Domestic Manufacturers Help Offset Oil Price Losses

Domestic Manufacturers  Help Offset Oil Price Losses Domestic Manufacturers  Help Offset Oil Price Losses

Domestic production reduces final cost of oil and gas exploration, development, and production, Reza Padidar, managing director of the Society of Iranian Petroleum Industries Equipment Manufacturers (SIPIEM), was quoted by ILNA as saying on Sunday.

Four contracts were signed with private Iranian firms for construction of drilling rigs, the official said. Initially 14 contracts on construction of drilling rigs were signed with private companies, however, due to the oil ministry's financial constraints the number of contracts was brought down to four.

"Utilization of domestic equipments in the oil industry is a constructive measure, albeit some parts are imported and the entire rig is not manufactured domestically," Padidar said.

Domestic manufacturing of oil industry equipments addresses financial limits and enhances domestic capabilities. It also allows contractors to pay in installments, whereas if equipments were imported relevant costs had to be paid at once, and in cash of course.

It can help offset the falling trend in oil prices over the past months by reducing costs of producing a barrel of oil. Crude oil prices have fallen nearly 50 percent since late June mostly due to rising production and slowing global demand.

Oil rigs manufactured domestically conform to the highest international standards, as the technology has been transferred from major international companies when they were operating in Iran. Currently two domestically-manufactured oil rigs are operating in the onshore oilfields of Khuzestan Province, the contractor for which is the National Iranian South Oilfields Company.

Ten types of major oil equipment and machinery are manufactured by domestic companies, including line hangers, subsurface safety valves (SSSV) and mono bores, which are three essential parts required for drilling and extraction operations.

Moreover, Iran has achieved self-sufficiency in manufacturing various types of pumps used in oil and gas industry. "We can save more than 400 million dollars if we manufacture all the pumps the country needs for oil, gas and petrochemical projects," Faraj Pourvand, managing director of Iran Industrial Pumps Group, said.

Domestic producers are capable of manufacturing 70 percent of the equipment and only 30 percent of the industry’s spare parts and equipment are imported, Padidar stated.