100b Tons

Transcription

100b Tons

Iran Petroleum Issue No.7, November 2012
Majlis Urged to Back
Oil Projects Finance
Iran’s Petroleum Minister Rostam Qasemi has called on
the Parliament to adopt pieces of legislation for financing
petroleum development projects.
Petchem Installed
Capacity to Hit
100b Tons
Iranian Petroleum Minister Rostam Qasemi has said that
the Iran’s installed petrochemical capacity will hit 100
billion tons by the end of the country’s Fifth Five-Year
Development Plan (March 2010-March 2015).
New Investment
Opportunity at
Tehran Fair
Iran Petroleum No.7
Like other industrial sectors, Iran’s petrochemical industry puts on
exhibit its achievements and products every two years at Tehran’s
International Permanent Fairgrounds.
An Overview of Energy Giants
Human Resources Programs
Human resources management is an important department in any
organization because it plays the major role in recruitment and
payment as well as their training, health and administrative communications of the staff
T
he innocence of Imam Hussein (peace be upon him) does not mean humiliation. On the
contrary, he is the greatest combatant in the history of Islam. He fought in the battlefield
courageously while he always remained humble. As much as he is great, he was
oppressed. He finally embraced martyrdom with courage.
Iran’s Supreme Leader Ayatollah Ali Khamenei
Managing Editor:
Es’haq Royvar
Manpower
Outstanding Feature of Iran’s Oil Sector
B
esides updated
technological knowhow,
experience is a
requirement in the oil
industry. The issue of
human resources in the oil industry
came to the fore mainly following
the 1997 sharp fall in the oil prices
and the subsequent migration of oil
specialists to other industrial sectors.
Since then, recruitment of specialist
manpower has grown into a major
challenge for big oil companies.
The average age for oil engineers in
the world was 47 in 2007 with the
retirement age at 55. Oil companies
in the United States and the Middle
East moved to adopt plans to attract
specialist manpower from across the
globe in order to make up for their
shortcomings. A large number of
Iranian engineers were also recruited
by foreign companies.
Currently, Iran’s oil industry has
more than 210,000 employees in
its different sections. A view of the
pyramid of manpower in Iran’s oil
industry is indicative of the high level
of their expertise and experience.
Official figures indicate that the
average age for the nearly 99,000
officially employed oil staff stands at
43 with 18 years of experience.
At present, the number of employees
with advanced studies exceeds 40,000,
including 28 percent, aged under 35.
A total of 4,295 employees are former
outstanding students.
Department for Human Resources of
Iran’s Petroleum Ministry had worked
out mechanisms to recruit young and
specialized forces ,while providing
better conditions to its current
employees.
The strategy of human resources
management in Iran’s oil industry
relies on repairing the composition of
experts and managers. To that effect,
outstanding university graduates
have been recruited. In the meantime,
special projects like training oil
industry managers, standardization of
education, training young managers,
drafting oil industry human resources
development document, as well
as management of knowledge and
documentation of experiences
of oil managers have been under
way in order to materialize the
objective set in the oil development
programs. The special conditions of
Iran’s oil industry, along with the
determination of Petroleum Ministry
for self-sufficiency, have improved
technology-based training for
manpower.
Doubtlessly, development of human
resources in the oil industry is a major
policy of the country. In that case,
Iran will be able to implement major
development projects in the oil, gas
and petrochemical sectors by relying
on its own specialists, not to mention
the possibility to export technical
and engineering services required
by the oil sector to other countries.
Chief among the breakthroughs are
young Iranian oil experts’ acquisition
of technology to develop catalysts
needed in the petrochemical industry,
implementation of research projects
and patenting technical license for
isomerization, methanol production,
gas-to-propylene, MTP, VAM, DME,
designing sophisticated software for
fuel distribution and planning for
enhanced recovery from oil and gas
reservoirs.
At present, Iran’s Petroleum Ministry
is trying to prepare more grounds for
research with the help of universities
and research centers and support
private knowledge-based companies
in the hope of mastering technology
for full designing and building oil and
gas refineries in five years. This firm
determination is indicative of the selfconfidence of Iranian oil industry and
the superiority of its manpower.
July 2012 /
1
8
Iran
Petroleum
Monthly
Publisher:
Ministry of Petroleum
of the Islamic Republic of Iran
Managing Editor:
Es’haq Royvar
Ministry of Petroleum
Public Relations Manager
Editorial Board:
Abol Hassan Darvishi
Mostafa Jalali
Amir Hossein Hashemi Javid
Javad Asghari
Executives:
Raheleh Khaleqi
Sara Yekrangi
Photographers: Hassan Hosseini
Contributors:
Mohammad Afshin
Setak Kakoyee
Arash Haji Khalili
26
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Cover Photo:
HASSAN HOSSEINI
Translation, Graphic Design and
Printing:
Asia Financial News
Graphic Designer: Ali Shams Amiri
Translator: Kianouche Amiri
Email: [email protected]
* The opinions expressed in this
magazine do not
necessarily reflect the official positions of Petroleum
Ministry of the
Islamic Republic of Iran.
Corrigendum
In our fifth issue, the article on Page 12 should have been
headlined “IOPTC carries...” which was inadvertently typed
“Railroads carry...”. The error is regretted.
Editor
22
12
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Photo: MOSLEM ABBASI
Sarakhs
Modern Approaches
in Human Resources
Development
background, Sarakhs is also the
commercial gate between Iran
and Turkmenistan. Products
from Iran’s eastern regions are
exported to Turkmenistan via
Sarakhs. Here is a report about a
city, today known as Iran’s entry
gate into the Far East.
Farmlands in Desert City
To reach the border city of
Sarakhs, we had first to fly
to the holy city of Mashhad.
Before I went there, I had
heard that Sarakhs was a free
trade zone with a gas refinery.
A large number of vehicles
were plying the road from
Mashhad to Sarakhs, but the
road was not wide. Denselypopulated villages were seen
on the way to Sarakhs. The
countryside changed from time
to time: desert, mountainside.
Scattered trees had grown on
the mountains. There was a
jungle of wild pistachio trees
in the middle of the desert. We
Photo: HASSAN HOSSEINI
leave the mountains behind and
everything becomes normal.
The road is now lined with salt
cedar trees, some of which are
tall.
Ten kilometers to Sarakhs
stretches a railroad. The special
economic zone is also seen over
there. Everything changes after
passing by the special zone. The
nature changes dramatically
so that nobody could believe
we had just left the desert.
Wherever we looked, we saw
extended maize and cotton
farms. The reason for all this
green landscape rests with rivers
near the city. Tajan River in the
east and Kashf roud River in
the south are flowing. Ancient
historians have described
Sarakhs as a city located in the
middle of desert, but with plenty
of farmlands.
People Are Mainly Relatives
We arrived in Sarakhs after a
three-hour drive. There were
several boulevards and a small
square in the small city. It
must have been considered an
abandoned village had it not
been close to a free trade zone
and adjacent to Turkmenistan.
Residents of Sarakhs mainly
work at Khangiran gas
refinery. Others are farmer
or animal breeder. A certain
species of sheep is raised in
Sarakhs. People in Sarakhs
wear long robes similar to
those put on by people in the
southeastern province of Sistan
& Balouchistan. The main
ethnic groups in Sarakhs are
Balouch, Turk and Kurd. The
establishment of Sarakhs has
its own story. An old man there
says people moved here after a
severe drought in Sistan some
50 years ago. The ethnic groups
here have intermarried and that
is why they have become close
relatives. Our driver greeted
everyone in the street, saying
they were all his cousins, uncles,
aunts, etc. Any stranger entering
November 2012 / 63
By Forough Gashtasbi
S
Human Resources
I
Gateway to the Far East
n the northeasternmost
spot in Iran, 180
kilometers from the holy
city of Mashhad is located
the city of Sarakhs, where
farming and animal breeding
battle hot and dry weather. In the
ancient times, Sarakhs served
as a caravanserai on the “Silk
Road”. In addition to its historic
A Review of
World’s Oil
pecialist and knowledgeable human
resources are assets of
an organization and
the main competitive
advantage for today’s knowledge-based economy. Offering
products and services of high
quality, cutting costs, creativity
and competitiveness are among
the advantages of qualitative
and knowledge-oriented human
resources. That is why business
strategies are based on human
resources.
Oil industry, as the pivot of the
country’s development, will remain as important as it is. However, the persistence of activities
depends on dynamic human
resources being in convergence
with national, regional and global
developments and on efforts for
equipment with modern technologies and strategies. To that
effect, laying the groundwork
for the flow of scientific and
technological information and
accelerating their utilization by
the oil industry specialists would
be a key strategy.
The oil industry contributes
significantly and vitally to the
administration of the country. It
needs to be the least invulnerable
possible so that its development
would never be hindered.
The significance of the issue of
human resources and the necessity for its relevant planning
prompted the Institute for International Energy Studies (IIES) to
establish a think-tank – Management and Human Resources
Management (MHRM) – in
2007.
IIES, affiliated to
20
Iran’s Petroleum Ministry and
Ministry of Science, Research
and Technology, has been
operating as a research institute
for more than two decades. The
mid- and long-term objectives
of the institute include assisting the oil industry to realize
its objectives in the scientific,
economic, social, political and
international sectors, contributing
to decision-making by senior oil
managers based on energy studies, human resources management, financial management and
planning, technological strategy,
world energy scenarios as well as
international oil and gas markets.
All these activities are under way
in the Energy Economy Research
Center, Human Resources and
Management Research Center as
well as Technological Strategies
Studies Research Center.
Today, the countries owe their
development to extensive
planning to take advantage of
all human resources, correctly
manage them for an optimal use
in view of creating maximum
value-added at the national level.
Moreover, the dynamic growth of
Iran’s huge oil industry notably
in the past three decades following the 1979 Islamic revolution
has resulted in numerous and significant experiences, innovations
and skills for human resources
management. That would help
the country realize its goals
under its 20-year vision plan. In
the meantime, competition with
regional and international rivals
and improving the status of oil
industry in the country re-
quire paying serious attention to
human resources.
An option to raise the satisfaction level among employees is
to invest in human resources as
the most significant asset of an
organization. Therefore, it would
be necessary to make comprehensive planning to boost the
capabilities of human resources
through modern scientific methods in the management of human
resources.
The IIES Research Center
for Management and Human Resources is the most
influential research center in
offering consultation on human
resources. Mohammad-Mehdi
Rashidi, head of the research
center, enumerates its missions:
defining modern strategies and
approaches for the development
of human resources, recruiting
entrepreneurs, benefiting from
the successful experiences of
Iranian and foreign research
centers in development of human
resources, steering changes in
organizations, job planning and
defining standardization models.
“The research center, as think
tank in the oil industry, is tasked
with exploring challenges to human resources management with
the help of the subsidiaries of the
Petroleum Ministry,” he said.
Based on a strategic program, the
research center is active in three
fields – knowledge management,
strategic management and human
resources development.
Since the establishment of the
research
center, the experiences of other
institutes and universities in
development of human resources
in the oil industry have been
used. To that effect, an extensive
network of university professors
and specialists are active.
Knowledge Management in
the Oil Industry
Rashidi underscored the successful implementation of research
projects in the oil sector by the
research center, saying one of
them is a comprehensive system
for management of knowledge in
the oil sector.
“This project was defined upon a
request from National Iranian Oil
Company (NIOC) and is currently
under way. The objective behind it
was to present a national model for
identification and documentation
of models in the oil industry. After
these models are identified, the
branches of knowledge are defined
so that the knowledge tree would
be sketched out. The implementation of the project would provide
NIOC with a comprehensive
model
to have access to the
knowledge of all
its labor force
and it will
no longer
face such
problems as
the flight of
intellectual
assets.”
“Before
the
Bourses
T
By Setak Kakoei
Deterding, Founder of Royal
Dutch/Shell
R
oyal Henri
Wilhelm August
Deterding KBE
(Hon), (19 April
1866, Amsterdam
- 4 February 1939, St. Moritz)
was one of the first executives
of the Royal Dutch Petroleum
Company and for 36 years
(1900–1936) its chairman and
the chairman of the combined
Royal Dutch/Shell oil company.
He came to power after the
early death of the Royal Dutch’s
original leader, Jean Baptiste
August Kessler.
He made it to the runner up
against John D. Rockefeller’s
Standard Oil and it is still one
of the world’s largest petroleum
companies. He was made
an honorary KBE in 1920,
ostensibly for service to AngloDutch relations, but mainly for
his work supplying Allies with
petroleum during World War I.
Called the “Napoleon of Oil”,
Deterding was responsible for
developing the tanker fleet that
let Royal Dutch compete with
the Shell Company of Marcus
Samuel. He led Royal Dutch
60
to several major mergers and
acquisitions, including a merger
with Samuel’s “Shell” Transport
and Trading Company in 1907
and the purchase of Azerbaijan
oil fields from the Rothschild
family in 1911.
In the last years of his life,
Deterding became controversial
when he became an advocate
of the German Nazi party. In
1936, he discussed with them
the sale of a year’s oil reserves
on credit; the next year, he
was forced to resign from the
company’s board membership.
The Royal Dutch Shell Group
was created in February 1907
through the merger of two
rival companies - Royal Dutch
Petroleum Company (Dutch
legal name : N.V. Koninklijke
Nederlandsche Petroleum
Maatschappij) and the “Shell”
Transport and Trading Company
Ltd of the United Kingdom,
founded by Marcus Samuel, 1st
Viscount Bearsted.
It was a move largely driven by
the need to compete globally
with the then dominant
American petroleum company,
John D. Rockefeller’s Standard
Oil, and as a strategy to face
the challenges brought by the
crisis of 1907. The terms of the
merger gave 60% ownership of
the new Group to the Dutch arm
and 40% to the British.
The “Shell” Transport and
Trading Company (the
quotation marks were part of
the legal name) was a British
company, founded in 1897 by
Marcus Samuel and his brother
Samuel. Their father had owned
a company, importing and
selling sea-shells, after which
the company “Shell” took its
name.
Initially the Company
commissioned eight oil
tankers for transporting oil.
In 1919, Shell took control of
the Mexican Eagle Petroleum
Company and in 1921 formed
Shell-Mex Limited which
marketed products under the
“Shell” and “Eagle” brands in
the United Kingdom. In 1932,
partly in response to the difficult
economic conditions of the
times, Shell-Mex merged its
UK marketing operations with
those of British Petroleum to
create Shell-Mex and BP Ltd,
a company that traded until the
brands separated in 1975.
Around 1952, Shell was the
first company to purchase and
use an electronic computer in
the Netherlands. The computer,
a Ferranti Mark 1*, was
assembled and used at the Shell
laboratory in Amsterdam. In
1970, Shell acquired the mining
company Billiton, which it
subsequently sold in 1994 and
now forms part of BHP Billiton.
In 1936, Deterding bought the
manor of Dobbin near Krakow
am See, (Germany) and moved
to that place. After he died in
Switzerland he was buried at
Dobbin in Mecklenburg, but his
body was transferred to a grave
in Liechtenstein in 1968.
Deterding was married three
times (resp. to Catharina
Neubronner, Lydia Koudoyaroff
and to Charlotte Knaack) and
had seven children, among
whom the eccentric Olga
Deterding.
he main philosophy
behind establishment
of petroleum
commodities
exchanges has been
to determine the real crude oil
prices by making supply and
demand system more transparent
in the oil market. Top oil bourses
and their offshoots provide
an appropriate platform for
registering futures and swap
contracts in the oil, gas and
energy sectors. Oil markets have
been among the first energy
commodities’ exchange across
the globe.
A commodities’ exchange is
an exchange where various
commodities and oil products
and byproducts are traded. The
existing commodities’ exchange
contracts are valued at $ 380
billion. In these exchanges,
transactions are regulated within
the framework of standardized
contracts with precise schedule,
volume, price and delivery place.
Crude oil is one of the important
commodities traded in these
markets within the framework of
futures contracts. Concentrated
orange juice, wheat, soybean and
other products are also traded in
the commodities’ exchanges.
Under futures contracts, two
parties agree to purchase or sell
a specified asset of standardized
quantity and quality for a price
agreed today (the futures price
or strike price) with delivery
and payment occurring at a
specified future date,i.e. the
delivery date. In these contracts,
prices are negotiated and major
oil producing companies have
always the chance to forecast the
future of oil markets and gain
higher profits.
The world’s top commodities’
exchanges are listed as below:
1.
2.
3.
4.
5.
6.
7.
CME Group
Tokyo Commodity Exchange
NYSE Euronext
Dalia Commodity Exchange
Multi Commodity Exchange
Intercontinental Exchange
Africa Mercantile Exchange
Oil is traded online under futures
contracts on Bloomberg, known
as a databank for investors and
a market indicator. The main
indicators in futures contracts are
as follows:
1.
2.
3.
4.
5.
6.
Gas Oil Future (USD/bbl)
Brent Crude Future (USD/
MT)
Heating Oil Future (USD/
gal)
Natural gas Future (USD/
MM Btu)
Gasoline RBOB Future
(USD/gal)
WTI Crude Future (USD/
bbl)
-
Price Discovery Parameters
Speculation
Speculation is very common
in the commodities exchanges.
During the first and second
Persian Gulf Wars initiated
by the former Iraqi Baathist
regime, speculation was rife
about the downfall of Saddam
Hussein and subsequently the
oil prices were fluctuating to the
benefit of investors. Since the oil
market is affected by political
developments in the Middle East,
a simple calculation error could
inflict heavy losses on the futures
contracts.
The speculators enter Spider
contracts – a combination of long
term and short term – to stoke oil
price hikes.
Short Position
Occurs when a person sells
stocks he or she does not yet
own. Shares must be borrowed,
before the sale, to make
“good delivery” to the buyer.
Eventually, the shares must be
bought back to close out the
transaction. This technique is
used when an investor believes
the stock price will drop.
-
Long Position
A long position in a security,
such as a stock or a bond, or
equivalently to be long in a
security, means the holder of
the position owns the security
and will profit if the price of the
security goes up.
Spider contracts cause oil
price hikes psychologically.
Speculators define their strategies
based on the significant events
transpiring the oil market.
Geopolitics and Climate
These two factors significantly
impact the oil prices. For
instance, if a hurricane is
forecasted to lash the Gulf of
58
November 2012 /
3
First Line
Majlis Urged
to Back Oil
Projects
Finance
4
Photo: MOHAMMAD REZA TAEB
I
ran’s Petroleum
Minister Rostam
Qasemi has called
on the Parliament
to adopt pieces of
legislation for financing
petroleum development
projects.
Qasemi made the remark
to the Parliament’s
Planning and Budgeting
Committee members
during their tour of South
Pars gas field.
“Ten phases of this
gas field have already
been developed and the
development of other
phases is under way,” the
minister said.
Qasemi noted that Iran
would see its share of gas
recovery from South Pars,
shared with Qatar, rise
when the remaining phases
of the massive gas field
have been developed.
“Development of South
Pars would bring big
revenues for Iran’s
economy. Therefore, the
Parliament is expected to
support the oil industry
to reach its macro
objectives,” he said.
The head of Majlis
Planning and Budgeting
Committee, Gholam-Reza
Mesbahi-Moqaddam,
said the members of this
parliamentary committee
have discussed ways of
financing oil industry
projects notably in South
Pars gas field.
He said a working
group comprised of
representatives of
Petroleum Ministry and the
parliamentary committee
has been set up to explore
ways of accelerating oil
projects.
“Within this working
group, we hope to present
new projects in a bid to
grant more credit to the oil
industry,” he added.
November 2012 /
5
NIOC Eyes Cutting Costs
M
First Line
anaging
director of
National
Iranian Oil
Company
(NIOC) Ahmad Qalebani has
called for the reduction of oil
production costs in the country.
He said the only way to reduce
the costs while producing oil
of the best quality and in the
shortest possible time was to use
the state-of-the-art technology.
“Solidarity and coordination
for sharing experiences would
effectively help us reach this
objective.”
The official said that successful
companies should share their
experience with NIOC in
order to overcome production
challenges.
“Some companies have been
active in outsourcing. We can
hold meetings with them in
order to benefit from their
experiences.”
He said the experiences of
veteran oil industry staff need to
be documented in a book to be
used in the oil and gas sectors.
Petrochemical Feedstock to
Rise
Qalebani said production
of feedstock needed in the
country’s petrochemical plants
would rise with the inauguration
of new phases of South Pars gas
field.
“Supplying feedstock to
petrochemical units is in a good
status and inauguration of new
phases of South Pars would
increase the amount of feedstock
needed in petrochemical plants,”
he stated.
“NIOC has already announced
its future programs to the
National Petrochemical
Company (NPC) in terms
of feedstock, and we are
currently negotiating to finalize
the amount of feedstock for
petrochemical plants,” said
Iran to Raise
Domestic
Equipment Share
in Local Refineries
A
deputy minister of
petroleum has said
that plans are under
way for domestic
manufacturers to account for
80 percent of the equipment to
be used in new refineries.
“Indigenization of the technical
knowhow for constructing
refineries, raising the share
6
of Iranian-made products in
the construction of refineries,
meeting domestic needs and
self-reliance in engineering are
all signs of progress by Iranian
engineers,” Ali-Reza Zeighami
said.
He said 40 trillion rials
have been invested in the
development of Imam
Qalebani.
“NIOC is ready for whatever
cooperation with petrochemical
plants we are ready to
support the petrochemical
industry towards growth and
development,” he said.
Oil Bonds Forwards
The NIOC chief said the
company is planning to sell
crude oil to people by issuing oil
bonds forwards.
“Oil bonds forwards is an
effective instrument in the
oil industry. By applying this
method, the capitals of real and
legal entities would be used in
this industry,” he said.
He said the bonds would also
be an effective operational
instrument for financing new
oil projects. “This method
can help people invest in oil
production and extraction and
gain remarkable profits.”
“The diversity of financial
Khomeini Refinery in the
central city of Shazand. “For
the first time, an Iranian
consortium handled this
megaproject and managed to
accomplish it successfully.”
He said the refinery would see
its refining capacity rise from
170,000 to 250,000 b/d, while
its fuel oil production would
fall from 38,000 to 15,000 b/d.
Converting fuel oil to gasoline,
is one of the objectives of
development of the refinery.
Development of Imam
Khomeini Refinery is
the biggest project being
implemented by National
Iranian Oil Refining and
Distribution Company
(NIORDC). After its complete
development, Imam Khomeini
Refinery will become the
instruments would collect
liquidity scattered among
people. We will witness
economic development and
productivity if all liquidity held
by people serves the projects.”
Qalebani said the oil bonds
forwards would also cushion the
impact of oil price fluctuations.
NIOC needs 30 billion dollars
of investment per annum, the
official said.
leading gasoline producer in
Iran.
“Over the past one to two years
and concurrent with tightened
sanctions, domestic companies
have been of greater help in
the oil industry and many
foreign commodities have been
replaced with domestically
manufactured ones,” Zeighami
said.
The official noted that
Iran will benefit from
national knowledge for the
development of Abadan,
Isfahan and Bandar Abbas
refineries, and the construction
of Persian Gulf Star Refinery.
Noting that Iran is constructing
refineries in conformity
with the international
standards, Zeighami said:
“The construction standards
Iran Eyes 10% of World Gas
T
he exploration
operations conducted
in Iran in the past
years have covered
only one-third of the
country’s land and territorial waters.
However, Iran remains the top
holder of hydrocarbon reserves in
the world.
Javad Oji, deputy minister of
petroleum for gas affairs, recently
said Iran has more than 34,000
bcm of recoverable gas, adding that
only 2,039 bcm have so far been
recovered. He said Iran produced
more than 69 bcm of gas and 800
mcm of gas condensates in the first
half of 2012. Since the beginning of
the current Iranian year in March,
27.6 bcm of gas has been delivered
to power plants, industrial plants
and other sectors.
Oji said a revolution has taken place
in Iran’s gas industry following
the 1979 Islamic Revolution. At
present, 929 cities and 13,000
villages benefit from natural gas
supply with respective penetration
rates of 97 and 58 percent. Iran is
often known as a country of four
seasons, but in the winter, more
than two-thirds of Iranian provinces
experience freezing temperatures.
That is why gas has always been
vital for Iranian people. Oji, who is
also managing director of National
Iranian Gas Company (NIGC), said
226,000 kilometers of gas pipeline
have been laid out in Iran. “This
company has been supplying gas
to 15,351,000 customers in the past
three decades.” Natural gas pollutes
the environment less than other
fuels do. In all countries, gas is a
prioritized source of energy. “Gas
supply to 50,506 industrial units
is over in Iran and the industrial
sector’s dependence on liquid fuels
has declined. If the necessary credit
is allocated, all Iranians will have
access to gas supply in three years,”
Oji said.
Following the implementation of
subsidy regulation plan in Iran, the
progressive gas consumption trend
was halted. Last year to March
2012, household gas consumption
dropped between 20 and 25 percent.
Since September 10 to midOctober, only one percent of gas
customers have had above-normal
consumption.
Oji said NIGC is fully ready to
deal with the growing consumption
in winter. “In the first half of
2012, 13 refineries have been
overhauled by Iranian engineers.
For the first time, we have not sent
gas turbocompressors abroad for
reparation and 290 of them have
are confirmed by foreign
companies and we have to
reach self-sufficiency in this
sector in a bid to skirt enemies’
sanctions.”
He said that the gasoline
production unit at Imam
Khomeini Refinery was
a sign of benefitting from
the capabilities of Iranian
researchers and engineers.
“This national project was
jointly operated by the
Research Institute of Petroleum
Industry (RIPI) and engineers
at Imam Khomeini Refinery. It
lasted four years.”
Persian Gulf Star Refinery –
are up for sale.
“Bank Mellat is willing to
purchase some stocks of this
refinery. We are deciding on the
price of stocks,” he said.
Zeighami said NIORDC, Oil
Industry Pension Fund and
Social Security Investment
Company are the stockholders
of the refinery project.
He added that NIORDC’s
48-percent share is to be cut to
20 percent.
“In case of willingness on
the part of the private sector,
the refinery is ready for full
privatization,” he added.
Persian Gulf Star Refinery is
designed to treat 360,000 b/d to
produce nearly 36 million liters
of gasoline. It would be the
most profitable refining project
in the country.
The Most Lucrative
Refining Project
Zeighami said the stocks of
Iran’s most lucrative refining
project – construction of
been repaired inside the country by
Iranian engineers.”
He said Parsian and Fajr Jam
refineries are capable of processing
30 mcm of sour gas produced in
South Pars gas field.
South Pars gas refineries are
currently processing 45.5 percent
of Iran’s total gas. Parsian and Fajr
Jam refineries account each for 17.5
percent share in the gas processing.
“After the construction of new
pipelines like Loushan-Rasht
Pipeline and operation of gas
booster facilities in Parchin and
Semnan, gas delivery by transnational pipeline will each amount
to 720 mcm and there would be
no gas supply problem in the
winter,” Oji said. Gas recovery from
underground reservoirs reaches its
peak in the winter. Even the largest
gas producers have to store gas in
their facilities in order to deal with
the winter freezing temperatures.
Iran hopes to acquire a 10 percent
share in the global gas trade in the
coming five years. To that effect, it
has tried to preserve its gas exports.
“More than five bcm of gas were
exported to neighboring countries
up to the end of the seventh month
of the Iranian year. It was up one
percent year-on-year,” said Oji.
The official dismissed as
propaganda the European Union’s
gas embargo against Iran. “Iran
sits atop the second largest gas
reserves in the world. It can be a
major exporter of gas to European
countries and embargos would
inflict losses on the Europeans.”
Oji said a pipeline, stretching from
Andimeshk (southwest) to Bazargan
(northwest) and supposed to deliver
Iran’s gas to Europe, would become
operational by March 2014. He
added that Iran will begin pumping
gas to Pakistan in a year and a half.
He said NIGC quickly repaired
Iran-Turkey gas pipeline after each
supply cut due to blasts by terrorist
groups.
Oji also said that Iran imported
2.7 bcm of gas mainly from
Turkmenistan in the first half of
the current calendar year. The gas
imports show a 52 percent decline
compared with last year due to the
overhaul of gas facilities in both
countries.
55% Progress
Zeighami, who is also
managing director of NIORDC,
said the construction of Persian
Gulf Star Refinery has made 55
percent progress.
“Nearly 300 kilometers of
pipeline carrying feedstock
from Assaluyeh to Persian
Gulf Star Refinery has been
constructed and is currently
being tested,” he said.
The official said the first phase
of the refinery would become
operational with a treatment
capacity of 120,000 b/d in one
year time from now.
He said Petroleum Ministry
has been authorized to attract
investment as much as needed
in Persian Gulf Star and Pars
refineries.
Persian Gulf Star Refinery
would produce 55 ml/d of oil
products, including 36 ml/d of
gasoline, 14 ml/d of gasoil, 4
ml/d of liquefied petroleum gas
(LPG), 3 ml/d of jet fuel and
130 t/d of sulfur. The refinery
can also store nearly 11 million
barrels of oil products in its
storage tanks.
November 2012 /
7
Iran, a Southwest Asian state,
sprawls on more
than 1.6 million
square kilometers. The country,
whose civilization
is millennia-old,
is home to more
than 70 million.
First Line
The first people
settled in ancient
Persia more than
five millennia ago.
They had based
their social lives on
communications.
They always favored understanding and solidarity
among themselves
and also with
neighbors and other
civilizations.
The Medes, one
of ancient Persian
tribes, used to dispatch their cultural and economic
ambassadors to
other countries
in a bid to lay the
groundwork for
cultural and social
communications
as well as economic and commercial
interaction.
8
After the victory
of the 1979 Islamic
revolution in Iran, the
Iranians were determined to control their
national resources.
The Public Relations Department of
NIOC shouldered a
heavy responsibility in
regulating the communications between
the oil industry and
other bodies and their
foreign customers. The
public relations office
has managed to make
great contribution
to NIOC’s increased
interactions.
Iran to Host
the Upcoming
Meeting of OPEC
Member
Countries
Public
Relations
Departments
In 1908, oil was
first discovered in
Iran. After the United
States, Iran became
the first oil producer
in the world. Along
with the development of oil industries,
public relations offices were unofficially
established to deal
with the administrative affairs of the oil
industry.
P
ublic Relations (PR)
managers
from OPEC
Member
Countries met on 5-8
November 2012 at
the OPEC Secretariat
in Vienna, for the 1st
Meeting of the Member
Countries Public Relations Managers. The
Meeting was organized
to discuss how to forge a
closer working relationship between the OPEC
Secretariat and Member
Country Ministries
through the exchange
and sharing of information.
The Meeting was
declared open by
the OPEC Secretary
General, HE Abdalla
Salem El-Badri, who
stressed the importance
of promoting such an
initiative proposed by
Iran in today’s challeng-
ing environment.
Participants were given
detailed presentations on
the tasks and activities
of the Secretariat’s PR
and Information Department (PRID), as well
as OPEC’s involvement
in some environmental
activities. There were
also comprehensive
presentations from the
Member Countries
on their PR activities
and experiences. Mr.
Royvar, the Public Relations Manager of Iran’s
Petroleum Ministry
Iran’s Manager of PR
of Iran’s Petroleum
Ministry had a comprehensive and informative
presentation, which was
admired and welcomed
by the Secretariat’s
officials, as well as the
participants.
The participants agreed
upon establishing
direct and firm contacts
between PRID and
Member Countries’ PR
operatives as a paramount importance to the
success of any public
relations initiative
launched, and in this
regard, called on OPEC
Member Countries to
consider setting up an
OPEC PR Liaison office
or “OPEC desk” in the
ministries of OPEC
Member Countries.
Finally, Mr. Royvar, the
Public Relations Manager of Iran’s Petroleum
Ministry of the Islamic
Republic of Iran offered
to host the upcoming
Meeting. However, the
issue requires to be approved by the Board of
Governors of the OPEC,
which is the second
highest decision making organ of the OPEC
Secretariat.
In 1951 and after
the nationalization
of oil industry in
Iran, the first public
relations office was
set up at Abadan
Refinery by Dr Nateqi, who was a specialist in this field.
The activities of this
office influenced
the interactions of
National Iranian Oil
Company (NIOC).
When the Organization of the
Petroleum Exporting
Countries (OPEC)
was established in
1960, Iran was a
leading oil producer
in the world, and was
actively present in
all decision-making
meetings of this influential body. Iran has
always favored constructive economic
and cultural communications with OPEC
member states.
November 2012 /
9
8Iranth Plast
I
ranian Petroleum
Minister Rostam
Qasemi has said that
the Iran’s installed
petrochemical capacity
will hit 100 billion tons by
the end of the country’s Fifth
Five-Year Development Plan
(March 2010-March 2015).
10
“Iran’s vast natural gas
resources have made the
petrochemical sector one of
the most important industries
of the country,” the Iranian
minister said in an address to
the inauguration of Iran Plast
exhibition in Tehran.
He noted that a major portion
of petrochemical industry
is privatized in Iran, adding
that the governmental section
is not operating in the
downstream sector.
Qasemi also said that
Iran Plast International
Exhibition, in which
70 foreign companies
have taken part, can
help demonstrate Iran’s
capabilities in the industry.
He went on to say that
Islamic Republic of Iran’s
natural gas production from
South Pars gas field will hit
1.4 bcm/d by March 2016,
adding that the current
Petchem Installed
Capacity to Hit 100b Tons
output of the gas field, which
is located in Assaluyeh
in the southern Iranian
province of Bushehr, stood
at 600 mcm/d. The minister
added that the field is also
producing 400,000 b/d of
gas condensates, which is
expected to exceed 1m b/d in
coming years.
The minister said Iran’s
natural gas production from
South Pars gas field will hit
1.4 bcm/d by March 2016.
The minister noted that the
current output of the gas
field, which is located in
Asaluyeh in the southern
Iranian province of Bushehr,
stood at 600 mcm/d.
South Pars Gas Field covers
an area of 9,700 square
kilometers, 3,700 square
kilometers of which are in
Iran’s territorial waters in the
Persian Gulf. The remaining
6,000 square kilometers, i.e.
North Dome, are in Qatar’s
territorial waters.
November 2012 / 11
Iran Exports Petchems to
5 Continents
M
8Iranth Plast
anaging
director of
National
Petrochemical
Company (NPC) has
said Iran is exporting its
petrochemical products to
all five continents, noting
the Islamic Republic faces
restrictions for petrochemical
exports to Europe. AbdolHossein Bayat, who is also a
deputy minister of petroleum,
said Indian Subcontinent
, Southeast Asia, China ,
Europe, Far East and Middle
East account for 13 , 23 ,
12
22 , 18 , 5 and 15 percent
of Iran’s petrochemical
exports,respectively.
In his address to the
inauguration of Iran Plast
exhibition, he said Iran
exported $14.7 billion
worth of petrochemicals in
the Iranian calendar year
to March 2012. “During
the first half of the current
year, $ 6.1 billion of
petrochemicals weighing
7.7 million tons have been
exported.”
“Nearly 5.2 million tons of
products were delivered on
domestic markets in the first
half of the current year. They
were used in the mid-stream
and downstream industries,”
said Bayat.
The official said Iran’s
petrochemical sector has
managed to fabricate
catalysts. “The grounds
have been prepared for the
fabrication of catalysts in the
country and we are ready to
collaborate with all financiers
for commercial production of
catalysts,” he added.
Regarding gasoline
production in the
petrochemical plants,
Bayat said: “Gasoline
production is a
breakthrough for Iran’s
petrochemical sector and
our petrochemical plants
would be able to produce
gasoline in aromatic units.
Our gasoline production
is enough to meet the
domestic demand.”
“Petrochemical companies
can produce between 17
and 20 ml/d of gasoline.
We are currently producing
between 8 and 10 ml/d.”
Regarding shortage
of feedstock in some
petrochemical units, Bayat
said National Iranian
Oil Company (NIOC)
and other subsidiaries of
Petroleum Ministry are
cooperative to that effect.
“We also expect the
country’s banking system
to provide further support
for petrochemical units in
the country,” he said.
Bayat said more than
5,000 companies are active
in the plastic industry in
Iran. “Due to such massive
activities, Iran Plast
exhibition has become
a venue for exchange of
views and cooperation
between activists in this
sector in the Persian Gulf,
Middle East and Central
Asia.”
“Downstream
petrochemical sector
is the link between oil
and gas reservoirs and
final products. To that
effect, NPC is supporting
downstream industries
by supplying feedstock,
offering technical and
after-sales services.”
Bayat said Iran is currently
producing over 4 mt/y of
polymer products.
Petrochemicals
Revenue
Earner
for Iran
I
ran’s Deputy Minister
of Industry, Mining
and Trade MohammadSadeq Mofateh has said
that the petrochemical sector
is a key parameter in Iran’s
economy.
In his address to the inauguration of Iran Plast exhibition, he said regardless of
restrictions and sanctions,
petrochemicals make 36
percent of Iran’s non-oil
exports. He added that Iran
earned nearly $ 57 million
from exporting downstream
petrochemical and plastic
exports in the first half of the
current calendar year which
began in March.
He noted that prices of raw
materials have grown illogically in the past several
months.
“The downstream sector
has reached a stage where
its products are serving
as raw materials for other
industries. We process a
petrochemical product to
feed other industries and in
case this chain goes on as
expected it can bring about
blossoming for the plastic
industry,” Mofateh said.
The official noted that raw
materials for the downstream industries should be
provided to consumers at
reasonable prices.
November 2012 / 13
New Investment
Opportunity at Tehran Fair
L
Photo:HASSAN HOSSEINI
8Iranth Plast
ike other
industrial
sectors, Iran’s
petrochemical
industry puts on exhibit
its achievements and
products every two
years at Tehran’s
International
14
Permanent
Fairgrounds. The
event lets Iranian and
foreign visitors learn
better about Iran’s
petrochemical sector
and find new customers
for their products. This
exhibition is known as”
Iran Plast”.
History
National Petrochemical
Company (NPC)
concentrated its attention
on the quantitative and
qualitative development
of petrochemical
products, specifically
polymers, in the late
1990s. To that effect,
the NPC decided to
create market for
petrochemicals and
set up a specialized
international exhibition
up to the global
standards. To that end,
the NPC won permission
from the Exports
Promotion Organization
(EPO) to organize Iran
Plast (www.iranplast.
nipc.net).
Iran Plast was first
set up in 2002. In the
first exhibition, 70
foreign companies
from 18 countries
and 214 Iranian
companies displayed
their products. The
second one was held
in 2003 when 172
foreign companies from
20 countries and 289
domestic companies
were present. A year
later, the number of
foreign companies
soared to 220 and
domestic companies to
350.
Iran Plast was again
held in 2005 with 295
foreign companies
from 23 countries, as
well as 400 domestic
companies. In 2006,
260 companies and
more than 390 Iranian
companies put their
products on exhibit.
By
Parisa
Since
2006Rahnama
onwards,
the organizers decided
to hold Iran Plast
every two years. The
following exhibitions
were held in 2008 with
the participation of 119
foreign companies and
366 Iranian companies,
and in 2010 with
257 foreign and 423
domestic companies.
Iran Plast 2012
The eighth Iran Plast
exhibition was held this
November with 100
foreign and 400 Iranian
companies. The foreign
companies were mainly
from France, Italy,
Austria, South Korea,
China, Turkey, Saudi
Arabia, Thailand and
Taiwan.
The exhibitors were
divided into five
groups. The first group,
comprised of 220
companies, was the
group of manufactured
and semi-manufactured
products. They
occupied more than
7,000 square meters of
land. The second group
included manufacturers
of polymer machinery
and equipment. They
were 100 companies
sprawling on 4,000 square
meters. The third group
consisted of raw materials
producers. They were 80
companies on 4,000 square
meters. The fourth and fifth
group showcases technical
and engineering services, and
polymer composites. They
were allotted 1,500 square
meters.
Participating Companies
Pouya Polymer
Pouya Polymer is a joint
venture between Iran and a
South Korean company, which
is also operating in Indonesia,
Sri Lanka, Brazil and the
United Arab Emirates. Pouya
Polymer produces mainly
compounds and master-batch,
which is a solid or liquid
additive for plastic used for
coloring plastics (color masterbatch) or imparting other
properties to plastics.
The R & D director of
the company said Pouya
Polymer and other companies
participate in Iran Plast in
a bid to find new markets.
He said the depreciation of
the Iranian currency rial is
benefiting exporters, and
Iranian companies are turning
to domestic producers because
imports from European and
Asian states are too costly.
quality.
Its sales manager said this
Italian company attended Iran
Plast for the third consecutive
time. He said presence in Iran
Plast would help improve
trade level between European
and Iranian companies.
He noted that Iran’s
petrochemical market would
be attractive for Italy. He said
Iran and Italy are running
eight join projects valued
at between 100,000 and 2
million Euros, adding that
the Italian company holds
close trade ties with Isfahan’s
Gitipasand Company and Arak
Petrochemical Company.
He downplayed the impact of
Europe’s economic downturn
on the activities of ICMA,
saying the Italian company is
a small-sized one with only 52
employees.
Polikim
This Turkish company has
been cooperating with Iranian
market for seven years. Its
main customers are in Tehran
and the northwestern city of
Tabriz. Its products are mainly
used in
railway,
machinery components
and medical equipment.
The factory is located near
Istanbul.
It was the first time Polikim
attended Iran Plast and its
commercial director felt happy
with Iran’s petrochemical
market.
He acknowledged that Iranian
companies are unwilling to
purchase Turkish products
since their prices equal those
of the Europeans companies.
TINCOO Machinery
Established in 1989, TINCOO
is a professional supplier
devoted to the designing and
production of big-scaled and
multi-layer extrusion
molding machine.
Machines from the
company are mainly for
export, and have been
exported to more than 80
countries in Asia, MidEast, Europe, Africa,
Australia, and LatinAmerica. The marketing
network has covered all
over the world.
There are 2 general
departments in the
company: machinery
department and mold
department. Machinery
department is focused on
designing and developing
various plastic extrusion blows
molding machine by learning
foreign advanced techniques
and administration faith, based
on our own strong techniques
force; mold department is
focused on mold design and
manufacturing of perform
mold and extrusion mold
& blow mold. According to
different nature of different
plastic material, we have
successfully designed different
extrusion blow molding
machines, which are suitable
for different products:
ICMA SAN GIORGIO SPA
A dynamic Italian company
successfully present in the
international market for
decades, with state of the art
compounding and extrusion
systems for technological
solutions and productive
November 2012 / 15
container of PE, PVC，PP,
PC, PETG, PS, PAN, PA, PPE,
PP0, ABS, POM, TRV, etc.
Its representative in Iran Plast
said Iran’s market could be
lucrative for TINCOO.
Tech-send Extrusion
Machinery
8Iranth Plast
TS series large diameter
HDPE/PVC double-wall
corrugated pipe machine
,ribbed extrusion line ,large
diameter HDPE steel strip
reinforced pipe extrusion line
,large diameter DHPE water
supplying and gas supplying
pipe extrusion line ,large
diameter UPVC pipe extrusion
line ,PP-R PEX pipe extrusion
line ,PVC wood composite
foamed profile ,board and door
extrusion line ,UHNW-PE
ultrahigh molecular weight PE
pipe and sheer extrusion line
,XPS heat insulation board
extrusion line ,XPS(IXPE)
cross –link PE foamed coil
extrusion line ,PE/PVC
aluminum composite
sheet extrusion line
16
,PE,PP,PS,ABS,PET,PETG
single-layer ,multi-layer sheet
,board and film extrusion line .
This company is of the opinion
that Iran’s petrochemical
sector is so lucrative that any
company would be willing to
skirt the sanctions and grab a
share in Iran’s petrochemical
market. It is attending Iran
Plast for the second time in
a row. The representative of
this company said Tech-send’s
products cost much lower than
European ones. He noted that
Iran’s five-percent economic
growth rate has persuaded the
company to develop ties with
Iran.
Zhangjiagang Xinda
Plastics Machinery Co.
This company has attended
Iran Plast to win a foothold in
Iran’s attractive petrochemical
market. The focus of this
company is on PVC products
and considers Iran’s market
to be extensive and attractive.
This company hopes to meet
Iran’s construction industry
needs in interior decoration,
furniture, windows and PVC
pipes.
The representative of this
company at Iran Plast said the
Chinese company has already
been successful in Bangladesh
and Vietnam due to its highquality products.
Zhangjiagang Faygo
Union Science Co.
This Chinese company
specializes in PET, PP,
PC, and any other blowing
machine industry. It has staff
specializing in PET industry
and air compressors. Its blowing
machines include automatic and
full automatic, and each kind of
specification one-stage process
or two steps. This
company
is
actively present in Iran’s sewage
pipes. It manufactures seamless
pipes for transfer of wastewater.
The representative of this
company at Iran Plast complained
about the Forex rate fluctuations,
but said Iran’s economy had a
bright prospect.
He noted that Iran still needs to
transfer modern technology for
producing some alloys.
Xin Xing Twin Screw
This Chinese company is a
producer of extruder, pipes and
plastic products. It was its fourth
presence at Iran Plast.
Its commercial director said
Iranian visitors are incapable of
buying the products from this
company due to the sharp slide in
Iran’s national currency.
Sanaat Sazan
It is a leading producer
of plastic kitchenware.
This company
has attended
all Iran Plast
exhibitions.
The sales
manager
of this
Iranian
company said the Forex rate fluctuations
have not had any significant impact on its
revenues as it purchases its raw materials
from domestic petrochemical companies.
He said the presence of Sanat Sazan at Iran
Plast was aimed at getting familiar with the
products of its rivals and studying the market.
He added that Iran Plast is the only
opportunity for investment in the plastic
industry.
Persian Gulf
Raad Plastic Machine
This Iranian company manufactures heavy
and light machinery for plastic injection. It
is based in the northwestern city of Tabriz.
Among its rivals, Raad Plastic Machine is the
only manufacturer of Milling Machine 120.
This company is capable of manufacturing
85 percent of machines like mills and mixers,
but it needs to indigenize technology for
producing advanced injection machinery.
Polymer
Market
Razak Chemie
Razak Chemie, an Iranian company, produces
plastic storage tanks of 360, 770 and
1,100-liter capacities.
Javad Mir-Heydari, managing director of this
company, said it has managed to sell waste
separation tanks to an Iraqi company under a
one-million-dollar deal. He said companies
from Turkey, Tajikistan and Afghanistan
have registered orders with Razak Chemie.
He added that the granules used in the
company’s products are anti-bacterial and
anti-inflammable.
Mir-Heydari said some European countries
have lost a big chance by their refusal to
attend Iran Plast.
Parsian Plastic Processing Machine
Manufacturing
A regular participant at Iran Plast, this Iranian
company manufactures 100 plastic injection
machines in different models every year.
The managing director of this company gave
a positive assessment of Iran Plast 2012 and
noted that Iranian manufacturers are now
capable of competing with their Chinese
rivals.
He expressed hope that his company would
sign deals with companies from Armenia,
Tajikistan, Cuba, Oman, Iraq, Afghanistan
and Azerbaijan.
He said Parsian is one of those few
manufacturers taking advantages of the
state-of-the-art technology and using highquality raw materials to produce modern
machines for Iran’s market.
Holding
Controls
By Sara Yekrangi
T
he privatization of
petrochemical units is a
positive step for growth
and development in the
petrochemical sector.
Shoring up the private sector in view of
accelerating petrochemical development
projects and enhancing petrochemical
output would be lucrative and jobcreating.
Persian Gulf Holding Petrochemical
Company (PGHPC) is the largest
privately-owned producer of polymer
products in Iran. It has 15 offshoots
including seven producing companies and
two utility suppliers. PGHPC is among the
largest markets in the stock market.
Ali-Reza Pouri, director of production
at PGHPC, has said his company is
accounting for 67 percent of Iran’s PVC.
He said PGHPC is also producing water
bottles and detergents at its Tondgouyan
Petrochemical Plant, tires, liquefied
petroleum gas (LPG) and ethane in its
Pars Petrochemical Plant.
Pouri said PGHPC is operating
petrochemical development projects in
Chabahar Free Trade Zone, adding that
the company plans to invest in Sarakhs
Free Zone while benefitting from facilities
like railroad, gas resources and airport.
PGHPC is exporting its products to
European states and China. All its
exports activities are handled by Iran
Petrochemical Commercial Company, 45
percent of which is owned by PGHPC.
Pouri said PGHPC is to list on the stock
market in the near future.
November 2012 / 17
Enhanced Recovery
Consortium,
First National Project
By Parisa Rahnama
More than a century after oil
was discovered in Iran, the
country still needs to develop
modern technologies for
recovery enhancement and
refining. Iran’s oil industry
– the most important element
in Iran’s economy – needs
technology to outdo its foreign
rivals. To that effect, Iran’s
Ministry of Petroleum, in
collaboration with Ministry
of Science, Research and
Technology, is determined to
benefit from Iran’s scientific
capabilities to conduct
research projects. For this
purpose, Ministry of Science,
Research and Technology’s
Research Department has
started its activities in the
recovery enhancement
consortium, whose relevant
agreement was signed between
the two ministries several
months ago. The department
is led by Mohmmad-Mehdi
Nejad-Nouri, who answers
Iran Petroleum’s questions.
Photo: NISOC RECEIVED
18
Q: What mechanism is the
consortium based on?
A: Normally, executive organs
are asked to declare their
research needs to the Ministry
Technology that would in turn
define scientific and research
projects. The executive bodies
may need education. But
anytime we feel that Petroleum
Ministry’s demands are
prioritized, we will take it into
account.
Everyone knows how important
enhanced recovery is. The
Fifth Five-Year Economic
Development Plan (20102015) requires the country to
enhance its recovery by one
percent. If everything goes
ahead as planned, we will see
nearly $ 750-billion increase
in our hard currency revenues.
Petroleum Ministry is required
to realize the objectives set in
the economic development plan,
but it needs collaboration of
and Technology. Oil and gas
are important elements in
the country’s economy and
and Technology is determined
to cooperate with Petroleum
Ministry on research projects.
Q: What are the criteria
utilized for the selection of
universities to be involved in
enhanced recovery project?
A: Petroleum Ministry has
had negotiations with some
universities and the selection
has been done by this ministry.
In the meantime, Ministry
Technology has been of the view
that a single university would
not be capable of handling such
an important project and that
several top universities should
help. Shiraz University, Tehran
Polytechnic University, Tehran
University, Sharif University of
Technology, Sahand University
of Technology and Petroleum
University of Technology are
to collaborate with Petroleum
Ministry in this regard.
Q: When did this consortium
start its work and which stage
is it in now?
A: The agreement for
establishment of the consortium
was signed nearly five months
ago. The consortium has
currently 15 projects under way.
Q: Are any observers
envisaged to measure the
quality of the project?
A: Yes, this project is under
way in a professional manner.
An observer keeps a tab on
the implementation of this
project, which is going on in an
acceptable manner. Ministers
of oil and higher education
are members of the Board of
Trustees of the consortium. The
main philosophy behind the
establishment of the consortium
is to help the country reach its
envisaged one-percent recovery
enhancement rate.
Q: How have the two
ministries been cooperating in
research and education so far?
A: Oil, gas and petrochemicals
constitute influential industries
in Iran. They are specifically
important for the future of the
country due to their comparative
advantages. We know that most
technologies are applicable
in the oil sector and focusing
on oil does not necessarily
mean that we will lag behind
in other technologies. On the
contrary, the oil sector would
encourage us to develop modern
technologies. If the significance
and position of the oil industry
in the country is understood, we
will reach a good status in the oil
and gas sectors.
In Iran, there are 4.2 million
students and more than 2,000
higher education institutes, 20
of which are state-run. There are
also 73,000 university professors
and 400,000 advanced level
students. The oil and gas sectors
are expected to recruit at least 20
percent of them.
and Technology has always
benefited from Petroleum
Ministry’s assistance in
construction, laboratories and
other facilities.
Another point here is that
our concentration on further
cooperation between the two
ministries does not mean that the
and Technology is running
short of credit and research
projects. We plan to become the
region’s top economy. We eye
a knowledge-based economy
with the highest value-added. We
need to increase our wealth and
we have to lay the groundwork
for a jump.
Q: Does Ministry of Science,
Research and Technology
have any plan for a better
knowledge of the scientific
needs of the oil industry in
order to strengthen relations
between the two ministries?
A: Ministry of Science, Research
and Technology envisages
transforming science into wealth.
The five-year development plan
also calls for shifting attention to
research. The ministry has made
the necessary preparations at
universities, which are seriously
bracing for research works. We
are waiting for more cooperation
between the industrial sector and
universities. The scientific bases
are ready for that purpose.
Q: Is there a databank to
help different industries
benefit from the scientific and
technological capacities of
and Technology?
A: Our capacities are clear
and available in the website of
and Technology. Moreover,
Ministry of Petroleum has
classified the capacities of
different universities involved in
the consortium.
November 2012 / 19
Modern Approaches
in Human Resources
Development
By Forough Gashtasbi
Human Resources
S
pecialist and knowledgeable human
resources are assets of
an organization and
the main competitive
advantage for today’s knowledge-based economy. Offering
products and services of high
quality, cutting costs, creativity
and competitiveness are among
the advantages of qualitative
and knowledge-oriented human
resources. That is why business
strategies are based on human
resources.
Oil industry, as the pivot of the
country’s development, will remain as important as it is. However, the persistence of activities
depends on dynamic human
resources being in convergence
with national, regional and global
developments and on efforts for
equipment with modern technologies and strategies. To that
effect, laying the groundwork
for the flow of scientific and
technological information and
accelerating their utilization by
the oil industry specialists would
be a key strategy.
The oil industry contributes
significantly and vitally to the
administration of the country. It
needs to be the least invulnerable
possible so that its development
would never be hindered.
The significance of the issue of
human resources and the necessity for its relevant planning
prompted the Institute for International Energy Studies (IIES) to
establish a think-tank – Management and Human Resources
Management (MHRM) – in
2007.
IIES, affiliated to
20
Iran’s Petroleum Ministry and
and Technology, has been
operating as a research institute
for more than two decades. The
mid- and long-term objectives
of the institute include assisting the oil industry to realize
its objectives in the scientific,
economic, social, political and
international sectors, contributing
to decision-making by senior oil
managers based on energy studies, human resources management, financial management and
planning, technological strategy,
world energy scenarios as well as
international oil and gas markets.
All these activities are under way
in the Energy Economy Research
Center, Human Resources and
Management Research Center as
well as Technological Strategies
Studies Research Center.
Today, the countries owe their
development to extensive
planning to take advantage of
all human resources, correctly
manage them for an optimal use
in view of creating maximum
value-added at the national level.
Moreover, the dynamic growth of
Iran’s huge oil industry notably
in the past three decades following the 1979 Islamic revolution
has resulted in numerous and significant experiences, innovations
and skills for human resources
management. That would help
the country realize its goals
under its 20-year vision plan. In
the meantime, competition with
regional and international rivals
and improving the status of oil
industry in the country re-
quire paying serious attention to
human resources.
An option to raise the satisfaction level among employees is
to invest in human resources as
the most significant asset of an
organization. Therefore, it would
be necessary to make comprehensive planning to boost the
capabilities of human resources
through modern scientific methods in the management of human
resources.
The IIES Research Center
for Management and Human Resources is the most
influential research center in
offering consultation on human
resources. Mohammad-Mehdi
Rashidi, head of the research
center, enumerates its missions:
defining modern strategies and
approaches for the development
of human resources, recruiting
entrepreneurs, benefiting from
the successful experiences of
Iranian and foreign research
centers in development of human
resources, steering changes in
organizations, job planning and
defining standardization models.
“The research center, as think
tank in the oil industry, is tasked
with exploring challenges to human resources management with
the help of the subsidiaries of the
Petroleum Ministry,” he said.
Based on a strategic program, the
research center is active in three
fields – knowledge management,
strategic management and human
resources development.
Since the establishment of the
research
center, the experiences of other
institutes and universities in
development of human resources
in the oil industry have been
used. To that effect, an extensive
network of university professors
and specialists are active.
Knowledge Management in
the Oil Industry
Rashidi underscored the successful implementation of research
projects in the oil sector by the
research center, saying one of
them is a comprehensive system
for management of knowledge in
the oil sector.
“This project was defined upon a
request from National Iranian Oil
Company (NIOC) and is currently
under way. The objective behind it
was to present a national model for
identification and documentation
of models in the oil industry. After
these models are identified, the
branches of knowledge are defined
so that the knowledge tree would
be sketched out. The implementation of the project would provide
NIOC with a comprehensive
model
to have access to the
knowledge of all
its labor force
and it will
no longer
face such
problems as
the flight of
intellectual
assets.”
“Before
the
project was implemented on a
massive scale, Arvandan Oil
and Gas Company (AOGC) was
picked as pilot. In the first phase,
preliminary and theoretical studies were then conducted to give
a model to be used in the second
phase. We forecast to implement
the project in one year.”
“A strategic document of knowledge management has been
designed for the National Iranian
Gas Company (NIGC) and the
relevant research studies would
be complete in five months at
the latest. A system has been
designed to register the documented experiences of managers.
Moreover, a knowledge tree has
been defined so that experts or
other people would get the latest
information about knowledge
and experiences. So far, 48
percent of this comprehensive
management system has become
operational. With the adoption
of strategies currently under
way, we will achieve a strategic
document that would include all
knowledge-related activities for
the 20-year horizon,” Rashidi
said.
Strategic Document for Oil
Industry Human Resources
By 2025, Iran’s oil industry
would become the top economic,
scientific and technological
power among the countries in
the region. To that effect, Iran
should improve its knowledge
and produce science and technology by relying on its own human
resources and social assets.
In order to harmonize the 2025
vision plan with its missions, objectives, strategies, policies, plans
and human resources activities,
the oil industry defined a document for strategic management
of resources.
The diversity of missions assigned to the Islamic Republic
of Iran’s oil industry and the
significance and complexity of
conditions necessitate comprehensive attention to the national
and international environmental
conditions in view of strategic
orientation. Moreover, in order to
distance from raw materials exports, it was necessary to define a
strategic document for the development of human resources.
The drafting of this document
started in 2008 by the IIES
research center upon a request
by the Petroleum Ministry’s
Department for Management
and Development of Human
Resources. The final reports were
ready in the first half of 2010,
but it had to undergo revision
due to changes in Article 44 of
the Constitution and tightened
international sanctions against
the Islamic Republic. The final
copy was prepared in 2011.
Rashidi said the main idea behind this document was to draw
up upstream strategic documents
like the country’s 20-year vision
plan and the fifth five-year economic development plan.
Regarding the implementation
of the project, he said Schuler
& Jackson human resources
management model was picked
as the framework. Among human resources practitioners, the
term “strategic human resources
management” is used broadly
to signal the view that human
resources management activities
should contribute to business effectiveness. This linkage between
HRM activities, the needs of the
business, and organizational effectiveness is the core of the area
called strategic human resources
management (Schuler/Jackson
1999). Two guiding assumptions
of strategic human resources
management are that effective
human resources management
requires an understanding of and
integration with an organization’s
strategic objectives and effective
leads to improved
organizational
performance.
In drawing up the
strategic document for the oil
industry human resources
development,
myriads
studies were conducted in different related sectors. The PEESTbased study was one of them.
Rashidi said: “In the first phase
of the document which lasted 16
months in a row, the perspective, missions, macro objectives
and fundamental values of the
oil industry have been defined
in conformity with the 20-year
vision plan.”
The second phase, implemented
in 2010, was in fact in the action
plan related to the main four subsidiaries of Petroleum Ministry.
The first and the second phases
of this comprehensive strategic
document need to be revised
every five years.
Highest Demand for Management Projects
Based on surveys, NIOC accounts for the bulk of human
resources management projects
at the IIES’s human resources
research center. Most of these
projects have been defined to
meet the oil industry’s needs.
Successful Research Projects
The IIES’s human resources
research center has conducted
studies related to seven projects
proposed by the Petroleum
Ministry’s R & D Department
in a short period of time. This
quickness is a strong point for
the institute.
Rashidi enumerated seven
projects whose studies the
institute has concluded as follows: Comprehensive project for
boosting oil industry productivity, reengineering of oil industry
organization, defining proper
methods of education for correct
energy consumption, establishment of EPR in the oil industry,
establishment of intellectual
assets system in the Petroleum
Ministry and QHSE.
the request of the Petroleum
Ministry’s Public Relations
Department, the IIES’s research
center for management and human resources defined a strategic
plan to study changes inside the
ministry. In the end, a perspective
plan was adopted defining fundamental values for the oil industry,
its missions, strategic objectives
and actions. A roadmap for
public relations is forecasted to
be developed in five years.”
The plan has been drafted to
strike a balance between the
expectations of influential sectors
and beneficiaries from the public
relations.
Comparative Studies on
China, Malaysia and Brazil
Rashidi said the human resources
management in three leading oil
companies in China (CNPC),
Malaysia (Petronas) and Brazil
(Petrobras) were studied.
This comparative study was
aimed at acquiring information about the performance of
international oil companies in
recruitment of manpower and
their payment. Then, they were
compared with NIOC. Five
parameters – philosophy, policy,
performance, program and process – were studied.
Public Relations
Rashidi also said a document
has been drafted about the
activities of oil industry public
relations. “In 2011 and upon
November 2012 / 21
Housing Oil Staff
Human Resources
By Parisa Rahnama
P
roductivity of
organizations and
improvement of
the quality of their
services and products
is in direct relation with motivation on the part of their staff.
Management experts consider
motivation as the motive force
of humanity. What is clear is that
human resources constitute the
motive force in any operational
organization, and any improvement in productivity, application
of state-of-the-art technology;
innovation and the success of
an organization depend on its
human resources. To that effect,
it would be necessary to glorify
human resources in a bid to
create wealth for the country’s
22
economy.
Proper employment of human
resources is the most valuable
and the biggest wealth in every
society. Iranian Petroleum
Ministry officials have always
taken into account this important
issue. In other words, mankind
is the target of development and
its factor, as well. Realization of
the objectives of development
is to a great extent dependent on
the management of wealth.
Given the fact that human
resources play a key and significant role in the growth and
development of the oil industry,
especially in the challenging
world of today, it is important
to know that any organization
could not be managed properly
in the absence of motivation. To
that effect, the Iranian oil industry has always paid especial attention to its employees working
in hazardous and precarious operational zones, and has sought
to upgrade the level of welfare
for them and their families. One
of the basic necessities of the
employees of the oil industry is
their housing. In view of the oil
industry, housing affects other
aspects of life and contributes to
their psychological serenity.
Exploring ways of winning satisfaction of oil staff would play
a significant role in realizing the
objectives of the oil sector. Oil
and gas constitute the country’s
assets, but human resources
are more valuable because the
oil industry would have no use
without engineers and experts.
Iranian engineers are capable of
developing oil and gas fields in
the country without any dependence on foreign countries. That
is a great achievement of the
Islamic revolution.
The oil industry moved in 2010
to identify the employees who
do not own accommodation.
Surveys indicated that 40,000,
out of a total 160,000 oil staff,
deserve to receive housing facilities under a government project
known as Kindness Housing.
Then, an agreement was signed
between Ministry of Housing
and Ministry of Petroleum for
providing housing to the oil staff
deserving the facilities.
Mohammad Amirkhani, an advisor to the Petroleum Minister
Rostam Qasemi, is following up
on the housing project for the
oil staff. “Under this agreement,
we took advantage of legal capacities for housing. Petroleum
Ministry agreed to provide lands
to its four subsidiaries so that
they do not need the Housing
Ministry to build houses for the
oil staff.”
The Housing Workgroup of oil
industry, led by Amirkhani, first
identified 550 ha of land where
houses would be constructed for
the oil staff.
Regarding the present and future
plans of the housing project for
the oil staff, Amirkhani said:
“Thanks to the minister of
petroleum and upon a request
from senior oil managers, plans
have been adopted to provide
housing to young staff close to
marriage.”
He added that at least 40,000
flats could be given to the oil
staff, noting that more houses
could be constructed within the
framework of cooperation with
Ministry of Road and Urban
Development.
At present, the priority for
housing has been given to the
oil staff working in oil-rich
operational zones in southern
Iran. But other provinces, where
gas supply and distribution of
oil products are done, have not
been ignored.
The main condition and /or
criterion to receive housing are
to be married or breadwinner.
“The total project is estimated to
cost nearly 1.1 trillion rials, 500
billion rials of which would be
provided in facilities by Bank
Maskan (Housing),” Amirkhani
said. The interest rates on the
loans granted to the oil staff
vary from four to nine percent,
depending on the level of costs
in different cities.
In one year time from now,
2,000 housing units would be
ready for the oil staff in the oilrich southern city of Ahwaz.
Human resources are the main
parameters of development;
therefore, meeting their needs
would be of specific significance.
November 2012 / 23
Human Resources
An Overview of Energy Giants
Human Resources Programs
H
uman resources
management
is an important
department in
any organization
because it plays the major role
in recruitment and payment as
well as their training, health and
administrative communications
of the staff. In order to improve
the efficiency of its human
resources management, any organization is expected to adopt
optimal methods to stabilize
an appropriate working culture
and create healthy and thriving
working conditions.
In the industrial organizations
and entities including oil companies, optimization of products
and services are directly linked
with research, knowledge
acquisition, and training professional manpower and skilled
engineers. Close interaction and
collaboration with universities,
scientific centers and technology parks, and offering the
necessary oil and gas related
training courses are among the
prime necessities.
Most major oil companies in
the world have experienced
periods in which such problems as shortage of specialized
manpower and lack of access
to technological updates
emerge. Analyzing the
management methods
and experiences of
these companies
24
in recruitment of skilled manpower could be of great help for
any company.
The following is a review of human resources management in a
number of famous international
oil and gas companies:
Statoil (Norway, established in
1972, operating in the North
Sea)
The company often issues
statement of recruitment for
its industrial, technical and
administrative sections. In this
way, the Norwegian state-run
company spares candidates any
frustration over job. It also classifies the CVs regularly received
from students, engineers and
others to have easy access to the
job applicants any time needed.
Statoil has also employees
working under contracts. It offers courses at universities and
holds seminars on the campuses
in a bid to identify qualified
graduates for future recruitment.
Statoil also develops education
software for its employees and
trainees at different levels. With
the collaboration of its
offshoots,
it has
managed to boost its employees’ knowledge.
Statoil is operating in nearly
40 countries in the world and it
has to recruit local manpower
for the projects it handles. It is a
good opportunity for local manpower in the countries where
Statoil is active.
The short-term training courses
and seminars held by Statoil
focus on drilling, project management, oil and gas marketing,
energy supply management,
human resources management,
communications, economy and
finance, safety and health.
Implementation of Statoil-style
methods in Iran is impractical due to the large number of
graduates from Iranian universities.
Statoil encourages students to
submit dissertations on oil and
gas projects as part of its plans
to prepare its future specialists.
Job applicants in different
countries can click into Statoil
website and apply for vacancies
announced. Of 32,000 Statoil
employees in 36 countries
across the world, nearly 19,000
are in Norway. The company
earns Norway nearly $ 78 billion a year.
ExxonMobil (US, established in 1999, operating in
Angola):
Exxon Mobil Corporation or
ExxonMobil is an American
multinational oil and gas corporation which is a direct descendant of John D. Rockefeller’s
Standard Oil Company, and was
formed on November 30, 1999,
through the merger of Exxon
and Mobil. Its headquarters is in
Irving, Texas. It is affiliated with
Imperial Oil which operates in
Canada.
ExxonMobil controls concessions covering 11 million acres
(45,000 square kilometers) off
the coast of Angola that hold an
estimated 7.5 billion barrels of
crude. Due to its large activities
in Angola, 72 percent of ExxonMobil employees are Angolans.
It also offers oil education to 19
percent of a region in Nigeria. In
Indonesia, 15 months of English
courses are among the top
necessities of working in the oil
and gas sectors.
Marathon Oil Corporation
(established in 1887, operating
across the globe)
Marathon Oil Corporation is
a United States-based oil and
natural gas exploration and
production company. Principal
exploration activities are in the
United States, Norway, Equatorial Guinea, Poland, Angola and
Kurdistan territory in Iraq. Principal production activities are
in the United States, the United
Kingdom, Norway, and Equatorial Guinea. Marathon Oil has
trained 1,600 people in Nigeria
over five years. The interesting
point is that local manpower
is recruited in conformity with
the projects. Extensive training
courses are indicative of the
willingness of these companies
for long-term presence in some
countries. A major challenge
this company was grappling
with, was its professional but
aged engineers and skilled
manpower. Due to the lack of
skilled manpower, the company
has had to keep people aged
above 60.
Oman Oil Company (established in 1996)
The Oman Oil Company (OOC)
is a national oil investment
company of Oman. It is wholly
owned by the Government of
the Sultanate of Oman. Creation
of the Oman Oil Company
was proposed in 1992 and the
company was established in
1996. In addition to the oil and
gas exploration and production,
the company also invests in
power generation, energy transportation and infrastructure, oil
refining, and petrochemicals
manufacturing.
Since foreign companies
have not been active in
Oman, the OOC’s technicians and engineers
have been working
in a national
industrial
company.
A large number of these
experienced engineers found
jobs in foreign companies that
gradually came to Oman for
offshore exploration, extraction
and refining. It was economical
for foreign companies to train
new manpower or recruit local
people who were working at
much lower salaries.
A survey conducted among
the OOC employees indicated
that only 25 percent of respondents referred to their pays as
their main incentive. Nearly 87
percent referred to proper working conditions, respect from
superiors and progress in work
as their incentives. The survey
also indicated that 42 percent
wanted that the managers let
employees express themselves
about decisions.
ENI (established in 1953)
Eni S.p.A. is an Italian multinational oil and gas company
present in 79 countries, and
currently Italy’s largest industrial company with a market
capitalization of €87.7 billion
($138 billion), as of July 24,
2008. The Italian government
owns a 30.3% golden
share in the company,
3.93% held through
the state Treasury
and 26.37% held
through the
Cassa depositi e
prestiti. Another
2.29% of the shares
are held by BNP
Paribas group.
According to the 2011 statistics,
42 percent of Eni’s employees
were Italian. Every year, Eni
grants 25,000-euro scholarship
to 24 students from developing
countries like Nigeria, Angola
and Pakistan.
Eni regularly holds seminars
and training courses. It has invested in Indonesia and Pakistan
by holding MBA courses in a
bid to recruit specialist manpower. It is also active in South
America, Venezuela, Oceania
and East Timor.
Chevron Corporation (established in 1984)
Chevron Corporation is an
American multinational
energy corporation based in
San Ramon, California, United
States and active in more than
180 countries. It is engaged in
every aspect of the oil, gas, and
geothermal energy industries,
including exploration and
production; refining, marketing and transport; chemicals
manufacturing and sales; and
power generation. Chevron is
one of the world’s six “supermajor” oil companies. For the
past five years, Chevron has
been continuously ranked as
one of America’s five largest
corporations in the Fortune 500
and it is currently ranked the
eight. In 2011, it was named
the 16th largest public company
in the world by Forbes Global
2000. Chevron is one of the
largest corporations in the world
in terms of revenue.
Chevron employs approximately 62,000 people worldwide, of
which approximately 30,000 are
employed in US operations. The
company has a worldwide marketing network in 84 countries
with approximately 19,550 retail
sites, including those of affiliate
companies. The company also
has interests in 13 power generating assets in the United States
and Asia.
Conclusion
The parameters contributing to
the effectiveness and efficiency
of manpower in the oil companies could be summarized as
follows:
Encouraging students to submit
better dissertations on oil and
gas projects in return for their
guaranteed recruitment;
Developing software to inform
employees of organizational approaches for their progress;
Offering specialized courses to
local people notably in remote
areas;
Holding English language and
oil and gas principles courses;
Keeping the average age of employees, notably engineers, low;
Offering attractive payment to
employees;
Letting employees express
themselves about decisions; and
Respecting HSE standards in
workplaces.
November 2012 /
25
Lead Money Supply
to National Projects
F
ormer minister of
petroleum Masoud
Mir-Kazemi
says selling oil
at the current
prices would harm the future
generations.
Mir-Kazemi, who also served
as minister of commerce, said
in an interview with Iran
Petroleum that the oil prices
have not increased in harmony
with the gold price hikes.
“In the 1970s, Iran sold
oil at 20 dollars per barrel
when gold cost 35 dollars per
ounce. Today, it is around
100 dollars per barrel, while
each ounce costs 1,700 dollars.
It indicates that producers’
purchasing power has
significantly dropped over
the past 40 years,” said MirKazemi, currently chairing the
Iranian Parliament’s Energy
Committee.
The full text of the interview is
as follows:
Q: Where does Iran’s oil
industry stand now and what
are the main issues it is faced
with?
A: Some issues of this industry
depend on domestic factors. It is
easy to find numerous domestic
factors causing challenges for
the oil industry. Removing these
challenges requires adoption of
effective laws and formulating
proper plans. Foreign investment
in Iran’s energy sector is
facing challenges, but an
optimal management of money
supply could accelerate the
implementation of development
projects.
It is important to note that our
By Amir-Hossein Hashemi-Javid
country is facing a new serious
economic battle. We have
no other choice but to resist
and make precise planning
to overcome the obstacles.
In the meantime, it would be
possible to change threats into
opportunities. For example,
when crude oil exports face a
problem we can seize on the
moment to wean away the
economy from petrodollars.
During eight years of imposed
war (1980-1988), we did not let
any halt in the flow of oil. In the
post- war period, tough sanctions
and restrictions failed to stop
our progress, on the contrary
we became self-reliant in the oil
industry. The challenges may
impose costs on us and may slow
down the affairs, but they could
never grind the country to a halt.
Q: Under the present
circumstances, what do you
propose for financing oil
projects in the country?
A: An effective proposal
to that effect is to invest in
national projects through fiscal
mechanisms. To that effect,
financial and economic bodies
in the country should make
policies and develop methods
to lead liquidity to the oil sector.
For this purpose, the Central
Bank of Iran (CBI) should
reconsider the interest rates
on bonds to make them more
attractive to potential investors
in development projects. Oil
projects are productive and they
expect to come to fruition in
less than a year. Iranian banks
are also capable of investing in
development oil projects. They
could be of great help to that
effect. The banks should also
revise the way they grant shortterm facilities for the oil, gas,
petrochemical, and refining and
energy sectors. Another option
is to attract investment from
Iranian expatriates. There are
lots of Iranians living abroad
and willing to invest in Iran’s oil
sector, but we have to prepare
the necessary conditions for
them to transfer their money into
the country.
Q: What grounds are
needed for attracting foreign
investment, mainly from
foreign countries and OPEC
member states?
A: Due to several reasons, OPEC
member countries may not be
willing to invest in Iran, but
other countries tend to invest in
Iran’s lucrative energy market.
Some oil giants have noted that
despite their willingness to invest
in Iran they have been forced
to cut business with Iran due to
penalties. The undeniable fact
is that foreign companies are
eager to participate in business
activities with Iran, but they face
obstacles. Even neighboring
states, specifically Muslim
countries, are keen to invest in
Iran; however, the first step is to
facilitate procedures.
Q: How can pension funds
and financial institutes be
encouraged to finance national
projects?
A: We have to clear the way
for investment by proper
management of capitals. All
institutes and people should be
convinced that investment in the
energy sector would be lucrative
and guaranteed.
Q: Non-replacement of
crude oil with other energy
products in the 20th century is
indicative of the significance
of this source of energy. Oil
continues to remain a powerful
instrument for generating
wealth. Given the advantages
of the oil sector in Iran, what
do you propose to maximize
benefits from this source?
A: In the oil and gas sectors, oil
products would generate more
value-added as long as they
are processed and refined. The
value-added from crude oil sales
is much lower than the valueadded gained from oil products
like gasoline and diesel fuel. We
have to make more headway in
science and knowledge. In the
meantime, we have to take steps
toward reducing our exports
while maintaining the level of
our income. The solution is
to brace for knowledge-base
companies and convert raw
materials to products of higher
value-added. We have taken
steps to that end, like planning
to build refineries. There are also
projects to renovate refineries.
The advantage with refinery
projects is exporting less crude
but selling products of higher
quality and value-added.
Anyway, putting an end to crude
oil and raw materials sales and
acceleration of development
projects are tied to supplying the
necessary finance for refining
projects currently under way in
the country.
Q: What measures need to be
taken so that Iran would reach
Strategic Energy Proposals
O
the position it deserves to
enjoy in the oil market?
A: Growing oil production in
the Persian Gulf and Iran is
an objective pursued by the
Western governments and the
United States. Is there any
reason for us to be the first or
the second producer of oil? At
present oil is selling at very
low prices. In the 1970s, Iran
sold oil at 20 dollars per barrel
when gold cost 35 dollars per
ounce. Today, each barrel is
around 100 dollars while each
ounce costs 1,700 dollars.
Therefore, it indicates that
producers’ purchasing power
has significantly dropped over
the past 40 years. The oil price
growth has been very low,
and since crude is traded in
dollars, we have witnessed
inflation in Iran. It would be
unfair to sell oil at such low
prices. The future generations
should also benefit from the oil
revenues. Anyway, we have to
invest our petrodollars in the
sectors that would generate
higher value-added and wealth,
and transform underground
reserves to assets.
il, a prime
necessity in
the world, is a
strategic tool in
the hands of its producers for
maneuvering in the arena of
international diplomacy. In
other words, oil can lay the
groundwork for diplomatic
dynamism and political
growth in the producer
countries.
Oil is a strategic instrument
in Iran, too. Since some
countries are trying to use
oil for their own benefits,
it is necessary for Iranian
officials to manage the
country’s energy sector with
more precision.
Over the past three decades,
we have managed to reduce
our dependence on other
countries and take influential
steps in view of developing
domestic energy industries.
But now, in a bid to protect
this powerful energy tool,
we have to clear the way for
oil to prove its influence and
further activate the Islamic
Republic’s international
diplomacy.
To that end, two approaches
are proposed. They could
help clear many hurdles
on the way of the Islamic
Republic to enjoy more
freedom of action.
The first point is that the
country’s budget has been
oil-dependent for years. Due
to this heavy dependence on
petrodollars, any fluctuations
in the oil prices may
overshadow Iran’s economy.
Changes in the oil revenues
have restricted state officials’
room for maneuvering.
Therefore, legislative and
executive bodies should take
By Mehdi Mousavinejad, MP
action to that effect and plan
for reducing the country’s
annual budget taking into
consideration oil revenues.
In fact, the exit of oil
from the country’s budget
would make this Godgiven resource a strong
tool for control. With the
help of oil, it would be
possible to adopt strongarm
tactics or incentives on the
international scale. In that
case, oil embargo would not
even leave the least impact
on the country’s economy
and would even harm the
imposers of sanctions. In
other words, oil would be a
tool exclusively in our own
hand.
The second point is that we
have so far adopted reactive
and subsequent policies visà-vis sanctions. We have
always waited to see which
sector the enemy is going to
ban and then we have tried
to find solutions to encounter
the sanctions. Naturally,
the whole thing would be
difficult, costly and nonstrategic.
Therefore, the oil managers
should adopt policies based
on hypotheses and forecasts
against sanctions.
Besides, these two points
are other issues which can
have their own solutions.
One of them is controlling
consumption. Despite
Islamic teachings, we
practice consumerism. A
country of 75 million should
not consume equally with
a country of 300 or 400
million. To that effect, we
need to take the necessary
measures.
Reliance on domestic
production and trust in
domestic products would
clear the way for economic
progress and industrial
development. Specifically
in the oil sector, using
domestic products would
dispense with the need for
imports and would make
domestic producers more
experienced. To that effect,
Iran’s Petroleum Minister
Rostam Qasemi has said in
clear terms that the ministry
is fully ready to establish
domestic markets for
producers.
The important point here
is that Iranian employers
should trust the private
sector.
The proper proposal is
establishment of a body
outside the government
to coordinate affairs
between manufacturers and
consumers. In that way,
the consumer presents its
quantitative and qualitative
indices to the manufacturer,
that would in turn, supply
the required products. That
would make domestic
production target-oriented
and cohesive.
Developing Knowledge
Networks in I.R.Iran’s
Petroleum Industry
Ruhollah Tavallaee (Young Advisor to the Minister of Petroleum)
Adolescence is the best time in life. The most important feature of this useful
period of time is being active, energetic, hopeful and ready to learn and experience.
Using this energy and capability properly could help any organization to succeed in
fulfilling its tasks and missions. To that effect, Iran’s Petroleum Ministry has set up
think-tanks in recent years for a more effective presence of youths in the oil industry
procedures. The think-tank is working under the title of Young Advisors to the
Petroleum Minister.
Acculturation in view of realizing the oil-related objectives set in the country’s
20-year vision plan, preparing the grounds for a more effective presence of young
engineers, benefiting from the views of creative experts and boosting motivations
for teamwork are among the main objectives of establishment of the think-tank
of young advisors. In the meantime, the think-tank holds symposiums aiming at
exploring traumas, enhancing productivity, slashing costs and identifying young
engineers to establish a databank, and documenting the experiences of veteran
managers and employees.
Rouhollah Tavallaie, a young advisor to the petroleum minister, holds a PhD in
industrial management from Tehran’s Allameh Tabatabaei University. He says
training young people to serve as managers in the future is the most important goal
of this think-tank. He has authored an article about knowledge-base companies.
INTRODUCTION
In order to reach the goals and do the duties, organizations own different sources
and assets. Some of these sources are valuable and strategic which play a main
role to acquire organizational competitive preference. Knowledge is one of these
sources and assets for all organizations, so that experts consider knowledge as
final alternative for production, wealth, and monetary capital [‎ 14]. In fact, knowledge is a unique source in the organization that during usage of time not only its
value does not decrease, but also it increases.‎[7] This knowledge does exist in
organizational procedures, instructions, viewpoints, actions and decisions. It does
mind more when it transforms to valuable products and services. Therefore, it can
be concluded that organizations permanent competitive preference comprises of
the things they know and with what speed they can use their knowledge. [‎ 3]
Knowledge management means taking control and authority of the knowledge
of human capital of organization and even the knowledge in exterior part of
organization, propagating it to do current assignments in the organization which
would be more improved and developed. The goal of knowledge management is
to identify, collect, classify and organize, store, publish, disseminate and make
available the knowledge in organizations. In organizations which are managed
through traditional approaches, the knowledge flows from up to down through
organizational lines. Thus, the knowledge is seldom available at the right time and
where it is needed more. But, in the knowledge-oriented organizations in which
implementing knowledge management is considered, the knowledge is flowing
throughout the organization. Everyone can use it to do his/her assignments at the
right time according to his/her own needs.
28
The necessity of managing knowledge in Iran’s
petroleum industry
I
n the petroleum industry of Iran;
a wide range of specialists active
in various fields such as oil, gas,
petrochemical, purification and distribution of oil production, drilling,
business management, IT, etc take advantage of knowledge, proficiency, and experience and work on different projects
with different subjects in different cases
- exploration, extraction, transportation
and production. In petroleum industry
(particularly because of expansion of
activities) a huge volume of knowledge
is produced through implementation of
different projects.
Some parts of this knowledge are
recorded in the form of evidences, reports, software, instructions, etc.(explicit
knowledge) and some parts are intangible
(tacit knowledge) which remain concealed in people’s minds as experiences,
relations, skills, insights, etc. These parts
have a little possibility for transferring
and being used again. Lack of allotment
and re-using of produced knowledge in
the existing activities and knowledge
capitals in petroleum industry (including human capital, structural capital,
and communication capital) is actually
wasting financial resources and it is a
proof for lack of productivity. On the
other hand, since an important part of
current knowledge in petroleum industry
is intangible and it is hidden in people’s
minds as intellectual capital, in practice
when those people leave the industry
due to getting retired, being transferred,
being redundant) the industry will not
benefit from this knowledge anymore.
From a decade ago, the petroleum and
gas industries around the world have
been using knowledge management
improvements and now it is taken into
consideration by different petroleum
companies as a scientific subject with
various organizational, technological,
and human approaches. When oil companies focus on new technologies, using
external resources, taking new partners,
assessing management, governmental
regulations, managing capacities, reducing costs and environmental issues,
knowledge management groups can help
them in forecasting, planning, processing, and lots of technological innovations through using the technology and
knowledge transferring.
The definition of Chevron Company; as
one of the major petroleum companies in
the world; about knowledge management
which is applied in many parts of the
industry, defines it as: processes, tools,
and behaviors which give correct concept
to correct individuals at the proper time
and in the proper situations. As a result,
they can make the best decisions, take
advantage of existing opportunities, and
propagate innovative ideas. It is noteworthy that the world gas and petroleum
leaders focus on knowledge management, as well:
Ken Derr, manager of Chevron Company says: “We have learned we can use
knowledge to achieve improvements in
our company. We focus on purchasing
knowledge from external parties, bringing it into the organization rather than
attempting to create something by our
own. Every day that a new idea comes
and we cannot use it, actually we have
lost an opportunity. We should participate
into knowledge promptly”.
John Brown of BP Company says: “Using a knowledge which is more efficient
than competitors, is an issue that all
companies encounter with it”.
Brendan O’Neill from Imperial
Chemicals Industries says that: “Knowledge management is a framework for
innovation. It brings business success in
compatibility of employees with quickly
changing operational environment”.‎[13]
A Framework for
knowledge networks
High performing knowledge workers
have been found to leverage their informational environments through networks
because they find and use information
through using their own knowledge and
expertise but also through their social
networks by seeking out information
from colleagues and friends. [‎ 4]
The framework of knowledge networks
comprises of the following components:
actors, individuals, groups, organizations; and relationships between actors,
which can be categorized based on
form, content and intensity; resources
which may be used by actors within their
relationships, and institutional properties, including structural and cultural
dimensions such as control mechanisms,
standard operating-procedures, norms
and rules, communication patterns and
so on.
These components can be perceived
from either a static or a dynamic point
of view. From a micro perspective, we
conceptualize knowledge networks on
the following three building-blocks. [‎ 1]
Developing a model of knowledge
networks
(knowledge network necessities, knowledge network levels, and knowledge
trees) and other variables are related to
content features (knowledge species and
intellectual capital of organization). Each
one of these variables includes some
components as follows:
Knowledge network: the main applications of knowledge network in the
organization are: knowledge acquisition,
knowledge sharing, as well as accessing
to internal and external knowledge.
Knowledge network necessities: a
knowledge network needs to be supported by technology infrastructures (like the
Internet and Intranet), communication
and architectural networks‎[9]
Networks levels of organization: networks which exist in the organization are
divided into levels as follows: organizational network, national network, international network, multinational network,
and global network. [‎ 10]
Knowledge tree: knowledge fields in
organizations can be classified in tree
structure. Generally, knowledge fields
in all organizations are divided into two
knowledge groups: general knowledge
(i.e. common among all organizations,
like management knowledge), and
technical knowledge (is related to special
activity of each organization).
Knowledge species: through a brief
review of scientific resources, generally,
Fig. 1: Framework of knowledge networks_ a micro perspective
Briefly reviewing the literature of article,
one can find out that in order to design
the development model of knowledge
networks, some variables are related to
structural properties of these networks
there are two different typologies for
knowledge of organization. Edwards and
Mahling believe that different kinds of
knowledge are as follows: administrative knowledge, declarative knowledge,
procedural knowledge, analytical knowlNovember 2012 / 29
edge. ‎[6] But some other experts believe that knowledge
of organization comprises
of two kinds of explicit and
tacit knowledge.‎[12]
The aforesaid experts believe that explicit knowledge
can be encrypted and coded,
so it can be easily transmitted, processed, transferred,
and stored in data bases. We
can shape this kind of knowledge and publish it between
people in the organization
in the form of a scientific
formula or a guidebook.
Instructions, laws and
regulations, procedures,
standards, detailed description and so on, which are
formally used by people in
organizations and can be
simply transferred, are all
explicit knowledge. But tacit
knowledge is subjective and
personal. It is difficult to
formulate it. This kind of
knowledge which is often
acquired through sharing
experiences and observations and also emulating,
are derived from people’s
actions, procedures, values
and feelings. In addition,
tacit knowledge could not be
easily coded and transmitted
through a similar language.
According to former
studies conducted in the
petroleum industry and based
on researchers’ recognition
about this industry, the second typology is applied more
in the petroleum industry.
So it is used for drawing the
basic suggested model of researcher in macro theoretical
framework of the research.
Intellectual Capital: It
includes that part of whole
capital and asset of company
that is based on knowledge
and the company owns it.
Intellectual capital comprises
of three main parts such
as below: human capital,
structural (organizational)
capital and communicative
(customer) capital. (Edwinsson & Malone, 1997)
30
Knowledge networks pattern in petroleum industry
have some functions, the
most important of which are:
Assisting in policy making
and determining the policy of
Petroleum Ministry.
Classifying the knowledge
based on materiality, function, degree of confidentiality
and so on.
Operational and administrative policies.
According to presented
definitions, the basic suggested model for developing knowledge networks in
organizations is as follows:
Conclusion
Managing knowledge
networks within organizations has taken on enhanced
importance in recent years
because of the decline of
middle management and
other changes in formal
organizational structures,
the growth of information
technologies, and our increasingly competitive global
economy.‎[8]
Knowledge networks can
be manifested in a variety
of forms: project teams,
research groups, advice
networks, professional communities, communities of
practice, support groups, and
so on. Individuals increasingly find that they must
determine for themselves
what choices they will
make, distilling the information they have gathered in
their personal networks to
knowledge, which in its own
turn results in strategies they
can pursue as they act in a
more complex world. The
awareness of the operation
of knowledge networks is,
quite literally, an important
survival tool for individuals.
In turn, it leads to individual
learning; nevertheless actions
determine how organizations
adapt to rapidly changing
environments and innovate
to face new challenges.
As mentioned before in
this article, due to special
properties that exist in Iran’s
petroleum industry, knowledge management is of high
importance. However official
structures of petroleum
industry, which are illustrated in structural diagrams,
do not display the real flow
of knowledge in industry;
however, informal networks
play a major role in fulfilling
its missions and transferring
knowledge.
Over the recent years, informal networks have attracted
the most attention of senior
managers. Organizations
have found out that most
activities are done cooperatively and through benefitting from these informal
networks.
Taking into consideration the
capabilities that are created
by knowledge networks for
organizations; they are appropriate solutions for innovation, knowledge creation,
sharing individual and organizational knowledge in petroleum industry (and other
industries). Benefitting from
knowledge networks are the
most efficient and effective
way to manage knowledge.
They are designed to share
knowledge amongst different individuals and knowledge bases. According to
the researches’ view, the
second typology is applied
more in petroleum industry.
It is used for drawing the
basic model for developing knowledge networks in
organizations. By designing the model, knowledge
networks will demonstrate
the main applications and
the most important functions
of an efficient and effective
knowledge network.
References
1. A. Seufert, G. Krogh
and A. Bach, “Towards
knowledge networking”,
Journal of Knowledge
Management, Vol. 3
Issue: 3 pp. 180 – 190,
1999.
2. M. Castells, The Information Age: Economy,
Society and Culture; The
Rise of the Network Society (2nd edn), Oxford:
Blackwell, 2000.
3. M. Cohen, G. James and
P. Johan, “A garbage can
model of organization
choice”, Administrative
Science Quarterly: 1-25,
1998.
4. T.H. Davenport, “Thinking for a Living: How
to Get Better Performance and Results from
Knowledge Workers”,
M.S. thesis, Boston,
Harvard Business
School Press, 2005.
5. S. Durbin, “Creating
Knowledge through
Networks”, Gender,
Work and Organization,
Vol. 18 No. 1, January
2011.
6. D. L. Edwards and D.
E. Mahling, “Toward
Knowledge Management Systems in the
Legal Domain”, in Proc.
Proceedings of Group
97, Published in May
1997 by the Association
for Computing Machinery (ACM), USA:
Phoenix Arizona, 1997,
pp. 158-166.
7. R. Glaser, “Measuring
the knower: toward a
theory of knowledge
equity”, California
Management Review,
Vol. 40, No. 3 : 175-194,
1998.
8. J. Johnson, Managing
Knowledge Networks,
Cambridge University
Press, 2009.
9. P. Monge, J. Fulk, M. E.
Kalman, A. J. Flanagin
10.
11.
12.
13.
14.
and C. Prnassa, “Production of Collective Action
in Alliance-Based”, Inter
organizational Communication and Information
Systems, Organization
Science, vol. 9 (3), pp. 411433, 1998.
J. Nahapiet and S. Ghoshal,
“Social capital, intellectual
capital, and the organizational advantage”, Academy of Management Review,
vol. 23 (2), pp. 242-266,
1998.
S. Newell, M. Robertson,
H. Scarbrough and J.
Swan, Managing Knowledge Work, Basingstoke:
Palgrave Macmillan, 2002.
I. Nonaka, and H. Takeuchi, The Knowledge
Creating Company, Oxford
University Press, Oxford,
1995.
R. Tavallaee, Knowledge
Strategy Formulation in
the Islamic Republic of
Iran petroleum Industry,
Case Study in the NIOC,
M.S. thesis, Dep. Management, Imam Sadegh (a)
Univ., Tehran, I. R. Iran.
A. Toffler, Power shift:
knowledge, wealth and
violence at the Edge of the
21st century, New York:
Bantam Books, 1990.
November 2012 / 31
Pulsed Fluid Pressure Sludge
Dryer Design & Manufacturing
Introduction
A significant environmental challenge in all refineries and oilrelated industries is the oil sludge. Generally speaking, heavy sludge
often settles in the crude oil tanks, likely to disturb the oil refining
systems. Throughout different stages of water, oil and suspended
solids separation, a large volume of oil sludge is produced, causing
serious problems for the refineries. Therefore, it would be necessary
to develop an effective method to separate oil compounds from the
sludge in different sections of the oil industry.
Various methods have so far been presented for separating sludge
from oil. Some of them are centrifuging, filtration, and solvent
extraction, thermal and biological methods. Each method has its own
advantages and disadvantages. Thermal desorption methods pollute
the environment because they release pollutant gases. Moreover,
less recovery of oil materials from the sludge are obtained because
some of the hydrocarbons are removed. Biological methods take
a long time and also remove all hydrocarbons. Extraction-based
methods are used in the refineries which produce solvents as one of
their products. But the problem is that solvents, which are organic,
are costly and to some extent pollute the environment. Centrifuges
have high speeds and therefore are amortized quickly and their
equipments are expensive.
The project has been conducted by Research and Technology
32
Photo: ARASH YADOLLAHI
Directorate of National Iranian Oil Refining and Distribution
Company (NIORDC). It focuses on the design and manufacturing
of a fluid pressure dryer to dry oil sludge. The method was used in
the country for the first time to separate solid parts of oil sludge.
The advantage of pulsed fluid pressure devices is that they lack the
restrictions of biological methods and centrifuges. They can also
recover a high percentage of oil and water from the sludge and they
are effective for sludge with different physical properties.
The advantages of this dryer are as follows:
•
•
•
•
•
•
The maintenance of these systems is very inexpensive
since they lack any sophisticated mechanical and rotary
equipments.
They are able operate in a vast spectrum of concentrations
and different kind of sludge.
The system is highly efficient, being able of converting
one-percent solid sludge into 90-percent solid dewatered
sludge.
Possibility of separating water and oil from highly viscose
sludge.
The system is portable and could be carried to different
sections of the refinery.
It is highly flexible and could be designed to meet various
conditions and needs.
Methodology
The project focuses on designing
and manufacturing a pulsed
fluid pressure dryer to separate
the liquid phase of oil sludge
from its solid phase. The design
calculations have been made
based on the fluid pressure
systems equations. An usual
compressors have been used to
create the proper pressure in the
system. These compressors are
the most customary ones are
available in the industrial market.
In this system, the pressure
declines gradually because the
sample’s physical form
changes form – from paste
to something like cracked
cake. The system, designed
on the lab scale, is capable
of transforming various oil
sludge input sample into
solids containing less than
10-percent liquid phase.
The lab prototype of the system
has passed the necessary tests and
the technological knowhow for its
industrial manufacturing has been
mastered.
The pulsed fluid pressure sludge
dryers are expected to:
1.
2.
3.
4.
5.
Recovering maximum
valuable oil and
hydrocarbon materials
from oil sludge;
Minimizing wastes
through maximizing the
solid percentage of the
sludge;
Achieving the highest
separation yield;
Minimizing energy
consumption and costs;
and
Simplifying the system
and it’ operation.
Conclusion
Fluid pressure filtering is a
method for separating oil from
oil sludge. This process is a
physical one with a large number
of factors, and has rarely been
analyzed theoretically. This
method could be highly efficient
if high pressure is applied.
The pressure forces needed in
pulsed pressure systems are
generated by various devices
like pumps and compressors.
The resistance forces include
frictions and the resistance of
solidified separated sludge cake.
At the beginning, the sludge
resistance is zero, but it increases
as filtering goes on. If the solid
sludge is washed after filtering, its
resistance will remain unchanged
during the operation. Usually as
time passes, the resistance of slid
sludge increases and the pressure
drop increase notably.
Drying by fluid pressure systems
is a specific case of flow in porous
media. As mentioned earlier,
resistance to flow increases as
the dryer is filled with dewatered
sludge.
The manufactured devices are
capable of separating the liquid
phase from the solid phase of
the oil sludge regarding the oil
industry’s needs and the absence
of an appropriate device; with
these characteristics such a system
would be the key to resolve the
challenge of oil sludge in the oil
industry.
The project is specifically
designed and manufactured to
serve the oil and petrochemical
industries. This pulsed fluid
pressure sludge dryer has been
upgraded to its maximum
efficiency in oil and hydrocarbon
separation.
November 2012 / 33
Black Gold Rush
in the Horn of Africa
By Parisa Fotouhi Mozafarian
Introduction
The recent developments in North
African countries unseated Ben Ali in
Tunisia, Hosni Mubarak in Egypt
and Moammer Gaddafi in Libya.
They were all turning points for the
MENA.
The new leaders in the North
African states are defining modern
strategies. Their success still hangs
in balance, but what is certain is
that economic, social, political
and cultural structures would be
significantly affected.
In many Arab states influenced by
these developments, oil and gas are
major parameters in their economies.
The revenues gained from oil and gas
exports constitute the bulk of their gross
domestic product (GDP). Moreover, neighboring
Arab states with no significant oil and gas reserves
depend on their labor force working in the oil or gas-rich
countries. Therefore, the economy of Arab states in the
34
MENA is influenced by oil in a
way or another.
The impact of waves
of unrest in the
Arab states is not
limited to the
region because
the world’s
economy
depends on oil
and gas supply
from the
MENA.
Given the
significance of
Egypt and Libya
in the region and
the fundamental
changes in their
regimes, the present article
studies the impact of political
unrest on these two countries’ oil
and gas sectors in terms of production,
transportation and investment.
Impact of Developments on
Domestic Consumption
The Arab world accounts for
49.6 percent of the world’s total
proven oil and 29.1percent of
the world’s proven gas reserves.
Such hydrocarbon richness has
spread the wrong belief among
their people that they can use
up these resources at very low
prices.
It’s no surprise that the per
capita consumption of fossil
fuels in the Arab world is much
higher than in other countries,
thanks to the huge subsidy
allocation by their governments.
The price of crude oil and its
products stand very low in
most Middle East nations and
these prices are not unrealistic.
Therefore, these major crude
exporters would have to cut
their exports due to their
growing domestic consumption.
To tackle this challenge, many
Arab governments decided to
reduce domestic consumption
through mechanisms like
removing subsidies, but they
faced the resistance of the
majority of people.
In the aftermath of the outbreak
of unrest in North Africa, the
Persian Gulf Arab states began
paying more cash to people.
Protests erupted in Algeria, but
the outcome was different from
what happened in Tunisia and
Egypt. One reason was that the
Algerian authorities took the
demonstrations seriously and
lifted a 19-year-old emergency
law. The Algerian government
also promised housing and
financial facilities to youth,
higher pay to the government
employees and more subsidy
allocation to foodstuff.
Countries with low-income
in North Africa cannot adapt
themselves with the incentives
offered by Persian Gulf littoral
states and Algeria, while
they have no tendency to cut
subsidies. A project in Arab
countries to reform energy
prices in order to bring them
closer to the market prices
remains hamstrung. Therefore,
the growing domestic
consumption of oil products
would go on and will pose a
serious challenge in the coming
years.
Impact on Foreign Investment
According to the latest forecasts
by the International Energy
Agency (IEA), the world’s oil
and gas sectors would need
respectively $ 10 and 9.5
trillion of investment through
2011 to 2035. Since the world
would depend on the MENA
for oil and gas supply for at
least several more decades,
the oil and gas industry in the
Middle East needs remarkable
investment.
Since the bulk of this investment
should be made by international
oil companies which generally
prefer to invest in politically and
economically stable regions,
the continuation of political and
social tensions in the Arab states
of MENA would disturb the
attraction of foreign investment
and subsequently oil and gas
production in this region would
drop in the long-term.
Political tensions and food price
hikes in 2011 were the main two
factors that affected MENA. Oil
price hikes in the oil exporting
countries except for crisisaffected Libya and Yemen have
increased national revenues.
The GDP growth in this region
was 4.9 percent in 2011 and
is forecasted to fall to 3.9
percent this year. In general,
the growth rate in MENAstates
is falling due to the hindrance
of economic activities by
political developments, decline
in domestic and foreign
investment and the number of
foreign tourists.
Impact on Egypt Oil and Gas
The Egyptian revolution has left
insignificant impacts on the oil
and gas production, oil products
refining as well as oil and gas
delivery. The shipment of oil
and gas through Suez Canal and
Sumed pipeline never topped
despite the anti-regime protests.
Some gas pipelines were on the
receiving end of the political
tensions in this country.
Egypt is not a major oil
producer in the world and
specifically in MENA. Its
oil output reached its peak
of 935,000 b/d in 1996 and
has since faced declines to
fall to 735,000 b/d this year.
In spite of the discovery of
new fields and the adoption
of new technologies for the
enhancement of the recovery
factor in some oil fields, the
production is forecasted to keep
falling to reach 690,000 b/d.
In return, the oil consumption
reached 709,000 b/d in 2012
and is forecasted to reach
820,000 b/d in 2016. That
means that Egypt would depend
on oil imports to meet its
growing domestic demand.
Analysts are of the opinion that
this country would make up for
its oil output decline by quick
development of its gas sector
and exports. Egypt has been
recognized as one of the main
gas producers and exporters in
the past decade. Egypt holds
the third largest gas reserves
in Africa, just behind Nigeria
and Algeria. Gas production in
this country has trebled from
2000 to 2012, hitting 61.3
bcm. But exports have not
increased quickly due to the
growing domestic demand. Gas
consumption soared to 49.6 bcm
early this year from 20 bcm in
2000. The Egyptian government
plans to raise its gas production
by 10 percent by the end of
2013.
Throughout the widespread
waves of unrest against the
former Egyptian government,
oil and gas fields were
never attacked and the new
government is trying to
attract foreign investment to
develop them. Analysts say the
government’s success in foreign
investment attraction depends
on political and economic
stability in this country.
Before the outbreak of unrest,
the Egyptian government was
planning to reduce energy
consumption rate by cutting
subsidies. In the face of public
fury against high prices, the new
Egyptian leaders are unlikely
to reconsider energy carriers
pricing. The government is
likely to adopt the policy of
increasing government costs and
keeping subsidies unchanged.
With 10 refineries, Egypt
constitutes a large segment of
the African refining sector. Its
refining capacity is beyond its
domestic need, requiring Cairo
to import crude and export oil
products.
Over the recent years, Egypt
has adopted plans to develop
its refining capacity. These
plans need foreign investment
and guaranteeing investment
requires economic stability and
increased internal security.
Egypt is playing an influential
role in the world’s energy
market through Suez Canal
and Sumed pipeline – both
providing routes for crude oil
and liquefied natural gas (LNG)
exports from the Persian Gulf.
The income from transit of these
products constitutes a major part
of the Egyptian government’s
revenues. Moreover, any
hindrance of delivery of cargoes
would negatively affect the
consumption markets notably in
Europe.
Suez Canal, 120 miles
long, connects the Red Sea
and the Persian Gulf to the
Mediterranean Sea. Crude and
oil products are transported
on both sides of the canal, in
the north to the Mediterranean
Sea and in the south to the Red
Sea. The LNG transfer through
the canal is often carried out
through Suez Canal from Qatar
to European and American
markets.
November 2012 / 35
In late 2000, one percent of the
world’s total crude oil supply
or 5 percent of the marine oil
shipment was done through
this canal. This figure shows
a decline from the previous
decades. In 1956 and from 1967
to 1975, the canal was blocked
due to the outbreak of war. That
was why alternative routes were
considered.
Sumed pipeline, 200 miles long,
is an alternative to Suez Canal
for big cargoes. This pipeline
was constructed in 1967 due
to the closure of the canal.
With a capacity of delivering
2.4 mb/d, Sumed connects the
Red Sea to the Mediterranean
Sea. The pipeline stretches
from south to north, carrying
oil from the Persian Gulf to
the Mediterranean coasts. the
pipeline is owned by the Arab
Petroleum Pipeline Company/
Sumed Company, a joint
venture of EGPC (50%, Egypt),
Saudi Aramco (15%, Saudi
Arabia), IPIC (15%, the United
Arab Emirates), three Kuwaiti
companies (each one 5%), and
QGPC (5%, Qatar).
The oil shipment via Suez
Canal and Sumed pipeline has
declined since 2008 for the
following reasons:
1.The fall in the world’s
economic growth and
subsequently lower demand for
crude: OPEC and specifically
Persian Gulf producers reduced
their output or suspended
their production hike plans in
reaction to the falling demand.
It resulted in lower oil trade
in region at time of the 2009
economic turmoil in the world.
2.Since mid-2000, the global
oil market’s indicators changed
a lot. Oil consumption and
imports in Asian states, notably
China and India, have increased
compared with European
countries and US, and the flow
of crude oil from the Middle
East to East gained momentum.
3.Piracy and security concerns
in the Horn of Arica obliged
some exporters to go a longer
way to deliver their cargos to the
36
Western markets.
Unlike crude oil, LNG shipment
via Suez Canal has increased.
The delivery of LNG cargoes
through the northern route
of the canal takes place from
Qatar or Oman to European and
North American markets. The
southern route is used for the
delivery of cargos from Algeria
and Egypt to Asian markets.
In the event of the closure of
Suez Canal and Sumed pipeline,
oil and LNG tankers will have
to bypass southern Africa to
cross the Cape of Good Hope
– a longer and costlier distance.
Throughout the
2011 unrest in
Egypt, the delivery
of cargoes via Suez
Canal or Sumed pipeline
faced no problem.
Impact on Egypt Upstream
Oil and Gas Sectors
Chilean state firm ENAP
doubled its Egyptian production
to 7,000 b/d as output soared
at its operated East Ras Qattara
concession. ENAP is looking
to further expansion after
recently signing an exploration
and production agreement
for the Sudr block, located in
the Gulf of Suez. It is one of
the seven fields the Egyptian
oil company put to tender in
2010. ENAP and its subsidiary
Sipetrol are operating three
main oil blocks in Egypt and
are determined to win another
block. Egypt last issued tender
bids for its oil fields in March
2011, offering seven quite
small fields for development.
Since Egypt’s oil company
lacks sufficient resources to
finance the projects, the fields
have been commissioned for
development to contractors
under service contracts. Under
such contracts, the contractor
pays for the maintenance of the
equipment and will take a share
of new products according to its
investment and technology.
ENAP was totally recouped for
its costs despite domestic unrest
in Egypt. Currently, 20 percent
of ENAP production in the
world comes from Egypt.
A BP PLC-led group started gas
production from Seth field in
the Nile Delta offshore Egypt
in June.
Two wells in the
western part of the
Seth reservoir are
expected
to reach 170 mcf/d
and develop about 240 bcf
of gas. Meanwhile, the group
has accelerated Phase 2 of the
development of the eastern
part of Seth through two more
platform wells that should go on
production by the end of 2012,
hiking total output to more than
250 mcf/d.
The Seth development went
on production on 23rd June, 18
months from project section and
15 weeks ahead of schedule. BP
predecessor, Amoco Production
Co. led a group that discovered
Seth and other Nile Delta fields
in the mid-1990s.
Seth field is 60 km offshore in
the Ras El Bar concession in the
East Nile Delta Mediterranean
near the group’s producing
Ha’py and Denise fields.
Seth is being developed with
a 6-slot, normally unmanned
platform in 262 ft of water. Gas
is being shipped via the Denise
(Pliocene) pipeline to the El
Gamil gas terminal near Port
Said. El Gamil handles 20% of
the gas produced in Egypt.
BP is operator of Ras El Bar
with 50% interest, and Eni SPA
has 50% through its subsidiary
International Egyptian Oil Co.
BP said its joint venture with
Egyptian General Petroleum
Corp./EGAS, the Pharaonic
Petroleum Co., and BP’s
partners
meets nearly 40%
of Egypt’s domestic
gas demand.
BP is actively
exploring in the Nile
Delta and investing to
add production from
existing discoveries,
and it is developing
West Nile Delta, a
strategic project that
will supply gas to the
domestic market.
Impact on Libya Oil and
Gas
The impact of Arab Spring
on the Libya’s oil industry
was much more than on the
neighboring countries’. The
overthrow of Mubarak was
less violent. NATO and foreign
armies made great contribution
to the Libyan regime change.
It is no surprise to see regime
change in Egypt without any
significant decline in the oil
production, while the Libyan
oil industry was paralyzed and
some of its fields, terminals and
refineries were attacked. Libya
accounts for 3.4 percent of the
world’s proven oil reserves and
sits atop the largest oil reserves
in Africa. The Libyan oil sector
enjoys the following two
advantages:
1. Geographically, oilrich Libya is close to energythirsty Europe. Despite their
efforts to diversify their energy
basket, the Europeans heavily
depend on oil which could be
easily imported from Libya.
2.Unlike the oil produced in
the Persian Gulf, Libyan oil
is of high-quality thanks to its
low sulfur content. The Libyan
crude oil is better for processing
and treatment could be done in
a simple refinery without any
sophisticated equipment.
Sweet and light crude oil
shortage is much more difficult
than the shortage of sour and
heavy crude oil. The reason is
that the refineries fed by light
and sweet crude are less flexible
and of lower quality compared
with others. The world’s oil is
mainly heavy and sour, pushing
Libya into bold relief due to the
quality of its oil.
In the Persian Gulf states,
including Iran, Iraq, Kuwait
and Saudi Arabia, oil was
discovered in the early 20th
century, but Libya explored
oil in the late 1950s.
However, Libya
became the world’s
fourth big exporter
of crude oil in the late
1960s.
But due to Gaddafi’s
wrong policies, Libyan oil
production and exports dropped
sharply four decades later.
Libya undertook fewer efforts
than other countries to attract
international oil companies.
Besides, international sanctions
against Libya and
Gaddafi’s ignorance of
international norms and
conventions dissuaded
international oil firms
from investing in the
North African state.
In 2000, when all
sanctions were lifted,
Libya was expected to
retain its position as a leading
oil exporter and consumer.
Significant contracts were
signed with BP and Eni. Alas,
this period was short-lived.
The Libyan officials were loath
to attract foreign investments
and the Libyan companies
were working under tight
bureaucracy. Continuation
of this trend will leave oil
reservoirs untapped in Libya.
Unlike Egypt, Libya is one of
the most significant producers
of oil in the world, Middle
East and North Africa. Oil
production in this country was
1.66 mb/d in 2010, but declined
to 480,000 b/d in 2012.
Given the fact that Libya’s
petrodollars make 95 percent
of the country’s hard currency
revenues and more than 70
percent of its GDP, it would be
significant to fully prospect in
its hydrocarbon reservoirs.
The urgent need for Libya
to enhance its crude output
again has motivated the
country to reconstruct its oil
infrastructures. Libyan oil wells
need regular maintenance and
six months of halt in production
must have inflicted heavy
damage on the facilities. Libya
has six main terminals, two of
which were seriously damaged.
In addition to oil, Libya’s
huge gas resources remained
untapped. Libya became a
gas exporter in 1971. Libya’s
gas exports soared to 3.6 bcm
in 1977. But in 1980, Esso
Libya was declared as national
asset and the prices went up.
Consequently, LNG buyers
either scrapped their deals or
reduced their purchases.
Two decades later, LNG
industry development declined
due to the economic sanctions
and the lack of interest on the
part of foreign companies. In
the early 2000s, the gas industry
became profitable again. A
340-mile subsea pipeline,
constructed by Eni and Libya’s
national oil company and
connecting Libya and Italy,
was inaugurated in October
2004. In February 2011 when
Libya plunged into uprising,
Eni blocked the pipeline before
reopening it by the end of
the year. The resumption of
gas exports in Libya was a
significant step in this country’s
oil and gas industry.
At present, many famous
oil companies like Eni,
Spain’s Repsol, France’s
Total, Germany’s Winterzahl,
US ConocoPhillips, Hess
Corporation and Marathon Oil
Company have voiced their
interest in resuming work in
Libya. Some of them have even
dispatched their representatives
there for negotiations. Libya’s
oil production is forecasted
to reach 1.95 mb/d in 2016 in
the light of interest by foreign
companies to invest in this
country.
Different estimates have been
given about the time required
by the new Libyan government
to rebuild the country and make
up for damage inflicted on the
oil infrastructures. Reparation
of structures requires a high
level of security as well as legal
frameworks.
Any decision about oil deals in
Libya depends on their future
president. Anyway, Libya has
to repair the fields, terminals
and other damaged facilities.
The Libyan authorities have to
start from scratch as their frozen
assets have been released.
Conclusion
The recent developments in
Arab and African countries
have been more influential
on Libya’s oil industry than
Egypt’s. Analysts believe
that Libya would become
a significant factor in the
world’s energy market in
the mid-term by establishing
political stability and economic
security. Financial transparency
is needed for economic
development in North Africa.
Economic problems do not
necessarily stem from financial
shortages and may result
from improper allocation of
resources. Economic woes
always give rise to political
problems and therefore the
North African states have to put
job opportunities’ creation and
better life quality high on their
agenda.
Economic stability in MENA
requires politically fundamental
changes. Moreover, due to the
public demand for transparency
and auditing, the new contracts
are examined with more
precision.
November 2012 / 37
Mini-Refineries in Russia
By Sousan Afzalzadeh
Director for refining, distribution and gas projects planning, Petroleum
Ministry Department for Hydrocarbon Resources Planning and Supervision
Introduction
The primary crude oil refineries were a simple distillation tower whose products were of low quality. Over the past half a
century, modern refining technologies have been developed and new units like isomerization and CCR have been added to
the refineries in a bid to offer products of better quality. The development of new technologies requires higher investment
which faces restrictions. The discovery of crude oil reservoirs in oil-rich countries like Iran, Iraq, Russia and the United States
prompted their officials to look for a technology to build small-sized refining units close to their crude oil reserves.
1. Technology
One of the sophisticated technologies applied in the
construction of mini-refineries is ordinary distillation
technology. In the past, external reflux causes separation in the
distillation tower, but today, internal reflux has been set twice
and more to increase separation, which is done in vertical pipes
measuring between 0.5 and 3 meters in length and between 6
and 25 millimeters in diameter. This process is known as Linas
Technology, developed by Russia in the late 20th century. In the
beginning, refineries processed 150 b/d, but their capacity was
raised to 8,000 b/d soon. The technology became operational
in four years. In 2008, seven mini-refineries in Siberia treated
150 to 8,000 b/d.
2. Linas Technology
Feedstock
Density (gram/cubic
centimeters)
Crude
0.805-0.860
Gas condensates
0.75-0.79
Crude mixed with gas
condensates
0.75-0.83
Table 3 – Refined Products Specifications
This technology is flexible enough and is applied in crude oil
and gas condensate distillation.ّFeedstock could be crude oil,
gas condensate and /or crude mixed with gas condensates.
Table 1 specifies distillation towers for different capacities of
treatment.
Table 1 – Distillation Towers for Different Refining
Capacities
Product
Start of
Distillation
(degrees
C)
90%
Distillation
(degrees C)
Density
(gram/ cubic
centimeters)
Gasoline
33-40
145-170
0.7-0.73
160
330-335
0.82-0.84
175-165
0.935-0.92
Refining Capacity (1,000
tons/year)
Tower’s
Length
(meters)
sdddTower’s
Diameter
(meters)
Diesel
fuel
12
7
0.5
Fuel oil
50
7
0.9
150
7
1.6
The refining capacity could be enhanced by adding two pipes.
Tables 2 and 3 specify inputs and outputs.
38
Table 2 – Feedstock in Linas Technology Refineries
Fig. 1. Schematic Comparison between Ordinary and Linas Distillation Towers
of Russian refineries process less than 9,000 b/d.
3. Advantages and Disadvantages
Construction of mini-refineries through utilizing Linas
technology has the following advantages:
-
-
-
-
It facilitates refinery designs and could be used
anywhere in the world.
It is usable in very low refining capacities even below
1,000 b/d.
Its technological knowhow costs less than other
technologies.
However, this technology could not be used in largesized refineries because it would not be economical
when the diameter and length of pipelines increase.
Data about Russian Mini-Refineries
Russia – the second largest non-OPEC producer in the world
– has in some occasions been recognized as the largest oil
producer with a refining capacity of 9 mb/d. Nearly 20 refineries
are operating in the European section of Russia and 6 more
in its Asian section. Their refining capacities vary between
14,000 and 380,000 b/d of crude oil and gas condensates.
There are nearly 160 mini-refineries in 53 spots in Russia with
a treatment capacity of less than 14,000 b/d.
Russia has numerous small crude oil reservoirs for which a
big refinery would not be economical; therefore min-refineries
have been built close to them. The US and Russia account for
the bulk of mini-refineries in the world. More than 30 percent
4. Linas Technology in Iran
Oil-rich Iran has nine refineries for processing crude oil
and gas condensates. It has also large refining plants under
construction, but it is still seeking to boost its refining capacity.
Iran has scattered oil and gas fields, some of them shared with
its neighbors. Gathering crude oil and gas condensates from
so many reservoirs into a single large refinery would have no
economic benefits and application of Linas Technology would
be cost-effective.
Given Iran’s climatic diversity and the difficulties of oil
products delivery in cold seasons to some regions, it would be
logical to build mini-refineries in Iran.
5. Conclusion
Building mini-refineries whose capacity is below 10,000 b/d
in remote regions, notably in the west and south, where oil and
gas fields abound, would be reasonable because construction
of pipelines for feedstock delivery is costly. It is recommended
that Linas Technology be applied for building small refining
units in a bid to meet local needs for strategic oil products.
November 2012 / 39
Composite Pipes at
Mashhad Sadra Sharq
By Mohammad Afshin
A
small but
dynamic factory.
Everyone is
busy working. It
smells resin everywhere.
The pipes, tanks and profiles
stored outside indicated
how active the factory was.
We were waiting for the
guide. He finally arrived
with several masks. We wore
the masks and entered the
factory. Welding machinery
and metalworking lathe
were operating. Experts
were assessing the products.
One of these products was
MT6 supposed to produce
fiberglass pipes for the first
time in Iran. Fiberglass is
a fiber reinforced polymer
made of a plastic matrix
reinforced by fine fibers of
glass. It is also known as
GFK.
Iran used to import fiberglass
pipes from the United
States and India, but today
Mashhad Sadra Sharq Co.
is manufacturing these
40
pipes at much lower costs
than foreign companies.
Fiberglass pipes are key to
oil and gas industries.
The company is located in
Khorasan Razavi province,
in northeastern Iran.
Properties
Today, composite materials
are largely used in the
oil, gas, water supply
and chemical industries.
Composite materials, often
shortened to composites or
called composition materials,
are engineered or naturally
occurring materials made
from two or more constituent
materials with significantly
different physical or
chemical properties which
remain separate and distinct
within the finished structure.
Underground pipes are used
across the world for the
transfer of oil, gas, water and
sewerage and protection of
telecommunications cables
and power transmission
lines. These pipelines, often
buried under soil or water,
always face challenges of
protection and maintenance.
But reconstruction and
reparation of pipelines is
technically and economically
significant. The first
composites developed by
mankind were hatch and
adobes using straw. These
composites date back to four
millennia BC. Iran’s historic
citadel Arg-e Bam is the best
example of composite in
ancient times.
The need for faster, more
secure and less costly
methods shifted attentions
to using composites for
repairing pipelines. The
tendency to composites
stemmed from successful
experiments with fiberreinforced plastic (FRP).
Also known as fiberreinforced polymer, FRP
is a composite material
made of a polymer matrix
reinforced with fibers. The
fibers are usually glass,
carbon, or aramid, although
other fibers such as paper
or wood or asbestos have
been sometimes used. The
polymer is usually an epoxy,
vinylester or polyester
thermosetting plastic, and
phenol formaldehyde resins
are still in use. FRPs are
commonly used in the
aerospace, automotive,
November 2012 / 41
marine, and construction
industries.
A common example of a
composite would be disc
brake pads, which consist
of hard ceramic particles
embedded in soft metal
matrix. Another example is
found in shower stalls and
bathtubs which are made
of fiberglass. Imitation
granite and cultured marble
sinks and countertops are
also widely used. The most
advanced examples perform
routinely on spacecraft in
demanding environments.
Low Weight, High
Resistance
Advanced polymer
composites are light,
reinforced and highly
resistant to destruction and
42
corrosion. Therefore, they
make repaired pipelines
more durable. Among other
advantages of this method is
easy and quick installation
without any need for drilling
to pull out the pipe.
The most significant
advantage of composite
pipes is the low cost of their
maintenance and resistance
to corrosion from fluids
(liquids and gases) on the
inner and outer walls.
Managing-Director of
Ali Pilzour says the company
is a leading manufacturer
of pipes, joints, tanks and
fiberglass profiles in Iran. He
said the company has taken
great strides in pushing ahead
the composite industry by
relying on its own technical
knowledge.
Saving Money
Pilzour said the company
began producing fiberglass
pipes in 2006 in a bid to save
100 million dollars a year in
state coffers. This company
has expanded its activities in
Assaluyeh and has managed
to be present in Phases 13-18
of the giant South Pars Gas
Field in collaboration with
Iran Power Plant Projects
Management Company
(MAPNA). Mashhad Sadra
Sharq Co. is currently
cooperating also with Persian
Gulf Gas Liquids Refinery
and National Iranian South
Oil Company (NISOC).
Among non-oil projects
operated by Mashhad Sadra
Sharq are water supply
to Markazi, Fars, Yazd,
Kermanshah, Khorasan
Razavi and Semnan
provinces.
Pilzour said the company
has so far patented two
inventions related to
composite pipes.
First in Middle East
is the first Middle Eastern
company meeting all
the composite pipelines
requirements of Iran’s oil
industry. It has patented the
design and manufacture of
continuous pipes.
The nominal capacity of
this company is 11,400
tons a year, but is currently
operating at half its capacity.
If needed, it can raise its
capacity.
Pilzour said Iran purchased
in 1992 its first pipe making
machine from Italy’s
Sarplast, which is the global
leader in the design and
production of fiberglass
pipes. After the purchase
of the machine, Iranian
engineers at Mashhad Sadra
Sharq Co. managed to
acquire the technology to
build the machinery.
Currently, the necessary
fiberglass for this company
is imported from foreign
states. However, Pilzour
said Iranian companies can
produce fiberglass if the
necessary technical savvy is
purchased.
Iran imported more than
9,000 tons of fiberglass in
the first eight months of the
current calendar year which
began on March 21. Iran’s
FRP imports from mainly
Asian and European states
are forecasted to reach
10,000 to 12,000 tons –
much higher than last year.
Iran is also importing big
consignments of resins.
Modern Methods
The production of fiberglass
joints at Mashhad Sadra
Sharq Co. is done either
manually or mechanically. In
many developed countries,
manual methods are still in
effect.
Ali-Reza Fadaei Pour,
an executive director at
Mashhad Sadra Sharq
Co., said: “This method
needs more labor force, but
mechanical production is
more attractive to customers.
In order to respect our
obligations and satisfy our
customers, we have installed
the necessary machinery for
manufacturing composite
pipes.”
Mechanization of composite
pipe production at Mashhad
Sadra Sharq Co. began in
2008, Fadaei Pour said,
adding that the company
has been modernizing its
machinery. He said the first
machine installed in the
factory was a four-axis one.
R&D
Sattar Maleki, the company’s
R&D director, said the main
product of Mashhad Sadra
Sharq is composite pipe
and joint, in sizing varying
from half an inch to 4,500
millimeters, manufactured
either continuously or
discontinuously.
Mashhad Sadra Sharq has
acquired the technology
for designing and building
machinery manufacturing
composite pipes.
Over the past years, Iran’s
oil industry has broadened
its communications with
universities and scientific
centers. Every year,
thousands of dissertations
and theses are focused on
upstream and downstream oil
sectors.
Maleki said Mashhad
Sadra Sharq has been in
touch with polymer and
scientific centers, working on
composite pipes, for the past
ten years.
“Since four years ago, our
communications with the
universities entered a more
practical stage and we
have managed to conduct
several joint projects, the
most significant of which
was an oil and gas pipeline
reparation project in 2009.
November 2012 / 43
Turbine
Machine
Middle East
Company
Develops
Gas Turbines
T
he most
significant asset
of every nation
is its creative
manpower that
could contribute to economic
progress. Creative manpower
is like a beacon showing the
way towards progress.
Economic flexibility is
known as the most prominent
advantage due to the existence
of effective and young
manpower. Over the past
years, some international
restrictions in Iran’s oil
industry have encouraged
researchers and managers to
brace for risks. At present, 75
percent of Iran’s oil industry
equipment is manufactured
domestically. The percentage
is planned to reach 98 percent
by March 2016.
Among strategic oil and gas
equipment, gas turbines are
the most important. These
turbines are used in oil and
liquefied gas production
factories, oil pumps and gas
booster stations. Given the
significance of turbines in the
44
Photo: ARASH YADOLLAHI
oil industry, the manufacturing
of their main components
topped the agenda of
knowledge-based companies.
Thanks to Iranian experts
and manufacturers, a large
segment of these components
have been indigenized.
A leading company to that
effect is Turbine Machine
Middle East Company (TMC),
which is currently producing
full package of gas turbines
with capacities of 10,000 to
15,000 horsepower.
Design and manufacture of
gas and steam turbines are
among the most sophisticated
technologies. Only two or
three countries have already
mastered the technology for
manufacturing gas turbines.
Iran has joined this club. Over
the past three years, Iranian
engineers have been following
in the footsteps of American
and European engineers, but
the point is that the Iranians
will make headway much
more quickly than foreigners.
In less than two decades,
Iran will become a leading
manufacturer of gas turbines in
the world. TMC, a knowledgebased company, has reached a
stage to be capable of providing
the necessary components of
industrial turbines for Iran’s
oil industry. The company has
90 staff, 75 percent of whom
hold university degrees. They
are aged around 30, but they
are developing systems whose
technology is mastered by few
industrialized countries. Javad
Taqizadeh, executive director
of this company, says engineers
work 14 hours a day in TMC.
He said a contract has been
signed with Tehran Kala Naft
Company for the manufacturing
of three top rotors installed in
5- and 18-megawatt industrial
turbines. Taqizadeh said TMC
has also agreed to retrofit rotary
machinery in the platforms of
Forouzan Oil Field. Retrofitting
refers to the addition of new
technology or features to older
systems. Retrofit projects
replace or add equipment
to existing power plants to
improve their energy efficiency,
enhance their output and extend
their lifespan, while mitigating
emissions.
TMC mastered in three
years the technology for
manufacturing and retrofitting
turbines, compressors and
other equipment used in the oil
industry.
Mechanics and metallurgy
constitute the components of
research work at TMC. The
metallurgy team has conducted
a precise study about turbines
and their operation, while the
mechanical team has focused
its efforts on manufacturing.
TMC engineers began working
on their first project in 2005
and managed to develop the
prototype of their first product
one year later. The product
was a gas depressor used in
four-megawatt turbines. It was
installed on one of the turbines
of the National Iranian South
Oil Company (NISOC).
Taqizadeh says gas depressors
are like the heart of turbines and
make great contribution to air
compression and combustion in
the turbine. Gas depressors are
the most sensitive component
of an industrial turbine. He said
TMC then moved in 2007 to
develop another type of rotor
– air compressor – which was
installed in Lavan Island. TMC
has so far manufactured and
installed 15 other components
of turbines.
Due to the diversity of
equipment manufactured by
TMC, engineering and research
groups in this company focused
further on indigenization of
technologies and a variety of
gas and steam turbines were
manufactured.
Taqizadeh said restrictions
and non-diplomatic conduct
of some countries against Iran
failed to frustrate TMC and
it even added to the technical
knowledge of Iranian scientists
and specialists.
Over the past years, the
company has managed to win
awards at national scientific
festivals.
“Since its establishment,
TMC set up an overhaul
unit for industrial turbines in
parallel with its manufacturing
of rotors, turbines and
compressors,” Taqizadeh said.
TMC first conducted overhaul
on gas turbines in 2005.
TMC has so far provided
services to NISOC, Iranian
Offshore Oil Company (IOOC),
Iran Oil Terminals Company
(IOTC), Iranian Oil Pipelines
and Telecommunications
Company (IOPTC), Ramin
Power Plant, as well as oil and
gas refineries and petrochemical
plants.
TMC has so far delivered more
than 120 types of products
to different industrial plants.
The company’s capacity in
designing and manufacturing
under-15 megawatt industrial
turbines is unique.
“In the past, there was no
sense of self-confidence for
domestic manufacture of rotary
machinery, but today, Iranian
engineers are firmly determined
to do so. We can say that
Iranians are engaged in every
industrial field, but employers
are required to provide much
more support,” said Taqizadeh.
Nearly 40 technologies are
required to manufacture
industrial turbines – among the
most expensive in the world.
Currently, the components of
these strategic commodities are
manufactured in the country at
much lower cost.
These turbines used to be sent
abroad for overhaul, but today
they are repaired inside the
country.
Taqizadeh says Iranian
companies should be trusted
upon for the signature of longterm deals. “At present, nearly
75 percent of the components
of five-megawatt turbines are
manufactured by TMC. But
this company intends to unveil
a fully Iranian five-megawatt
turbine” in the next Oil Show
due to be held in April 2013.
TMC’s main activities could be
listed as follows:
 Reverse Engineering/
Manufacturing of Rotor Parts
 Centrifugal Compressor
Rotor Design & Manufacturing
 Repair & Reconstruction
 Overhauling of Gas & Steam
Turbines
 Refurbishment of Parts
 Control System Retrofit
 Procurement & Supply of
OEM Parts
 Rotor Services/Repair/
Restaging
 Complete Rotor
Manufacturing of Gas & Steam
Turbines
 Manufacturing of Hot &
Cold Section Blades, Disks and
Shafts
 Consultancy, Design,
Manufacturing, Supplying and
Installation of CHP packages
based on gas turbines.
November 2012 / 45
T
he Middle East
accounts for more
than 56 percent
of the world’s oil
reserves held mainly
by Iran, Saudi Arabia, Iraq,
Kuwait and the United Arab
Emirates.
Since the discovery of oil in the
Middle East in Iran’s Masjid
Soleyman, oil production
preservation and output
enhancement have always
been causes of concern for
the producers in the region.
In order to keep oil flow from
the reservoirs, new wells are
required to be drilled because
of pressure decline. Every year,
producers spend heavy costs on
drilling.
The equipment required for
drilling is costly. One of the
basic and quite expensive tools
in drilling is casing. At present,
the Persian Gulf oil producers
are top importers of casing
and it would be significant
for Iran to invest in the casing
manufacturing.
Saudi Arabia, Iran and Iraq are
the leading oil producers in
the Middle East, but Iran has a
46
Esferayen Louleh
Produces
longer history than its neighbors
in terms of oil recovery.
International estimates indicate
that Iran would account for
more than 16.34 percent of the
Middle East oil production by
2015. Iran is bent on playing
a more significant role in
the world’s energy market
by enhancing its oil and gas
recovery in the coming years.
To that end, Iran’s Petroleum
Ministry is considering new
drilling. Given the significance
of drilling in the development of
oil fields, implementation of oil
industry projects require precise
scheduling. To that effect, the
priority should be given to steel
seamless pipes, and drilling
and refining equipment. Iranian
engineers have indigenized
production of a large number
of strategic products and
equipment required in the oil
industry in the year to March
2012.
Iran’s Minister of Petroleum
Rostam Qasemi has said that
there is no problem for the
oil industry to reach selfsufficiency, adding that the
necessary planning has been
made for nationalizing the
manufacturing of oil industry
equipment in the shortest
possible time. The technology
for manufacturing expansion
casings used in hydrocarbon
exploration operations has been
mastered. Down-hole casings
are largely used in the drilling
industry, and thanks to Iranian
manufacturers, the country has
no longer to import them.
Esferayen Louleh Gostar
Company (ELGC) is one
of the Iranian companies
manufacturing pipes. The
company was initially
established to provide the
necessary oil and gas pipelines
in the country. The next step
for ELGC is to supply the
necessary pipes to Persian Gulf
and Caspian Sea littoral states.
ELGC was set up with a capital
investment of $ 31 million
plus 710 billion rials in the
northeastern province of North
Khorasan.
The first manufacturer of
down-hole casing in the Middle
East, ELGC is prioritized by
Industrial Development and
Renovation Organization
(IDRO). Its proximity to
Esferayen Industrial Plant – the
sole producer of steel billets and
super-alloys – is a privilege for
this company.
Diversity in Products
The products of this company
are diverse. The company has
units manufacturing seamless
pipes measuring 7 to 16 inches
in diameter, casings measuring
4.5 to 16 inches in diameter,
casing coupling pipes measuring
1.9 to 16 inches in diameter and
casing tubing pipes measuring
1.9 to 7 inches in diameter.
The rolling process is as
follows: The billets are heated
in rotating furnaces up to 1,300
degrees centigrade before being
transformed into seamless
and thick tubes or casings by
hydraulic press and elongator.
They are then rolled into mother
pipes before undergoing final
touches to turn into plain end
pipe.
The technology used in here is
Pilger Mill.
A tube-rolling unit including
a Pilger mill is used primarily
Gostar Company
Casings
to manufacture seamless pipe
of large diameter (400–700
mm). The initial material is
round ingots, which may be
solid and cast in ingot molds
or hollow and prepared by
continuous casting; hollow
billets produced on hydraulic
presses are also used. The billets
are preheated and rolled on
a piercing mill and then on a
Pilger tube-drawing mill, which
is a two-high mill with periodic
control of the rolls. The pipe is
rolled on a cylindrical mandrel,
with stepped feed by a special
mechanism at each revolution
of the rolls. The pipe is reheated
after rolling and is then sized,
straightened, and put through
the finishing process.
Pilger Mill makes pipes more
resistant to rupture.
Pipe Testing
In the casing factory, both
ends of the pipes are threaded
by CNC apparatus. CNC pipe
threading lathe is a highly
efficient and high precision
oil pipe and casing thread
machining lathe developed
to meet the needs of the oil
industry. The series of machine
tool is designed mainly for
machine shops supporting the
oil field activities, in certain
steel industry and other
industries where large-diameter
pipe and casing is threaded.
This CNC pipe threading lathe
features high rigidity, high
precision, and high efficiency.
The pipe threading lathe can
be equipped with automatic
up-enders, and loading and
unloading devices which
together can achieve systems of
continuous automatic machine.
This is ideal for the machine of
oil pipe and casing.
The CNC pipe threading lathe
adopts front-situated selfcentering pneumatic chucks
with large jaw travel. The
chucks are easy to clamp, resist
contamination, and can meet
the needs of machining oil line
couplings and heavy oil pipe.
The machine spindles
incorporate tapered roller
bearings that are capable of
withstanding large axial and
radial forces, for high rigidity
and high accuracy of the
finished work-piece.
The standard configuration of
the electrical cabinet provides
a complete seal from external
elements, and has an air
conditioning system to reduce
dust contamination and reduce
heat within it.
Mehdi Barzi Keshtan, manager
of ELGC, says the factory
manufactured 20,000 tons of
casings last calendar year to
March, forecasting the current
year’s production to reach
33,000 tons to serve oil and gas
industries.
At present, the casing
production line of this factory
is operating at 26 percent of its
nominal capacity, but is capable
of operating up to 40 percent
of its capacity if it receives
new orders from domestic
companies.
Iran’s oil industry uses nearly
35,000 tons of tubing pipes per
year. But ELGC, the only tubing
manufacturer, supplies nothing.
Barzi Keshtan said 80,000 tons
of casings are used in the oil
and gas industry every year.
“ELGC has made planning to
manufacture 35,000 tons of
pipes this year. This company
is also capable of producing
250,000 tons of coupling pipes
a year.”
Quality Certificates
Quality control, destructive
and non-destructive testing is
done simultaneously on LEGC
products. The metallurgy lab
conducts tension and pressure
test, metallography, chemical
spectrometry, MFL, VT, MT
and PT.
Moreover, chemical tests
including water analysis in
purification post and cooling
tower, examination of varnishes
and lubricants, corrosion tests
like HSC and SSC are chief
among the other activities
carried out in the laboratory.
Precise quality control based
on qualitative engineering
principles is done by
experienced people.
Being an IDRO subsidiary,
ELGC is the sole manufacturer
of seamless steel pipes in the
Middle East. Its products outdo
foreign ones in terms of quality.
ELGC has so far been awarded
ISO 14001: 2004, OHSAS
18001: 2007 and Certificate of
Self-declaration Manufacturers’
Record.
November 2012 / 47
Azarab Building Boilers
& Storage Tanks
I
t would be no cause for
humiliation when an
oil producing country
imports equipment
from industrialized
countries to serve its oil sector.
However, improper conduct
of some Western countries
vis-à-vis Iran has promoted
the country’s oil engineers to
consider manufacturing instead
of imports in a bid to counter
unjust restrictions.
Iranian contractors are currently
active in South Pars gas
filed, known as the beating
heart of Iran’s oil industry.
Iranian companies are capable
of operating the projects
abandoned mid-way by foreign
contractors in South Pars, the
largest gas field in the world.
Iran’s Minister of Petroleum
Rostam Qasemi says transfer
of technological savvy tops the
agenda of the ministry. “Iranian
contractors are capable enough
to manufacture the equipment
needed in the oil, petrochemical
and refining industries. More
than 80,000 Iranians are
currently working in different
phases of South Pars without
any dependence on foreign
contractors.”
An Iranian company largely
active in manufacturing is
Azarab Industries Company
– a leading manufacturer of
power plant and oil, sugar and
gas refinery equipment in the
Middle East. Its equipment also
serves cement, sugar, gypsum
and mining industries.
Among the short- and long-term
strategies of Azarab are:
Winning foothold in
global markets and finding
international customers,
becoming a general contractor
equipped with the state-ofthe-art technology, capturing
national and regional markets,
achieving annual 20 percent
growth in selling products,
48
Photo: HAMED NOORI
striking a balance to its targets
for development of human
resources and technology
and applying endogenous
and exogenous technological
methods.
International Scope
Some examples of Azarab’s
cooperation with foreign
companies are listed below:
Transfer of technology from
Japan’s IHI for designing,
engineering, manufacturing and
installing boilers with capacity
of 20 to 2,200 tons of steam
per hour, transfer of technology
from Japan’s GKK for
manufacturing air pre-heaters,
transfer of technology from
Japan’s JSW for designing and
building towers, reactors, highpressure storage tanks, technical
cooperation agreement with
China’s HEC for procurement
of the mechanical equipment
of water turbines, acquiring
ISO 9001 certificate, being
awarded by Management and
Planning Organization (MPO)
for designing new products,
receiving GQM, ISO 14001
and OHSAS 18001 certificates,
transfer of technology from
Spain’s FW for designing heat
recovery steam generator
(HRSG), cooperation with
Russia’s LMZ for designing
and manufacturing
butterfly valves and
transfer of technology
from Austria’s VOITH
for water turbines.
Azarab has signed
a consultation
agreement with
Velosi for
manufacturing
steam boilers
and highpressure
storage
tanks up
to ASME
standards. The consultant
is a foreign expert affiliated
with the American Society of
Mechanical Engineers (ASME).
Depending on its unique
capacities and facilities,
Azarab is currently designing,
manufacturing and installing
SC, SD, SN, SR, HRSG and gas
air heaters.
The Department of the
Environment (DOE) and Water
and Wastewater Department
(WWD) have obliged Azarab
to comply with the defined
standards regarding the
environment. An independent
committee, mandated by DOE,
submits annual reports about
the compliance Azarab with
environmental obligations.
Hydraulic Power Plants
Department
Azarab established a department
20 years ago to manufacture
and overhaul power plants
equipment. The department
is expected to indigenize
fundamental industrial
technology
within the
framework of
management
systems on the
GC and EPC
bases.
While relying on
the technological
savvy acquired from
foreign companies
and using the unique
equipment available
there, Azarab designs
the sophisticated
equipment of refineries,
and offers consultation
services on construction of
hydraulic power plants.
In recent years, this company
has handled the construction
of Karoun 1-4 power plants
and the development of Masjed
Soleyman and Karkheh power
plants. Azarab has managed to
win foothold in international
markets in China, Belarus
and Austria. It has managed
to install OHSAS: 18001 for
safety and professional health
management.
In addition to these investments,
Azarab has been serious in
transfer of technology. Its
signature of an agreement with
the famous LMZ Company for
designing and manufacturing
butterfly valves is a case in
point. Currently, Azarab’s power
plant activities are concentrated
on designing and manufacturing
butterfly valves and water
turbines.
Azarab’s products and services
in the oil and gas sectors have
grown significantly in recent
years. This company is now
capable of operating turnkey
development projects.
High-Pressure Cylinders
Azarab’s products are mainly
high-pressure cylinders and
storage tanks. The storage tanks
are used for storing water and
fuel in refineries, power plants,
petrochemical plants and other
industrial places. High-pressure
cylinders are pressure vessels
used to store gases at above
atmospheric pressure. High
pressure gas cylinders are also
called bottles. A pressure vessel
is a closed container designed
to hold gases or liquids at a
pressure substantially different
from the ambient pressure.
Heat exchangers, towers,
gas pre-heaters and chemical
reactors are variations of highpressure cylinders developed
by Azarab. Designing and
manufacturing these cylinders
are done based on a variety of
parameters including operational
pressure, operational thermal
temperature, type of consumed
steel, workshop facilities,
environmental effects, wind,
earthquake, useful
life and resistance to
corrosion.
The cylinders’ pressure
is calculated based
on ASME and BS
standards. The thermal
temperature and
pressure of designing
are of high significance
and they directly
affect the cylinder’s
thickness. The existing
standards for designing
pressure vessels are
ASME, BS5500 as
well as standards
developed by German
and Italian institutes.
Azarab mainly relies
on American standards
in development of its
cylinders. In order to
design a product, some
parameters need to be
calculated in advance.
The main software
Azarab applies in
designing high-pressure
cylinders are PV elite,
Aspen B-Jack, Nozzle
Pro, Compress,
Nastran and Ansys.
Inflow and
outflow
nozzles for
fluids, small
and large
windows,
temperature
sensors,
safety
valves, trays
and distributors are
designed before their
construction begins in
the workshop.
Quality Tests
After the end of
the construction
stages, the product
needs to undergo
hydrostatic test
by water. In that
way, the residue
stress created
due to welding
are removed.
The cylinder is
put in a stressrelieving furnace
under standard
temperature.
The main tests
conducted
in the final stages are
ultrasonic test and
penetration test – all
conducted under the
supervision of quality
control section.
The storage tanks
developed by Azarab
are used for storing
fuel and chemical
in the oil, gas and
petrochemical
industries and
in power plants.
Their capacities
are up to 300,000
cubic meters with
their dimensions
measuring 150
meters in diameter
and 24 meters
in height. They
are designed and
manufactured up to
API 620 and API
650 standards.
of activities like mechanical
design, construction, power
supply, control and instruments.
Among the projects Azarab
has handled recently are
stainless steel storage tank in
Chabahar, spherical tank at
Ilam Refinery, olefin and boiler
towers at Maroun Petrochemical
Plant, petrochemical boilers
in Kermanshah, Maroun and
Kavian, cement production
equipment in Shahre Kord,
cement furnace in Mazandaran,
350-ton boiler at Bandar Imam
Petrochemical Plant, 120-ton
boiler at Kavian Petrochemical
Plant, three boiler packages
for Lorestan Petrochemical
Plant, three boiler packages for
Mahabad Petrochemical Plant
and oil refinery boilers in some
neighboring states.
Moreover, Azarab has signed
contracts
for
designing
Azarab
Products in Iran’s
Oil Industry
Azarab has recently
won EPC-style
projects in
tender
bids.
Designing
and
manufacturing
storage tanks
on an EPC
basis would
include a
variety
and
manufacturing
six boilers for
Phases 22, 23
and 24 of South
Pars gas field,
designing and
manufacturing
in Kharg
Petrochemical
Plant, boiler for
Persian Gulf Star
Refinery, designing
and manufacturing
four boilers
as well as
designing
and building
towers and
reactors for
Phases 13, 22, 23
and 24 of South Pars gas field,
installing boilers in Phases 17
and 18 of South Pars gas field as
well as six 180-ton boilers for
Phase 19 of South Pars gas field.
But a key project operated by
Azarab is its contribution to
the development of Shazand
Refinery in Arak, in central Iran.
It is known as an important
project in the oil industry in the
Islamic Republic and is aimed at
enhancing the refining capacity
of the treatment facility. With
the implementation of this
project, the refinery’s output
would soar to 250,000 b/d from
a current 175,000 b/d. Quick
design and manufacture of
equipment for the development
of Shazand Refinery has raised
the country’s gasoline output
by 12 million liters per day.
Moreover, Iran managed to
produce for the first time highoctane gasoline up to Europe
2004 standards.
Azarab has signed an eighttrillion-rial deal with Shazand
Refinery for the manufacturing
and installation of two 227-ton
boilers, three heat recovery
boilers, 38 reactors and towers
as well as 40 heat exchangers.
All these achievements have
been made in spite of unjust
sanctions imposed against Iran.
November 2012 / 49
Osveh Industrial
Group Indigenizes
Economizers
W
hen you visit
a refinery,
you will see a
boiler, which
is an inseparable part of
oil, gas and petrochemical
facilities. A boiler is a closed
vessel in which water or
other fluid is heated. The
heated or vaporized fluid
exits the boiler to be used in
various processes or heating
applications.
Steam boilers generate steam
and raise the temperature in
order to accelerate chemical
changes in the oil industries
like in refineries.
Until recently, Iran used to
purchase steam boilers from
Germany and Italy. But
several years ago, a staterun and a pharmaceutical
company managed to
acquire the technology to
manufacture boilers. In
that way, Iran became a
manufacturer of boilers and
saves millions of dollars
a year. Osveh Industrial
Group (OIG) is one of the
manufacturers of steam
boilers. This company has so
far operated several projects
for Iran’s oil industry.
“Since 1979, we started work
as the first private company
involved in the oil, gas and
50
steel industries. We are now
producing steam boilers
whose capacity is above 30
tons,” the acting manager of
OIG said in an interview.
Amirbahador Kashefi said:
“Before OIG decides to
operate oil industry projects,
it used to manufacture
steam boilers for buildings.
We built and installed four
30 ton/hour boilers for
Mobarake Steel Mill. Then
Razi Petrochemical Plant
ordered a 100-ton boiler to
us. We have also built and
installed two 150-ton boilers
for Razi. Currently, we are
working on a project in [the
southern city of] Shiraz.”
Noting that boilers are
necessary for refining,
Kashefi said steam boilers
are required in all oil and gas
refineries and petrochemical
plants. He added that OIG is
ready to build steam boilers
for all oil industry sectors.
“It is necessary to observe
the standards in the oil
industry. When a private
company is to become a
supplier of equipment for
the oil industry, oil experts
examine its products
qualitatively.”
Kashefi stated that
domestic companies and
manufacturers are capable
of supplying the bulk of
equipment required in the oil
industry. “Iranian engineers
enjoy high capabilities in
designing and implementing
industrial projects. That is
why Iranian experts receive
lots of proposals at the
international level. It has
been proved that Iranian
engineers and companies are
capable of handling projects
much better than foreigners.
Trust in the technical
knowhow of Iranian
manufacturers encourages
them to get more involved in
manufacturing.”
Kashefi said the steam
boilers manufactured inside
the country can rival famous
foreign brands. “OIG
enjoys special technology in
building stream boilers. The
dimensions of the structure
are smaller and therefore the
price would be lower and it
would become economical
for buyers.”
“In Assaluyeh, foreign
boilers whose capacities
are 150 tons are currently
operating. But the point is
that we manufacture boilers
with two flares, while foreign
boilers are four-flare. That is
an advantage for our product
because it would boost the
efficiency of the boiler and
cut energy loss.”
Kashefi said the most famous
world companies are willing
to collaborate with OGC due
to the quality of its products
and its relatively low prices.
“We established a section for
exports in 2009.”
Currently, OIG is capable of
manufacturing different types
of boilers for all refineries
and oil industry facilities.
“The projects operated by
OIG are of significance from
two standpoints: Financially
speaking, our products cost
30 percent lower than foreign
products. The second point
is that our company offers
after-sales services. It has
happened many times that
foreign companies never
provide after- sales services
for their defective devices.”
“The project we operated
for Bidboland Gas Refining
Company was optimization
of its steam unit. We
modernized the boilers,
which were 50 years old
and worked manually.
We equipped them with a
controlling system so that its
management would be done
by fewer people. This project
prompted us to expand
system control unit in our
company which is another
step towards independence
of foreign experts.”
Kashefi said OIG seeks to
enhance the efficiency of
refineries. “We are currently
working on recovery
boilers. To that effect, we
have signed an agreement
with a South Korean
company. They design and
we manufacture. Our oil
industry desperately needs
this technology. The energy
products prices are also
raising and we need to build
recovery boilers in a bid
to make our refineries and
power plants more efficient.”
“OIG is conducting studies
to transform gases into
steam in a bid to avoid the
waste of gases. Moreover,
we are envisaging building
economizers that heat the
feed water, a combustion
air heater in the hot flue gas
exhaust path, or both.”
Kashefi said an economizer’s
costs would be recovered in
two years. “Some refining
units and old power plants
are not equipped with
economizers due to the low
price of gas and negligence
of environmental obligations.
An economizer raises the
efficiency of the boiler by
5 to 15 percent without
requiring fuel or energy
product. It would also serve
the environment.”
November 2012 / 51
NIDC Engineers
Reconstruct BOP
B
lowout preventers
(BOPs) and hydrils
are among the main
equipment needed
in oil and gas wells
drilling. Their manufacturing is
monopolized by several Western
countries.
Yadollah Kamali, director
of Department for Drilling
Equipment of at National Iranian
Drilling Company (NIDC), has
said Iran had to buy its required
BOPs and hydrils from foreign
companies before they could be
reconstructed in the country.
Each BOP or hydril costs one
million dollars, he said, adding:
“Thanks to engineers from NIDC
and knowledge-base companies,
reconstruction of each BOP costs
2 billion rials and each hydril
costs 200 million rials.”
Kamali referred to the
indigenization of components of
BOPs like packing element which
Iranian engineers have managed
to design and manufacture less
costly than foreign ones.
“At present, Iran’s drilling
industry is independent of
advanced equipment and has
already more than 80 percent of
the required equipment. Iranian
engineers are planning to fully
52
develop BOPs.”
BOP is a large valve at the
wellhead that may be closed if
the drilling crew loses control
of formation fluids. By closing
this valve (usually operated
remotely via hydraulic actuators),
the drilling crew usually regains
control of the reservoir, and
procedures can then be initiated
to increase the mud density until
it is possible to open the BOP
and retain pressure control of the
formation.
Kamali said the reconstructed
BOPs in Iran are up to the global
standards, noting that they are of
high quality and durable.
“Under the aegis of this success
achieved within the framework of
the policies of Iran’s Petroleum
Ministry and National Iranian Oil
Company (NIOC), millions of
dollars have been saved in hard
currency, industrial plants have
been activated and jobs have been
created,” the official said.
Kamali said NIDC is scheduled
to showcase domestically
manufactured equipment on the
anniversary of its establishment
in late December.
T
he first pilot plan
aiming at using gas
in the transportation
sector started in
the southern city
of Shiraz in 1977 where taxis
used gas as their fuel. It was the
beginning of serving gas vehicles
in Iran. Several years later, the
plan was extended to the taxis
in the holy city of Mashhad in
northeast. However after the
outbreak of war the relevant
activities halted for two decades.
In 204, nearly 63 CNG stations
were built, but CNG’s share
in the country’s transportation
sector was below one percent.
Iran is now a center of excellence
in CNG knowledge.
The current calendar year, [20
March], is named after national
production. The country is also
facing unjust sanctions imposed
by Western governments. Iran’s
Supreme Leader Ayatollah
Seyed Ali Khamenei called for
“economy of resistance” as the
solution in the face of tightened
sanctions.
Senior economists are of the
opinion that the energy sector – a
main element of management
of financial resources and
revenues – is key to economy of
resistance.
Undoubtedly, CNG industry is
one of the most important and
most influential instruments
for developing a model of
economy of resistance in the
country’s energy industry.
Therefore, it requires planning
and management by relevant
officials.
Gas Legislation
In 1979, the Iranian Parliament
adopted a piece of legislation
according to which dual-fuel
vehicles had to replace clappedout cars. That was the first time
the law stressed the need for
dual-fuel cars.
People turned to dual-fuel cars in
2007 and 2008 and the number
of such cars rose progressively.
Consequently, CNG stations
increased. Even today, in view
of people’s warm welcome for
clean fuel, construction of CNG
stations is followed up on by the
relevant officials.
CNG, Contributor
to National
Independence
At present, nearly 25,000 people
are employed in the CNG sector.
This figure will significantly
rise when new CNG stations
have been constructed. A
priority in this national industry
is to develop the relevant
technologies and industries.
CNG industry has managed to
activate some other industrial
sectors in a short period of
time. Due to the growing prices
of crude oil and its products,
specifically gasoline, CNG has
come to the fore in the energy
planning of countries. Pakistan,
Argentina and Brazil are among
the countries massively involved
in this sector.
Most Gas Vehicles in Iran
At present, Iran is the leading
state in the world in terms of the
number of CNG vehicles. As far
as CNG stations are concerned,
Iran is ranked fourth. In terms of
the ratio of CNG stations to gas
vehicles, Iran comes eleventh.
CNG lower price compared
with gasoline, environmental
considerations and energy
security or diversification of
fuel in the transportation sector
constitute the outstanding
features of CNG compared with
other non-electrical fuels.
CNG, Contributor to
Independence
Official figures indicate that
CNG consumption in Iran has
cut gasoline imports by 20
ml/d. The data provided by
National Iranian Oil Refining
and Distribution Company
(NIORDC) indicate that CNG
would account for a 15.5 percent
share in the Iranian Petroleum
Ministry’s fuel basket by March
2016 and to 13.1 percent by
2025. These figures are for the
total transportation fleet in the
country.The fuel basket for
light vehicles contains only two
percent of gasoline and CNG –
much lower from the 22 percent
a year before.
Alborz Gas, Example of SelfReliance
Iranian engineers have
significantly contributed to
the development of domestic
production by designing several
production lines in the energy
sector, notably gas industries.
Although continuation
of this trend still requires
resolving some structural and
administrative problems related
to CNG, and needs support from
the upstream sector, the future
of domestic production in this
modern industry is forecasted to
be promising.
Alborz Gas Industrial Group
(AGIG) established Rahbaran
Tose’eh Alborz Transportation
Company in 2010. This
company has a special fleet
for transporting petrochemical
products. It can carry 25,000
tons of liquefied natural gas
and has storage facilities for
propane, butane, ammoniac and
propellant.
This company is active in
storage, charging and distribution
of liquefied petroleum gas
(LPG) canisters for household,
commercial and industrial use in
the western city of Azna with an
annual capacity of 20,000 tons.
The company has made up for
the shortages in the country’s
gas industry notably after the
imposed war. AGIG launched
the first LPG purification plant
with a capacity of 3,600 tons a
year on 18,000 square meters of
land in 2009.
The plant is now producing
odorless gases with impurity rate
below 1 ppm for industrial use.
Due to easy access to production
resources and consumption
market, the western province
of Lorestan was chosen as its
location. More than 20 billion
rials of investment were made
in this plant and the required
technical savvy has been
indigenized.
November 2012 / 53
s h o r t
s t o r i e s
Petcham Production Capacity to Hit 57 m/t
I
ran’s petrochemical production capacity will hit
57 million tons following
commissioning of a number
of petrochemical projects at
Kavian, Kermanshah and
Bandar Imam Khomeini petrochemical plants by the end
of this Iranian calendar year
[ 20 March 2013].
Director of planning and
development at National Petrochemical Company (NPC),
Ramezan Owladi made the
remarks on the sidelines of the
Eighth Iran Plast Exhibition in
Tehran adding the country’s
total petrochemical production stood at 42.7 million tons
last year. “Plastic industry’s
main players were present at
this year’s Iran Plast Exhibi-
tion to present their latest
achievements”, Owladi said.
He continued: Private sector’s
companies took part in the
exhibition in large numbers
and held very constructive
meetings with NPC, which
will bear fruit in the future in
view of growth and flourishing
the petrochemical industry.
Owladi went on to say that
during the event, private sector
offered constructive suggestions that paved the way for
better confrontation with some
challenges. Elsewhere in his
remarks, Owladi said petrochemical industry had finalized its 6th Development Plan
adding the plan is focused on
complementary industries.
Iran Exports Petrochemicals to All around the World
I
slamic Republic of Iran
exports petrochemical
products to five continents.
Speaking in a news conference at the 8th Iran Plast
Exhibition, Abdol-hossein
Bayat, managing director
of National Petrochemical
Company (NPC) made the
remarks denying sanctions
have impeded production
or exports of petrochemical
products.
He continued $1.5 billion of
petrochemical products including methanol and various
polymer grades were exported to Europe during the last
Iranian calendar year which
ended on 20 March 2012.
‘At the time being, NPC exports petrochemical products
to many countries across the
globe, Bayat said.
According to Bayat European
countries and the Middle East
make up 5 and 15 percent of
Iran’s petrochemical exports
destinations, respectively.
He went on to say that last
year 14.7 billion dollars of
petrochemical products were
exported from the country
adding during the first six
months of current Iranian
calendar year petrochemical
exports stood at $ 6.1 billion
and 7.7 million tons, respectively in terms of value and
weight.
During the first six months
of current year, total petrochemical production hit 20.5
million tons excluding those
transactions occurred within
domestic petrochemical
complexes.
Iran May Revise its Oil Exports Policy
I
slamic Republic of
Iran will revise its oil
exports policy if West
intensifies sanctions.
Iranian minister of petroleum, Rostam Qasemi,
made the remarks in an interview with Shana, adding
Iran does not like to make
such a decision in response
to the sanctions because
absence of Iran’s oil not
only will have an impact
on oil prices but will hurt
people in oil consuming
countries, a move that their
54
related governments should
take the responsibility.
Referring to bouncing back
oil exports during the recent months, Qasemi said:
Measures are underway to
improve oil export situation
amid emerging an upward
trend in oil exports.
He said enemies of Iran
plan to hinder development
of Iran’s oil industry adding
despite all the impediments, oil industry projects
are moving ahead with
desirable speed.
“Despite recent pressures
and sanctions imposed
against oil industry, we
have managed to leave
behind sanctions by taking
appropriate measures”, the
official said.
Eliminating Iran’s oil from
the world market will jeopardize security of supply
in oil markets resulting in
uncertainty and volatility
and mounting oil shortage
in those markets, Qasemi
noted.
Despite releasing some
statistics by foreign media
on falling Iran’s oil production, Iranian minister of
petroleum announced, on
the sidelines of World Energy Forum in Dubai late
October that the country’s
oil production capacity
stood at 4 million barrels
per day.
Qasemi confirmed rising
oil consumption at home,
adding the move was the
result of rising oil refining
capacity.
Domestic Companies Making
%80 of Refining Equipment
D
omestic manufacturers will make 80
percent of equipments needed for construction of oil refineries and
implementation of their
development plans.
Speaking to Shana, deputy
minister of petroleum,
Alireza Zeighami made the
remarks adding indigenizing oil refineries’ expertise, raising the share of
Iranian made equipment
in building oil refineries,
manufacturing bulk of the
needed items at home, selfsufficiency in engineering
and implementation of the
refining projects are the
samples representing Iran’s
experts and engineers’
progress in the sector. Referring to 40 thousand
billion rials investment in
development plan of Imam
Khomeini (Shazand) oil refinery, Zeighami noted that
for the first time an Iranian
consortium has been fully
responsible for implementation of a mega project
and managed to complete it
successfully.
By implementation of
Imam Khomeini oil refinery’s development plan,
refining capacity of the facility will edge up from 170
thousand barrels per day to
250 thousand barrels per
day amid cutting produc-
tion of fuel oil production
from 38 to 15 thousand barrels per day.
Upgrading and improving
the quality of Imam Khomeini oil refinery’s products is the biggest ongoing
project of National Iranian
Oil Refining and Distribution Company (NIORDC)
that upon completion will
turn the refinery to the largest producer of gasoline in
the country.
Rising Oil Exports Suggesting
Sanctions Failure, Qasemi
O
il exports has
bounced back and
that is why we say
Islamic Republic of Iran has
left behind sanctions, Iranian
minister of petroleum Rostam Qasemi said.
Speaking at a meeting with
board of directors of oil
industry’s OAP syndicate,
Qasemi said this year investments would rise in oil industry considerably reaching
as much as $ 40 billion.
He referred to development
of shared oil and gas fields
as top priority of Petroleum
Ministry adding development of all South Pars gas
field phases is underway and
upon completion will enhance the country’s revenues
equivalent to production of
six million barrels of oil per
day. ‘Excluding two or three
fields that their situation will
be determined by the end
of current Iranian year on
March 2013, we have made
decision on all other shared
oil and gas fields’, Qasemi
told the meeting.
He continued: last year as
much as $ 30 billion invested in oil industry, which
is unprecedented, adding
while total investments stood
at $13 to 15 billion in 2010
it will rise to as much as 40
billion dollars, this year.
Second Drilling Contract of Azar Oil Field Signed
P
ersia Oil and Gas
Company and Oil Industries Engineering
and Construction Company (OIEC) signed Azar
oil field’s second drilling
contract.
Operator of Azar and
Changuleh oil fields,
Hamid Karimi, made the
remarks adding Persian
Oil and Gas Company and
National Iranian Drilling
Company (NIDC) have
dispatched two drilling rigs
to the area and the third
drilling contract will be
signed in near future.
He continued drilling operations will start next week
and six drilling rigs will
enter the area before the
end of current Iranian year
ending on 20 March 2013.
Azar oil field will yield 65
thousand barrels of oil per
day in a 55-month period
but before that, oil production will start initially with
30 thousand barrels per
day in a 36-month period.
Under the contract, Persia
Oil and Gas Company are
responsible for drilling of
two oil wells in a 29-month
period. NIDC and OIEC
have already signed another contract on drilling 7
development wells under
which NIDC would drill
31.5 thousand meters in a
35- month period.
With in-place oil reserves
at about 2.5 billion barrels,
the oil field is located west
of Iran and is shared with
Iraq. Development contract
of the field was signed
September last year between OIEC and a consortium comprising domestic
companies.
November 2012 / 55
Asian Crude &
Products Market
demand caused regional prices to rise. Meanwhile, weakening
Brent levels allowed for more Atlantic Basin crude to head to the
east.
Crude Prices
Brent, Dubai, WTI
150
BRENT1, 111.68
120
DUBAI1, 108.87
90
$/bl
C
rude prices dropped on October, after a four month
raise. Weak economic signals from China and Europe
outweighed geopolitical tensions and supply concerns.
U.S crude WTI fell $ 5/85 per barrel to $ 84.44 per
barrel while Dubai and Brent prices recorded much smaller loss
on October. Brent declined by $ 2.16/bl to $111.68 per barrel.
The Persian Gulf marker Dubai decreased 2.97 dollars at $
108.87 a barrel (see chart).
At the beginning of October, Mideast Gulf producers sharply
increased their official selling prices (OSPs) for light sour crudes,
anticipating firm demand for light products as winter approaches.
In addition, medium and heavy sour Mideast Gulf grades were
under pressure because of weak fuel oil market. The Saudi
Arabia’s OSPs for December loading released at the beginning
of November. The same trend was continued as the country
raised OSPs for light grades and decreased the heavy ones.
Lower refinery maintenance in Asia and consequently strong
WTI1, 89.47
60
30
0
08
09
10
2011
11
12
01
02
03
04
05
06
07
08
09
10
2012
Asian Products Markets
At the top of the barrel, two products- gasoline and naphthareceived slight gains over the reporting month. The other
products posted a bearish performance over October. However,
weaker than expected economic activity in China and India
limited some of increase. Product cracks came under further
pressure as refineries returned from maintenance and added
to available product supplies.
• Light Distillates
The monthly average of Singapore gasoline price was
$124.07/bl, $1.86/bl down from September due to the fall
in crude prices. However, Singapore gasoline crack- the
Singapore gasoline price minus Dubai crude price- was
up $1.11/bl. The bullish trend was attributed to healthy
regional demand from Indonesia, Vietnam, Pakistan and
Sri Lanka. In Indonesia, the Haj pilgrimage in late-October
picked up the gasoline imports. Pakistani import increased
mostly because of the problems with gas supplies and
infrastructure in the
country. Ample supplies in the
region eliminated
the gains in gasoline
market and
Singapore onshore
light
distillate
stocks fell
56
Singapore Products Stocks ( Thousands of Barrels)
Light
Distillate
(Gasoline,
Naphtha)
Middle
Distillates
(Gasoil,
Jet)
Residual
fuels
(Fuel Oil)
28-June
10,978
8,260
20,631
26-July
9,337
8,464
17,607
29-August
8,283
9,600
17,321
26-September
9,773
9,325
18,532
31-October
9,180
9,370
20,471
M-O-M
Change
+1,490
-275
+1,211
Singapore Products Prices VS. Dubai
(Products Crack)
25
20
15
BMU95
10
$/bl
to 9,180 thousands of barrels at the end of October, -6 %
m-o-m change (see chart). Naphtha was the other winner of
the month. The mean of Singapore naphtha price was $104.91/
bl in October. Singapore naphtha crack spread rose a little. The
market was supported by better than expected demand from
petrochemical sector as well as tight supplies. There was also
some pressure on the market by a rebound in Indian naphtha
export. Although, the demand from gasoline blenders in the West
was lower than previous month, the western arbitrage arrivals
were low. The demand for naphtha was weak in the Europe
because of decline in US gasoline demand. Therefore, arbitrage
inflows are expected to rise next month. However, these
additional volumes may be absorbed by rebounding demand
from crackers returning from maintenance in November.
• Middle Distillates
Moving to the middle of the barrel, the mean of Singapore
gasoil and jet/kero prices were $127.63 per barrel and $130.17/
bl respectively. The weakness in gasoil market was on the back
of growing regional exports, especially from India. Indian and
Chinese gasoil demand was low due to slowing economic
growth. Therefore, more cargoes were free for export from India
and more gasoil was imported to China. Less opportunities to
ship gasoil to Europe was also a weakening factor.
However, there was some supports from strong
Australian import.
The jet/kero market was mostly unchanged.
Singapore jet/kero crack spread fell very slightly.
Tight supply and increased demand from China
were supporting the market. Meanwhile,
lower arbitrage inflows to US eliminated the
strength. Looking forward, some supports
are likely to happen from increased kerosene
production in Northeast Asia at the expense
of jet fuel.
• Fuel Oil
At the bottom of the barrel, fuel oil continued with its
downward trend. Singapore fuel oil crack fell sharply
and It was the most decline since June when HSFO
crack started to weaken. However, some gains were
seen in the market over the reporting month partly
because of the decline in outright crude prices and also
the possibility of demand raise ahead of winter. During
October, the fuel oil 380 and 180 fell to $ 639.27 /mt and
$ 650.24 /mt ,respectively. Singapore onshore fuel oil
stocks stood at a four month high of 20,471 thousands
of barrels (see table). Plentiful shipment from Europe
over the recent months has led to ample fuel oil
supply. As a result, the fuel oil forward
curve moved into contango, quite
recently.
FH180
5
FH380
0
GOR5P
JETKR
-5
-10
2011
2012
-15
-20
November 2012 / 57
NA
A Review of
World’s Oil
Bourses
T
By Setak Kakoei
he main philosophy
behind establishment
of petroleum
commodities
exchanges has been
to determine the real crude oil
prices by making supply and
demand system more transparent
in the oil market. Top oil bourses
and their offshoots provide
an appropriate platform for
registering futures and swap
contracts in the oil, gas and
energy sectors. Oil markets have
been among the first energy
commodities’ exchange across
the globe.
A commodities’ exchange is
an exchange where various
commodities and oil products
and byproducts are traded. The
existing commodities’ exchange
contracts are valued at $ 380
billion. In these exchanges,
transactions are regulated within
the framework of standardized
contracts with precise schedule,
volume, price and delivery place.
Crude oil is one of the important
commodities traded in these
markets within the framework of
futures contracts. Concentrated
orange juice, wheat, soybean and
other products are also traded in
the commodities’ exchanges.
Under futures contracts, two
parties agree to purchase or sell
a specified asset of standardized
quantity and quality for a price
agreed today (the futures price
or strike price) with delivery
and payment occurring at a
specified future date,i.e. the
delivery date. In these contracts,
58
prices are negotiated and major
oil producing companies have
always the chance to forecast the
future of oil markets and gain
higher profits.
The world’s top commodities’
exchanges are listed as below:
1.
2.
3.
4.
5.
6.
7.
CME Group
Tokyo Commodity Exchange
NYSE Euronext
Dalia Commodity Exchange
Multi Commodity Exchange
Intercontinental Exchange
Africa Mercantile Exchange
Oil is traded online under futures
contracts on Bloomberg, known
as a databank for investors and
a market indicator. The main
indicators in futures contracts are
as follows:
1. Gas Oil Future (USD/bbl)
2. Brent Crude Future (USD/
MT)
3. Heating Oil Future (USD/
gal)
4. Natural gas Future (USD/
MM Btu)
5. Gasoline RBOB Future
(USD/gal)
6. WTI Crude Future (USD/
bbl)
Price Discovery Parameters
Speculation
Speculation is very common
in the commodities exchanges.
During the first and second
Persian Gulf Wars initiated
by the former Iraqi Baathist
regime, speculation was rife
about the downfall of Saddam
Hussein and subsequently the
oil prices were fluctuating to the
benefit of investors. Since the oil
market is affected by political
developments in the Middle East,
a simple calculation error could
inflict heavy losses on the futures
contracts.
The speculators enter Spider
contracts – a combination of long
term and short term – to stoke oil
price hikes.
-
Short Position
Occurs when a person sells
stocks he or she does not yet
own. Shares must be borrowed,
before the sale, to make
“good delivery” to the buyer.
Eventually, the shares must be
bought back to close out the
transaction. This technique is
used when an investor believes
the stock price will drop.
-
Long Position
A long position in a security,
such as a stock or a bond, or
equivalently to be long in a
security, means the holder of
the position owns the security
and will profit if the price of the
security goes up.
Spider contracts cause oil
price hikes psychologically.
Speculators define their strategies
based on the significant events
transpiring the oil market.
Geopolitics and Climate
These two factors significantly
impact the oil prices. For
instance, if a hurricane is
forecasted to lash the Gulf of
mechanisms to blunt the impact
of US economy on the oil prices.
One of them is to trade oil in
other currencies than the dollar.
A top oil and gas producer, Iran
can become the Middle East’s
hub if it stabilizes its national
currency. In that event, a new
benchmark would vie with
North Sea Brent and WTI. The
opening of Kish Oil Bourse was
the beginning of the movement
towards an international energy
commodities’ exchange.
Facilitation of legal procedures
could help Iran realize its
objectives.
Futures Contracts in Energy
Commodities’ Exchanges
Mexico in the coming three or
four months, the oil prices would
rise and more futures contracts
would be signed. Predicting war,
earthquake and other natural
disasters would also stir the
prices.
Oil Storage Capacity
Oil storage capacity is a
determining factor in the futures
contracts in the energy markets.
If for whatsoever reason, an oil
producer fails to stock oil as
much as it often does the futures
contracts would differ. Economic
powers and oil producers have
long been locked in a systematic
debate about oil supply and
demand.
The growing demand by
emerging economies like China,
India and Brazil for crude oil
has significantly affected the
general demand index for years.
That could raise demand for
oil and subsequently add to the
number of futures contracts.
Iran has the capacity to sell its
oil to these emerging economies
within the framework of futures
or long-term contracts. Even in
the short-term, Iran can sell part
of its oil under futures contracts
and earn the National Iranian Oil
Company (NIOC) significant
gains.
US Greenback
Since oil is traded in the US
dollars, its prices would be
affected by the changes in the
value of the US legal tender.
For instance, if the US economy
is forecasted to plunge into
recession next March or its
interest rates are to be cut, the
oil prices would go up and
more futures contracts would
be signed. However, there are
An oil financier is supposed to
buy 1,000 barrels of oil (42,000
gallons) in December 2012 at
$ 127 per barrel. The barrels
should be delivered on schedule.
What is the logic behind such
transactions?
Financiers enter futures contracts
for risk management. Rarely
do futures contracts end in the
delivery of commodity because
these contracts are standardized
and just change hands. These
contracts are traded in the market
and they result in oil price
discovery.
Given Iran’s long experience in
capital market management, Kish
Oil Bourse is capable of carrying
out such transactions. That, along
with Iran’s capacity in mass
production of fossil fuels and
petrochemicals could stabilize
Iran’s position in the price
discovery of oil and its products.
The more dynamic the energy
commodities exchange, the more
complete the price discovery
process would be.
Oil Bourses
Intercontinental Exchange (ICE)
Established in 1990,
IntercontinentalExchange, Inc.,
known as ICE, is an American
financial company that operates
Internet-based marketplaces
which trade futures and overthe-counter (OTC) energy and
commodity contracts ,as well
as derivative financial products.
While the company’s major
focus was energy products (crude
and refined oil, natural gas,
power, and emissions), recent
acquisitions have expanded
its activity into the “soft”
commodities (sugar, cotton and
coffee), foreign exchange and
equity index futures.
West Texas Intermediate (WTI)
West Texas Intermediate (WTI),
also known as Texas light sweet,
is a grade of crude oil used as
a benchmark in oil pricing.
This grade is described as light
because of its relatively low
density, and is sweet because
of its low sulfur content. It is
the underlying commodity of
Chicago Mercantile Exchange’s
oil futures contracts. The price of
WTI is often referenced in news
reports on oil prices, alongside
the price of Brent crude from the
North Sea.
DME Oman Crude Oil Futures
Contract
Launched by the Dubai
Mercantile Exchange (DME) on
June 1, 2007, the DME Oman
Crude Oil Futures Contract
(OQD) is the Asian crude oil
pricing benchmark. The contract
is traded on the CME Group’s
electronic platform CME Globex,
and cleared through CME
Clearport.
From 2007 to 2010, the futures
contracts in this exchange market
soared from 200 to 700 million
barrels.
Pension Funds
Pension funds are main
stockholders in the oil and
gas companies and influence
futures contracts. When the
energy market contracts become
complicated, the pension funds
would have to work out new
mechanisms to salvage their
future contracts and the prices
would subsequently be affected.
If their strategy is based on short
position, speculation will drive
the oil prices down. In the event
of long position, raising the value
of the contracts would benefit
them.
November 2012 / 59
Deterding, Founder of Royal
Dutch/Shell
R
oyal Henri
Wilhelm August
Deterding KBE
(Hon), (19 April
1866, Amsterdam
- 4 February 1939, St. Moritz)
was one of the first executives
of the Royal Dutch Petroleum
Company and for 36 years
(1900–1936) its chairman and
the chairman of the combined
Royal Dutch/Shell oil company.
He came to power after the
early death of the Royal Dutch’s
original leader, Jean Baptiste
August Kessler.
He made it to the runner up
against John D. Rockefeller’s
Standard Oil and it is still one
of the world’s largest petroleum
companies. He was made
an honorary KBE in 1920,
ostensibly for service to AngloDutch relations, but mainly for
his work supplying Allies with
petroleum during World War I.
Called the “Napoleon of Oil”,
Deterding was responsible for
developing the tanker fleet that
let Royal Dutch compete with
the Shell Company of Marcus
Samuel. He led Royal Dutch
60
to several major mergers and
acquisitions, including a merger
with Samuel’s “Shell” Transport
and Trading Company in 1907
and the purchase of Azerbaijan
oil fields from the Rothschild
family in 1911.
In the last years of his life,
Deterding became controversial
when he became an advocate
of the German Nazi party. In
1936, he discussed with them
the sale of a year’s oil reserves
on credit; the next year, he
was forced to resign from the
company’s board membership.
The Royal Dutch Shell Group
was created in February 1907
through the merger of two
rival companies - Royal Dutch
Petroleum Company (Dutch
legal name : N.V. Koninklijke
Nederlandsche Petroleum
Maatschappij) and the “Shell”
Transport and Trading Company
Ltd of the United Kingdom,
founded by Marcus Samuel, 1st
Viscount Bearsted.
It was a move largely driven by
the need to compete globally
with the then dominant
American petroleum company,
John D. Rockefeller’s Standard
Oil, and as a strategy to face
the challenges brought by the
crisis of 1907. The terms of the
merger gave 60% ownership of
the new Group to the Dutch arm
and 40% to the British.
The “Shell” Transport and
Trading Company (the
quotation marks were part of
the legal name) was a British
company, founded in 1897 by
Marcus Samuel and his brother
Samuel. Their father had owned
a company, importing and
selling sea-shells, after which
the company “Shell” took its
name.
Initially the Company
commissioned eight oil
tankers for transporting oil.
In 1919, Shell took control of
the Mexican Eagle Petroleum
Company and in 1921 formed
Shell-Mex Limited which
marketed products under the
“Shell” and “Eagle” brands in
the United Kingdom. In 1932,
partly in response to the difficult
economic conditions of the
times, Shell-Mex merged its
UK marketing operations with
those of British Petroleum to
create Shell-Mex and BP Ltd,
a company that traded until the
brands separated in 1975.
Around 1952, Shell was the
first company to purchase and
use an electronic computer in
the Netherlands. The computer,
a Ferranti Mark 1*, was
assembled and used at the Shell
laboratory in Amsterdam. In
1970, Shell acquired the mining
company Billiton, which it
subsequently sold in 1994 and
now forms part of BHP Billiton.
In 1936, Deterding bought the
manor of Dobbin near Krakow
am See, (Germany) and moved
to that place. After he died in
Switzerland he was buried at
Dobbin in Mecklenburg, but his
body was transferred to a grave
in Liechtenstein in 1968.
Deterding was married three
times (resp. to Catharina
Neubronner, Lydia Koudoyaroff
and to Charlotte Knaack) and
had seven children, among
whom the eccentric Olga
Deterding.
Sirens Wailed
Over Iran
Win
When the World War I
broke out, the British troops
entered Iran and promoted
golf &football. These games
were mainly held between
the British troops and
Anglo-Persian Oil Company
(APOC) in Masjed Soleyman
& Abadan. Anytime the
APOC team was close to
winning, the oil site’s sirens
were suddenly activated, the
game was halted and APOC
players had to rush to their
work. The game had no loser
then!
November 2012 / 61
In Three Years:
I
Sarakhs Gas
Refinery to
Process 60 mcm/d
mplementation of new units at
Sarakhs Gas Refinery to sweeten
sour gas would add 10 mcm/d
to the processing capacity of the
treatment facility to raise its daily
treatment capacity to 60 mcm.
Managing director of Sarakhs Gas
Refinery Masoud Hassani has told
Iran Petroleum in an interview that
enhanced gas production is among the
strategies of this refining company.
“Based on these strategies, projects
have been defined to enhance gas
output. Sour gas sweetening unit is one
of them.”
“The initial studies for the
implementation of these projects
are under way. The studies are to be
finalized in the first quarter of next
year [beginning in March] so that
construction operations would start in
August 2013.”
He said the sweetening unit would last
three years to be complete.
“With the discovery of Tous Gas Field,
located 60 kilometers from the refinery,
4 mcm/d of gas would be delivered to
the treatment facility,” Hassani said.
Currently, five gas refining units are
operating in the refinery, he said.
“These units are supposed to produce
41 mcm/d of refined gas, which would
soar to 50 mcm/d.”
Biggest Sulfur Producer
Hassani said Sarakhs Refinery
processes the most acidic gases in
the country and even in the region,
adding that the refinery produces 2,000
t/d of sulfur. Sarakhs Refinery is the
biggest sulfur producer in the country.
“Currently, four sulfur producing units
are operating in the refinery. They
are capable of producing 2,600 t/d of
sulfur – 70 percent of which would
be exported. Sulfur export s earns the
country over $ 100 million a year.”
“Earlier,38 mt/y of sulfur was produced
from 1 mcm of gas, but now the sulfur
production has exceeded 40 mt.”
Gas Processing Enhanced
Hassani said the refinery’s gas
processing capacity has increased by 3
bcm in the past ten years to reach 16.3
62
By Mohsen Qezeli
bcm/y, noting that the enhancement
is achieved due to the knowledge of
Iranian engineers.
Gas recovery from flares is another
significant measure taken at Sarakhs
Refinery, he said. “At present, 40
percent of the refinery’s flares’ gases
are recovered. According to our plans,
the plant would quit flaring by March
2014 and the relevant gas would be
used as fuel in boilers.”
Hassani said Sarakhs Refinery is
among the top green industry plants
although it is refining the most
polluting gas.
Overhaul in 21 Days
The manager of Sarakhs Gas Refining
Company said the time needed for
overhaul operations in the refinery has
been slashed to 21 days from 46 days.
The refinery’s preparedness rate has
climbed to 94 from 92 percent in the
past six years.
All technical equipment are designed
and supplied by Iranian engineers,
Hassani said. “We are ready to launch
and overhaul other gas refineries in the
country.”
“One of our strategies is to export
specialist manpower and technical
knowledge. To that effect, we have
designed a sour gas storage facility for
one of Turkmenistan’s gas fields.”
No Winter Gas Supply Problem
Hassani said the refinery is fully
prepared to supply the necessary gas in
the winter.
“The overhauls carried out in the first
half of the year ensure that the refinery
would go ahead through winter. We
are not concerned at all with the
sanctions,” he said.
“We have not sat idle in the face
of sanctions,” he said, adding that
domestic manufacturers are supplying
the necessary equipment to industrial
plants.
“We can say that 95 percent of the
mechanical equipment used in the oil
and gas industries is manufactured
domestically,” he said.
Sarakhs
I
Gateway to the Far East
n the northeasternmost
spot in Iran, 180
kilometers from the holy
city of Mashhad is located
the city of Sarakhs, where
farming and animal breeding
battle hot and dry weather. In the
ancient times, Sarakhs served
as a caravanserai on the “Silk
Road”. In addition to its historic
background, Sarakhs is also the
commercial gate between Iran
and Turkmenistan. Products
from Iran’s eastern regions are
exported to Turkmenistan via
Sarakhs. Here is a report about a
city, today known as Iran’s entry
gate into the Far East.
Farmlands in Desert City
To reach the border city of
Sarakhs, we had first to fly
to the holy city of Mashhad.
Before I went there, I had
heard that Sarakhs was a free
trade zone with a gas refinery.
A large number of vehicles
were plying the road from
Mashhad to Sarakhs, but the
road was not wide. Denselypopulated villages were seen
on the way to Sarakhs. The
countryside changed from time
to time: desert, mountainside.
Scattered trees had grown on
the mountains. There was a
jungle of wild pistachio trees
in the middle of the desert. We
leave the mountains behind and
everything becomes normal.
The road is now lined with salt
cedar trees, some of which are
tall.
Ten kilometers to Sarakhs
stretches a railroad. The special
economic zone is also seen over
there. Everything changes after
passing by the special zone. The
nature changes dramatically
so that nobody could believe
we had just left the desert.
Wherever we looked, we saw
extended maize and cotton
farms. The reason for all this
green landscape rests with rivers
near the city. Tajan River in the
east and Kashf roud River in
the south are flowing. Ancient
historians have described
Sarakhs as a city located in the
middle of desert, but with plenty
of farmlands.
People Are Mainly Relatives
We arrived in Sarakhs after a
three-hour drive. There were
several boulevards and a small
square in the small city. It
must have been considered an
abandoned village had it not
been close to a free trade zone
and adjacent to Turkmenistan.
Residents of Sarakhs mainly
work at Khangiran gas
refinery. Others are farmer
or animal breeder. A certain
species of sheep is raised in
Sarakhs. People in Sarakhs
wear long robes similar to
those put on by people in the
southeastern province of Sistan
& Balouchistan. The main
ethnic groups in Sarakhs are
Balouch, Turk and Kurd. The
establishment of Sarakhs has
its own story. An old man there
says people moved here after a
severe drought in Sistan some
50 years ago. The ethnic groups
here have intermarried and that
is why they have become close
relatives. Our driver greeted
everyone in the street, saying
they were all his cousins, uncles,
aunts, etc. Any stranger entering
November 2012 / 63
the city will soon be recognized.
However, the residents of
Sarakhs are hospitable people.
White Robes
The first thing striking
everyone’s eye is the way
people, notably old men and
women, get dressed. Long
and white robes falling up to
their knees, big trousers and
black vests are typical dresses
here. In the past, both men and
women used to wrap a white
turban around their head. Those
who are descendents of the
prophet Muhammad (PBUH),
wear green turbans. People are
traditionally attired in marriage
and mourning ceremonies.
Sheep Infringe Upon Borders
After a short visit to the city,
we are driven to the Sarakhs
border and its customs’ office
checkpoint. It took us five
minutes to reach there. We
saw Turkmens, businesspeople
and truck drivers there. The
Turkmens commute to Iran and
Mashhad to purchase carpets
and rugs.
To know the border better, the
driver took us to Tajan River,
which was one kilometer
away. We cut through a cotton
farmland to reach the river,
shared with Turkmenistan. Iran
and Turkmenistan have built
a friendship dam on this
river which supplies
water for
farmers in both countries. Two
bridges are constructed on
the river; one for transit trains
and one for trailer trucks and
vehicles.
A shepherd was grazing his
sheep over there. I asked
him if he had ever been to
Turkmenistan. “Almost every
day,” he replied. “Every night,
we took our cattle there to
graze,” he said. “Isn’t there
any problem?” I asked. The
shepherd asked if he had done
anything wrong or illegal. For
him and his cattle, demarcation
was meaningless.
We returned to the customs’
office checkpoint. Trucks,
carrying second-hand cars, were
queuing. These second-hand
cars are sent to Turkmenistan
to be scrapped. In addition to
vehicles, grain, cotton, potato
and onion are also waiting to be
cleared.
Three Days of Marriage
Ceremonies
64
In Sarakhs, I witnessed marriage
ceremonies here and there.
I asked people about their
traditions and I was told that
the ceremonies lasted three
days. The first day, they dye the
prospective couple’s hands and
feet with henna. The second day,
the groom is shaven and dressed
in new costumes before being
carried on a horse to a bathroom
in the village. After taking his
bath, he is taken to the bride’s
house.
Each ceremony has between
1,500 and 2,500 invitees,
who gather for three days at
the groom’s residence. The
residents of Sarakhs put a tub
at the entrance of the residence
of the lovebirds for
purification
and
happiness. The
bride weaves carpets before
getting married and takes them
into her new house.
Sheikh Loqman, a Mystic
Figure
Before travelling to this border
city, I studied about Sarakhs,
whose ancient name was
Sarika and located on the way
from Marv to Neyshabour and
Iraq. It was a big city in the
first centuries of the Islamic
period. Sarakhs was the capital
city of Alb Arsalan, a Seljuk
king. In the 19th century, the
Russians separated the ancient
Sarakhs along with Marv and
Neyshabour from Iran.
A respected figure in Sarakhs
is Sheikh Loqman Sarakhsi,
known as Father Loqman.
His tomb is near the city and
people have constructed fruit
garden around it. We arrived at
the tomb near the sunset. The
sheikh was laid to rest in a tomb
housed by a towering building
decorated with gypsum and
bricks. Remnants of turquoise
tiling are still visible. The
mausoleum is open to public
only on Wednesdays.
Many residents of Sarakhs say
Loqman has been a close ally
of Imam Reza, the eighth Shiite
imam. He was a mystic figure in
Khorasan.
Brick Museum
On the way back to Mashhad,
we visited Robat Sharaf, some
60 kilometers away from
Sarakhs. This caravanserai was
located on a foothill. From
there, one could easily watch
the wild pistachio trees. What
distinguished this caravanserai
from others was its brick
decoration. It had two yards. In
the first yards, businesspeople
treated their horses and camels.
In the middle of the second yard,
a stone basin gathered rainwater.
Small rooms in the second yard
were used by people for rest.
There are two mosques in the
caravanserai. Some gypsum
decorations in the buildings date
back to seven centuries ago.
Robat Sharaf could be named
Iran’s brick museum.
I toured the caravanserai for one
hour and a half. I went on the
rooftop to have a better view.
The first yard was for Commons
and the second year for Lords.
An old woman there said
she had come to visit her
husband, who looked after the
caravanserai.
“I regularly tell him to abandon
this place, but he doesn’t accept
to do so. I come here several
times a week so that he would
not be alone,” she said.
I closed my eyes for moments
and imagined myself in the time
this caravanserai was used by
businesspeople travelling on the
Silk Road. But today, the couple
should wait for hours until they
see someone pass by.
Vali ruins, one the glorious remaining monuments in Sarakhs
Mystic figure, Baba Loqman Mausoleum

100b Tons

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