of Binak field, which is under study due to the proximity of Binak field with the Persian Gulf and the suitability of intelligent water injection in this field in the study phase. A comprehensive study of this field has identified the option of smart water injection as appropriate and the laboratory phase has just been completed, while suitable water for injection with the greatest potential for oil production has also been identified.

With this in mind, is the scenario of the sanctions being lifted included in the planning of the National Iranian South Oil Company (NISOC)?

This matter is definitely considered.

In what way will you pay attention to domestic manufacturing?

The National Iranian South Oil Company (NISOC) does not have any obstacles in supporting domestic production, and our efforts are focused on eliminating the weaknesses and gaps in this sector by strengthening and expanding their activities.

I must state that more than 70% of the goods required by NISOC have already been localized, and for the rest, which mostly consist of installation equipment such as rotating machines, studies to use alternative methods are on the agenda.

To reach the 5-year plan goals, how much are you planning to dip into partnerships with domestic and foreign contractors?

All the work capacity in this regard is aimed at using domestic contractors and manufacturers, and we will fully support them, while the laws of the country are also in this direction. In addition, due to the vast capacity of the oil industry, we also support foreign investment and negotiations are underway in some areas. In the field of domestic manufacturing, several activities are being carried out simultaneously, and soon a contract for construction of a 15,000 Psi complementary field, which is considered a sensitive issue in the country for drilling high-pressure wells, will be signed to domestic companies for production of the pipes for the first time in the country. In addition, and due to the need of the oil industry for seamless pipes, its manufacturing and development is on the agenda of NISOC, and in addition, we will always use the ability of scientific, research and knowledge-based centers. We have no limits in this regard.

Do you have any plans to attract technology?

According to our studies, it is possible to attract new and indigenous technologies up to an annual capacity of Rls. 10,000 billion in oil-rich areas. These technologies are mainly in the field of equipment and goods. About 75% of the goods in the subsurface contract related concerning wells, ie about 12,000 items, have been localized so far. The needs of the regions in the field of technological localization have been identified and a significant part of them will be met through the capacity created by the Vice President for Science and Technology and using knowledge-based companies. In addition, NISOC has about Rls. 10,000 billion projects in the form of technology-based research projects with universities and research centers in the country.