Iran is targeting an investment of $250 billion in its upstream, midstream and downstream oil sectors, especially in liquefied natural gas (LNG) industry, over the next eight years.
Oil Minister Javad Owji made the statement on the sidelines of the Eighth OPEC International Seminar that ended on July 6 in Vienna, Austria, the Oil Ministry’s news portal reported.
“The National Iranian Oil Company has attracted close to $40 billion over the past 20 months and plans are underway to increase the fund by at least sixfold over the next eight years,” he added.
According to the minister, the state-run firm produces 3.8 million barrels of crude and gas condensates per day, in addition to 1 billion cubic meters of natural gas.
In view of the huge hydrocarbon reserves in the country, this limited extraction is not sufficient and NIOC plans to raise production in the coming years.
“Iran has become self-sufficient in developing offshore and onshore oil and gas fields, and most development operations are being carried out with the help of domestic experts,” he said.
The economy will struggle if the oil industry, the engine of economic growth, does not get the long-awaited impetus after years of underinvestment.
According to Owji, there are 10 oil refining companies and 21 gas processing facilities in Iran, which can accelerate operations to increase production capacity.
“Local and foreign companies, which invest in Iran’s LNG sector, will be allowed to market and sell their products to increase their profit margin,” he said.
Contracts for flare gas collection projects worth $6 billion will be put out to tender soon, he added, noting that the energy market is not predictable, but fossil energies are here to stay and they will complement renewables.
Flare Gas
Iran has made progress in using flare gas either for power generation or as feed for refineries and petrochemical plants. Reports say the government has invested $5 billion in related projects.
The Oil Ministry has implemented several measures to reduce gas flaring, such as collecting APG for injection into oil and gas wells, as well as converting it into petroleum products like natural gas liquids and for power production.
Commenting on green energy initiatives, the oil minister said Iran’s current renewable energy output of 1 gigawatts will rise by at least seven time over the next three years.
Owji held separate meetings with senior officials from top oil-exporting countries, including the Saudi Arabia, the UAE and Iraq.
Participants in the two-day event took the opportunity to review market conditions and agreed to continue consultation with their non-OPEC counterparts, through mechanisms such as the Ministerial Monitoring Committee (JMMC) and OPEC and Non-OPEC Ministerial Meeting (ONOMM), in their continued efforts to support a stable and balanced oil market.
Seminar participants thanked Saudi Arabia for extending its 1 mbpd voluntary cut for the month of August. They also thanked the Russian Federation for its additional voluntary reduction of exports by 500,000 bpd and Algeria for its additional voluntary cut of 20,000 bpd for the month of August 2023.
The seminar focused on key issues related to energy transition, such as energy security, technological innovation, environmental matters, sustainable development, energy policies and world economic trends.
“The OPEC International Seminar has an outstanding record for both the caliber of participants and the high level of discussions that take place on major issues affecting the energy sector, especially at this critical time in the global industry,” OPEC Secretary-General Haitham al-Ghais said.
Russian Gas Producer
According to Ahmad Asadzadeh, deputy oil minister for international affairs and trade, Russian gas producer Gazprom is devising a comprehensive plan to develop six oilfields and two gas fields in Iran, and expects to sign contracts by the end of the current Iranian year (March 2024).
The National Iranian Oil Company and Gazprom had signed an MoU last June, based on which the Russian company would help NIOC develop Kish and North Pars gas fields as well as six oilfields.
Collaboration with Gazprom is part of a plan to invest about $160 billion in the upstream sector, of which $90 billion will go to the oil industry and $70 billion to the gas industry.
The long-term plan will help raise crude output from the current 2.5 million barrels a day to 5.7 mbd in 2030. Natural gas production is expected to increase by 500 million cubic meters to reach 1.5 billion cubic meters in eight years.
Of the total investment of $40 billion, $10 billion will be allocated for the expansion of North Pars field, located 120 kilometers southeast of Bushehr Province, and the development of Kish Gas Field, the second largest field in the Persian Gulf after South Pars, located 30 km east of Lavan Island.
The development of the two fields will raise NIOC’s natural gas production by at least 100 mcm per day.
North Pars is one of the biggest independent gas fields of the country. A brief review of North Pars shows that 17 wells have so far been drilled and 26 offshore platforms have been installed there.
North Pars has the capacity to produce 100 million cubic meters of gas per day. Such a recovery would require the drilling of 46 wells. The rate of recovery envisaged for North Pars stands at 61%. Its gas will be used in processing plants for the annual production of 20 million tons of liquefied natural gas.
