Monday Feb 19, 2018

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How NIOC Will Prevent Output Cut

(Monday, February 12, 2018) 12:54

TEHRAN, (Shana) -- Deputy CEO of National Iranian Oil Company (NIOC) Mohsen Paknejad says plans are under way to prevent a decline in the production from ageing oil fields. He explained the NIOC's plans in an interview with Iran Petroleum:


 Q: Where do the NIOC subsidiaries currently stand in terms of production?

A: After the intensification of sanctions and concomitant reduction in crude oil exports, we had to make arrangements for reducing production from some oil fields. Of course, this was carried out so as to leave minimum impact on downstream units particularly oil refineries and petrochemical plants. After [Iran's] nuclear deal [with six world powers] was achieved and oil exports restrictions were eased, National Iranian Oil Company (NIOC) brought production from oil fields back to the presanctions levels. For instance, in the National Iranian South Oil Company (NISOC), crude oil production rose from around 2.1 mmb/d in the 2013 to 2.9 mmb/d in the first quarter of the current year. Meanwhile, in the Iranian Central Oil Fields Company (ICOFC), production soared from around 90,000 b/d to around 200,000 b/d.

Of course, along with planning for a return to the presanctions production level, special focus was put on the completion and operation of oil and gas projects in cross border fields. To this effect, planned production from South Pars gas field and its oil layer, West Karoun area, Azar oil field and the gas layer of Salman field has materialized.

Q: What are NIOC plans for fields which are faced with production decline?

A: At present, the most important measures taken to prevent production decline in some fields are water/gas injection, infill drilling and artificial lift. However, since preventing production decline in the fields requires precise and comprehensive studies to get to know the performance of the reservoir and reasons of decline before taking action to prevent or make up for the decline in production, numerous MOUs have been signed with international companies to study methods of enhanced oil recovery (EOR) and improved oil recovery (IOR) from oil fields. For that purpose, benefiting from the experience of companies which possess technology and reservoir engineering knowhow would be a top priority of NIOC in its studies on reservoirs in the country. In the current year, the framework for EPCF and EPDF contracts have been drawn up by the NIOC and notified to subsidiaries in order to facilitate execution of activities and projects related to enhanced recovery, which I hope that implementation of these contracts as well as upstream petroleum contracts would accelerate the enhanced production process.

In addition to these measures, planning is envisaged to make new exploration as part of the process to make up for the production decline in other fields. The NIOC has designed exploration, development and production contracts within the framework of upstream oil contracts to pave the ground for moving in that direction. In this regard, conducting reservoir studies and defining master development plan (MDP) using the state-of-the-art technologies and attracting foreign investment are of high importance to NIOC.

Q: What are the NIOC plans to enhance oil recovery from fields run by the NISOC and Iranian Offshore Oil Company (IOOC)?

A: Most NISOC-run oil fields are in their declining period; therefore, a new model of development contracts has been designed for them. Development of Shadgan, Parsi, Rag Sefid and Karanj fields within such a framework and with focus on EOR/IOR methods is on the agenda. NISOC has presented the first operation-based package of its proposed model of contract with the objective of increasing or stabilizing production from the fields. Production decline from these fields is expected to be stopped once hydraulic fracturing, under-balanced drilling (UBD), desalting plant construction, etc. are forfeited.

In the offshore sector, such projects as laying out pipelines, drilling, well workover and completion, as well as installation of wellhead platforms in Salman, Forouzan, Doroud and Abuzar fields are highly considered. Continued water injection into Doroud, Salman, Balal, Sivand, Dena and Esfand fields is another attempt for enhancing output from these fields.

Q: Technology transfer is a very important issue in Iran's petroleum industry, which has been highlighted in the Iran Petroleum Contract (IPC) model. What technology do you think Iran's petroleum industry currently needs to enhance production? 

A: Since most ageing oil fields in the country are in their production decline period and this level of production has been generally made by natural depletion, it is necessary to apply the latest scientific methods of enhanced recovery. Thermal recovery, chemical drives, etc. for enhanced recovery requires cutting edge technologies and investment. As mentioned earlier, the NIOC plans to benefit from the services of leading international companies. Transfer of technology and technical knowhow are expected to be realized under the aegis of contribution of exploration and production (E&P) companies in projects.

Q: The NIOC's pro-environment plans include flare gas recovery. What has been done in this regard?

A: Establishment of natural gas liquefaction plant (NGL) is one of the top priorities of the NIOC for gathering associated gas. For this purpose, numerous measures have been undertaken to relegate the construction of these plants to the private sector including petrochemical companies receiving feedstock. Meantime, auctioning off flare gas is on the agenda as a short-term solution until gas liquefaction plants have been constructed. Iran's petroleum minister has signed off new instructions for the NIOC to embark on transactions. Selling flare gas is set to be auctioned off soon. The preliminary agreement for investment by petrochemical companies has been done to optimize and renovate existing facilities of associated gas gathering. In case these projects are implemented we will witness a sharp decline in the volume of flare gas.

Q: How do you assess oil production management in the 11th administration?

A: I can answer this question in three parts: First, I highlight the increase in the level of production and exports after the removal of sanctions; the country's average oil production which had slashed by restrictions and sanctions from 3.9 mmb/d in 2011 to 2.8 mmb/d in 2013 soared past 3.8 mmb/d within months into the implementation of the JCPOA (Iran's nuclear agreement with world powers) and ensuing improvement in international conditions. As far as crude oil exports is concerned, the NIOC managed to regain its lost share in global market in six months, increase crude oil exports and bring it from 1 mmb/d to more than 2 mmb/d. We also witnessed a significant increase in the gas condensate exports; that is to say the average gas condensate export in the current year is 430,000 b/d.

Second, crude oil production from cross border fields increased; Yadavaran, North Azadegan and North Yaran fields became operational and the processing unit of West Karoun came online. In the ICOFC-run fields, output of Azar field was added to Iran's production since the start of 2017.

Third, natural gas and gas condensate production from gas fields in the country increased; natural gas and gas condensate production from South Pars gas field increased significantly in the 11th administration. This field's production has nearly doubled following the development and launch of new phases of South Pars by the end of 2016 and planned launch of remaining phases by the end of 2018.


Courtesy of Iran Petroleum