9 MOUs Signed during Oil Show

A total of 9 memorandums of understanding were signed on the sidelines of Iran’s 22nd Oil Show in Tehran. The MOUs, which were signed with both domestic and foreign companies, are centered on studying oil fields based on the newly developed model of oil deals (IPC), conducting research projects, and development of technology and sale of polyethylene. All these were aimed at helping Iran’s petroleum industry take a step closer to the world oil market.

Four MOUs were signed between National Iranian Oil Company (NIOC) and domestic or foreign companies to conduct studies on eight oil fields. They included Iranian E&P companies and the Philippines’ state-run oil company (PNOC EC).

Sepehr oil field was assigned to the Oil Industries Engineering and Construction Company (OIEC), Ab Teimour and Mansouri fields to Iran Power Plant Projects Management Co. (MAPNA), Pazanan and Darkhoein 3 fields to PNOC EC, and Susangerd, Cheshmeh Khosh and Paydar Gharb to Iran’s Industrial Development and Renovation Organization (IDRO).

Gholam-Reza Manouchehri, deputy managing director of NIOC for development and engineering, said a total of 28 MOUs had been signed with Iranian and foreign companies to study oil fields in the country.

“Based on these MOUs, NIOC will receive 75 study proposals, most of which focused on enhanced recovery,” he said.

Manouchehri said agreements worth $80 billion were planned to be signed over coming two years.

“Studies show that it is possible to increase Iran’s oil production capacity by 3 million barrels and plans are envisaged for stabilizing and promoting Iran’s standing within the Organization of the Petroleum Exporting Countries (OPEC) and in the world,” he said.

Manouchehri said signature and implementation of oil contracts would help create jobs in Iran’s oil sector.

Manouchehri said Iran holds more than 150 billion barrels of recoverable liquid hydrocarbon reserves and more than 700 billion barrels of crude oil in place.

“Every one-percent increase in the rate of recovery would mean an increase of 7.5 billion barrels to the country’s oil in place,” he added.

“Given the fact that abundant hydrocarbon potential remains [untapped] in the Persian Gulf and in western Iran, in coming years Iran continue to be among the top three players in the global energy sector,” said Manouchehri.

Manouchehri also referred to fields for which agreements had been signed with Iranian and foreign companies to conduct studies.

He said that Ab Teimour has potential to increase its production capacity to 150,000 to 450,000 b/d, citing proposals. He added that Mansouri field, which is currently producing 60,000 b/d, could see its output reach 300,000 b/d.

Manouchehri also said that Changouleh and Azar fields would see their production capacity grow.

“The results of these studies show that Iran could quickly increase its oil production capacity and we hope that capacity for a minimum output growth of 3 million barrels would be created,” he said.

Manouchehri said studies had been conducted on Mansouri and Ab Teimour fields in the past, adding: “New studies which are under way in cooperation with international partners provide very transparent figures about the output of these fields,” he added.

Manouchehri said technology transfer was of great significance in upstream contracts, adding: “This transfer of technology is under way at several levels, one of which is transfer of technology to upstream companies serving as domestic partner. In this method, domestic companies could benefit from the profits of these companies in the long-term.”

He said that oil production in conventional reservoirs with a natural rate of recovery cost $7 a barrel.

“In secondary and tertiary recoveries, production costs reach $10 to $15 [a barrel], which indicates the need for making more investment and increased operation and production costs,” said Manouchehri.

Pedro A. Aquino, CEO of PNOC EC, said the signature of MOU for studies on Pazanan and Darkhoein 3 oil fields was a starting point for cooperation between the two countries.

“The signature of this MOU is an important event in the history of the Philippines’ national oil company,” he said.

Aquino said that the MOU had been drawn up with the focus on common interests of the two countries.

He offered gratitude to the Iranian government and the NIOC, and expressed hope that the MOU would open doors to more friendly relations between Tehran and Manila.

Mansour Moazzami, Chairman of IDRO Board of Directors, and also deputy minister of industry, mine and trade, said on the sidelines of IDRO-NIOC agreement for studying Susangerd, Cheshmeh Khosh and Paydar Gharb oil fields that formation of E&P companies was an unprecedented step by the Iranian Ministry of Petroleum.

He said that implementation of IPC and subsequently job creation would help materialize the policies of resilient economy in oil sector.

“Thanks to the implementation of the JCOPA and the drafting of new oil contracts, domestic companies would be able to benefit from the capabilities of foreign companies in the world energy sector,” he added.

Moazzami said Iranian companies were now able to build platforms and deliver on time.

“These capabilities are the outcome of big opportunities provided to domestic contractors by the Ministry of Petroleum,” he said.

Moazzami said IPC deals would facilitate transfer of technology and capital into Iran.

Behzad Mohammadi, CEO of OIEC, said on the sidelines of the signature of MOU for conducting studies on Sepehr oil field that international conditions had become conducive to Iran’s presence.

“We hope that we will have a part in the energy market through activity in the upstream oil sector and by benefiting from the opportunity created for international cooperation,” he said.

Mohammadi referred to OIEC’s capabilities in operating oil and gas projects and citing Azar oil field development, he said: “Despite the toughness of job in the jointly owned Azar field and the complexities of this field, its production started in March 2017 and currently 15,000 b/d of oil is recovered from this field.”

He expressed hope that production from this field would reach 30,000 b/d soon, which is planned to reach 110,000 b/d.

“Based on talks we have had we are seeking to award the second phase of development of this field under the new format of oil contracts,” said Mohammadi.

Abbas Aliabadi, CEO of MAPNA, said on the sidelines of the signature of MOU with NIOC that MAPNA had carried out projects valued more than $50 billion.

He said that MAPNA had been involved in many activities particularly in the development phases of South Pars gas field.

Aliabadi said MAPNA was specialized in working out mechanisms in the capital market in order to gather money from people to finance major projects.

He said that MAPNA had been recognized as the third largest constructor of power plants in the world, saying the company was in compliance with standards.

Like previous years, Iran’s Research Institute of Petroleum Industry (RIPI) signed MOUs with Iranian and foreign companies and universities on conducting research projects. This year it signed MOUs with Italy’s University of Milan and the Iranian Offshore Oil Company (IOOC).

RIPI signed an MOU with Tehran Polytechnic University in upstream, downstream and environment sectors. Mansour Bazmi, deputy head of RIPI for technology and international relations, said that the memorandum would allow joint research projects.

He expressed hope that Petroleum University of Technology (PUT) and Milan University would start cooperation as soon as possible.

The MOU signed between IOOC and RIPI is valued at nearly IRR 200 billion, is expected to take effect in three years. It was signed between Hamid-Reza Katouzian, head of RIPI, and Hamid Bovard, CEO of IOOC.

“Following the signature of this MOU, a joint working group committee will be established in coming weeks to focus on different subjects within the purview of IOOC,” said Bovard.

Katouzian referred to past cooperation between RIPI and IOOC, saying: “In this MOU, issues such as analysis and interpretation of seismic testing, issues related to enhanced recovery, environmental issues, carbon management and corrosion management will be followed up on.”

Hamid-Reza Tayebi, head of the Academic Center for Education, Culture and Research (ACECR), signed an MOU with Bovard, head of IOOC, with the objective of broadening research and practical cooperation as well as transfer of technology and rendering lab services.

Bovard said development of technology and application of state-of-the-art technologies to petroleum industry would be among objectives pursued by IOOC in the MOU.

“The ACECR enjoys valuable experiences in different sectors including removal of oil pollutants and production of chemicals like demulsifiers, and over coming months several MOUs and agreements of cooperation will be signed between these two bodies,” he added.

Bovard said the ACECR would be able to work in such fields as reservoir studies, offshore geology, intelligent and horizontal drilling, chemical production, environment and efficient use of energy.

“The IOOC is set to use chemicals produced by the ACECR in Kharg,” he said.

An agreement for the development of coldbox technology was signed between National Iranian Gas Company (NIGC) and Aban Air Cooler Co. NIGC managing director Hamid-Reza Araqi and AACC CEO Reza Kheyri signed the agreement that seeks to empower domestic manufacturers.

Saeed Pakseresht, director of research and technology at NIGC, said coldbox was widely used in the oil, gas and petrochemical industries. He added that coldbox was like the beating heart of liquefied natural gas (LNG) production process.

Noting that coldbox was used in advanced projects, he added: “Our objective is to empower domestic suppliers. To this end a contract is signed with a domestic company in cooperation with a foreign partner.”

The head of AACC said his company had always sought to “indigenize” most of the equipment needed by industries in the country.

Japan’s Itochu Corporation signed an agreement to buy polyethylene from the Persian Gulf Petrochemical Industry Commercial Company (PGPICC). The agreement was signed between PGPICC’s chief Mohammad-Hossein Kakoeinejad and Itochu’s Koshi Hirayama.

PGPICC had signed an agreement with Itochu last November for the financing of a project.

The new agreement signed on the sidelines of Iran Oil Show is to take effect in coming months.

So far one container carrying 24 tonnes of polyethylene has been sent to Japan to examine the way of delivery and terms of payment.

“Based on this agreement, PGPICC will send 11,000 tonnes a month of polyethylene, valued at $150 million a year, will send to Japan’s Itochu to serve different markets,” he said.

Hirayama said his company was willing to expand its activities in Iran as Itochu was in cooperation with Iran’s petrochemical sector before international sanctions had been imposed on Iran.

He said that Itochu had moved to finance petrochemical projects in Iran and sell petrochemicals, adding that it was considering conditions for investment in Iran’s petrochemical industry.