Although the National Iranian Oil Company has boosted its natural gas and crude processing capacity over the last two years, both oil and gas sectors are in dire need of further investment to guarantee the country's energy supply in the future, the oil minister said.
"NIOC’s low oil and gas output is not proportional to the country’s enormous in-place oil reserves," ILNA quoted Javad Owji as saying.
The company’s daily oil and gas production has surpassed 3 million barrels and 1 billion cubic meters respectively, he added, noting that Iran’s extractable oil and gas resources stand at 154 billion barrels and 33 trillion cubic meters respectively.
“Despite having access to huge hydrocarbon reserves, lack on investment has caused the oil and gas industries to lag behind.”
Drawing a parallel between Iran and Russia’s extractable oil reservoirs, he noted that although the latter has less crude, it is producing almost three times as much as the former just because it has developed its infrastructures.
Iran holds the world’s second largest natural gas reserves after Russia, and the fourth-largest proven crude oil reserves. Iran holds 17% of the world's proven natural gas reserves and more than one-third of OPEC's reserves. Its largest natural gas field, South Pars in the Persian Gulf, is estimated to hold roughly 40% of Iran's gas reserves.
Attracting investments to develop oil and gas fields is among main priorities of NIOC, as it will secure energy supply in the future, the minister said.
“Lack of investment in the key sector is very likely to have a wide array of dire consequences, one of which is forcing NIOC to import oil derivatives, especially gasoline, instead of exporting them.”
Oil experts believe that the economy will struggle if the oil industry, the engine of economic growth, does not get the long-awaited impetus after years of underinvestment.
Energy Security
The official stressed that attracting much-needed investment is critical, otherwise there will be no way to guarantee the country’s energy security in the future.
Referring to the petrochemical industry, he noted that about 110 initiatives are in different stages of construction to complete the value chain of the sector and massive funding is required to undertake the projects in the shortest possible time.
“Close to $80 billion have been invested in the sector over the last four decades and 70 petrochemical companies are in the lead in generating foreign currency revenue at a time when Iran’s economy is under US sanctions and struggling with forex shortages.”
According to the minister, the construction of Mehr Persian Gulf Petro-Refinery in Hormozgan Province has registered 50% progress.
“The petro-refinery, which has been under construction by Iranian engineers for about three years, is expected to be launched by 2024.”
It is estimated to cost $661 million, of which 82 million have been spent so far. Contracts for the purchase and supply of equipment have been concluded and advance payments have been made, he added.
Owji noted that the facility has been designed by local experts and engineers, and all the required equipment are supplied by domestic manufacturing companies.
“The initial feed of the refining plant is 120,000 barrels of gas condensate. In the first stage, 78,000 liters of naphtha will be produced daily and in the second stage, 14 million liters of Euro 5 gasoline and 5 million liters of Euro 5 diesel will be produced daily,” he said.
The refinery is located 18 km northwest of Bandar Abbas and geographically suitable as it has good access to Shahid Rajaee Port for export.
It is located near the Persian Gulf Star Oil Refinery that is the largest refinery in Iran.
Petro-Refineries
Petro-refineries produce both fuels and raw materials for petrochemical companies. Such plants have boosted the profitability and development of petro-refineries in developed countries.
Moreover, the construction of Shahid Soleimani Petro-Refining Plant will start soon in the southern Hormozgan Province.
With a refining capacity of 300,000 barrels per day, the plant will help increase the production of gasoline and other value-added products. The new plant is expected to cost $9.5 billion.
Raising the gasoline output is important to prevent the fuel shortage in the near future because if domestic consumption continues to grow, Iran could become a gasoline importer again within a few years.
Iran imported gasoline until 2019 when Persian Gulf Star Refinery was launched and made the country self-sufficient in the production of the fuel.
However, as consumption has had an upward trend since then, officials expressed concerns and devised projects to increase the refining capacity.
The National Iranian Oil Products Distribution Company has predicted gasoline consumption to exceed 130 million liters per day by 2024 while the company’s current production level is 110 ml/d.
