Domestic Companies Supply 80% of Petroleum Equipment

Domestic companies manufacture 80% of equipment needed by the oil and gas industry, the managing director of the National Iranian South Oil Company (NISOC) said.

Bijan Alipour made the statement in a ceremony to launch the production line of teethed oil drilling bit that has been indigenized with the help of NISOC and Jahad University Institute of Khuzestan, ILNA reported on Tuesday.

Pointing to domestic oil equipment manufacturers' capacity, Alipour noted, "The National Iranian Oil Company has recognized 100 items as essential equipment for the oil and gas industry 80 of which have been indigenized by domestic firms and we hope that the rest, including wellheads and downholes, will also be manufactured internally."

According to the official, Jahad University is expected to produce 870 pieces of the bits for NISOC based on the agreement.  

"NISOC also needs 700 pieces of polycrystalline diamond compact (PDC) drilling bits," he said, adding that plans are in place to acquire the expertise to mass produce the high-tech equipment.

On plans to manufacture 10 categories of high-demand equipment for the oil sector, Alipour said contracts have been concluded with Iranian research centers to manufacture seven groups that can help the government reduce its hard currency spending.

Moreover, Jahad University Institute of Khuzestan, Shahid Chamran University of Ahvaz and Behsazan Jonoub Company have been assigned to indigenize the production of PDC bits, SRP pumps and wellhead equipment.

The Oil Ministry has taken measures to boost domestic manufacturing of oil equipment to stem the outflow of capital. In 2014, a committee was set up to pursue the production of 10 major categories of equipment for the key sector, including turbines and compressors.

  Special Support System

"Oil Ministry and its subsidiaries are obliged to buy equipment via the Integrated System for Protection of Domestic Production, which contains a full list of eligible local suppliers," Reza Padidar, the former head of Society of Iranian Petroleum Industries Equipment Manufacturers noted.

"As the system is still being developed and it is not stable yet, companies cannot buy certain items from domestic manufactures and have to approach foreign oil equipment companies or middlemen who often demand fat commissions."

Padidar said the ministry should take steps so that its subsidiaries meet their needs through  domestic producers to the extent possible instead of dealing with go-betweens.

Reportedly, out of 25,000 firms that had applied to join the Integrated System for Protection of Domestic Production, only 3,000 companies have been legally registered and the rest are unidentified brokers.