Iran Exempted from Output Cut OPEC, Non-OPEC Agree on ...

Iran Petroleum Issue No. 84 June2019

monthly

Instex Ineffective Without

Petrodollars

OPEC, Non-OPEC Agree on ‘Charter of Cooperation’

Iran Exempted from Output Cut

Russia Firms Ready to Help Iran Export Gas

Tehran, Moscow Ink 25 MOUs

The 176th Meeting of the Conference of the Organization of the Petroleum Exporting Countries (OPEC) was held in Vienna on Monday, 01 July 2019. Three issues were to be discussed: extension of the OPEC Secretary General’s term, charter of cooperation between OPEC and non-OPEC, and output rollover. Agreements were reached on all of them. In the run-up to the meeting, speculation was rife about OPEC. Some analysts said ceaselessly that the Organization was toothless. The decline in oil prices, lower demand and higher supply, as well as cooperation between OPEC and non-OPEC along with the US’s sanctions against two OPEC member states – Iran and Venezuela – were among rumors fabricated to undermine the Organization.Iran had said in the OPEC Conference

that its main objective was to safeguard the body’s existence and independence. As Iran’s Minister of Petroleum Bijan Zangeneh said unilateralism posed the most serious threat to OPEC.OPEC is an organization established

based on safeguarding common interests of member states and also safeguarding oil supply security and market stability. OPEC has always stuck

with its ideals.Thanks to Iran’s efforts and support

by fellow OPEC members, the latest OPEC Conference turned into a scene of convergence among members for consensual decision-making. External pressure was not allowed to politicize OPEC’s structure and decisions. The most significant challenge

threatening the oil market today is the US’s unilateralist decisions and use of oil as a weapon to ratchet up pressure on independent nations. The US, with an output of over 12

mb/d, is currently the world’s largest oil producer. Oversupplying the market and imposing sanctions on oil producers and consumers, the US has turned the oil market into a venue for its unrealistic and illogical policies. Every party will suffer from this politically-dominated market. As an influential OPEC member country,

Iran believes that OPEC’s stability would be the biggest guarantor of stability and security in the international energy market. It hopes that all OPEC MCs and non-OPEC countries would understand this reality and regulate their policies in such direction so that instability would not be imposed on the market.

OPEC Independence Guarantees Stable SupplyKasra NouriDirector General of Public Relations

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Kerman,6,000 -Year-

Old City

NISOC Weightlifter Eyes Olympic Gold

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Iran No Threat to World Energy

Security: Zangeneh

SP14 Offshore Sector to

Come Online

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COVER

Ministry of Petroleum

Islamic Republic of Iran

Managing Editor:Kasra Nouri

Director General of Public Relations

Editor in chief:Parastoo Younchi

Executive Editor:Hamid-Reza Shakeri-Rad

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Hassan Hosseini

Reporter:Negar Sadeqi

Javad Asghari

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Tel/Fax: (+98 21) 61626113

[email protected]

Russia-Korea-Oil Triangle to Defeat US

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US Oil Output Hike, Challenge to

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monthlyOPEC

OPECJune 2019 Issue No. 84

Iran Exempted from Output Cut

OPEC, Non-OPEC Agree on

‘Charter of Cooperation’The adoption of “Charter of Cooperation” between

OPEC and non-OPEC partners, which was the result of more than seven hours of in-camera

deliberations in the OPEC headquarters in Vienna on June 2, proved once more Iran is an influential

OPEC member state.

Rarely could one imagine that Iranian Minister of Petroleum Bijan

Zangeneh’s resistance against Saudi-Russian agreement on the sidelines of the recent G20 summit on reducing oil output

due to US sanctions would come to fruition. Thirteen of 14 OPEC members sided with Iran in the 176th OPEC Conference by voicing

their opposition to the Charter of Cooperation. Finally, under Iran’s pressure, a clause was incorporated into the charter saying the

provisions are voluntary and are not in contrast with OPEC statute.The global decline in oil prices and release of OPEC 2020 Outlook predicting

a decline in global demand for oil had already overshadowed the 176th OPEC Conference. On one hand, US sanctions had forced Iran and Venezuela to reduce

their supply on the market while some OPEC and non-OPEC oil producers were increasing their production in a bid to seize the share of Iran and Venezuela. All developments were indicative of OPEC’s agreement on a 9-month extension of the deal requiring OPEC to chop 800,000

b/d from its total output and non-OPEC to cut 400,000 b/d from its production. However, Moscow-Riyadh agreement on extending the agreement on the sidelines

of the G20 summit in Japan on extending the deal by end of 2019 hinted that the meeting between OPEC and non-OPEC would be a simple formality. It is

exactly what Iran’s Zangeneh firmly opposed since the very beginning. It was not the first time Zangeneh had warned against the ineffectiveness

of the Organization of the Petroleum Exporting Countries. In his opening speech in Iran’s last oil show in Tehran, the minister had

warned against “possible collapse” of OPEC due to “unilateralism” adopted by some member states.

Every Gesture Meaningless Without Unity

Before leaving Tehran for Vienna to attend the OPEC Conference, Zangeneh had said: “Iran welcomes any

cooperation with non-OPEC oil exporters but as long as some OPEC members are causing tension against fellow members including Iran,

OPEC’s entente with non-OPEC will become meaningless and there would be no space for cooperation. Therefore, nobody would believe the self-declared good

intention of [certain] belligerent members of OPEC.” Noting that without internal unity within OPEC, any other issue would be merely ineffective gesture, he said: “When two OPEC member states are looking to harm the interests of fellow members, OPEC will go

towards collapse.”

Countering UnilateralismUpon arrival in Vienna, Zangeneh said Iran had no problem with a 9-month extension of

OPEC+ deal to reduce output. “The main problem with OPEC now is unilateralism and OPEC has to fight unilateralism in order to preserve its unity,” he said. Zangeneh said OPEC needed

discussions, consultation and collective decision-making. “It has not been common within OPEC that countries outside OPEC reach agreement and endorse their deal with OPEC. That is the

biggest threat faced with by OPEC,” he added. Zangeneh said al issues had to be discussed by 14-member OPEC. He added: “OPEC is expected to remain OPEC, but it has been weakened

seriously.” He said: “We are not here to implement decisions taken outside. I believe that if OPEC wants to live longer it has to make its decisions within itself instead of

receiving instructions from outside.” Zangeneh said the world was not being threatened by US President Donald Trump, adding there are some

other instances of unilateralism. “OPEC is a venue for collective decision-making and I think OPEC members will

resist any procedure other than this.”

Iran to Stay in OPECAsked if Iran would leave OPEC in

case Saudi Arabia and Russia were to decide for the Organization, Zangeneh said: “No. Iran will not

leave OPEC. But I believe that with these procedures OPEC will die.”He also said he had no problem with discussing

OPEC developments with Saudi Arabia. When asked if OPEC wanted Russia to join the body, he said: “We have not

received any request from Russia.”

Zangeneh’s TalksAhead of the 176th OPEC Conference,

Zangeneh held talks with Russian Energy Minister Alexander Novak, Venezuelan Oil

Minister Manuel Quevedo, Iraqi Oil Minister Thamir Ghadhban , Algerian Minister of Energy

and Mines Mohamed Arkab, and Permanent Secretary of Nigerian Ministry of Petroleum

Resources Folasade Yemi-Esan. Meantime, Zangeneh held a trilateral meeting with OPEC

Secretary General Mohammed Barkindo and OPEC Rotating President Quevedo.

An outstanding feature of this round of OPEC meeting was Zangeneh’s

handshake with Saudi Minister of Energy Khalid al-Falih.

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Iran Voice HeardAhead of the OPEC Conference, Zangeneh insisted on the

independence of OPEC, saying: “We have no problem with extending the previous decision or even increasing the amount. What was

problematic was the process of this decision-making. I think our voice was heard.”

“I fear that OPEC may decide unilaterally and one or two members speak for OPEC. OPEC means 14 members with equal rights,” he said.When asked if Iran’s voice had been heard with regard to US sanctions

targeting Iran’s oil, Zangeneh said: “Most OPEC members condemn the US sanctions imposed on Iran, but some others believe that OPEC has no mission to

condemn the US.”Asked if Iran would call on OPEC to support the Islamic Republic against US sanctions, he said: “We have no enmity with anyone and we threaten nobody. We demand that they

shake our hand.” Zangeneh was asked to say if Russia-Saudi agreement threatened OPEC

unity. He replied: “I didn’t say anything about any specific country. I didn’t mention any country and I don’t want to confirm any names.”

Regarding the downward trend of oil prices which were supposed to go upward, he said: “The US is making maximum

benefit from these conditions in a bid to find a market for its shale oil.”

Zangeneh Warning Logic In the lead-up to the OPEC Conference, Russian President

Vladimir Putin said the deal between OPEC and other oil producers to curb oil output had played a positive role in stabilizing oil markets.

“We believe that our production stabilization agreements with Saudi Arabia and OPEC in general have had a positive effect on market stabilization

and forecasting,” he said. “I believe both energy producers, in this case, oil producing countries, and consumers are interested in this, because stability is

definitely in short supply at present. “And our agreements with Saudi Arabia and other OPEC members undoubtedly strengthen stability. As for whether we will extend the

agreement, you will find out in the next few days,” Putin said. After meeting Zangeneh Novak said that, Moscow was interested in Iran remaining an equal player in the global

energy market, according to a statement released by the Russian energy ministry. Russian presidential press secretary Dmitry Peskov said the statement made by Russian

president Vladimir Putin on readiness of Russia and Saudi Arabia to extend the deal within the OPEC+ oil production limiting agreement merely reflects positions of the

two countries and does not predetermine the outcome of discussions of this issue underway in Vienna.

“The point is that two countries [Russia and Saudi Arabia] declared their position, their approach,” Peskov said. “The two countries made such

decision for themselves,” he noted. “However, the decision of other countries [participating in the discussion] will be definitely

needed,” Peskov added.

Charter of Cooperation Non-Binding

The Charter of Cooperation between OPEC and non-OPEC has no impact on OPEC’s decisions and

operational mechanisms. Furthermore, financial aspects of this process will be put to independent decision-making. It means the

charter imposes no new financial burden on OPEC. The meetings will be held at the OPEC Secretariat. The president and vice-president of the charter will be

intermittently selected from among OPEC and non-OPEC countries and will change every year. After the signature of the charter, Zangeneh told reporters all changes demanded

by Iran had been applied. He said the charter of cooperation was not binding, adding: “Cooperation between members is voluntary and will have no impact on OPEC’s decision-

making and operational mechanisms.” Asked about the impact of this charter on the future of OPEC, Zangeneh said: “The idea is to clear the way for non-OPEC nations to step ahead. In fact it

is a mechanism for the countries willing to cooperate with OPEC without joining it.”“We reiterated that OPEC continues to stand and that this charter, its principles and content will have no impact on OPEC,” he added. Zangeneh said Tehran will be exempt from OPEC’s

agreement to extend global crude production cuts for another nine months.He told reporters following that the Iranian demands were met, adding that all amendments

made with regard to the cooperation charter between OPEC countries and non-OPEC countries has no impact on the organization’s decisions and operational mechanisms,

pointing out that the Iranian government will not oppose the Charter, which is voluntary and non-binding. Zangeneh also said he was not worried about Russian-Saudi influence over OPEC, adding: “I believe that even if the US

joins us I will welcome it and if oil producers cooperate with each other I will not worry about it.” He added: “It is important

for us that Russia joins us and cooperate with us. Particularly under tough conditions,

we need Russia.”

Heated DebateOPEC’s 176th Conference was expected to last two hours,

but it lasted more than seven hours. There were discussions about how to institutionalize cooperation between

OPEC and non-OPEC.Iran’s Zangeneh was the only minister to oppose the charter of

cooperation. Finally, 13 OPEC members and 10 non-OPEC members added a clause stipulating the voluntary nature of compliance with

the charter without any prejudice to the generalities of OPEC’s statute.

Furthermore, all 14 OPEC members agreed to the extension of OPEC+ deal for a nine-month period (starting July 1, 2019 and ending March 31, 2020) and the continuation of Barkindo’s term as OPEC secretary general for a another three-year period. As expected, Iran was exempt

from any reduction in oil production. OPEC also agreed to hold its 177th Conference on

December 5.According to the latest report by the OPEC/non-OPEC Joint Ministerial

Monitoring Committee (JMMC), OPEC members had displayed144% compliant with the deal by end of May while non-OPEC countries’ compliance

stood at 204% for the same period. In total, OPEC/non-OPEC compliance with the declaration of cooperation was estimated at 163%.

OPECOPEC

June 2019 Issue No. 84

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Iran’s minister of petroleum, Bijan Zangeneh, said the European non-dollar trade

mechanism Instex, would not become effective should it fail to handle Iran’s oil money. “If you consider Instex as an operation, this mechanism will not be responsive without any safe money and just by depositing $3 to 4 million or €3 to 4 million,” he said. “Oil money should be deposited into it.” Zangeneh said although US sanctions on Iran’s petroleum sector had affected the country’s oil production capacity “we can export as much oil as we can”. He said that enhancing exports was the main issue in Iran. Zangeneh said the United States had imposed every sanction it could on Iran, adding that European countries had not accompanied Iran by purchasing its oil. “Should the Europeans fulfill their obligations, Instex will be of help to us. I reiterate that Instex would not be effective without receiving oil revenue,” he added. Zangeneh said US sanctions on Iran had nothing to do with the Organization of the Petroleum Exporting Countries (OPEC). “Some OPEC members want to pretend it is a non-political organ, but they use OPEC as an anti-Iran tool and a political tool,” he added.

Oil Market Secure Thanks to IranWhen asked about recent

attacks on oil tankers in the Gulf of Oman and the Strait of Hormuz, Zangeneh said: “We must see who is benefiting the most from more tensions in our region. We want to live in peaceful conditions, but the US and some neighboring countries in the Persian Gulf intend to pressure us. That’s unjust because we have no problem with a global [nuclear] agreement we have signed.” He said that the US “endangered” the Joint Comprehensive Plan of Action (CPOA), adding: “We want all the world powers to remain committed to the agreement we signed.” Zangeneh said he had no idea who was behind the oil tanker attacks, “but the Iranian side has made the market secure for more than 100 years now.”“We have said time and again

that the oil market should be depoliticized, and believe that oil should not be used as political tool or weapon,” he added. Zangeneh said: “If conditions become unsecure the main loser will be Iran not others.” He said the oil market should be depoliticized for everyone. “This is not a tool to be used against certain countries. Oil is oil.” The Iranian minister said the market should be based on fundamentals and “it should not be such that part of the market be pressured to act this or that way”. “This is in nobody’s interest, neither consumers nor producers,” said Zangeneh. He said the Americans are required to respect the Iranian people, government and Supreme Leader. “It is clear that we won’t change our attitude under pressure. As the first acceptable step, I think it would be necessary for the US to lift anti-Iran sanctions,” said the minister. “Our Supreme

Leader made it clear that as long as pressure exists, nobody can start talks. It means that if the US quits anti-Iran sanctions we can see significant changes in the situation,” he added.

US, Main Beneficiary of Oil PricesZangeneh said the US was

benefiting the most from the current downward trend of prices “in order to make shale oil production feasible and find a market for its shale oil”.Regarding Iran’s oil money,

he said: “Iran’s oil money is not stuck abroad but due to sanctions I won’t reveal channels of entry of this revenue.” The minister said that Iran had not reduced production of its gas and condensate “but we are looking for ways to export gas condensate”.

Round-the-Clock Efforts to Circumvent SanctionsZangeneh said despite the

impact of “unlawful and unjust” US sanctions on Iran’s economy, the country would continue resistance. “We are making efforts round the clock to find options to skirt around the sanctions and export our oil,” he added. The minister said: “I can’t tell you how we deal with the sanctions because otherwise it would help the US apply more pressure on Iran.”“Customers and producers are

entitled to know about Iran’s oil production and exports data, but this market is being manipulated by the US,” he said.“That’s not our problem. That

is a problem imposed on us by the US and it forces me not to say too much in order to safeguard national interests,” Zangeneh said. He added: “The clear point is

that Iran wants to keep selling its oil.”

Instex Ineffective Without Petrodollars

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Behrouz Hadi-Zonouz, economist 1Saudi Arabia in DilemmaIn the run-up to the OPEC ministerial meeting, Russia and Saudi Arabia – both top oil producers

behind the US – reached agreement during the G20 summit in Japan to limit oil production in a bid to control global glut. The objective sought in this agreement was to prevent oil prices from falling further.

However, Saudi Arabia is in a dilemma. This country has a budget deficit equal to 7% of its GDP, while at the same time it has political obligations to the US to increase

oil output. Therefore, Saudi Arabia is likely to keep oil prices stable for some time only. For its part, Iraq has also violated its quota and is unlikely to cut

output. With its current output at 4.8 mb/d, Iraq is currently suppling about 300,000 b/d above its OPEC quota. Iraqi officials say the country needs to gain revenue for reconstruction and therefore the country must be exempted from any output freeze or cut.Given the current oil supply conditions in the market, any significant decline in Iran’s exports will have a meager impact on the market. Russian President Vladimir Putin said the agreement would be in effect for 9 months, but the continuation

of this trend may be affected by the operation of Instex. In case Iran’s exports are facilitated and stabilized via Instex and Iran would have the

chance to sell oil to Europe and China, we may see a decline in oil prices.

Assadollah Qarekhani, Spokesman, Energy Committee, Iran’s Parliament

Oil Price Hike Short-LivedAlthough oil production has declined in Iran while the US has been increasing

its own output, global oil prices have not seen any hike and the market is seeing a reasonable rate. Despite ongoing tensions in the Middle East, Libya and Venezuela, oil prices have not gone up. Therefore, the 2-4% oil price hike which has been seen from time to time has been short-lived and periodical. Hence, I think that OPEC and non-OPEC states will not decide to increase oil prices and will keep the current price unchanged because the prevailing approach favors all oil producers. Iran has complied with its OPEC quota and is continuing to pump oil. However, there are restrictions to Iran’s oil sales, which explains why Iran has not had a prominent role. Speculation is rife that Russia

would be leading OPEC+ in cooperation with Saudi Arabia. Russia remains the top non-OPEC producer while Saudi

Arabia is OPEC’s linchpin. Saudi Arabia and Iran are moving in parallel with each other and they have

two reasons to be favoring the current price. First and foremost, in case oil prices increase oil projects will go on a downward trend. Second, the US will start producing shale oil as it becomes economical. Therefore, in case prices go up, the US but and other countries will not hesitate to produce more oil. With a

long-term look, it may be argued that countries are not against a less significant role for OPEC

so that OPEC+ would take over. However, it is not happening any time, soon.

Mehdi Motaharnia, International Affairs Expert3

Iran, Savior of OPECIran is making efforts to lead OPEC towards more unanimity and more

concentration on political interests. What Iran’s Petroleum Minister Bijan Zangeneh highlights is a solid-based political logic for OPEC members, vis-à-vis oil buyers who are making their utmost efforts to keep OPEC in a weakened position. There is some sort of emotional divorce between OPEC member states. Therefore, having a glance at OPEC’s structure we will see that the Russians stand alongside Tehran from time to time and criticize the conduct of fellow OPEC producers. For that purpose, each member is seeking to clear the way for international cooperation and use oil as a political and not economic tool for national development. Saudi Arabia is currently on top of all nations and by increasing level of its oil production and sometimes changing its output; it has sought to pave the ground for the use of oil as a political tool for its own interest and the interests of its extra-regional ally, the US. The Russians may from time to time chant slogans, trying to show they are more important than the Saudis; however, they are looking for securing their own interests and materializing their own objectives. On certain historical turning points, although they claim to be Iran’s strategic partner, they have used it as a political tool to get concessions from Iran and the US. And as the records indicate they never agreed to reduce their oil output after US sanctions were imposed so that the oil market would experience a significant shock in favor of alleviation of pressure and sanctions on Iran. An important point in this context is that the Middle East oil is no longer a strategic commodity. The Americans have become the world’s largest oil producer. Therefore, the Islamic Republic’s position vis-à-vis politics-dominated OPEC is realistic as Iran has always made efforts to use oil for striking a balance between consumers and producers. Iran has never used oil as a weapon against consumers, but has sought to use this national asset in the best interests of the entire region and nations that have voluntarily or not been dominated by extra-regional powers.

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GasmonthlyJune 2019 Issue No. 84

Gas

The 15th meeting of Iran-Russia Joint Business Council and the

second Iran-North Caucasus business meeting were held during three days in Tehran and Isfahan. Officials and private sector actors from Iran and Russia attended the meetings. Meantime, the third Iran-Russia energy working group committee convened. At the end of the convention, Iran and Russia signed 27 memorandums of understanding in the oil, gas, refining, petrochemical, electricity and nuclear energy sectors. The memorandums were signed by Iran’s deputy minister of petroleum for international affairs and commerce Amir-Hossein Zamani-Nia and Anatoly Yanovsky, Russia’s deputy minister of energy for

international cooperation.

Russia Firms Ready to Help Iran Export Gas

Russia’s Energy Minister Alexander Novak also

visited Tehran. After attending the Iran-Russia Business Council meeting, he met with Iran’s Minister of Petroleum Bijan Zangeneh. Zangeneh said he had discussed cooperation in the oil and gas sector with Novak, adding that gas fruitful talks were held on gas exports. He said some Russian companies voiced their readiness for cooperation in this sector. The Iranian minister said he had also discussed the global oil market conditions with Novak. “I made it clear that the oil market is under the impact of political wills and the media led by the Americans and Zionists are disturbing the market,” he said. Zangeneh said: “The oil market is in unstable and fragile conditions. We have to watch out for market conditions. Some of our neighbors in the region are causing disturbances in the oil market. Such conditions will benefit nobody in the short-term and long-term.” He said that Iran and some parts of Russia’s petroleum sector were under sanctions, adding: “Such market conditions are in nobody’s interest and we have to be careful. I will raise this issue in the upcoming OPEC meeting.” Asked if any talks had been held about the participation of Russia’s Gazprom in the Iran-Pakistan gas pipeline project, Zangeneh said: “We have discussed this issue, but no decision has been made.”

Bilateral Cooperation Before going into meeting with Zangeneh, Novak

told a news conference that the Iran-Russia Business Council meeting sketched out a future roadmap. He added: “There is much hope for the development of economic cooperation between

the two nations.” Novak said: “Linking Russia, Azerbaijan and Iran with railroad and establishing maritime transportation line between Iran and Russia have been agreed upon by the two countries. We also reached agreement in oil and gas.” The Russian minister said Iran-Russia trade level had grown more than 70% in recent years, adding: “Exchanges in the agriculture sector have increased 1.5 times. Today, we talked about agriculture, transportation, energy and aerospace and we reached agreement.”

Iran-Russia Energy MOUs Hossein Esmaeili Shahmirzadi, general director

for Europe, Americas and Caspian Sea littoral states affairs at Iran’s Ministry of Petroleum, said Iran and Russia took major steps in energy cooperation after signing MOUs. He said that Iran and Russia would cooperate in exploration, extraction, production and investment in the oil, gas and petrochemical sectors. One clause in the MOU involves synchronization of Iranian-Russian petroleum industry equipment standards. That would empower Iranian and Russian sides to use each other’s oil and gas equipment. Esmaeili also said that the two sides agreed to cooperate in the Caspian Sea. He said Iran’s Research Institute of Petroleum Industry and Iranian energy studies institutes held fruitful talks with their Russian counterparts in the research sector.

Iran-Russia Energy Cooperation

Zamani-Nia also underlined the need for stronger ties between Iran and Russia,

saying: “Iran and Russia have long had good and strategic relations. The document signed between the two parties could lead to a change in the relations between the two nations in the energy sector.” Under the MOU, cooperation between Iran and Russia in the oil, gas, refining, petrochemical and power sectors will increase, too. Zamani-Nia said Iran-Russia ties were set to grow, adding: “Russia is a big country in terms of energy. It has huge oil and gas resources. Russia supplies about 70% of Europe’s gas needs.” While noting that Russia was a major supplier of oil and gas in the world, he said that Iran and Russia enjoyed great potential for broader cooperation in the energy sector. Zamani-Nia said: “About 110 years have passed since oil was explored in Iran; however, Iran and Russia – which are both leading energy producers – have not had extensive cooperation in this sector.” “Now the two countries are determined to interact and cooperate in various sectors,” he said, adding that the high number of Russian delegates in Tehran was indicative of the depth of ties and the significance of energy in future cooperation. He said that the MOUs were aimed at shortening the path towards cooperation. He said: “Signing this MOU was a good start for the continuation of Iran-Russia cooperation.” Yanovsky also referred to historical

ties between Iran and Russia, saying: “There is great

potential for enhanced cooperation. At the Iran-Russia Business Council, we seek to use

modern technologies for development in the energy sector.”

Willingness for Better TiesIran and Russia have long had political ties,

but they have yet to broaden their economic cooperation. Over recent years, opportunities have emerged for the two nations to extend their strategic cooperation in the face of US sanctions. Economists believe that Iran and Russia could expect more stable and deeper ties thanks to existing potentialities for Iran-Russia ties. Iran-Russia strategic ties take up added significance in light of tight regional rivalry and the challenging policies of the US and some European powers. In the wake of talks between Iranian and Russian officials in different sectors in recent years for strengthening ties, a variety of MOUs and agreements have been signed between the two nations. To that effect, Iran and Russia have reached agreement on guaranteeing bilateral trade against the backdrop of US sanctions and hostilities against Iran. Iran-Russia joint borders necessitate stronger transportation infrastructure. In addition to air and maritime routes, land routes should be also used by building new roads and railways. The volume of exchanges between the two countries in recent years has not witnessed any significant jump despite huge efforts, and governments have been encouraging the private sector to increase the level of cooperation in various sectors. Official data show that Iran-Russia trade totaled $1.8 billion, up 2% year-on-year.

Tehran, Moscow Ink 25 MOUs

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Diversification of petrochemical products will facilitate exports.

In the face of US sanctions, Iran has no option but to go ahead with firm determination and move towards completing its petrochemical value chain and supply more products.The US Treasury

has blacklisted Iran’s petrochemical sector and its affiliated industries. Iran’s conglomerate Persian Gulf Petrochemical Industries Company (PGPIC) and 39 subsidiaries have been sanctioned.Despite all challenges, Iran’s

petrochemical sector is in a strategically significant position. By benefiting from all potentialities of this highly-valued industry, the sector can reach its real status. That would also help neutralize new US sanctions aimed at undermining Iranian petrochemical companies. To that end, strategic management has to

be exercised, smart energy diplomacy must be

adopted while efficient and experienced manpower is

required to be hired, not to mention to use technical and engineering skills. Behzad Mohammadi, CEO of

Iran’s National Petrochemical Company (NPC), recently said the issue of sanctions against Iran’s petrochemical industry is not something new. “We have been grappling with such issues since 2013 and coincidentally under such circumstances have we managed to enhance our production and make profitable sales.”Referring to the supply of

catalysts and equipment used in the petrochemical industry, he said: “Despite the sanctions, there is no problem and we can supply necessary materiel. The US sanctions imposed on Iran is a political show rather than an effective tool. We will continue our activities seriously regardless of the present circumstances.”Iran’s Foreign Affairs Ministry

spokesman Abbas Mousavi described the US sanctions on Iran’s

petrochemical exports as a “manifestation of economic terrorism” and continuation of the White House’s hostilities against the Iranian nation. Mousavi said: “The US

maximum pressure policy is a dud policy which former US presidents had tried time and again. That’s a wrong way and we assure the US that it will realize none of the objectives set behind this policy.”

Ineffective EmbargoThe supply and demand

balance in the petrochemical market shows that due to the diversity of Iran’s petrochemical mix and the unique character of Iranian companies, some countries depend heavily on Iran’s petrochemical industry. Tighter sanctions may cause problems for these buyers of Iran’s petrochemicals; however, they will keep buying from Iran.The present circumstances

in the world markets are such that the US policies vis-à-vis Iran will get nowhere and sanctioning each and every sector would be impossible. The US cannot restrict Iran’s petrochemical exports.

Meantime, US President Donald Trump’s imposition of tough sanctions on Iran indicate the significance of oil, gas, refining and petrochemical industries. International analysts say the US president, who is surrounded by a variety of advisors and economists, has failed to understand the Iranian economy properly. For them, the latest US sanctions prove the fallacy of US policy towards Iran. Given the US policy of sanctions in recent years, Iranian petrochemical industry managers had already predicted US sanctions and therefore made necessary arrangements. When the latest round of sanctions took effect, some restrictions occurred in the export channels; however, polymer and chemical exports to global markets continued and the US will fail to achieve its objective of halting Iran’s petrochemical exports.Analysts also believe that the

new US sanctions could not hinder development of Iran’s petrochemical industry due to the existence of infrastructure and production of strategic products. Regardless of some problems, Iran’s petrochemical industry is on the path towards growth and dynamism owing to its specialized and skilled

manpower. External pressure will fail to bring a halt to the process of development.US officials know quite

well that sanctioning Iran’s petrochemical industry would not be easy. Most petrochemical products have won toehold in the market even prior to being produced. Therefore, petrochemical exports are arranged under long-term plans and the traditional buyers of Iran’s petrochemical products could not easily leave this market. Petrochemical holdings in Iran are currently busy finding new markets so that petrochemical exports would not be affected by US sanctions. The Americans may choose to exert pressure on governments to stop buying Iran’s petrochemical products, but they could not sanction Iran’s petrochemical sector due to the diversity of such products. Meantime, Iran’s geographical position provides the possibility for exporting petrochemical items to various destinations through various routes and via various methods. Iran’s petrochemical industry is instrumental in Iran’s economy. In case this industry moves ahead at the right pace it would be possible

for Iran’s development train to race ahead, in which case the objectives of economic resilience in the oil, gas, refining and petrochemical sectors will be achieved. In a bid to avoid selling raw materials, options have to be sought for completing the value chain and facilitating petrochemical exports.Given the significance of

Iran’s petrochemical sector in Iran’s economic and industrial development, realizing the objectives of resilient economy and avoiding raw material sales would be among the most important plans in the petrochemical industry’s roadmap. Over recent years, this industry has been a leading sector in the realization of resilient economy objectives. Therefore, the petrochemical industry has abundant potentialities in this regard. The current year is of high significance for Iran’s petrochemical sector. Despite all problems, this industry will move in favor of national development and public welfare. In addition to the construction of new plants for completing the petrochemical value chain, production and exports will continue as planned.

Petchem Exports to Continue

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A senior official at Iran’s National Petrochemical Company (NPC)

has said US sanctions are overcome by diversifying Iran’s petrochemical products.Ali-Mohammad Bosaqzadeh,

director of NPC projects, said the US sanctions were political rather than being economic, adding: “Given the diversity in Iran’s petrochemical products, currently 300 in number, and the diversity of Iran’s export markets, the US could no longer isolate Iran’s petrochemical industry.”He noted: “Furthermore,

the experience of the first round of sanctions has helped us remedy our vulnerabilities in the sanctions and

largely reduce the impact of sanctions.”One month has passed since

the US imposed sanctions on Iran’s petrochemical industry. Many international experts had already said the US sanctions on Iran’s petrochemical industry would be merely political without having any impacts on petrochemical production and exports.Behzad Mohammadi, CEO of

NPC, has also said that the US petrochemical sanctions were mainly a political show with no impact on petrochemical production and exports.Iran is currently producing

54 million tonnes a year of products. The country earns

$12 billion from petrochemical exports every year.After the US announced

sanctions against Iran’s petrochemical industry, speculation was rife about the success of this scheme. NPC officials acknowledge

the impact of sanctions on petrochemical exports; however, they say the sanctions could not block Iran’s exports.Over the coming two years, 18

petrochemical projects would become operational, thereby boosting petrochemical exports.

New Sanctions vs. Past SanctionsBosaqzadeh referred to

international sanctions against Iran from 2011 to 2016, saying: “During the first

round of sanctions, the UN and all nations sanctioned Iran’s petrochemical industry, but this time only the US has imposed embargo on Iran’s petrochemical sales. Naturally, the nations following the US policy are less in number than last time.” He said Iran’s petrochemical

industry suffered shocks during the first found of sanctions. “The first shock was logistical

because we carried 70% of our products on vessels which were not owned by Iran,” he said.Bosaqzadeh added: “After the

sanctions [were imposed], many ship owners refused to cooperate with Iran. The second point was shipping insurance. Western companies were not ready to provide insurance cover to the ships.”He said: “These things created

many problems for us. In the first step it affected our exports and even cut our sales. In parallel, we tried to

strengthen our weaknesses.”“First and foremost we

reinforced our shipping fleet to transport our products. Some petrochemical plants purchased ships and National Iranian Tanker Company (NITC) started helping petrochemical companies export their products,” he added.Bosaqzadeh said: “In the

second step, to resolve the shipping insurance problem we provided insurance cover for vessels carrying petrochemical products in cooperation with Iran’s insurance agency.”

Petchem Exports Halted?Iran’s petroleum industry

has been faced with tough restrictions ever since the US pulled out of the JCPOA and

subsequently re-imposed sanctions on Iran.Washington plans to bring

Iran’s oil exports down to zero. But as Iranian officials say, the US has failed to meet its target.The next step in the US

sanctions against Iran was the petrochemical industry, which is key in Iran’s exports and currency earnings. That is why Washington decided to impose sanctions on Iran’s petrochemical production. But Bosaqzadeh said

the US sanctions had failed to cause any significant decline in Iran’s petrochemical exports.“Of course, it is

possible that due to the sanctions exports cost higher, but there would be no fluctuations in production,” he said.Bosaqzadeh noted

that Iran could not transfer money during the previous round of sanctions “but this time, based on the experience of previous sanctions we have had options for this purpose and we are doing our job.”He added that

relying on the experience of the first

Iran Petchem Diversification Thwarts US Sanctions Negar Sadeghi

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round of sanctions, now we have managed to eliminate the impediments. “By that time, we faced problems as most petrochemical catalysts were imported. We decided to draw up a comprehensive plan for the domestic manufacturing of catalysts and now you can see that Iranian private companies are producing many petrochemical catalysts and we are importing less day by day,” said Bosaqzadeh.Regarding the manufacturing

of items needed in the country, he said: “We manufactured many special products which we used to manufacture in Europe in the countries not subject to sanctions and we are cooperating with them now.”

Petrochemicals UnsanctionableIs it possible to identify

buyers of Iran’s petrochemical products? Does it impact Iran’s exports?Bosaqzadeh said: “I give a

simple example. If sanctions are to affect Iran’s petrochemical sales, our warehouses must be full now. But at the moment, we have no stocks, so it proves we are exporting products.”He added that petrochemical

products were not like crude oil to be processed at a specific refinery. “Petrochemicals such as methanol or polymers are used in all sectors and many countries need them.”

He said: “The petrochemical industry is not an industry whose products could be sanctioned. Furthermore, petrochemical products are more diversified than crude oil. Therefore, these sanctions are political, and economically speaking they cannot significantly affect Iran’s petrochemical exports.”Bosaqzadeh said everyone

has to be realistic. “Naturally sanctions will cause a decline in the number of our customers and it will squeeze our bargaining power in the price of our products.”He added: “But this policy will

not pay off in the long-term and once we distance ourselves from the current psychological pressure, we will be able to sell our products at the realistic prices.” During the previous round of sanctions, European markets received 25% of Iran’s petrochemical products, Africa 15%, Asia 30% and Far Asia 30%. Bosaqzadeh has now diversified its customers to the extent that they would not be affected significantly by US sanctions. “However,” he said, “due to US pressure our customers may be displaced. But we know how to sell our products and we can sell them.”

18 Petchem Projects for 2 YearsAsked if US sanctions would

affect investment in the

petrochemical sector and petrochemical development projects in coming months, Bosaqzadeh said: “Iran’s petrochemical industry has over recent years diversified its sources of income and that is why we have no serious problems with financing. However, without sanctions investment trend would be better and borrowing interest rates would be lower.”He noted that the US could not

isolate Iran’s petrochemical industry. “In light of our experience during the first round of sanctions I can say that we are still in talks for marketing our products and signing contracts,” he said. “Furthermore, over recent years, in light of diversity in our petrochemical production and the completion of value chain, there is no longer any possibility for sanctioning Iran’s petrochemical exports.”Bosaqzadeh said three

petrochemical projects would become operational this year and 15 more next calendar year. “It is noteworthy that

during the previous round of sanctions which were much tougher, we started the third phase of the Pardis

petrochemical project, we purchased our commodities and installed them. Pardis is currently operational,” he said.Bosaqzadeh said Iran

benefited from the sanctions relief granted by the 2015 nuclear deal to import commodities needed in the projects. “Meantime,

some catalysts have been domestically manufactured and we can implement the remaining petrochemical projects,” he said. Bosaqzadeh said 18 petrochemical projects would become operational by March 2021 with an investment totaling $13.3 billion. He added that these projects would bring Iran’s

petrochemical output capacity to 93.4 million tonnes, up 47% from 2017. He also said that the Kaveh methanol project, Phase 1 of Bushehr petrochemical project and the Ilam petrochemical project would come on-stream in the current calendar year. About €1.5 million has been invested in these projects which would add 7 million tonnes a year to Iran’s nominal production capacity. Bosaqzadeh said the Kaveh methanol project with a rated capacity of 7,000 tonnes of products was one of the largest methanol plants in Iran and the world. He said there was no problem with feedstock supply to newly-operational plants, adding: “As long as feedstock supply is not determined, no permit will be issued for projects.” Bosaqzadeh referred to NPC planning for overcoming petrochemical feedstock challenges, saying: “With the entry of new phases of South Pars since 2016 and particularly 2017, the problem of methane and ethane feedstock supply has been resolved and we will be faced with ethane feedstock surplus in the short-term.”

Passive Petchem ProjectsBosaqzadeh also referred to NPC’s plan about 14 passive

petrochemical projects, saying: “We earlier spoke about examination of passive projects. The meetings are regularly held for these projects so that we could operate them.” “But if for whatsoever reason we fail to reactivate them, we will change their licenses and define a substitute project,” he said. Bosaqzadeh said: “Since petrochemical projects need high investment we make our utmost efforts so that no project license would be reversed.”

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Iran No Threat to World Energy Security: ZangenehIranian Minister of Petroleum

Bijan Zangeneh, reacting to Saudi energy minister’s recent remarks about Iran being a threat to global energy security, said: “Mr. Falih is a technocrat and a respectable person and does not often speak politically; he must have probably been asked to say such political things.” Speaking in a televised interview on Sunday night, Mr. Zangeneh said: “Mr. Falih ought to have said so when I was still

there [in Vienna] so that I could properly respond.” He blamed the US for destabilizing the energy market in the world, saying: “Iran is the biggest guarantor of energy stability and security in the region while the US is the biggest de-stabilizing force in the world’s energy sector.” For the time being Iran is not primarily concerned with the price of oil and was rather focused on the amount of its oil exports, Zangeneh said.

“We have always said that oil is not a weapon but where energy security is at stake, we will be affected.” “Right now, the price of oil is not the number one issue for Iran, rather the number of

For the first time in Iran’s shipping industry, a giant oil tanker owned by National Iranian Tanker Company (NITC) has been repaired at a domestic yard. Following the successful docking of the 320,000-tonne DORE supertanker, which is 333 meters long, at ISOCO yard, Iranian engineers and technicians will handle the reparation of this giant vessel.Until recently, due to technical and

technological restrictions, reparation of such giant ships was assigned to foreign reparation yards. Ali Mansourzadeh, technical advisor to CEO of NITC, said: “Since infrastructure has been prepared following relentless efforts for this important issue, following the successful docking of this ship, the longtime wish of maritime industry actors came true.”He added that NITC and Iranian shipping

sector’s managers and staff hope that all giant tankers would be repaired in Iran.

Iranian Supertanker Repaired in Domestic Yard

EPL Customs System Launched at South ParsThe customs director of Pars Special Economic

Energy Zone (PSEEZ) has announced the operation of the EPL customs system in the South Pars gas field. Mohammad-Mehdi Mahdavi said the South Pars Customs was the first one ever launched in Iran’s special and free zones. He said it was aimed at enhancing transparency in imports and exports at PSEEZ. He said that all PSEEZ customs operation like bank transactions, tax affairs, tax declaration and the environment, involving imports and exports, are connected to EPL, adding that the whole process was paperless. Mahdavi said a main advantage with EPL was the increased pace of work, adding: “Alongside the increased pace which would please beneficiaries, particularly declarers, we can also highlight the agility of exports and imports process due to paperless procedure and maximum elimination of human factor in order to minimize errors.”

exported oil barrels is what that matters.” The US is the world’s largest producer of crude oil which had added roughly 3.6 mbd to its output over the past two years. Washington is

putting pressure on Iran and Venezuela to make room for its oil in the market, Zangeneh said. The market was shocked by the US crude output which was completely unexpected, he added. The Iranian Minister of Petroleum said too high prices could reduce demand for oil which would harm the producers by losing market share which was almost the case for the time being. He stated that shale oil production breakeven is reportedly below 40 dollars per barrel. He said Iran lacked technical savvy to complete South Pars Phase 11 whose development was planned in a

contract signed between by the National Iranian Oil Company (NIOC) and a consortium of Total, Petropars and CNPCI. Total pulled out of the deal and China has not stepped forward.Iran has learned a lot from foreign developers in South Pars, Zangeneh said. “CNPCI has so far failed to start developing Phase 11 project in Iran. Petropars, as a member of the project’s consortium, is to be assigned development of the project,” he said. “China is a friend of Iran and the latter would not opt for severing ties with China for foot-dragging in projects. We are seeking alternative solutions.”

operated by the Petroleum Engineering and Development Company (PEDEC); and three others were completed on demand. Ale-Khamis said 36,960 meters of drilling had been done, adding that 14 drilling rigs were being moved to locations. The official said

preparatory arrangements had been made in the first quarter of the year for the start of several new drilling projects by NISOC, ICOFC, PEDEC, as well as Exploration Directorate of National Iranian Oil Company (NIOC). All these projects had been awarded to NIDC through

tender bids. Ale-Khamis said: “Meantime, in parallel with NIDC Senior Management’s policy on establishing a coherent structure and boosting efficiency, one drilling directorate was integrated into the other three drilling directorates.”

A member of the Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM) has said domestic manufacturers would be able to meet the needs of Iran’s petrochemical industry. Reza Padidar said SIPIEM had made great

achievements over the past two decades in the domestic manufacturing of equipment for the oil, gas and petrochemical industry.“Iranian companies have largely contributed

to the development of petrochemical industry, as well as completion of development projects in this industry,” he said. Padidar said more than 75% of equipment

for various sectors of the petroleum industry was domestically manufactured. He added: “We enjoy a high capacity in the manufacturing of equipment for the petrochemical industry. We have to use it in the best possible manner.

Domestic Manufacturers Can Meet Iran Petchem Industry Needs

The Ilam gas refinery is set to feed more than 25,000 MW/hr of electricity to national grid, the head of the facility said. Shahryar Daripour said the planned electricity feed by Ilam refinery was aimed at compensating for possible power shortages in summer and as part of social responsibilities. “Since two years ago, Ilam gas refinery struck a deal with the Iran Electricity Network Management Company for the purposes of feeding electricity into national network to avoid blackouts,” he said, adding: “Over this time, it has fed more than 32,000 MW/hr of electrical energy into national network. Like previous years, it will supply electricity this year in the hot season when consumption reaches its peak.”Ali Assadi, CEO of Western Iran Electricity

Company, said Ilam gas refinery had been instrumental in avoiding blackouts in the past two years.

Ilam Gas Refinery Generates Power

The deputy CEO of National Iranian Drilling Company (NIDC) has announced the drilling of 28 onshore and offshore oil and gas wells during the first quarter of the current calendar year (started March 21). Mohammad Ale-Khamis said they included 13 development/appraisal wells

and 15 completed/worked-over wells. He said 19 wells had been spudded in areas administered by National Iranian South Oil Company (NISOC), two in areas run by the Iran Central Oil Fields Company (ICOFC), two in areas run by Iranian Offshore Oil Company (IOOC), two in areas

28 Oil/Gas Wells Drilled in

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New Projects to Bring Petchem Output to 15mtThe CEO of Iran’s National

Petrochemical Company (NPC) has said the commissioning of 14 new petrochemical projects in the Pars Energy Intensive Industries Special Economic (PEISEZ) would increase national output by about 15 million tonnes. Behzad Mohammadi said out of a total 55 petrochemical plants in Iran, 16 were operational in Assaluyeh. “Thirty petrochemical projects

are envisaged in Phase 2 of Assaluyeh, Kangan and Dayer. Seventeen projects are in progress and thirteen are in the stage of financing and technical knowhow.”Mohammadi said 15 new

phases of South Pars had come on-stream since 2013 when President Hassan Rouhani took office. “With the inauguration of these phases, significant feedstock will be supplied to petrochemical plants. That

would accelerate development of petrochemical industry,” he said. Mohammadi said cooperation between NPC

Pars Petchem Output/Sales Hit RecordThe head of the Pars Petrochemical

Plant has said a new production record has been smashed at this facility despite being blacklisted by the US. “Production at this unit has been running at 101-106% of capacity,” Hamid Zare said. He added that production at the styrene monomer unit of the Pars Petrochemical Plant had been below 100% earlier. “We predict the current trend of production would continue without any halt,” said Zare. He added that the record in output was not limited to the styrene monomer unit. Zare said production record of all products at the Pars plant was smashed during the first two months of the current calendar year. He said that the plant produced a total of 769,619 tonnes of ethane, ethyl benzene and styrene monomer in the first two months of the current calendar year. Zare added: “Record-setting in production has also smashed record in sales. The sales of products including styrene monomer, LPG and ethane in a single month reached all-time high.” “Although this plant was blacklisted by the US in November we see that now the highest production, domestic sales and exports at this plant was achieved in the second month of the current calendar year,” he said. Zare said since the start of the current calendar year, 392,723 tonnes of products from the Pars plant had been

sold on domestic markets and another 259,256 tonnes had been exported.

Petchem Plant Records Jump in PET Chain OutputThe Tondguyan Petrochemical Plant has set a

record in its polyethylene terephthalate (PET) chain’s products, the head of the plant said.Mohammad Isa Anousha said the plant had seen

its PET products grow 10% during first 100 days of the current calendar year since the year before.Referring to periodic overhaul in the second

PET bottle production line for sustainable output of this polymer product and supplying extra demand for PET in summer, he said: “Hot oil change operations in this production line were carried out by in-house experts within 10 days without any accident.” Anousha said the oil change operation has to be done every four to five years. He added that the latest overhaul would allow PET production at nominal capacity. He said that debottlenecking at the petrochemical plant had allowed setting a record in production at the sole plant producing PET in Iran. Anousha said the Tondguyan plant had produced 1,200 tonnes a day of products during the first 100 days of the current calendar year, up 10% year-on-year.He also touched on the boost in the quality

of products in the current year, saying: “The paraxylene feedstock required for the Tondguyan plant is being supplied regularly and constantly by Nouri Petrochemical Plant and we have no problem with feedstock supply.”

and Iranian Mines & Mining Industries Development & Renovation Organization (IMIDRO) would help progress

in the petrochemical industry in the Parsian zone. “There is appropriate infrastructure ready in Assaluyeh. Proportionately,

the petrochemical industry can develop in the Parsian zone,” he added. Mohammadi said 14 projects envisaged in PEISEZ would require about $19 billion in investment. He also referred to US sanctions imposed on Iran’s petrochemical industry, saying they were just a political show. “The sanctions will have no impact on petrochemical production and exports rate,” he said. Mohammadi said the issue of sanctions was not anything new for Iran’s petrochemical sector, adding that petrochemical production and exports would continue even under sanctions.

Incentives for Investment in PSEEZCEO of Pars Special Economic Energy Zone (PSEEZ)

Pirouz Mousavi has expressed readiness for attracting investment in this energy-rich zone. “In case investment projects are endorsed, necessary incentives will be presented for their operation,” he said. He added: “PSEEZ is an economically significant and sensitive zone in the country. It can play a significant role in economic blossoming based on production and employment.”Highlighting the role of PSEEZ in Iran’s oil and non-oil exports, he said: “By starting up development projects in PSEEZ, Iran has outperformed Qatar in gas production capacity from the jointly owned South Pars gas field. It can play an important role in increasing national revenue.” Mousavi touched on legal capacities of free and special zones for encouraging investment, saying: “Access to low-cost feedstock and the Persian Gulf international waterway and the existence of export ports like that of Pars Complex with good draft for giant vessels are among unique features of this area. Attraction of investment in these downstream projects, leads to boosting production and employment rate.” He also said that completing the production chain and stopping raw material trading was another advantage of investment in downstream projects. He added: “PSEEZ is unique. It is necessary to draw up a vision plan for this zone

in order to benefit from all legal capacities for blossoming and prosperity.”

Iran NOCs Assign Studies to Local FirmsThis May, during the International

Tehran Oil Show, the National Iranian South Oil Company (NISOC), among other Iranian oil companies, signed a contract for comprehensive studies on six oil fields. Earlier, the Iranian Offshore Oil

Company (IOOC) and the Iranian Central Oil Fields Company had also signed similar contracts with domestic consulting firms for comprehensive study on a number of reservoirs. Study of reservoirs is nothing new in the oil industry, but entrusting them to domestic consulting firms is an initiative of the Iranian Ministry of Petroleum.Regarding this issue, Karim Zobeidi,

director of the National Iranian Oil Company's Corporate Planning Affairs, told Shana: "This plan was put on the agenda by the Minister of Petroleum, so that by seriously studying some reservoirs, the path to achieving a more efficient recovery rate in these reservoirs become smooth." Zobeidi explained that these studies

entailed detailed studies and focus on reservoir details such as fluid properties, reservoir rock properties, and other reservoir specifications, while in MDP

studies, not much focus was given to such details.


June 2019 Issue No. 84 monthly

Which stage is SP14 in now? The first gas recovery from Platform 14A

(14mcm/d) was done in April 2018, while the second platform (14C) was launched in November 2018 to bring gas recovery from this phase to 28 mcm/d. Platform 14B was loaded out in Bandar Abbas in June and moved 105 kilometers farther. Installation and launch of a platform takes between 30 and 45 days. Therefore, gas recovery from this platform would be possible at the rate of 14 mcm/d in September. Platform 14D, a satellite platform and the last platform at SP14, is in the final phase of construction. It will be installed in October. It shows that before the arrival of winter, 14 mcm/d of gas would be recovered from this platform and the chain for the recovery of 56 mcm/d of rich gas, mainly in its offshore sector, will be completed. Since the onshore refinery of this phase is not complete yet, the gas recovered from these platforms was delivered to the refinery of SP12 via a pipeline connecting SP12 and SP14. By using the untapped capacity of this phase, processing and

sweetening operations will be carried out.

Why is the onshore sector lagging behind the offshore sector?

In addition to sanctions and financing shortages, the government structure as well as the multiplicity of contractors in the onshore sector have caused challenges to the expected agility. That has largely affected the project startup. However, under a plan we finalized with the onshore sector contractors, the onshore sector would be completed and operational before the start of 2021. The refinery of SP14, like other South Pars refineries, has four sweetening trains. But the requirement for the startup of these trains would be power supply to the refinery and startup of other utility units (water, steam, air and nitrogen). The power supply system of the refinery is to be launched soon, followed by utility units which are all necessary for the process of startup. Then, the first gas train of this phase would become operational by next March in order to let SP14 gas sweetening start. According to schedule, after the startup of the first train of sweetening, three other trains of sweetening would become

operational within three-month intervals.

As US sanctions become tougher, there is concern that the quality of

implementation of South Pars projects would be affected. To what extent are such concerns solid-based?We have no flexibility in the execution of

standards. The job is very sensitive and the least error would impose financial and physical costs on us. The Ministry of Petroleum is by no means willing to endanger human life, pollute the environment and finally reduce the useful life of refineries and offshore platforms by neglecting the implementation of standards due to sanctions. Iran’s petroleum industry has long been under sanctions. However, we have always tried to minimize diversion to the design and features of projects. I reiterate that National Iranian Oil Company (NIOC) would show no flexibility in such issues. Under certain conditions we may have to show flexibility in financial issues or the time needed for the startup of projects, but we are not flexible with technical aspects. It should be taken into account that contractors would be not be allowed to show flexibility due to onshore and offshore operations under gas pressure above 120 Bar and high H2S content. Concerns over conditions would not lead us to use substandard equipment in our projects.I think that Iran’s Ministry of Petroleum has

taken reasonable and strategic decisions under specific periods of time based on risks. During periods when the sanctions were eased on Iran’s petroleum industry, domestic manufacturing and transfer of technology were focused upon, whose results we are witnessing now. I remember quite well that about 20 years ago when Iran’s petroleum industry was not subject to such tough sanctions, and foreign contractors were involved in the petroleum industry, we would not have been able to build, install and launch platforms without foreign companies. By that time, it was

The offshore section of Phase 14 of the giant offshore South Pars gas field is expected to come on stream late this year. Currently, the two platforms of SP14 are producing 28 mcm/d of gas. The third platform of this phase was loaded out in Bandar Abbas recently and moved to its location at 14B. Mohammad Mehdi Tavasolipour, manager of SP14 project, said the chain of the offshore sector of this project would be completed before winter.

The Ministry of Petroleum

is by no means willing to endanger

human life, pollute the

environment and finally reduce the useful life

of refineries and offshore platforms by

neglecting the implementation

of standards due to

sanctions

South ParsSouth Pars

The refinery of SP14, like other South

Pars refineries, has four

sweeteningtrains

That would bring gas recovery

from SP14 to 56 mcm/d. The first gas train of this project is also

coming online this year. The Platform 14B load-out was done at ISOCICO

yard in Bandar Abbas. The platform was then installed in its Persian Gulf location.Iran Petroleum has talked to Tavasolipour about the SP14 project.

SP14 Offshore Sector to

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very sophisticated for us to install and launch platforms. In those days, even with foreign companies we installed and launched a platform within 64 days. When domestic companies started doing so it initially took three months. Then it was cut to 62 days and at the moment we can do it in 26 days. All that is done while observing regulations safety and without getting help from foreign companies.

To what extent can we rely on the equipment used in SP14 in light of tough sanctions?As mentioned before, when foreign companies

were operating in Iran we were after technical knowhow and we are now able to manufacture key equipment used in the petroleum industry. Although due to sanctions some equipment used in this phase may be technologically different with equipment used everywhere

in the world, it does not mean ignorance of standards. Furthermore, paying attention to domestic manufacturing and insistence on the application of standards in the projects has helped us implement South Pars projects without dependence on foreign companies. Of course it does not mean we no longer need to acquire technical savvy.

The startup of the onshore sector of this phase coincided with the toughening of sanctions against the petroleum industry. Do you think it would affect the startup of the project?Financially speaking, we will witness an increase

in the costs. Technically speaking, following instructions attached to the contract, certain equipment has to be installed and launched in the presence of manufacturers. But due to the

sanctions, some companies are not ready to dispatch technicians and supervisors to Iran, which would certainly affect the startup of projects. Given the experience of the previous round of sanctions, we can benefit from the potential of domestic manufacturers in similar industries. So far, such experience has been helpful and resulted in valuable success on many occasions. The contract for SP14 development was struck in June 2010 between NIOC and eight contractors during the tenure of the 10th administration. This phase resembles other SP phases in design. In order to recover 56 mcm/d of sour gas, 44 wells have to be drilled. Gas recovery will be made from four platforms – including two main platforms and two satellite platforms. Gas is transferred from sea to the onshore sector to be processed and sent to consumers. This phase was initially planned to

become operational in 35 months, but due to the multiplicity of contractors the project did not come online on schedule and it was delayed by six years. After the administration of Hassan Rouhani took office, the Ministry of Petroleum gave priority to the startup of South Pars phases as this gas field is shared by Iran and Qatar. Due to financial restrictions, the phases which had a higher degree of progress were prioritized for the allocation of financing and implementation. The result was the implementation of SP12, SP15, SP16, SP17, SP18, SP19, SP20 and SP21 in the 11th administration. Later on, SP13, SP22-24 came online. As Mohammad Meshkinfam, CEO of Pars Oil and Gas Company, has said, 60 mcm/d would be added to the South Pars gas production capacity this year. Therefore, gas production capacity in the South Pars gas field would reach 600 mcm/d by next March.


South ParsSouth Pars

After the administration of Hassan

Rouhani took office, the Ministry of Petroleum gave priority

to the startup of South Pars phases as this gas field is

shared by Iran and Qatar

when foreign

companies were

operating in Iran we were after technical knowhow and we are now able to manufacture

key equipment used in the petroleum industry

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Iran Crude Oil Refining Capacity GrowingThe CEO of National Iranian Oil

Refining and Distribution Company (NIORDC) has said Iran’s crude

oil and gas condensate refining capacity has increased from 1.55 mb/d in 2017 to 2.15 mb/d. Ali-Reza Sadeq-Abadi has said the figure would reach 2.4 mb/d by next March. Iran’s petroleum industry has been hit with the toughest ever sanctions since US President Donald Trump unilaterally pulled out of the six-nation Iran nuclear deal. Trump has been seeking to bring Iran’s oil exports down to zero; however, Iran’s Petroleum Ministry had made necessary arrangements well before the sanctions were imposed in order to blunt the impact of sanctions on the country’s petroleum industry. One of such policies was to increase the crude oil refining capacity and preventing the sales of crude oil. As new development phases of the

giant offshore South Pars gas field have come online under the administration of President Hassan Rouhani, Iran’s gas production capacity has reached 800 mcm/d. Moreover, due to the development of shared fields in the West Karoun area, Iran’s crude oil production capacity has experienced a big jump.In parallel, petrochemical development,

as well as refinery enhancement projects have been among key policies of the Petroleum Ministry in recent years. Despite the US’s attempts to zero Iran’s oil exports in the past one year, this objective has not been achieved in practice. On the contrary, Iran has seen its crude oil refining capacity increase. Furthermore,

the startup of the Bandar Abbas Gas Condensate Refinery, commonly known as the Persian Gulf Star Refinery, has been supplying feedstock for downstream plants to manufacture products with higher value-added.

Crude Oil / Condensate Refining CapacitySadeq-Abadi said: “Thanks to planning,

850,000 b/d of crude oil and gas condensate, which the US unlawful sanctions could prevent from entering world markets, has been refined in Iran and converted to products of higher

value-added.” Among the policies the Petroleum Ministry has adopted for boosting the refining capacity of the country are increasing feedstock receipt to take in maximum crude oil and condensate at oil refineries. The latest data show that the supply of gas condensate to refineries would increase from the current 450,000 b/d to 500,000 b/d and oil supply to refineries would go from 1.7 mb/d to 1.9 mb/d.

Persian Gulf Star Hits 480,000b/dDuring the previous round of sanctions

imposed on Iran in the final years of the 10th administration, Iran’s gas condensate had remained stored on the water as there was no customer for it. But after Iran’s nuclear

deal took effect, the entire stored gas condensate was sold. Even now that the US has imposed new sanctions on Iran, gas condensate remains a major target because as the South Pars gas output has exceeded 600 mcm/d, more condensate is being produced. To that effect, the Persian Gulf Star refinery was designed to process condensate. The refinery has

so far been developed in three phases. The fourth phase has just started up. The facility’s processing capacity has increased from 360,000 b/d to 400,000 b/d.NIORDC officials have said that

the processing capacity would go to 420,000 b/d in August and subsequently 450,000 b/d by October.Sadeq-Abadi has also said that the

Persian Gulf Star’s condensate refining capacity would reach 480,000 b/d by next March. The Persian Gulf Star refinery is supplying product equal to that of produced by a 1.3mb/d oil refinery. Based on this figure, it can be argued that Iran is the largest producer of high-quality products with high value-added among regional countries.Iran owes its refining and distribution

capacity largely to the Persian Gulf Star refinery as it has added its gas condensate processing capacity by 120,000 b/d, and 300 to 350,000 b/d of more crude oil has been processed by the Abadan, Isfahan, Tehran, Arak, Shiraz and Bandar Abbas refineries.

Strategic Gasoline/Gasoil ReservesDuring the previous round of sanctions, in

addition to oil and gas condensate, gasoline was also subject to sanctions. But over recent years, as new projects have been implemented at refineries, Iran’s gasoline production capacity has reached 110 ml/d, of which 90 ml/d has sulfur content of less than 10 ppm.Iran stopped importing gasoline in 2018.

That is why the Trump administration did not envisage any gasoline sanctions for Iran.Sadeq-Abadi has given a positive

assessment of Iran’s strategic gasoline and gasoil reserves, comparing it with Iran’s hard currency reserves.NIORDC is also tasked with supplying

feedstock to petrochemical plants. According to official data, NIORDC has surpassed 20-30% beyond its obligations for feeding petrochemical plants.

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Rival countries will not wait for Iran to finish development

of its sector to start recovery from their own share. Every day, Iran is seeing a decline in its share from the joint oil fields without even extracting a single barrel. That is why the administration of President Hassan Rouhani has reconsidered plans for developing joint fields whose lifecycle is shorter. The Rouhani administration has taken measures to raise the share of joint fields in national output from the current 7%. Meantime, the Iranian government’s economic plans have given rise to more obligations in the oil sector, like bringing the country’s oil production capacity to over 5.7 mb/d within four years.

Two-Phase DevelopmentChanguleh, an untapped field,

is shared with neighboring Iraq. It used to be known as an independent field, but new 3D seismic testing and interpretation of seismic data proved its joint status. Exploration Directorate of NIOC has also confirmed

that Changuleh is jointly owned by Iran and Iraq. The field is estimated to need $2.2 billion in investment. Activities like 3D seismic testing, location of wells and infrastructure projects like demining and building access routes have been done for

the development of the field. At least 19 wells need to be drilled for recovery from this field whose development is envisaged in two phases.In Phase 1, which is expected

to last 40 months, four wells will be drilled while two existing exploration wells

will be subject to workover, resulting in the production of 15,000 b/d of oil. Meantime, a 100-km oil pipeline as well as oil and gas separation facilities is to be built. In Phase 2, which is expected to last 60 months, 13 new wells as well as infrastructure facilities are envisaged. That would bring production from Changuleh to 40,000 or 50,000 b/d. In order to carry oil from Changuleh in the early production stage, a 130-km pipeline, 8 inch in diameter, will be used. According to the Petroleum Engineering and Development Company (PEDEC), by early development of Changuleh and assessing the hydrocarbon potential of this field, it would be possible to recover 65,000 b/d of crude oil.

Oil Reserves at 3.4bn BarrelsChanguleh is known as

Badra in Iraq. It is among hydrocarbon fields in the

Anaran Block. It is located between the cities of Mehran and Dehloran in Ilam Province. Bangestan Formation in Changuleh is the second most important field in Ilam. The Anaran Block was discovered in 2005 in cooperation with Norway’s Statoil Hydro and Russia’s Lukoil. It was estimated to hold between 400 and 650 million barrels of recoverable oil. Changuleh is estimated to hold 3.4 billion barrels of oil in place with an API gravity of 22. Two new wells are to be spudded while two other wells need to be completed. The surface facilities, a separator, transmission pumps, diesel-powered generator, evaporation tool, flare, line pipe and wellhead equipment

are on the agenda. A number of foreign firms have shown willingness to develop this field, and negotiations have been held with NIOC to that effect. Despite US sanctions targeting Iran’s petroleum industry, NIOC is in talks with foreign parties for investment in this field. In 2017, Iran’s Oil Industries Engineering and Construction Co. (OIEC) and Russia’s Gazprom Neft signed a non-disclosure agreement for developing Azar and Changuleh. The agreement was endorsed by NIOC. OIEC and Gazprom Neft agreed to hold meetings regularly to exchange views on technical, financial and legal aspects of cooperation.

Changuleh Oil Field Up for Investment

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The Changuleh oil field, which is located in western Iran, is among fields envisaged by National Iranian Oil Company (NIOC) for development. After the new model of oil contracts, known as the Iran Petroleum Contract (IPC), was unveiled, Changuleh was among oil fields introduced for foreign investment.

NIOC plans to develop Changuleh in two phases. According to Iran Petroleum Ministry data, there are more than 102 oil fields in Iran, 28 of which are shared with neighboring countries. Joint onshore fields are shared with Iraq, while the offshore ones are shared with the Persian Gulf and Gulf of Oman nations.

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The Ferdowsi oil field is located west of the South Pars gas field

and near the Golshan gas field. Ferdowsi is 190 kilometers far from Bushehr Port and 88 kilometers far from the coastline. Ferdowsi is a giant heavy

crude oil field with some gas in the Dalan and Kangan layers. It is known to be the largest field with heavy crude oil in Iran and the Middle East. The first exploration well

was drilled in 1966 in order to identify heavy crude oil layers. The second well was drilled one year later to examine gas layers potential. Based on the findings of wells 1 and 2, the Swiss company Adax conducted the master development plan (MDP) studies. The findings of studies indicate existence of heavy crude oil in this field. Ferdowsi is estimated to

contain 31 billion barrels of

oil in place. It is expected to produce 70,000 b/d of oil. The field is 20 kilometers long and 13 kilometers wide.After Adax concluded

its studies, due to the significance of heavy crude oil reserves and for the purpose of gaining more precise information for the development of Ferdowsi, NIOC instructed the Petroleum Engineering and Development Company (PEDEC) with conducting 3D seismic testing, drilling two appraisal wells for more precise assessment and taking cores from the crude oil layers to carry out necessary tests. The drilling of the third well in Ferdowsi started in April 2010 in order to assess the oil and gas layers. Initial findings showed that there was abundant heavy crude oil with various API gravities in the Kajdomi, Dariyan, Gadovan, Fahlyan

and Sourmeh layers.

Gas Potential in Lower LayersNIOC drilled a second well

in Ferdowsi to study gas potential in the Dalan, Kangan and Faraqoun layers. Gas was proven to exist in these layers in 1967. Based on an appraisal of the Ferdowsi field through the first and second wells, Adax estimated the field’s reservoir at 35 billion barrels with a recovery rate of 6%. But during an announcement about the field in 2015, the field was said to contain 37.1 billion barrels of oil in place.Development of the Ferdowsi

field is among projects aimed

at acquiring technology to recover heavy and ultra-heavy crude oil in the fractured carbonated reservoirs with a focus on practical research to choose the most appropriate method for heavy crude oil refinery.

AdvantagesNIOC studies indicate

that full development of the Ferdowsi field would need five to seven years. The significant oil and gas reserves, as well as the commerciality of developing this field make investment in these fields attractive.Given the special nature of

technology used in developing

heavy crude oil fields and the use of specialized tools, PEDEC has agreed to provide foreign companies with more data in case any MOU is signed for cooperation.The Ferdowsi field is

projected to produce 10,000 b/d of oil in the first phase and more than 300,000 b/d in next phases.

Technology TransferSince decades ago, production

of heavy crude oil and development of technologies for transfer and refining oil have dominated the world. In Iran, after identifying heavy crude oil fields, studies began in this regard. Although Iran’s

petroleum industry has been faced with numerous rounds of sanctions following the 1979 Islamic Revolution, Iranian petroleum industrialists have reported to use various methods to produce, transfer and refine crude oil.However, it does not mean

Iran no longer needs modern technologies to produce heavy crude oil. A major objective sought by NIOC in developing these fields is to build partnership with foreign companies in order to transfer in best-in-class technologies to develop oil and gas fields in Iran. This issue has been highlighted in all negotiations.

Ferdowsi, Mideast Largest Heavy Oil Field

The Ferdowsi oil field in the Persian Gulf is among the Middle East reservoirs with about 37 billion barrels of heavy crude oil.

National Iranian Oil Company (NIOC) hopes to develop this field under the Iran Petroleum Contract (IPC) model. Developing Ferdowsi would require five to seven years.More than 110 years of search have led to the exploration of supergiant South Pars gas field and Azadegan oil field. Iran has more than 100 oil and gas reservoirs, i.e. one new oil/gas field per year over the past century. Fifty years ago, a Swiss company made a big discovery in the Persian Gulf. No other company has since smashed this record. It was the discovery of the Ferdowsi oil field containing heavy crude oil.

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Natural gas storage projects are something rather new in Iran’s

gas industry. Meantime, they provide good support for energy. Over recent years, with the transfer of technical knowhow and by relying on domestic expertise, Iran has managed to establish several gas storage sites. Recently, a gas storage facility has been launched in the Khangiran gas field to store natural gas at the rate of 10 mcm/d during the eight hot months of the year in order to supply 20 mcm/d to be used during cold months.The facility belongs to the Iran

Central Oil Fields Company (ICOFC), a major oil producing company affiliated with National Iranian Oil Company (NIOC). ICOFC is responsible for the development of 80 oil and gas fields. In other words, as much as the giant offshore South Pars gas field is a major supplier of gas nationwide, ICOFC covers 11 provinces extending from north to northeast.Natural gas storage has in

recent years taken up added significance for countering

natural gas consumption fluctuations in various seasons and compensating for possible halt in production or safeguarding strategic reserves. Natural gas storage in the underground facilities, which are today strategic sites, plays a key role in striking a balance between supply and demand in various seasons and meets the country’s needs in the peak shaving. It is also influential in global energy markets and helps nations fulfill their gas export obligations.The East Oil and Gas

Production Company (EOGPC), a subsidiary of ICOFC, was established in 1998 in order to recover gas from the Mozdouran sour gas reservoir,

as well as the Shourijeh-B, Shourijeh-D and Gonbadli sweet gas reservoirs. EOGPC is responsible for supplying gas to the six provinces of Khorasan Razavi, North Khorasan, South Khorasan, Golestan, Mazandaran and partly Semnan.Ramin Hatami, CEO of ICOFC,

said the Khangiran field was the only source of hydrocarbon reserves in eastern and northeastern Iran. “About 95% of gas produced

in this field is sour gas. Given the strategic role of EOGPC in gas supply to six provinces in eastern and northern Iran and the necessity of storage of gas as a reliable source to cut dependence on gas imports, a gas storage project was envisaged in the Shourijeh field as the second and also the largest gas storage project. It is currently in its final stage,” he added. Hatami said: “All across the

country, there are two gas storage projects that have so far been designed, built

and launched. The first one was in the Sarajeh field and the second one with a higher capacity, i.e. the largest gas storage facility in the country, is located in the Shourijeh field, which we recently witnessed the inauguration of its gathering center.”This project was first

supposed to start out in 2012, but due to sanctions and the impossibility of supply of commodity the project had some problems. However, since 2017, construction started and it was completed a year later.For the early startup of this

project, rapid operations got under way in 2015. The project comprised high-pressure facilities, electricity post, emergency control systems, electrical equipment and instruments, chemical injection packages, safety and fire extinguishing systems, gas injection pipeline.

Fully Iranian DesignThis project includes a

gathering center, a center for separating 12 wells, pressure buildup and injection. The pressure buildup section is at the service of the storage section of National Iranian Gas Company (NIGC), while the upstream sector, including wells, pipelines, gathering lines and injection lines, is up to ICOFC.This project became

operational with €19 million plus IRR 200 billion from domestic resources.In line with the petroleum

industry’s initiative to move towards economic resilience and focus on domestic manufacturing, this project came online hiring domestic contractors and experts. The project is fully Iranian-designed. Apart from that, about 50% of the equipment related to electricity, chemical materials packages, safety systems and flares have been handled by Iranian experts. A major point in this project is full compliance with HSE obligations to avoid accidents.

20% Financial SavingThis project was put on the

agenda in line with strategic objectives, putting an end to dependence on other nations’ gas, particularly in cold months and boosting the reliability of gas supply to Eastern and Northern provinces, as well as enhancing recovery from gas reservoirs by building wellhead facilities

and pipelines. The main objective sought in the project was to inject 10 mcm/d of gas and recover 20 mcm/d in cold months from the Shourijeh D field. ICOFC plans to inject gas during eight hot months and instead be able to supply gas during the remaining four months when it gets cold. That would facilitate the use of this storage facility. EOGPC is located in the

northern part of the country. The only place in that part of the country with gas production is Khangiran. There is gas injection and reproduction in the Qom and Khanigran areas. The gas produced there, is supplied to five to six provinces.Thanks to the project,

wintertime gas supply has increased significantly. In the last period, during the consumption peak, about 15 mcm/d was used from storage sites. The separator of this project is becoming operational urgently. Maximum injection was registered at 12 mcm/d and maximum recovery at 15 mcm/d last year. Since the start of the current

calendar year, 471 mcm of gas has been injected. This amount is close to the required 720 mcm for the eight hot months.

Iran Largest Underground Gas Storage Site Operational

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June 2019 Issue No. 84 R&DR&D

Saeed Pakseresht, former R&D director at National Iranian Gas Company

(NIGC), said the company is supplying the bulk of its needs via domestic firms. Meeting domestic needs is under way in parallel with the development of science and technology. Iranian companies are no longer representing foreign companies; rather they are now equipped with cutting-edge technology. Paying attention to Iranian

knowledge-based companies, communicating with parks of science and technology, benefiting from the potentialities of Iranian manufacturers and broadening research work are among achievements in Iran’s gas sector. However, when it comes to economic development and progress in a country, the role of domestic manufacturers and suppliers of equipment, particularly suppliers of technical knowhow and technology, takes up added significance. Such thing will not happen necessarily under conditions of sanctions because when we look at the successful experience of developed nations we find out that they have taken preplanned steps towards meeting technological needs. Iran has been moving in such a direction since long time ago. At least, it has regulated policies for domestic suppliers and manufacturers, as well as suppliers of technical knowhow to grow. Recent years bear proof to this fact.

Policymaking Significance under SanctionsPakseresht said Iran had to

make arrangements before experiencing economic growth and development. He said over recent years

Iran had been talking about economic resilience, adding: “We believe that we should

regulate our economy so as to bring about development and basic knowledge in the country.” He said: “We should regulate our affairs on such basis. Then we will move towards supporting domestic manufacturing before speaking about boost in production.” Policymaking is instrumental in the gas industry. This issue takes up added significance when sanctions are imposed. Under such circumstances, domestic and knowledge-based companies become more prominent. Pakseresht said: “I agree that sanctions are worrying; however, the results of sanctions may help us move towards further growth and development so that we would reach our objectives much more quickly.” The unilateral and unlawful sanctions imposed by the United States against Iran have certainly caused some problems for Iran’s oil and gas industry. But if they are looked into at a higher level, one will see that the sanctions have made Iran much more resistant. Pakseresht said: “While causing hardships to us, the sanctions have helped accelerate our growth trend. We may reach the objectives previously envisaged much sooner.” During Iran’s recent oil show this year, many domestic companies had managed to fill the void left by foreign companies. “We are also supplying many of our needs through domestic companies and we are delighted to see that the supply of domestic needs has been in parallel with the growth of knowledge and technology,” said Pakseresht. He said: “Domestic companies have had good performance in engineering, operation, as well as growth of knowledge and technology. I dare to say with certainty that we are not worried about the absence of

foreign companies.” Pakseresht said: “We can build whatever we need by relying on intelligence, expertise and experience of our wise experts and youth.” He added that the “activities done in the sector of knowledge, research and technology have predicted all our needs in the gas industry cycle.” Pakseresht said: “We pin hope on knowledge-based economy. When we talk about technological products we mean that R&D has the final say because research is supposed to provide knowledge in favor of science, production and economy.”

Gas Sector R&DOver 4,000 knowledge-based

companies and a large number of knowledge-based companies specializing in the petroleum industry, as well as parks of science and technology are based in Iran. That is the result of policymaking and support by state-run companies like NIGC.“In today’s industrialized world,

we are adopting a new approach on a daily basis towards knowledge and technology; one day by awarding projects to research companies, another day by establishing knowledge-based companies and directing them towards supply of products and industrial needs,” said Pakseresht. He said that gas technomarket had taken shape to handle the establishment of ecosystem of technology and innovation. In such ecosystem, various actors are interacting with one another. He added: “In the gas industry technomkaret, we create the main actors and form various sectors. Different conditions are experienced in such technomarket. In some cases, suppliers may not financially afford costs, in which case we seek the assistance of investors.” “Despite risks, we focus on all aspects of the gas

Iran Gas Sector Set for Self-Reliance in Shadow of Sanctions

Today a major requirement for survival in the tightly competitive market and the blossoming of an industrial enterprise

would be to monitor industrial and technological progress, market and rivals as well as development of technology based on potential and practical capabilities of every company. Given the identity of each industrial enterprise, part of these activities is handled by R&D and IT divisions.

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technomarket. The outcome has been excellent so far,” said Pakseresht. According to him, many research projects have come to fruition in the past one year, providing products which are being used in gas refineries. “We considered about 30 technological products for the calendar year 1398 (to March 2019), which need about IRR 300 billion in investment,” he said. Pakseresht said the investment is provided to private or knowledge-based companies in order to transform their endorsed ideas to products needed by the gas industry. “All of this is done within the framework of research contracts for locally-manufactured products because domestic manufacturing and delivery of Iranian products would rest with the knowledge and research sector,” he said.Pakseresht said knowledge-

based companies based in parks of science and technology supply products needed in the gas industry. “We use NIGC’s budget to supply such products, which guarantees their

purchase. In other words, we finance our needs. Our business model at NIGC is such that we bargain for discount when we purchase from knowledge-based companies. The discounts are part of investment return,” he added. Pakseresht said the main contracts were signed in 2018 with the Khorasan and Pardis parks of science and technology. The parks have used their own knowledge-based companies to supply products mentioned in their contracts with NIGC. He added: “We prefer to have direct contracts with parks of science and technology rather than with knowledge-based companies because these parks would be able to supply some of knowledge-based companies’ needs.” The issue of communication with universities pertains to levels lower than technology, i.e. sectors requiring development of technology. Pakseresht said relationship with universities is established via specialized institutes that were formed in 2016 and 2017. These institutes involve gas processing, liquefied natural gas

(LNG), turbine and intelligent gauge. These institutes discuss NIGC issues and concerns with universities and research centers within the framework of agreements. “Therefore, our priorities are parks of science and technology, knowledge-based companies and then universities and scientific centers,” he said. “But the important point is that all these centers join each other to supply the country’s industrial needs like those of the gas industry so that we would become self-sufficient and our production would become prosperous.”

Mercaptan Self-SufficiencyOne of the important research

projects in the South Pars gas field was the mercaptan project which was officially inaugurated last March by President Hassan Rouhani. “Various departments like gas supply, R&D, technical inspection and HSE are making field assessment of mercaptan products,” said Pakseresht.“Our activities in South

Pars are mainly focused on technomarket. Turboexpanders

and control system of the South Pars Gas Complex are under way in cooperation with the Khorasan Park of science and technology,” he added. “We have long been seeking to prove that domestic manufacturing is tied to science and research. By attaching importance to the issue of research we can realize the objective of production boost,” he said. Pakseresht said it is the level of expertise that distinguishes real companies from fake ones. “In order to know that, we have no option but to make assessment through R&D,” he added. Pakseresht said: “If companies prove their capabilities we will trust them. In other words, first these companies have to prove themselves to us and win our trust. In case a company is importing parts and products from abroad and claims to be an Iranian manufacturer we would be able to catch it red-handed.” He said the right thing would be to classify companies based on their level of knowledge, adding this task rested with the Office of Vice-President for Science

and Technology. “Therefore, every company recognized as knowledge-based is supposed to have gone through all specialized stages, as governing bodies have very meticulous assessment and auditing. Specialized and scientific groups examine the companies technically and economically so that they would be recognized as knowledge-based in case of meeting the minimum requirements,” said Pakseresht. “We are in close contact with the Office of Vice-President for Science and Technology. When we need to manufacture a product, we ask this Office about knowledge-based companies capable of manufacturing the product we want, so that we would go to companies whose qualifications have already been proven,” he added. Pakseresht said the technology sector is high-risk, adding: “This issue is always stuck in our mind. If we invest somewhere, it has to be a capital risk for first-time cases. Therefore, we have to take into account this issue and give nascent companies a chance. Besides, based on our experience we can see to what extent they have managed to go ahead in line with our objectives. Therefore, we show flexibility wherever needed.”

Consumption ManagementMaking smart gas meters to

gauge consumption, has been a major objective sought by NIGC over recent years. Ever since this issue was raised at NIGC, the Directorate of Research and Technology has been handling the project. Smart gas meters are built based on the internet of things (IOT). Therefore, our sector of activity is very serious.This project includes gas

meter, data transfer system and analysis software. In other words, the data received in smart gas meters are sent to gas

centers real time to be analyzed. Pakseresht said: “To implement the project we first envisaged a pilot stage or field test. That was done in partnership with the IT, gas supply and R&D divisions by inviting companies to offer their proposals.”He said that some big cell

phone operators had expressed their readiness to be engaged in the data transfer section. “We are currently in the phase of assignment of these pilot projects to companies.” “What finally counts for us in data transfer of software development is smart reading. Therefore, we sought assistance from the Institute of Smart Assessment and Reading in order to examine the domains of cooperation,” said Pakseresht. He said that an agreement had been signed with the Sharif University of Technology for the development of software needed in smart reading. “They started their work last March and we hope NIGC objectives would be realized,” he added. Pakseresht expressed hope

for prosperity in business for knowledge-based companies in the current calendar year. “A major objective set for the

R&D Directorate in this year would be to set up an R&D Fund to absorb investments which may be fraught with risk,” he said. Pakseresht said the fund would be used to support companies willing to supply technological equipment and products. “We also want to make financial contribution,” he added, expressing hope it would happen in the first half of the current calendar year. Pakseresht also said that Iranian software would be developed to manage gas transmission lines. “This simulated software is like

GPMS which has been developed with GIS for the gas transmission network,” he said.

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Report

In the last four decades, this was the first time that a Japanese prime minister visited Iran. Although Abe’s trip to Tehran

was of great importance in terms of bilateral relationship between Tehran and Tokyo, it was thoroughly overwhelmed by political dispute between Iran and the US. Therefore, many analysts believed that he visited Iran as a mediator between the two countries. It can be argued that it was almost one year

ago that Trump’s unilateral withdrawal from JCPOA and reimposition of sanctions on Iran intensified tensions between Iran and the US. In May2019, the tensions reached their climax when the US did not extend the waivers for buyers of Iran’s crude oil. While alleging that Iran is getting ready to threaten the US interests and military forces in the Middle East, Trump dispatched some new military troops and warships to the region with the aim of combating Iran. Several countries including

Oman, Iraq, Qatar and Switzerland had already attempted to mediate between Iran and the US, but they failed in easing the tensions. It is said that Abe’s visit to Tehran had something to do with those countries’ attempts to mediate between the two countries, and led to optimism on the possibility of easing tensions in the region. Abe’s comments in the meeting with

president Rouhani are of great importance and worth analyzing:

The Japanese prime minister said: “Continuation of cooperation with International Atomic Energy Agency (IAEA) is considered positive action by Iran, and I

highly recommend Iran to continue cooperation with the IAEA”. Japan is one of major buyers of Iran’s crude oil, but under the US directives had to quit buying crude oil from

Iran. Abe is fully aware that Iran has almost lost its economic interests due to withdrawal of the US from JCPOA. Therefore, Iran has a set a 60-day deadline for the other signatories of the deal to provide a transparent position toward the issue. The question that comes to mind is: “Despite all these issues, why does Japan encourage Iran to stick to JCPOA?” In addition, Abe warned about probable outbreak of war. His warning was somehow in contradiction with visiting Iran as mediator. Taking all this into consideration, many observers believed his visit to Tehran was not a matter of mediation but concentrated on issues of the mutual interest.

Abe’s emphasis on the likelihood of occurrence of war may have a message for Iran. Hence, there are two possibilities: a) Trump has asked Abe to warn Iran about

probability of war; b) Abe is not really hopeful that the US intends

to ease tensions, and he just asked Iran to unilaterally contribute to calming down the region. Following his meeting with Rouhani, Abe said:” It is essential for Iran to play a constructive role in establishing peace and stability in the region”. In a way it can be argued that in his view Iran does not play such a role in the region, and expects Iran to do so.

Japan’s prime minister warned about probability of occurrence of an accidental war. He is quoted as saying:” At the moment, the level of tensions is increasing,

we need to do our best to prevent occurrence of an accidental war, and

Iran needs to play its constructive role”. There is a possibility of occurrence of an accidental scuffle, so the military encounter should be

prevented.” Whereas Abe had the privilege to easily visit the high-ranking officials of the two countries, he used this privilege to exchange message between Iran and the US. Although Japanese officials stressed that Abe has not travelled to Tehran to mediate between the US and Iran, Abe conveyed Trump’s message to the Supreme Leader of Iran. While appreciating Abe’s efforts, Ayatollah Khamenei said there is no doubt about Japan’s good intention; however, the US president does not deserve receiving any response from us, so I would not respond to his message now and in future.

The three major messages conveyed to the Supreme Leader of the Islamic Republic are as follows:

The US is ready to negotiate with Iran on the nuclear issue

The US is not after changing regime in IranThe US is decisive to prevent Iran from

manufacturing nuclear weapon After all, so far and based on the news agencies

reports, Abe’s visit to Tehran did not have tangible outcomes, because the Japanese prime minister was conveying the same messages to Iranian decision-makers as had been already conveyed to Iran through others. Abe did not talk about Iran’s view with regard

to the main reason of tensions. Iranian officials keep saying that the US “economic war” against Iran is the main factor fuelling tensions in the region, and easing tensions highly depends on the US quitting the “economic war”. In addition, Abe was not conveying message with regard to easing sanctions, on the contrary in coincidence with Abe’s visit to Tehran, new round of sanctions were imposed on Iran, particularly on Iran’s petrochemical sector, which does not indicate the US intention to settle down political dispute through negotiation.

Shinzo Abe Visits Tehran

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Shinzo Abe Japan’s prime minister, in a historic trip, visited Tehran on 12 June 2019.It was said that his visit to Tehran was aimed at easing tensions between Iran and the US. However, it seems that he could not fulfill his goals,

as he was not conveying any new messages from Trump.

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Analysis

The Strait of Hormuz, a narrow channel situated between the borders of Iran and Sultanate of Oman, accounts for

approximately 30% of the world’s seaborne oil traffic. The Strait of Hormuz is seen as one of the most important waterways in the world, linking crude producers in the Middle East with key markets in the rest of the world, and is the world’s busiest transit lane for seaborne oil shipments. In 2016, 18.5 billion barrels of crude passed through the waterway, or about one-third of all seaborne-traded crude oil. Most of the oil exported by the Persian Gulf countries is shipped through the narrow waterway. Recently, it was in the news that two oil tankers

have been damaged in a suspected attack in the waters between the United Arab Emirates and Iran, as they were leaving the Persian Gulf. The first tanker to report a problem was the Front Altair. It was reported to be carrying 75,000 tons of naphtha, loaded in Abu Dhabi, to Japan, although it was signaling a destination of Kaosiung in Taiwan when it was damaged. The second vessel was the Japanese-owned Kokuka Courageous, which was sailing from Saudi Arabia to Singapore with a cargo of methanol. This incident raises the question of who gains

what from them. The timing of the incidents also raises questions. They occurred as Prime Minister Shinzo Abe was visiting Tehran, conveying Trump’s message. On 12 June 2019

Abe urged Tehran to avoid conflict at all costs and pledged to do his utmost to ease tensions. The tankers damaged on 13 June 2019 were carrying cargoes related to Japan, Hiroshige Seko, minister of Economy, Trade and Industry, said on the ministry’s Twitter feed. It seems that some countries in the region were not happy that a high-ranking Japanese official visited Tehran either for exchanging views on the issues of mutual interest or easing tensions between the US and Iran.Although Washington blindly blamed Iran

for the attacks, Iranian officials firmly denied it. It is noteworthy that on many occasions in international energy conferences and fora, Iranian Petroleum Minister had stressed the necessity of depoliticization of oil sector. Zangeneh, a veteran oil expert and member of the cabinet has repeatedly deprecated using oil as weapon, as he believes it may jeopardize global energy security and harm world economy. In response to the US accusation, Iran said as the US has done before with now verified fabrications; it has hastily - and without any evidence or investigation - accused Iran of being behind these attacks. It did so within the same day of the attacks. How could an incident as serious as this be somehow solved without an investigation or evidence so quickly? We’ve seen this approach before in Iraq in 2003 where the rush to war was made before inspectors could confirm US claims of “weapons of mass destruction” in Iraq. We also saw the US did this

last year in Syria where it quickly accused the Syrian government of a “sarin chemical attack” in Douma before carrying out military strikes - all done before the OPCW could even begin its investigation - which by the way, concluded claims of sarin gas were false. For Iran, it is not rational at all to carry out such an attack, and especially so against a ship belonging to Japan while the Japanese Prime Minister is in Iran. Iran’s greatest strength at the moment is Washington’s lack of credibility and increasingly blatant aggression against Iran. The international community can see that Iran upheld its part of the JCPOA and that it was the US who walked away from it without justification. The best cards in Iran’s hand are the growing consensus that it is being victimized. Thus Tehran has nothing at all to gain by staging attacks against international shipping through the Strait of Hormuz. In addition, Iran has said by having a glance at the history of the Persian Gulf it has been always contributing to maritime security particularly in the Persian Gulf. And the proof for that is the fact that we haven’t seen tankers being targeted or caught in the cross fire in this way since the late 1980s. Although the incident reminds us of the so-called Tanker War of the 1980s in the Persian Gulf, when 451 vessels (259 of them oil or refined petroleum product tankers) were attacked, we are still far from the level of tension that existed during that period. However, all the concerned parties need to be careful not get involved in an “accidental war” as referred to by Abe during his visit to Tehran. The Japanese officials are fully aware that in case of any disruption in crude oil supply trend, global energy security will be jeopardized and America and its allies will have to cope with higher crude prices and disruptions to supplies.

Brent crude was up by as much as 4.45 percent on 13 June 2019, shortly after news of the incident broke. In this situation those countries which produce huge volumes of crude oil and have taken the market share of some OPEC member countries suffering sanctions and/or internal unrests, could benefit from the psychological impact of the incident leading to price hikes.There is another group that will benefit from the

incident — the people who want to see the US step up its campaign against Iran and move from an economic war to a military one. There are plenty of those, both in the US and among its allies in the Persian Gulf and wider Middle East regions. However, Shinzo Abe’s visit to Tehran indicated that the Japanese officials are wise and do believe that any disruption in the crude oil supply could harm the world economy including theirs, and everybody is to pay for its consequences. The interesting point is that a day earlier, to

show some flexibility Iran freed a US resident imprisoned on espionage charges. This would seem very clumsy timing from a country seeing the first tangible signs of any easing of the crippling sanctions imposed by the Americans. But it is absolutely understandable if you are someone whose ultimate goal is to derail any easing of tensions between the two nations, and to effect regime change in Tehran. Undoubtedly, those countries which are behind the incident in the Oman Sea are trying to mislead public thought and accuse others of being involved in the incident to legitimize and justify their unlawful intentions. Therefore, it is obvious that those behind the attacks are no friend of Iran. In other words, while trying to accuse Iran of being behind the incident, they attempt to abort the efforts made by global community aimed at easing tensions in the region.

Who Gains From the Incident in Oman Sea?

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US President Donald Trump’s energy policy has had significant impacts on global markets. Under

his administration, the United States has managed to increase its oil production to levels exceeding leading producers Russia and Saudi Arabia. Moreover, Trump’s efforts to change regulations for American oil exporters have made the country a top exporter of black gold. The US has also invested heavily in shale oil. That indicates the US’s new approach vis-à-vis international energy markets, and its attempts to boost its influence in the market.Leading oil producers in the Middle East

region have been affected by the new US policies more than any other state or group. Should these countries fail to adopt a clear policy vis-à-vis the US, they will face myriads of challenges.

US Growth, Mideast Decline The US Energy Information Administration

(EIA) has said the country’s oil production grew 1.36 mb/d in 2019 year-on-year to reach 12.32 mb/d. The US is projected to increase its oil production by 94,000 b/d next year.Despite the slow pace of production growth

in 2019, EIA expects the American oil output to hit new records this and next year. By the end of 2020, the US oil production will stand at about 13.5 mb/d. The US owes its high oil production largely to the shale revolution that has helped the US exceed Russia and Saudi Arabia and become the world’s largest oil producer. The US oil production is not

limited to overtaking top producers; rather, it has mainly contributed to lower energy prices. Over recent months, the decline in oil prices may be linked to oversupply and high exports by US companies. The abundant supply of oil against the backdrop of higher exports by the US has imposed numerous problems on other producers, particularly Middle East nations. Some of these oil producers have had no option but to sell oil at lower prices. For instance, Abu Dhabi’s Murban oil has been traded on Asian markets at rates below official prices for the 4th consecutive month due to the US oil glut. It has been unprecedented in the past two years. Abu Dhabi National Oil Company (ADNOC) has slashed the base price of this oil grade for the 4th consecutive month the cargoes purchased for delivery during the first four months of the current year were traded at 5-40 cent discount per barrel. Saudi Arabia has had to reduce the price

of all crude oil grades destined for the US in July. In the face of unfavorable market conditions in the shadow of US policies, the Saudis have chosen to bring down their crude oil exports to 7 mb/d in an attempt to prevent any significant decline in the price of oil. Saudi Arabia has already announced its intention to raise output in order to substitute Iran whose exports are faced with US sanctions.

Impact on World MarketsThe US energy policy

in general and oil production hike in particular have produced the

following impacts in the global energy market: Due to the increase in US oil output, world markets have not shown any significant negative reaction to disruption in oil exports by one or several top producers. Venezuela’s oil exports have fallen to their all-time lows while Libya is faced with uncertainty due to civil war in the African nation. Iran’s oil exports have been also squeezed due to the unilateral US sanctions. Nonetheless, international markets are not showing any significant reaction to such conditions in the oil production and export of long-time producers. This issue explains the US compensation of oil shortages.Over recent years, the increase in US

oil production has ended the country’s dependence on Middle East and Persian Gulf region oil for supplying its needs. The US spent about $386 billion on oil imports in 2008. But in 2018 the US spending on oil imports was slashed to $53 billion. Furthermore, the US’s oil imports from OPEC countries have hit their all-time lows in 32 years. The US is currently importing only 2.18 mb/d from member states of the Organization of the Petroleum Exporting Countries. That is why the US has in recent years taken such actions like imposing sanctions on oil producing countries.The US’s move to increase its oil production

has per se blunted the impact of decisions by such bodies as OPEC. The OPEC+ deal initially helped boost oil prices in international markets; however, the landmark agreement, signed between OPEC and non-OPEC partners led by Russia, is losing its efficiency. Therefore, the US has stepped into the oil market like a destructive

player, practically thwarting all efforts made for striking a balance into the oil market.

Challenge for FutureThe Trump administration is pursuing a

multi-faceted energy policy. On one side, it has increased oil production and exports in order to keep oil prices low for its political ends, while on the other it is waging trade war on China in a bid to negatively affect the global economic growth and cut energy consumption across the globe. In fact, the US is not only increasing its crude oil production to keep global markets in check and reduce oil prices, but also it is indirectly impacting energy market. For instance, China whose economy is among the largest in the world is faced with ambiguities in foreign trade due to the policies of the Trump administration. Official figures are indicative of a sharp decline in China’s imports and exports over recent months. In Japan, machinery orders have sharply fallen, showing limited capital expenditures of companies and the outbreak of trade war between the US and China. The more the US’s trade war with other nations lingers on, the more the global economic growth will decline. That would also cause a decline in energy consumption. Under such circumstances, Middle East nations which are dependent on petrodollars will run into serious challenges. In addition to the oil production hike in the US, other issues causing divestment in the Middle East and Persian Gulf countries include widespread insecurity due to revolutionary changes in Arab countries and the emergence of terrorist groups. Such factors have given rise to instability and discouraged top companies from investment in these regions. Meantime, a decline in oil consumption is also causing a decline in demand for oil. Oil consumption in energy-starved nations like China has been on the rise in recent years; however, most European countries have moved towards renewable energies. For this reason, oil consumption has sharply fallen compared to the previous decades.Therefore, major companies are shifting

attention from the Middle East.

US Oil Output Hike, Challenge to MideastShuaib Bahman

Analysis

Analysis

IPFProduction

Brazil Facing Offshore Gas

Constraint Brazil urgently needs investment

in offshore pipelines and onshore

processing facilities to develop its

offshore gas resources, according

to Wood Mackenzie. The consultant

expects the country to deliver close to

5 MMb/d of oil in the late 2020s, with

more than 90% coming from fields in

the Campos and Santos basins. Non-

flexible associated gas production

from the two basins should exceed 4.2

bcf/d by the same period. However,

the country’s two offshore pipelines

(Rota 1 and Rota 2) to develop Santos

basin presalt gas will likely lack spare

capacity until 2030. A third pipeline,

Rota 3, is under construction and will

have some capacity available in the

early 2020s.

Ivor

y Co

ast

UK

Funds Sought for UK North Sea ExplorationCluff Natural Resources is looking to

raise a minimum of £15 million ($19 million) to fund various exploration programs in the UK North Sea.These include the company’s share

of well costs on the Selene prospect in license P2437 and Pensacola in P2252 (Shell recently farmed into 50% of both licenses, both in the UK’s southern gas

basin); and work on Cluff’s other North Sea holdings and potential awards from the UK’s upcoming 32nd licensing round. Shell could begin drilling Selene in 2020.Cluff aims to initiate a farm-out process

by mid-year for P2352 in the UK central North Sea, containing the 39.5-MMbbl Dewar oil prospect.

China

Partnership Approved for

Offshore AustraliaCue Energy has received approval

from Australia’s National Offshore

Petroleum Titles Administrator (NOPTA) for title transfers of exploration permit WA-359-P offshore Western Australia. NOPTA

has ratified title transfers to BP (as operator), Beach Energy, and

New Zealand Oil & Gas and the formation of a joint venture between

the parties. The permit contains

the potentially giant Ironbark gas

prospect, thought to hold up to 15 tcf

recoverable. Cue CEO Matthew Boyall

said: “BP will become operator of WA-359-P and continue with the planning and execution of the

Ironbark-1 exploration well, which is

due to be drilled in late 2020.”

VIEW VIEW

China Groups to Explore Beibu Gulf Blocks

CNOOC China Ltd. has signed a petroleum contract with PetroChina Co. for

two blocks in the South China Sea. Beibu Gulf 23/29 block and Beibu Gulf 24/11 block are in the Fushan sag and Leidong sag regions. Block

23/29 covers an area of 980 sq km (378 sq mi) in water depths of 0-85 m (0-279 ft). Block 24/11

extends more than 464 sq km (179 sq mi) in 20-40 m (65-131 ft) of water.PetroChina will

serve as operator during the exploration period and carry 70% of the direct

exploration expenditures, the remainder handled by

CNOOC China.Brazil

Ivory Coast Awards Blocks to Eni

Eni has secured 90% operated stakes in two new exploration

blocks in the eastern part of the sedimentary basin offshore Ivory Coast.

The blocks were part of the 20 blocks available at the end of 2018.

Blocks CI-501 and CI-504 are about 30 km (19 mi) from the coastline and cover a total area of about 911 sq

km (352 sq mi).

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NewsNews

France Falls Short of Own Emission Targets France is falling way short of its self-set

climate targets as carbon emissions from transport and buildings are not dropping as planned and the government will have to triple its efforts to get back on track, the country’s new climate council said. In its first report, France’s newly appointed independent climate advisory council, the Haut Conseil pour le Climat (HCC) said that in 2015-18, emissions fell by just 1.1 percent, just over half the 1.9 percent that was prescribed.France was the driver behind the 2016 Paris

Agreement to limit global warming and the French parliament is now debating an energy bill that targets net zero emissions by 2050.

E.Timor, Australia to Ratify Gas Deal East Timor and Australia are set to ratify a

maritime border treaty, which regulates how the two countries will share revenue from the offshore Greater Sunrise natural gas field, later this year, East Timor’s foreign minister said.Dionisio Babo Soares told Reuters the

ratification could take place on Aug. 30, the anniversary of a referendum that gave the small Pacific nation, one of the world’s poorest, its long-awaited independence in 1999.Signed in March 2018, the historic treaty

resolved a long-running dispute over the Timor Sea border, which had delayed the development of the Greater Sunrise, which was discovered in 1974 and holds around 5.1 trillion cubic feet of gas.

NEWSNEWS

4

Canada and California said they had signed a memorandum of understanding to advance cleaner vehicles and fuels.The most populous U.S. state

and Canada said they will work together “to accelerate the adoption of zero-emission vehicles like electric cars” and share technical information and best practices in regulating cleaner fuels, as California does today though its Low-Carbon Fuel Standard.The announcement comes as

the Trump administration has proposed barring California from regulating vehicle emissions or requiring a rising number of zero emission vehicles.Canada is reviewing its

vehicle emissions standards. The Trump administration in August 2018 after a similar review proposed freezing fuel efficiency requirements at 2020 levels, a rollback of standards announced during the Obama administration.The administration plans in

the coming months to finalize a dramatic rewrite of fuel efficiency standards through 2026 that would also strip California, which wants stricter rules to fight climate change, of the right to set its own, tougher emissions rules.The Obama-era rules called

for a fleetwide fuel efficiency average of 46.7 miles per

gallon by 2026, compared with 37 mpg under the Trump administration’s preferred option. Earlier, 17 major automakers including General Motors Co, Volkswagen AG and Toyota Motor Corp urged the White House to resume talks with California to avoid a lengthy legal battle.

California, Canada Sign Clean Fuel MOU

1

3

Linde Plans $1.4bn Singapore ExpansionIndustrial gases group Linde said it will spend

$1.4 billion to boost its Singapore gasification facilities to support the planned expansion of Exxon Mobil Corp’s nearby integrated refining complex. The investment will enable Linde’s facility on Jurong Island to supply additional hydrogen and synthesis gas to Exxon’s Singapore refinery, the company said in a statement. Exxon’s expansion project, which is expected to come online in 2023, would convert fuel oil and other residual crude products into higher-value lube base stocks and distillates to help meet stricter emissions rules. The International Maritime Organisation (IMO) is introducing new rules on marine fuels from 2020, limiting the sulphur content to 0.5 percent from 3.5 percent, to curb pollution from ships.

Philadelphia to Permanently Shut Oil RefineryPhiladelphia Energy Solutions (PES) will seek to

permanently shut its oil refinery in the city after a massive fire caused substantial damage to the complex, the company confirmed. “The recent fire at the refinery complex has made it impossible for us to continue operations. We are grateful that the fire resulted in only a few minor injuries,” PES CEO Mark Smith said in a statement. “We are committed to an orderly process to safely wind down our operations.”Shutting the refinery, the largest and oldest on the U.S. East Coast, would cost hundreds of jobs and squeeze gasoline supplies in the busiest, most densely populated corridor of the United States. Smith, in his statement, said the company will “position the refinery complex for a sale and restart,” though such a process would probably take years and face community opposition.

NEWSNEWS

6

Growth in India’s demand for gasoline and jet fuel is expected to slow slightly this year, the head of the country’s largest refiner said, as prospects for world trade deteriorate.“Growth in the first six months

“has been slightly subdued because of many different reasons including monsoon impact,” Indian Oil Corp Chairman Sanjiv Singh told Reuters.IOC’s Singh said overall

demand will remain at 4% to 4.5%.“Anything between 4% and

4.5% is fairly decent,” he said.Still, the growth rate could

be lowest for the country since fiscal year 2013-2014, according to government data, a sign that demand in India, one of the two pillars driving global oil consumption growth other than China, is slowing.The International Energy

Agency has revised down its 2019 oil demand growth estimate by 100,000 barrels to 1.2 million barrels per day due

to the worsening prospects for world trade, although stimulus packages and developing countries should boost growth going into 2020.Simon Flowers, chief analyst

at Wood Mackenzie said at the Asia Oil and Gas Conference that further U.S. tariffs on Chinese goods could cut global oil demand growth by 400,000

bpd by 2020.Demand for gasoline and

jet fuel demand is expected to rise by 7-8% this year, Singh said, down from rates of 9-10% in the previous year.Diesel consumption could

increase by 3% this year, which is “still a decent growth,” IOC’s Singh said on the sidelines of the conference.

India IOC Sees Jet Fuel Demand Growth

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News

Thailand PTT in No Hurry Over LNG DealsThailand’s largest energy firm

PTT Pcl is in no hurry to lock in new long-term liquefied natural gas (LNG) contracts as it monitors domestic gas output and the growth of renewables over the next 2-3 years, its chief executive said. The country is expected to become more reliant on LNG imports because of falling output in the Gulf of Thailand, but natural gas demand growth has slowed to about 1% or less

in the past 3-4 years because of increases in solar power, said PTT President and Chief Executive

Officer Chansin Treenuchagron. “Thailand is good in terms of power plan development and we have good alternative energy,” Chansin told Reuters on the sidelines of the Asia Oil and Gas Conference. Renewable energy sources are gaining ground as the cost of solar panels and wind turbines has dropped sharply, while climate change initiatives have also accelerated non-fossil fuel use. Thailand currently consumes 4.7 billion cubic feet per day of natural gas, of which 3 billion cubic feet is from domestic production, 1 billion cubic feet is piped from Myanmar

and the rest is imported LNG, Chansin said. He expects natural gas demand growth in Thailand to hold steady at about 1% per year over the next five years.PTT won the rights last year

to take over production and development of the country’s largest natural gas fields Erawat and Bongkot in the Gulf of Thailand from 2022-2023.Production from the two fields

was forecast to fall by half to 1.5 billion cubic feet per day in the next 5-10 years as the government is keen to sustain output over a longer period, Chansin said.

NEWS

9

Qatar Petroleum has signed an agreement with Chevron Phillips Chemical to build a new petrochemicals complex, part of plans by the world’s top liquefied natural gas (LNG) exporter to broaden its energy interests. The project highlights how Middle East oil producers are expanding further into petrochemicals, used in the production of plastics and packaging materials, to move into new markets and find new sources of income beyond exporting crude oil and natural gas. Saudi Arabia’s and UAE’s national oil companies have both already announced plans to boost their refining capacity and petrochemicals operations.Qatar is one of the most

influential players in the LNG market due to its annual production of about 77 million tonnes, which is expected to grow about 43 percent by 2024 from a major expansion to the country’s North Field, the world’s largest natural gas field, which it shares with Iran.

The new petrochemical plant will be built north of Doha in Ras Laffan Industrial City and will come online by 2025 and tap the increased North Field production for feedstock, Qatar Petroleum CEO Saad al-Kaabi told a news conference.“The decision was driven by

the ongoing development of the

expansion project of the North Field ... which will yield significant quantities of ethane which can be used as feedstock,” Kaabi said. Chevron Phillips Chemical Co — a joint venture of Chevron Corp and Phillips 66 — will own a 30% stake in the complex, with the rest owned by Qatar Petroleum.

Qatar Joins Chevron Phillips for Petchem Project

7

Russian Arctic LNG-2 Knowhow to Slash CostsRussia’s Arctic LNG-2 project

will be around a third cheaper to build than the country’s Yamal LNG plant thanks to technology being built by Italy’s Saipem, stakeholder Total said. Arnaud Le Foll, Total’s head officer in Russia, said Saipem was building so-called gravity-based structure platforms (GBS) for gas liquefaction for the Arctic plant. GBS platforms have been used often in North Sea and

other gas projects but not in Russia. “There will be three such structures,” Le Foll

told Reuters on the

sidelines of a conference in St Petersburg. “They are being built in Murmansk by Novatek’s shipyard, it’s contracted with (Italy’s) Saipem.” Russian natural gas producer Novatek owns a 70% stake in the Arctic project, while Total and China’s CNPC and CNOOC each own 10%. The GBS platforms will be located near the Arctic Ocean coast and held in place on the seabed by ballasts. Novatek has estimated that the project will cost $20 billion-$21 billion, whereas the Yamal plant, operating since December 2017, cost $27 billion. The plant in the Arctic

Gydan peninsula is due to start operations in 2022-2023, with a total annual capacity for 19.8 million tonnes of LNG, the largest such plant in Russia. Novatek and Total were also in the consortium that built the Yamal plant. “We are targeting the project that will be more economic by 20% to 30% comparing to Yamal,” Le Foll said, when asked how the GBS technologies will impact the costs of Arctic LNG-2. He declined to comment on Total’s exposure to contaminated Russian oil discovered two months ago. Total actively trades Russia-sourced oil.

NEWS

10

A domestic consortium set up by Royal Dutch Shell and pension fund manager PGGM has taken a bigger lead in the race for Dutch energy company Eneco as two other contenders have dropped out, sources close to the matter said.French oil and gas company

Total SA and Italy’s electricity giant Enel, which had teamed up with Dutch pension fund manager APG, have both dropped out of the process, said the source.One of the sources added that

APG was now looking for a new partner. A spokesman for APG declined to comment.Infrastructure fund Macquarie

and Japan’s biggest trading house Mitsubishi Corp are also still in the race for the company estimated by analysts to be worth about 3 billion euros ($3.4 billion), sources said. One said French nuclear energy utility EDF had also made a non-binding offer.Enel, Total, Macquarie and

EDF declined to comment.

APG and Mitsubishi were not immediately available to comment.“This month we’re reviewing

non-binding offers, and we expect to notify the parties involved soon about what we’ve decided, and then we’ll move on (to the next phase in the sale process),” said Eneco

spokesman Edwin van der Haar. Shell and PGGM said in January they were looking to bid jointly, a move seen as an attempt by the two companies to bolster their firepower and put off competitors.The 53 Dutch cities that

currently own Eneco kicked off the sale in May.

Shell Likely to Acquire Dutch Eneco

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Market

Global oil demand is expected to remain weak in the second half of the

year with US-China trade war and as a result global institutions revised down their oil price and economic growth forecasts. Demand from Asian refineries decreased as a result of heavy maintenances during recent two months and consequently refining margins remained weak during recent weeks. However, global oil demand growth is expected to improve seasonally, from the bearish performance seen in the first half of 2019, with growth in second half forecast at 1.2 mb/d y-o-y according to OPEC monthly report.The economic growth trends

in the major economies have become more diverse, affected by trade issues, as well. Growth rate in major OECD economies and in China in the first quarter of 2019 turned out better than expected, but this economic upswing may have been in anticipation of worsening trade-related developments. The trade related aspects may; however, impact future growth negatively, depending on the outcome of the current disputes, the most significant of which is the US-China tariff disputes. This adds to the latest initiative by the US to impose tariffs on Mexico, the postponed tariffs on cars and car-parts – which would mainly impact the EU and Japan – and the numerous other trade-related negotiations that the US

is currently having with a variety of countries.On the other hand, OPEC has

cut its global crude oil demand forecast for 2019 to 99.87 million barrels per day mainly as a result of the trade disputes. According to OPEC oil monthly report, world oil demand will rise by 1.14 million bpd in 2019 in comparison with 2018 which is 70,000 barrels per day lower than previously expected. In 2019, call on OPEC is forecast at 30.5 mb/d, around 1.1 mb/d lower than the estimated 2018 level. Based on the latest OPEC Monthly Report, Non-OPEC oil supply in 2019 is anticipated to grow at the rate of 2.14 mb/d, y-o-y, following a robust increase of 2.91 mb/d in 2018. Non-OPEC oil supply in second half of 2019 is anticipated to increase by 1.8 mb/d, compared to the first half of this year and to increase by 2.1 mb/d y-o-y, which is less than growth seen over the same period a year earlier. According to the non-OPEC supply forecast for second half of this year, oil production is projected around 1.8 mb/d higher than in the first half of this year, following the return from maintenance in some countries, the opening of new pipelines in the Permian Basin, production ramp ups of new projects in Brazil and the possible start up of a giant field in Norway. From supply point of view, OPEC/non-OPEC cut agreement limited level of crude oil supply. The so called OPEC+ group of producers meets on July 1-2 to decide whether to extend the agreement beyond June.

OPEC and 10 non-OPEC allies led by Russia agreed in December 2018 to cut 1.2 million b/d in supplies through June, 2019. Most members appear ready to back an extension of the agreement when they meet in Vienna, although Algeria has broached the possibility of a deeper cut, according to media reports. Although, based on the statements of Saudi Oil Minister in Vienna in late June, 2019, the most likely outcome of the upcoming OPEC and OPEC+ ministerial meetings on early July, 2019 will be a decision to extend the current production constraint agreement for another nine months. On the other hand, sanctions imposed on Venezuela limited crude oil flows, too. The Brent/Dubai Exchange of Futures for Swaps, the premium of ICE Brent crude futures to Dubai swaps is still more than three, which shows difficulty in arbitrage from west to east. Although as a result of low freight rates arbitrage is still possible. In Asia, product markets suffered considerable losses, pressured by bearish sentiment caused by the release of the second batch of export quotas in China. Asian refinery margins in May showed a negative performance, pressured by lower exports as refineries in the US and Europe ramped up operations following turnarounds and increased product outputs. This development is also in line with a decline in Asia’s total products outputs, which dropped 0.21 mb/d y-o-y. Most of the

downside was attributed to fuel oil, as higher nuclear power availability in Japan and South Korea exerted pressure, despite some gasoline-related support on the back of firm driving requirements in China due to warmer weather.Besides, backwardation in Brent

market structure, which has emanated from geopolitics and very low North Sea supply, has weakened during month of June. Oil flows via the Baltic port of Ust-Luga and via the Druzhba pipeline limited because of contamination and high level of chloride since April. Druzhba pipeline which is one of the world’s biggest crude oil pipeline networks carries oil from the eastern part of the European Russia to Ukraine, Belarus, Poland, Hungary, Slovakia, the Czech Republic and Germany.

Asian Product MarketsWhile the naphtha market

remains in its weakest in over a decade, Naphtha cracks (vs Dubai crude oil) have rebounded slightly during last week of month of June. That is due to increase of naphtha demand as a result of lower steam cracker maintenance this month. However, most of this additional demand has been supplied by higher domestically produced volumes in the region. As a matter of fact the recent decrease in Liquefied Petroleum Gas prices which is a competing feedstock fuel has heavily influenced the preference for naphtha in the last weeks. Also less margins in the

petrochemical industry affected naphtha margins. Gasoline cracks recovered slightly in last week of June. In general, with refining capacity returning from maintenance, June typically observes lower mogas cracks m-o-m, so we expect weakness in market during next months by growth in production and marginal increase in demand of this product. Besides, the explosion at the alkylation unit at the 335,000 barrels per day Philadelphia Energy Solutions refinery, the largest on the east coast of USA, limited gasoline production of this refinery and as a result increased gasoline crack in both Asia and Europe markets during last week of June. Middle-distillate cracks in Asia have remained strong over recent months and it is expected to improve by International Maritime Organization (IMO) new regulation that will be effective from 2020. Fuel oil crack made a

remarkable recovery in first week of June as a result of high level of prompt demand but it had a downward trend in rest of the month. But it is expected that the approach of IMO 2020 weighs strongly on crude oil prices in near future. According to this new regulation from January 2020, the IMO will ban ships from using bunkers with sulfur content above 0.5%, compared with 3.5% now. Only vessels which use sulfur-cleaning devices known as scrubbers will be allowed to continue burning fuel with high-sulfur content.

Global Oil and

Asian Product Market,

June 2019

Leyla Sadr

Probably, the most remarkable development of the last few

weeks has been the pretty sharp decline in outright prices

emanated from a number of reasons such as weak demand,

lower refinery margins and also revised world economic forecasts;

while mid-east geopolitical tensions was a supporting factor

for oil prices. However, outright crude oil prices strengthened in

late June 2019, on the back of lower US crude oil inventories;

nevertheless, the uncertainty regarding the outcomes of G20

and OPEC meetings as well as oil demand growth limited the

increases.

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Petromuseum

Darvazeh Dowlat Filling StationIran’s first petroleum industry museum was

opened in the oil-rich city of Abadan in winter 2017. The second one was also built in Abadan under the name of Artisan Museum two years later. The Abadan gasoline museum is located where the first petrol station in Iran was erected. Various equipment related to gasoline pumps and the history of using them in the country, display of a full gasoline pump and a car filling in, rebuilding an old retailer shop of kerosene , riveted tanks, fuel tanks as well as documents about petroleum products distribution in Iran are among sections of this museum. The site of Abadan’s Artisan Museum, covering more than 12,000 square meters, was launched where the first technical school was launched in Abadan. About 7,000 meters of the floor area is allotted to the exhibition. It is known to be the largest industrial museum in Iran. In addition to the equipment and tools used in workshops, artefacts and historical documents are put on display in the museum. Thanks to all these objects, the Abadan Artisan Museum is of great

value. Nematollahi said at the inauguration of the Darvazeh Dowlat museum that two more petroleum museums would be opened by next March. “After the launch of the Kerman and Sabzevar petroleum museums, Iranian petroleum museums would be five in number,” he added. Nematollahi said old cars like the car belonging to a former minister of petroleum, the Pahlavi-era taxis, various pumps and pump equipment and fuel are put on display at the Darvazeh Dowlat museum. He added that 100 more structures were to be registered with the Cultural Heritage Organization to serve as centers for collecting historical documents related to the petroleum industry. He also said that 10,000 objects including old pumps had been identified and restored. Nematollahi said a total of 28 petroleum museums were planned by the Directorate of Petroleum Museums. Tehran’s mayor Hanachi said establishment of petroleum museums would attract tourists to the cities of Abadan and Masjed Soleiman. He added that Tehran Municipality was ready to cooperate in safeguarding the petroleum industry history.

Tehran 1st Petroleum Museum Inaugurated


The first petroleum museum in Tehran has been inaugurated in the Darvazeh Dowlat district. This museum, which is the third

petroleum industry museum in Iran, puts on display an old petrol station in the Iranian capital. The inauguration was attended by Akbar Nematollahi, director of Center for Museums and Documents of Iran’s Petroleum Industry, and Pirouz Hanachi, the mayor of Tehran.The petrol station in Darvazeh Dowlat is the

sixth one in Tehran. Operations for building a museum there started in 2017. Nematollahi said 124 petroleum industry buildings had been registered as cultural heritage, adding that 20 million documents pertaining to the petroleum industry had been collected from

mothballed places. More than 110 years have passed since oil was discovered in Iran. The petroleum industry has been an influential sector in the political, economic and social developments in Iran over the past century. Under the administration of President Hassan Rouhani, the Ministry of Petroleum decided to renovate artefacts and equipment once used in the petroleum industry in order to put on display the legacy of Iran’s petroleum industry. Preparations began in 2013. Setting up specialized petroleum industry museums was on the agenda because such museums would collect various documents, images and equipment and let ordinary people and researchers see them.

a total of 28 petroleum museums were planned by the Directorate of Petroleum Museums

Setting up specialized petroleum

industry museums was on the agenda because such

museums would collect various

documents, images and

equipment and let ordinary people and

researchers see them

Photo:Moslem Abbasi

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SportsJune 2019 Issue No. 84

First, please tell us about yourself and explain how you decided to become a weightlifter?I’m Afshin Taheri Hajivand

was born on 9 March 2000 in Chahar Mahal Bakhtiari Province. But I grew up in Ahvaz. I became interested in weightlifting when I was 12. After some time I could win the top title in the province. Then I joined NIOC club after winning the trust of Mohammad-Reza Kazeminejad, the technical director of the club. Until today, I have been exercising

weightlifting under the training of Hamid Rashidi, Amir Hezbeh and Bahman Makvandi.

When and where did you first win a championship title in weightlifting?My first presence was

in 2017 in the Junior World Championships. I finished fourth. But four months after I finished runner-up in

the Asian junior championship in Nepal by recording 139 kilograms in snatch and 157 kilograms in clean-and-jerk.

When and where did you gain the highest titles in weightlifting? The best titles I have ever

achieved were the second rank in the Asian junior championship in the 77kg category in Nepal, third rank in 2018 in Uzbekistan in the 85kg category and the second ranking in 2019 in Fiji in the 96kg category.

What nationality were your rivals in the Fiji weightlifting championship games? Which records did you register? Did you imagine to win medals in those games?I lifted weights in the 96kg

category and my rivals from Kazakhstan, Russia, Poland and Egypt among other nations. Based on my physical preparedness in the run-up to the matches I expected a medal. I recorded 161 kg in snatch and 180 kg in clean-and-jerk.

Why did you lose the gold medal?I was ready enough for the

matches. I had lifted weights throughout exercises. I was luckier for the gold medal in the snatch category, but due to weather-related illness I caught in Fiji my physical conditions were affected and unfortunately I failed the gold and won the silver. I feel sad for what happened. I was about to win the gold and I had made every effort for that purpose. But as I mentioned my sickness affected my physical conditions and in the clean-and-jerk stage I did not have enough energy to challenge my rivals. However,

thanks to God, I did not return empty-handed and like all my teammates I had a share in the championship title. I promise to do more to achieve better results in the future.

Did you choose the weights yourself or were you readying yourself based on what your rivals did?As I said the rivals were very

close to each other in ranking. Some weightlifters choose risky weights to win medals, but that causes them to be defeated. I prepared myself based on their choice and also following the instructions of trainers.

How do you assess the level of the Fiji games?Like previous years, the

matches were held at a good level. Many teams were in and rivalry was very tight. There were seven of us in the 96kg category. We could lift approximately equal weights and we were in a close and tight rivalry. All weightlifters were pinning hopes on championship and they could not be easily eliminated.

Would you please tell us about the renewed championship title for the Iranian weightlifters?Iran’s weightlifting has always

been rewarded. Nobody doubts our capacity. Last year we were crowned Asian champion. This time, our main rivals were the US, Russia, China and Japan. All of them had sent in powerful teams. However, our junior team was fighting for championship and it managed to win the top title.

What’s your main wish in weightlifting?Like all other athletes, I hope

to win the Olympic gold. But I have to win the championship title in the world matches first before readying myself for championship in Olympic matches. This objective could be achieved. I have to prepare myself for that purpose by exercising further.

Who are your main national and international rivals in weightlifting?The rivals are not always

the same. New persons are joining the matches every year. Therefore, I can’t mention any specific names. However, countries like Russia, the US and China as well as East Europe nations have always been among the best and are therefore hard rivals.

How has the NISOC club been instrumental in your promotion?Khuzestan is definitely a

center of excellence for Iran’s weightlifting. That is thanks to the NISOC club, which has been largely instrumental in my progress and will continue to do so. I found my way into the national team from this team. I am sure to be lucky in this club.

NISOC Weightlifter Eyes Olympic Gold

Getting up and running with weightlifting, where the Iranian national team have been crowned the champions of the Junior World

Championships for the 4th successive year. Iran, which had participated in the 2019 International Weightlifting Federation Games held in Fiji with 10 athletes, topped the men’s overall classification with 622 points, thanks to their 2 gold, 4 silver and 9 bronze medals. The US finished second, while Japan followed in third. Afshin Taheri was a key weightlifter in Iran’s team, contributing to the championship title. Taheri, affiliated with the National Iranian South Oil Company (NISOC) weightlifting team, won a silver medal to become the runner-up of the Fiji games. Iran Petroleum has conducted an interview with Taheri.

Arash Jafari

Sports

Kerman,6,000-Year-Old City

Shahzadeh GardenShahzadeh Garden is among the most beautiful

traditional gardens in Iran. Located at the foothill of Mount Tigran, it is reminiscent of Abdol-Hamid Mirza Farman-Farma, the governor of Kerman during the final years of Qajar Dynasty.This garden has a very beautiful entry gate, a royal edifice and a bathroom. Water supply network and water pools in the middle of the garden are captivating.The garden was restored in 1991.

Kerman is the capital city of a province with the same name. It is the most important city in southeast Iran in terms of industrial, political, cultural and scientific aspects. This city enjoys a long

history with some historians and researchers saying man first lived there in four millennia BC. Kerman is among the five ancient cities in Iran. A historian has said that the history of Kerman reflects the whole history of the country. Here is a brief review of tourism attractions in Kerman.

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Photo:Hamidreza Shakeri Rad

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Meymand Village

Meymand Village, in Kerman Province, is a rocky area wherein people are still living.It has been registered as a UNESCO World

Heritage site. Based on inscriptions found there, the village is estimated to be more than 12 millennia old dating from ancient times. However, the Cultural Heritage Organization has found potteries in Meymand Castle, indicating the village is 2 to 3 millennia old.

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Hos

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Shahdad Yardangs Shahdad yardangs are the most important factor in attracting tourists to

this city after the ancient Bam Citadel. Yardangs are streamlined protuberances carved from bedrock by the dual action of wind abrasion by dust and sand, and the removal of loose material by wind turbulence. Shahdad yardangs located in an area 40km east and north east of Shahdad have been formed by the extreme soil and water erosion and extend from north-west to the southeast of the region. They are considered as one of the greatest natural phenomena in Iran and quite unique in the world. Every year thousands of overseas tourists fly to Kerman to visit these breathtaking sights.

Ganj-Ali Khan BathroomGanj-Ali Khan Bathroom is one of the most beautiful historical bathrooms in Iran. It was built in

1611 at the order of Ganj-Ali Khan, the then governor of Kerman. This bathroom symbolizes the culmination of Safavid-era art and is an architecture masterpiece. It is located on the main path sneaking through Kerman Grand Bazaar. Ganj-Ali Khan Bathroom was used until 1937. It was restored in 1971 and then became a museum of anthropology.

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Jabalieh DomeJabalieh or Rock Dome, also known as the Gabri Dome, a place of historical importance, has been constructed

of stone and brick, though the building is made of stone and gypsum, and its architectural affects have been inspired from the Sassanid period. It was restored during the first decades of the advent of Islam in Iran. It is of octagonal design and comprises three floors crowned by a rather flat dome, totally empty inside. It appears to predate the 2nd millennium AD and may have been a Zoroastrian building, and is remarkable because of being constructed of stone rather than the more usual brick.

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