The National Iranian Oil Company will draw up contracts worth $500 million with knowledge-based firms to revive abandoned oil and gas wells, the oil minister said.
“Some 54 startups have expressed readiness to get involved in projects that can help increase NIOC’S annual oil production capacity by more than 80 million barrels,” Javad Owji was also quoted as saying by the Oil Ministry’s news website.
The Economic Council has approved NIOC’s proposal to draw on startups’ ability to both revive abandoned wells and increase production level from wells whose output have decreased substantially, he added.
According to the minister, Iran has more than 5,500 oil and gas wells, 700 of which are in their last stage of production process that is characterized by a slow, gradual decline in output.
“NIOC is determined to create opportunities for startups and pave the way for knowledge-based firms so that they can bolster different sectors of the oil and gas industry, especially those active in manufacturing pipes, turbines and compressors,” he said.
Owji noted that deals worth $100 million were clinched by universities with technology-driven business owners in 2021 and more contracts will be signed soon.
NIOC has completed the construction of a new technology park in Shahr-e Rey in southern Tehran, indicating that it plans to support startups and university-based firms in oil-related industries.
Oil and gas production capacity could be enhanced from hydrocarbon reserves in abandoned wells with the help of cutting-edge technologies of startups, he added.
EOR/ IOR
Plans are underway to link startups with local oil and gas firms so that they can help minimize the risk of ventures like applying modern enhanced oil recovery (EOR) and improved oil recovery (IOR) techniques that are crucial for increasing production.
“The revival of abandoned oil and gas wells in Iran by tapping into cutting-edge knowledge of startups can help reduce production costs by 90%,” Mohammad Esmaeil Kefayati, the head of the Oil Industry Technology and Innovation Park, said.
“The National Iranian Oil Company must spend at least $10 million on drilling each new well, whereas by using knowledge-based firms’ expertise, the state-run company can revive each abandoned well at a cost of $1 million.”
The official noted that the Economic Council has allocated $700 million for projects to increase crude output by 200,000 barrels per day from wells whose production have decreased, hoping that startups could be linked to local oil and gas firms to help minimize the cost and risk of ventures by applying modern enhanced oil recovery and improved oil recovery techniques that are crucial for increasing production.
Kefayati said more than 500 knowledge-based firms are active in oil, gas and petrochemical sectors, and taking advantage of their prowess can help reduce costs in the key industry.
“The government is planning to offer tax and customs exemptions to high-tech firms, ease the cumbersome process of issuing commercial licenses, cut social security insurance costs, reduce the obligatory military service duration [for tech enthusiasts] and help empower innovative businesses,” he said.
Unprocessed Products
According to Mohsen Khojastehmehr, the head of NIOC, about 50% of exports are unprocessed or semi-processed products, which is not acceptable, as the use of knowledge-based companies in this field, in addition to generating value added, can create employment and earn revenues for the country.
Iran is striving to increase the export of oil and byproducts, despite sanctions imposed by the United States on Tehran's crude sales.
The US sanctions have made it impossible for international companies to cooperate with Iran. As a result, local firms and startups have been emerging to help address the oil industry challenges.
Knowledge-based companies and startups are expected to propose creative ideas for reducing production costs and boosting productivity in the key industry. The ministry’s Research and Technology Department is tasked with facilitating their activity.
“Startups have already indigenized key catalysts and essential equipment and parts for the petrochemical and drilling sectors,” he said.
According to Mohammad Sadeq Khayyatian, an official with Iran National Innovation Fund, due to its overdependence on oil revenues, Iranian governments did not pay attention to the revenue-generating potential of knowledge-based firms.
Khayyatian said that has now changed and Iran is increasingly counting on its technology ecosystem for creating wealth and the government is also increasing its financial support to knowledge-based companies.
