Bijan Namdar Zanganeh,
Minister of Petroleum

Our Undeniable Specialty: If you assume a categorization of business functions for different nations based on their expertise, Iran will automatically go under the petroleum category. In that case, oil industry must be the basis for all our development plans be it in terms of industry, economy, population and even public works. Such a strategic decision will tell us what must be our country’s approach toward petrochemicals, refining, energy-intensive industries, etc. This fact has been very well appreciated even in some regional countries that are not as socially and as industrially developed as Iran.

Strategic Priorities: Before dealing with Petropars, I would like to elaborate on three strategic priorities that the Ministry of Petroleum is pursuing for production:

1. Offshore Activity: Out of Iran’s total crude production capacity of 4 million barrels, some 600,000 barrels can be exploited offshore and 3.4 million barrels onshore. The offshore portion belongs to the Persian Gulf area where Iran and its neighbors south of the Persian Gulf share the same reserves with the same geological structure. Production capacity on our side is 600,000 barrels, while on their side it is 5 million barrels. This comparison indicates Iran’s shortcoming in offshore oil production. Therefore, one major strategy of the Ministry of Petroleum is to increase offshore oil production capacity.

2. Reservoir Productivity Rate: Not all the petroleum in a reservoir can be exploited. To make more out of our resources we need to achieve a high productivity rate. Iran’s productivity rate is currently insignificant. This means burying our assets inaccessible and useless underground. For example, if exploitation index is 18% in our country and 25% or higher in developed countries, then the number would be astronomical once you estimate the value of reserves that we are losing. Achieving a high productivity rate requires advanced technology. There is no other way.

3. Fuel Substitution: Iran’s production capacity is 4 million barrels per day: 2.5 million barrels for export, and 1.5 million barrels for domestic use. OPEC quotas determine our production minus domestic use. If we lower our domestic production, we can export more. A comparison between consumption patterns indicates that the same amount of oil is burned in Iran and China. Burning 1.5 million barrels of oil per day means burning about $20 billion per year. The Ministry of Petroleum currently believes that it can replace up to 800,000 barrels of this oil with gas.

One Unique Jewel: South Pars is the world’s largest gas field. It is shared by Iran and Qatar. Our neighbor has been exploiting this field for 15 years while we have not lifted one cubic meter yet. Although Qatar is righteously exploiting her side, but that means our share is shrinking gradually since there is no wall underground to separate our reserves.
South Pars is expanded over 3,600 square kilometers. It has been divided into twelve phases. The first phase has been granted to Petropars; phases two and three to TotalFinaElf; phases four and five to Eni and Petropars; and phases six, seven and eight to Petropars. A tender has been put out for phases 9 and 10 and the winner will soon be announced. Phases 11 and 12 have not been put to tender yet.
Now what happens when these phases bear fruit? Each phase of South Pars will yield 30 million cubic meters of gas and 40,000 barrels of condensates everyday. Each year, Iran exports about 120 million tons of petroleum. Compare this with a total 135 million tons of hydrocarbons including natural gas and condensates that twelve phases of South Pars will yield. It means that once all the twelve phases are in fully commissioned, South Pars alone will produce more than Iran’s total oil exports. As you see, I do have reason to claim that South Pars alone is enough to guarantee the development of our entire country. Moreover, this field is capable of meeting a remarkable portion of global energy demands. However, development of South Pars demands vision and wisdom. I believe that the reality of South Pars is yet to be appreciated in our country. A single day of delay in each phase of South Pars will cost Iran $3 million. South Pars development is not a matter of years and months; it is a matter of days and hours.

Petropars Jobs: In the first phase, the executive period for Petropars is 33 months starting on January 1, 2000. Petropars has had 70% of progress in the first phase and the project is hoped to go on stream next year. We have hit the reserves by drilling appraisal wells and drilling of production wells will be next on schedule. A tender was announced to set up a refinery for this phase and the winners were IDRO-Daelim for the contract worth of $287 million. Sadra-Samsung were the winners of topside bid for the contract value of $199.5 million. The sea-bed pipeline project was granted to IOEC-CCC at $56 million. POGC was assigned to the drilling project for $70 million of credits out of which $55 million has so far been spent.
For phases 6, 7 and 8, the operation is planned to take 66 months out of which 15 months have passed. There will be three platforms each with 10 wells. The condensates and LPG out of these phases will belong to Petropars since it is a buy-back project. The natural gas will be transferred to Port Assaluyeh and then to Aghadjari via a 512 km pipeline. This gas will be used for injection into oil fields in order to increase the productivity rate of reservoirs. Petropars has the potentials and the ambition to start operating internationally. We will certainly step out once we have made reliable progress in phases 6, 7 and 8 of South Pars.