The Forum for Partners in Iran's Marketplace

August 2011, No. 61

Exclusive 16th International Oil Show

Iran Invests $150 bn in Oil Industry

At present, studies on reservoirs, drilling and construction of undersea pipeline have been carried out by domestic contractors.

Ahmad Ghalebani, Managing Director of National Iranian Oil Company

Economic outlook of the world projects more demand for energy and the dominant role of oil and gas. Based on current forecasts, oil demand in the next 20 years will be two times the past 20 years and natural gas, as the best fuel of the century will be more in demand.

Having 151.31 billion barrels of exploitable oil reserves and 33.1 trillion cubic meters of gas, Iran stands out among other countries.

Therefore, development plan of the country, which is based on oil, has already started and total amount of liquid and gas hydrocarbons has been mentioned at 151 billion barrels and 33 trillion cubic meters.

A glance at Iranian oil and gas fields will show that some of them are shared with neighboring countries like Iraq, Kuwait, Saudi Arabia, Qatar, the United Arab Emirates and Oman.

The huge South Pars gas field is shared with Qatar and is the biggest and the most important shared field.

Arash gas field is shared with Kuwait while Esfandiyar, Forouzan, Farzad A and Farzad B oil fields are shared with Saudi Arabia.

Belal and Reshadat oil fields are close to border with water. Salman and Nosrat are also shared with the United Arab Emirates.

Therefore, the 10th government has made development of shared oil and gas fields a top priority. It is not only a priority of the Fifth Economic Development Plan, but also a priority for National Iranian Oil Company in the current Iranian calendar year (started March 21, 2011).

To speed up development of such fields, the Fifth Economic Development Plan has allocated 72 billion dollars to their development and, at least, 20 billion dollars of investment in upstream oil industry will be needed.

Out of that figure, 13 billion dollars will be invested in oil fields and 57 billion dollars in gas fields. A total of 1.5 billion dollars will be invested in exploration.

Production from shared oil fields will increase 125 percent and output of shared oil fields will rise by 200 percent by the end of the Fifth Economic Development Plan. Production from South Pars gas field will reach 800 million cu. m. per day.

Due to importance of exploration, 40 percent of exploration by National Iranian Oil Company will be done in border areas and shared fields and all the affairs of this field will be given top priority.

Exploration in western and southeastern parts of the country and the Persian Gulf will include two-dimensional and 3-D seismology, geology, gravimetry, magnetometry, road construction drilling and production of static and dynamic models.

During the Fourth Economic Development Plan, six rigs were allocated to exploration every year. The number will increase to eight rigs per year in the Fifth Economic Development Plan and 40 percent of exploration activities will be focused on border areas and shared fields.

$150 bn to be invested in Fifth Economic Development Plan: Out of 500 billion dollars investment needed for the Iranian oil industry by 2025 about 150 billion dollars will be invested in upstream oil industry, including 50 billion dollars from internal resources and 75 billion dollars through foreign finance.

On the other hand, oil and gas projects are to be financed through energy funds. Mellat and Melli banks have joined hands with domestic companies to launch energy funds.

A total of 3,000 billion tomans of bonds were issued in 2010 for upstream projects alone.

In 2010 and by the end of March 2011, about 10.7 billion dollars were invested in development of the remaining 14 phases of South Pars gas field. Those phases will be fully operational by early 2015 through an investment of about 60 billion dollars.

About 6.3 billion dollars was invested in development of South Pars phases in 2009 which proves acceleration of projects by domestic contractors.

Value of South Pars gas field is 1.2 times higher than Iranís entire oil revenues in the past 100 years. If every barrel of oil is sold for an average 50 dollars and given the current oil sales figures, total revenues earned through oil exports in the past century will amount to about 3,600 billion dollars. Meanwhile, value of South Pars products will be 1.2 times higher than that figure.

South Pars is the biggest shared gas field in the world which straddles Iranís border with Qatar. Eight phases of the field were to be developed by such international companies as Total and Shell, but unilateral sanctions pushed them out of Iran. On June 15, 2010, however, domestic companies took charge of developing those phases.

At present, studies on reservoirs, drilling and construction of undersea pipeline have been carried out by domestic contractors.

Due to all-out support from the government, contracts for the remaining phases of South Pars will be signed with Iranian contractors. Thus, the field is being entirely developed by Iranian specialists.

In addition to direct advantages of developing South Pars gas field, the project will also create jobs and cause regional development.

Using domestic manpower when foreign companies are enforcing international sanctions will prevent disruption of oil industry projects. Many Iranian companies are now involved in these projects. Being a host to foreign contractors until a few years ago, South Pars region is now seeing more of domestic companies and apart from Phase 11, all other phases are being developed by domestic contractors. Iranís gas exports are expected to reach 200 million cu. m. per day by the end of the Fifth Economic Development Plan and the country is ready to sign long-term contracts.

On the whole, there are countless opportunities for gas industry, including provision of feed to petrochemical plants. At present, production and processing of gas has reached 650 million cu. m. per day.

250 million cu. m. gas to be injected into oil fields: Based on early goals for gas injection into oil fields, a total volume of 250 million cu. m. of gas will be injected per day and the figure will rise.

During the past year gas injection into Darkhoein oil fields started. Gas coming from phase 6, 7, and 8 of South Pars gas field is also injected into Aghajari oil field. At present, a total daily amount of 20 million cu. m. of gas is injected into Aghajari which will reach 56 million cu. m. per day.

Based on this plan, gas injection will increase the output of Aghajari field to 5 billion barrels of oil.

National Iranian Oil Company has planned to continue gas injection during the Fifth Economic Development Plan in order to increase pressure of domestic fields, prevent pressure fall and waste of oil, and to increase recovery factor from oil fields. Volume of injected gas depends on such variables as production rate, properties of rocks, type of fluid in reserves as well as primary and secondary volume of exploitable reserves.

On the whole 34 gas injection projects will be implemented in oil rich Aras, including 18 projects in southern fields, seven projects in central fields and the rest in other parts of the country.

Development of phases, 6, 7, and 8 and construction of the fifth and sixth gas trunk lines will be carried out to inject gas in oil fields.

Since the Fifth Economic Development Plan aims to increase crude oil production by one million barrels and gas production by one billion cu. m., special importance has been attached to building upstream oil and gas industry equipment.

Building the first national rig with export capacities and ability to work on offshore and onshore projects, manufacturing drilling parts, transfer of output rise technology and implementing plans for secondary oil and gas production, especially in South Pars gas field are among research priorities of the Iranian Ministry of Petroleum for upstream oil industry.

Iran code assigned to 500,000 important oil industry equipments: At present, about 70 percent of needed parts for oil industry are manufactured and supplied by domestic entities and about 90 of commonly used oil industry equipment have been manufactured in the country. A plan has been in gear to assign codes to various oil industry equipments and classify them according to a national coding system. Based on current projections, more than 500,000 important oil industry equipments used by oil, gas and petrochemical industries will be assigned national codes before the end of the first half of the current Iranian calendar year (started March 21, 2011).


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  August 2011
No. 61