The National Iranian Oil Company is set to assign the private sector with some 40 projects on curbing the flaring of associated petroleum gases from southern oilfields to be used in petrochemical complexes as feedstock , a senior energy official said.
“Based on initial assessments, the collective investment will range between $700 million and $2 billion,” Ruhollah Mahdavi, the head of Energy Commission at Tehran’s Chamber of Commerce, Industries, Mines and Agriculture, was quoted as saying by NIOC’s portal.
“Awaiting the Cabinet’s approval, the projects are envisaged to use the collected APG as the feedstock for petrochemical complexes,” he added.
APG is a form of natural gas found in petroleum deposits. It is often released as a waste product and burnt off as flare gas.
He noted that the southern oil-rich regions could be great opportunities for the private domestic contractors, since the majority of oilfields and major petrochemical companies are located there.
Mahdavi, who is also the director of Sobhan Energy, a private institute for energy studies in Tehran, said over three million barrels per day of oil are produced in the country.
"Feasibility studies show that the ventures can curb a total of 17.5 million cubic meters of APG, which are sent into the atmosphere every day, contributing to air pollution," he said.
The Oil Ministry is studying several ways to curb APG levels: collecting it for injection into oil and gas wells, converting APG into petroleum products such as natural gas liquids and using APG for electricity generation.
Referring to other NIOC ventures in curbing gas emissions, Mahdavi said 12 natural gas liquid production units have been built by NIOC in the past seven years, which make use of APG and turn it into usable natural gas.
Parallel Moves
In line with the plan, the National Iranian South Oil Company, a subsidiary of NIOC, signed two contracts worth $1.2 billion earlier this month with two domestic companies on preventing gas flaring from oilfields in the east Karoun region, Khuzestan Province.
Mohammad Mostafavi, an NIOC official, said the collected APG will be supplied to the under-construction Bidboland-2 Gas Refinery (14.4 mcm/d) and Marun Petrochemical Company (7 mcm/d).
In addition, NISOC’s output of natural gas liquids will increase by 38,000 barrels per day, which will be delivered to Bandar Imam Petrochemical Company as feedstock.
“Thus, petrochemical plants will receive 1.6 million tons of ethane and other heavier gaseous compounds per year, which is a big leap toward alleviating the shortage of feedstock,” he said.
Mostafavi stressed that the feedstock is worth $1.3 billion, resulting in producing materials worth $2.6 billion per annum in petrochemical complexes.
According to a World Bank report, a great deal of gas flares at oil production sites around the world burn approximately 140 billion cubic meters of natural gas annually, releasing more than 300 million tons of carbon dioxide into the atmosphere.
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.
Around 17 billion cubic meters of gas are burned off in the country annually, which means a $4-6 billion loss for the country, according to published reports.
The government is obliged to curb the flaring of natural gas to 10% or lower by 2021 as part of a slew of ratifications by the legislature related to the Sixth Five-Year Development Plan (2016-21).
