“Iran Petroleum” has interviewed Ali Reza Pakdaman, NISOC director of engineering and construction, to learn about various development projects by the company supplying 80% of Iran’s crude oil.

NISOC installations are decrepit. How do you plan to renovate them and the pipelines?

Although NISOC installations are old, in the past, except for a short period of time, maintenance and optimization of the installations has been taken into account in parallel with production. Currently, NISOC is producing oil using the same installations and equipment. Every year, alongside production plans, renovation, reconstruction and maintenance projects are defined, which would be assigned after going through administrative procedures to the Division of Engineering and Construction of NISOC. These projects would be awarded to successful bidders for operation. This process is under way regularly. It would be not true to say we have decrepit installations because renovation and reconstruction projects are regularly under way in NISOC.

Are there any decrepit installations at NISOC facilities?

Generally speaking, we can say we have no decrepit installations within NISOC. In other words, we don’t have any installations to be unusable. The installations are old, but they are overhauled, maintained, renovated and optimized and we are continuing production with the same installations. In parallel with production, we also take measures for renovation and reconstruction of these installations. It is not that we refrain from overhaul and renovation of installations and equipment in a specific period of time to finally phase them out. We define and operate good projects for the renovation, reconstruction and maintenance of installations including operation, desalinating, gas injection and LNG facilities, which are scattered across zones, in order to meet our production targets. For the current calendar year, when we presented our production plan to National Iranian Oil Company (NIOC) we continued our production with existing installations. We can even launch projects, make new drillings and proceed with overhaul to return to pre-sanctions production levels. Based on calculations, we may be able to raise production to levels higher than that of the pre-sanctions period. It also deserves to mention that good financial lifeline has been released for the implementation of projects, most of which are in the phase of licensing round. We hope to implement more and larger-scale projects next calendar year.

Which projects are under way?

Currently there are more than 200 active medium and large-sized projects and major projects like waste injection into wells and overhaul and renovation of pipes. We plan to develop Khami reservoir in upcoming years. Desalinating projects are becoming active. Over the past years we have had no permit to build facilities, but this ban has been lifted and new projects are undergoing the approval process. For instance, gas gathering projects are under way and such equipment as pumps and compressors are being manufactured with the help of knowledge-based companies. In fact, it could be argued that sanctions have lost their deterrent impact and we are currently seeking to benefit from the opportunities created by sanctions. Of course, it does not mean that we would not need foreign knowhow and technology. But we have to acknowledge that sanctions are no longer paralyzing and we have not been stopped. With the renovation and reconstruction of installations, oil production continues for local refineries and for exports.

Is there any chance for attracting investor in NISOC?

Yes, as the petroleum industry grows older, more investment would be needed. Therefore, there are good opportunities for domestic and foreign investment in this sector because the number of wells, desalting plants, gas gathering facilities and gas injection plants is increasing. Therefore, we regularly need to attract new investment. For instance, we are currently using petrochemical plants, which are consuming NISOC gas liquids, as investor and implement development projects associated with the gas industry and petrochemical feedstock. The investment and investor’s proceeds are recouped through feedstock.

Which projects?

Construction of flare gas gathering installations is under way by the Persian Gulf Bid Boland Gas Refining Company with a view to capturing 2 bcf/d of flare gas. The investor in this project is Persian Gulf Petrochemical Industries Company (PGPIC) that has been chosen as the project operator in order to supply its own feedstock. It comprises 28 projects classified under three groups; gas pre-compression and injection, flare gas gathering and turbine and pipeline optimization. The initial investment is estimated at $1.1 billion for the projects scattered in the four provinces of Khuzestan, Bushehr, Kohguiluyeh and Boyer Ahmad, and Fars. The projects are funded by banks, National Development Fund of Iran and investors. Finally, after the projects are implemented, the capital and benefits are recouped through feedstock delivery.

How many projects do you have in the phase of bidding?

We have nearly 100 small and large-sized projects in the process of bidding, most of which pertaining to oil and gas output hike. These projects are aimed at overhaul, reconstruction of plants, building new units and optimization of installations and equipment.

How many desalting plants do you have under construction?

Currently, our desalting plants are prioritized for construction. They include Gachsaran 4 with capacity of 110 kb/d, Maroun 3 Bangestan with capacity of 50 kb/d, Mansouri Asmari and Lali Bangestan. Furthermore, completion and launch of the second phase of the Ahvaz desalter is under way with capacity of 100 tb/d. These projects are in the stage of completion of estimates and procedures for the start of licensing round.

Would you please tell us about NISOC Khami fields’ development?

Development of Khami gas fields is on the agenda with an initial estimate of €5.9 billion. We are currently introducing these projects to petrochemical plants in order to attract investment for the continuation of work. The conceptual studies phase has been defined for these projects. Subsequent to the basic engineering phase, the project would be awarded to contractors through EPD and EPC.

How many fields are involved and how much would be the gas output?

We have plans for developing 16 fields and based on initial forecasts, about 3.1 bcf/d of gas would be recovered.

What measures do you have under way for the construction, repair and maintenance of pipelines?

Currently inspection of pipelines is under way in NISOC-run areas by using smart pigging as well as overhaul and maintenance of main oil pipelines. In parallel, there are plans to build 42 and 48-inch pipelines from Ahvaz to Goreh and Genaveh. This 250-km-long pipeline would be a major project to carry oil to export terminals. We are currently in the process of bidding for the purchase of pipes. Moreover, a 60-km-long pipeline is planned from the Maroun 1 production unit to the Omidiyeh pumping station to deliver feedstock to refineries.

Will no action be taken for the renovation and reconstruction of pumping stations?

Some plans have been adopted for the renovation and reconstruction of pumping stations, based on which in parallel with the overhaul and reconstruction of pipes and old pumping stations, the pumping station systems will be also renovated. A project has been approved for the combined electropump-turbopump pumping station to replace older pumping stations in Ahvaz. Once feasibility studies are completed, the project would be awarded on an EPC basis.

What arrangements have been made for the supply of turbines required by pumping stations?

We are close to signing agreements with local manufacturers and knowledge-based companies. Domestic manufacturing of this equipment is expected to start next calendar year after agreement has been signed with manufacturers. When domestic manufacturing comes true, spare parts for the turbines would be supplied. Domestic companies have built proper capacity in this sector and they have manufactured the bulk of components. If a full turbine package is manufactured, new turbines will substitute for older turbines. Apart from that, the technological knowhow for the manufacturing of turbines will be localized.

Would you please explain about the comprehensive plan to renovate and reconstruct installations at NISOC?

Recently, studies have been started for the renovation and reconstruction of NISOC installations with a final objective of sustainable production at 300 production, NGL, desalting, pressure compression and gas injection units and pumping stations. The first edition of services is being finalized within the Directorate of Engineering and Construction, which would be assigned to consulting service companies in the future.

There was recently word on recovery from the gas cap of NISOC fields. Would you please tell us more?

NISOC oil production goes on as long as oil reservoirs have not been depleted, after which, recovery from gas caps will normally start. Concurrently, with recovery from gas caps, the second industrial phase of gas sector would start in Khuzestan and southern provinces. Of course, some injection projects are under way for compression now and it could be said that gas injection into gas caps will be some sort of underground gas storage for future generations.

Iran Petroleum