The National Iranian Oil Company signed 28 contracts worth about $1.5 billion in 2021 with Iranian companies to collect associated petroleum gas in Khuzestan’s oilfields mainly operated by the National Iranian South Oil Company and Maroon Oil and Gas Production Company, the oil minister Said.
“APG collection projects have been designed with the aim of preventing gas flaring, preserving the environment, creating added value from gas collected from the fields in the east of Karoun River and providing sustainable feed to petrochemical companies,” Javad Owji was also quoted as saying by IRNA.
The ongoing initiatives are in different stages of construction and are expected to become operational over the next two years, he added.
Some of the firms with which the agreements were concluded are the Persian Gulf Bidboland Gas Refinery, Oil Turbo Compressor Group, MAPNA Turbine Engineering and Manufacturing Company and Energy Industries Engineering and Design Company.
There are still oilfields where APG is burned off in flares, but negotiations are underway with more local firms to collect it.
Unfortunately, about 40 million cubic meters per day are being flared in Iran mainly from the oilfields of Khuzestan Province.
According to Owji, investment in the petroleum industry is very crucial for Iran.
“We hope that in less than four years, all the flare gas in east and west Karoun regions that include several large oilfields straddling the Iran-Iraq border would be collected,” he said.
APG, or flare gas, is gas dissolved in oil. It is a mixture of hydrocarbons obtained from oil extraction and separation processes. The gas can be utilized in a number of ways after processing: as feedstock for the petrochemical industry and for gas distribution networks.
Owji said about 15 million cubic meters of APG will be collected in the next two years, processed at the Bidboland Refinery and used as feedstock in petrochemical complexes.
APG collection is an important safety measure at many oil and gas production sites, as it prevents industrial plant equipment from over-pressuring and exploding.
Environmental Protection
Collecting APG from oil and gas fields is a priority of the Oil Ministry in the framework of the policy to safeguard the environment, curb the loss of national wealth and create jobs.
Iran has made verifiable progress in using flare gas for generating electricity and feeding refineries and petrochemical plants. Reports indicate the government has so far invested $5 billion in eco-friendly projects.
However, despite the progress, Iran has the highest rate of energy waste in the form of APG in the Middle East and ranks third in the world in terms of gas flaring after Russia and Iraq.
Bidboland plant is operating with a gas processing capacity of 56 million cubic meters per day and produces 3.4 million tons of petrochemical feedstock annually.
Speaking about the importance of gas industry, Owji said the growth rate of gas in the energy mix is higher than that of other fossil fuels.
“The global price of each cubic meter of gas has reached $3 partly because of the Russia-Ukraine tensions and is expected to cross $3.5 per cubic meter. But in Iran, gas is supplied to petrochemical plants at a rate of 20 cents and about 1-2 cents for household consumers due to the high subsidy allocated to it,” he added.
Stressing that the drop in pressure and the subsequent decline in oil and gas output must be prevented, the oil minister said, “We had a daily gas deficit of 250 million cubic meters last winter. If we do not invest in the industry, the conditions will become worse in the coming years and we may be forced to import gas and products.”
He added that oil and gas industry has the lowest investment risk and the highest profitability.
Owji said if the oil industry were to operate at full tilt, various sectors could run efficiently and the economy would prosper.
