Iran's energy sector review

Iranian President Hassan Rouhani’s visit to Kazakhstan on December 22 ended without any energy deal. A source in Iran’s Oil Ministry told Trend that “no talks were scheduled to be held about oil and gas issues with Kazakhstan”. However, several major energy projects have been negotiated between two Caspian littoral nations in the last several months: refinery and power plant construction projects as well as oil swap. Of course, Rouhani said in Kazakhstan that both Iran and Kazakhstan are oil and gas exporters and can cooperate in this sector. “We can receive Kazakh oil in Caspian Sea and deliver the same amount of oil to Persian Gulf,” Iranian president said Dec. 22. Oil swap Iran is preparing to resume oil swap with Caspian littoral states. The capacity of storage facilities in Iran's Neka port on the Caspian shore is being increased to about 2.5 million barrels per day (mb/d), director of Iran's North Oil Terminal Hamid Reza Shahdoust said previously. Current

Only 15 percent of Iran’s household are well-optimized based on energy standards and the rest of them are losing $5 billion worth of energy annually, Mohammad Shekarchizadeh, head of Road , Housing and Development Research Center said Dec.19. His statement came, while Iranian government has defined a $2 billion worth energy package to prevent energy lose in housing sector since 2013, but the plan hasn’t realized yet. Iran needs to attract $2 billion to optimize 600,000 engine rooms. About 80 percent of Iran's households use heaters, while the others use central heating system in apartments. About 20 million heaters are active in Iran, consuming 1500 cubic meters each on average annually. Currently, engine rooms waste 50 percent of energy they receive. The housing sector consumes 91 billion cubic meters per year gas as well as 70.5 billion kWh of electricity annually. Beside 20 million heaters, about 2.2 million households use central heating systems. About 1 million hous

Two months after Iran announced that “importing gas from Turkmenistan is no longer a necessity and urgency”, Iran is now alarmed that its northern neighbour would use gas as a leverage of pressure in winter when the country’s gas demand is on peak point. Turkmenistan claims Iran has a $2 billion debt over gas import, delayed since the international sanctions on Iran were commenced in 2012. Fars news agency has quoted an Iranian official as saying on conditions anonymity that if Turkmenistan continues to threaten Iran with stopping gas deliveries in winter, Tehran would cancel gas deal with Ashgabat. The official said that in case Turkmenistan claims debt against Iran, it should appeal to an international court. During last decade, Turkmenistan halved gas deliveries to Iran, but shortly after negotiations it resumed gas export again. Besides China, Iran is the only buyer of Turkmen gas, as Russia stopped gas intake from Ashgabat in early 2016. Over the past Iranian year (

Iran and Russia’s Gazprom Neft signed a memorandum of understanding Dec.13 on two oil fields, bringing the total field number, delivered to Russian companies to be studied to 7. Six of them are brown, while only Dehloran is a green field (non-operational). The most important issue for Iran is increasing the recovery rate of these fields, which contain 43 billion barrels of medium and heavy oil in-situ reserves with 6-17 percent recovery rate on average. All of the mentioned fields, located in central and western regions of Iran, are among the 49 fields which Iran offered to foreigners based on the newly designed model contracts, called the Iran Petroleum Contract or IPC. Oil fields Oil in-situ (billion barrels) Current production (Thousand b/d) API Russian company Mansouri 15.142 60 20-25 Lukoil Ab Teymour 15.258 60 22-22.5 Lukoil Aban 0.138 9 21 Zarubezhneft West Paydar 0.952 28 18-20 Zarubezhneft Cheshmeh Khosh 3.

Iran signed three heads of agreements (HOA) with Anglo-Dutch Shell to study South Azadegan with less than 6 percent oil recovery rate and Yadavaran with 8 percent oil recovery rate as well as the country’s second major gas deposit Kish field with 1.4 trillion cubic meters of sour gas reserves. Enhanced oil recovery (EOR) sector still remains one of Iran’s major challenges in upstream sector. Azadegan and Yadavaran as well as Yaran field are joint between Iran and Iraq, called West Karoon block with 64 billion barrels of oil in-situ reserves, accounting about 8 percent of the country’s total oil in-situ reserves. The recovery rate of this block is about 6 percent in average, namely in normal situation, Iran is able to produce only 6 percent of the reserves. The country plans to increase this rate to 25 percent. In total, the recovery rate of Iran’s oil fields is about 25 percent. Fiscal Year Recoverable oil reserves Life of reserves New in-situ reserves discovery Oil p

Iranian President Hassan Rouhani on Dec. 4 submitted the next fiscal year’s budget to the parliament on Dec.4. In the budget, 30 percent account for oil and gas condensate revenues, remained almost unchanged year-on-year. The total budget stands at about $97 billion (1,100 trillion rials), based on a dollar rate at 33,000 rials, about 3,000 rials more than the official rate during the current fiscal year. The amount of oil and gas export volume hasn’t been mentioned in the budget bill, but Iranian media quoted some officials as saying that the oil price has been set at $50 per barrel. Iran’s oil and gas condensate revenues is expected to increase by by 48 percent and 40 percent, compared to the current fiscal year based on rial and the US dollar respectively . But how realistic are these figures? Recently, OPEC reached an agreement to cut output by 1.2 mb/d to 32.5 mb/d, but Iran was not only exempted, but was also allowed to increase the output by 90,000 b/d to 3.797 mb/d i

Iran’s President Hassan  Rouhani set up a committee tasked  with ratifying Iran’s oil deals on November 27. Headed by Mohammad Forouzandeh, former chief of staff of the Islamic Revolutionary Guard Corps (IRGC), the staff including several top officials of former hardliner president Mahmoud Ahmadinejad, would monitor oil deals. The staff members are Davoud Daneshjafari, economy minister of Ahmadinejad, Ghoalhossein Nouzari, oil minister of Ahmadinejad and several figures close the current government including Houshang Naderian, Mohammad Mir-Mohammadi and Gholamreza Shafei. The committee will monitor the compliance of new oil deals proposed by the Oil Ministry with the regulations instated by the country’s cabinet. The new committee staff implies that Rouhani wants to include the representatives of all political wings in the new oil and gas deals with foreigners, to reduce the opposition’s ideas for the new designed oil contracts, called Iran Petroleum Contract (IPC). Unde

Iran’s crude oil and gas condensate production reached 4.15 million barrels per day (mb/d) in August 2016, about 0.85 mb/d more than the same month in 2015, according to the Monthly Energy Review of the US Energy Information Administration (EIA). The output for August is the highest since establishment of the Islamic Republic in 1979. Iran’s crude oil and gas condensate output was 5.861 mb/d in 1973 and 5.350 mb/d in 1975, the EIA statistics indicates. Earlier, the highest level since 1980 was recorded at 4.139 mb/d in 2005, when ex-President Mahmoud Ahmadinejad took office. Currently, Iran produces about 540,000 b/d of gas condensate, almost same as in August. Therefore, Iran’s crude oil production was 3.61 mb/d in the eighth months. Nearly all of Iran’s gas condensate production came from South Pars gas field, only several phases of which were inaugurated until 2005. During Ahmadinejad’s presidency, the number of active phases reached 10 and the country’s total gas conde

Iran has to generate 7 percent of its electricity from renewables by 2020, otherwise it can face fines under the Paris climate deal, the spokesman of Iranian parliament’s energy commission Asadollah Gharekhani has told Trend. Iran has committed itself to decrease CO2 emissions by 4 percent in 14 years by investing $17.5 billion. By absorbing further $35 billion of international investments, Iran says it can reduce CO2 emissions by 12 percent, based on the Paris climate deal, known as the COP21, achieved in late 2015. The power sector with a 33-percent share of CO2 emissions is one of the major areas that Iran has a massive plan to optimize, both for curbing CO2 emissions and decreasing energy intensity. So far the COP21 agreement doesn’t threaten any country with sanctions, but once it is signed by 55 nations, the major CO2 producers may face punishments in the future. Global carbon dioxide emissions in 2014 were about 35,900 million tons. Iran ranked 10th among the major CO2

Iran targeted exporting 0.5-2 million metric tons per year (MT/y) of LNG exports using mini-LNG plants and floating LNG vessels, Ali Kardor, the managing director of National Iranian Oil Company told Mehr. Iran stopped completing a 10.4-MT/y LNG project last decade due to sanctions, but resumed negotiations with foreign companies in 2016 to bring the 52-percent developed plant to operational stage. Despite than, the talks have not reached to any results yet. Completing “Iran LNG” projects needs reportedly about $8-$10 billion of investment, but Iran has two other options to export LNG in restricted amounts to international markets. The country has started negotiations with foreigners to collect flaring gas and convert it to LNG. Currently, Iran’s flaring gas amount stands at about 11 billion cubic meters per year (bcm/y). Each mini-LNG plant can produce about 50-150 thousand tons per year and Iran plans to export the liquefied gas, produced in these plants to remote regi

With 290 sunny days covering m ost part of Iran, the Islamic Republic has huge potential to boost the renewables’ share in the country’s power generation. Currently the figure stands at about 0.3 percent (240 megawatts), but according to an official document, obtained by Trend, the Energy Ministry of Iran has planned to increase the share of renewables in Iran’s total power generation to 3.78 percent by March 20 and 5 percent by March 2011. Recently, the deputy of Energy Minister Houshang Falahatian told Trend on October 18 that Iran has 5-10 gigawatts (GW) renewable power firm projects for foreign companies in the next ten years. Power plants 2016/2017 MW 2017/2018 MW 2018/2019 MW 2019/2020 MW New solar power firms 350 600 960 960 New wind firms 140 90 100 100 Total cumulative renewables 730 1420 2480 3540 Total power generation 77422 80862 81997 91254 Iran ’s power generation plans from current fiscal year

During the last five years, Iran’s annual power generation growth stood at about 2.5 percent on average, about a half of planned volume and reached 74.7 gigawatts (GW) in a year to March 2016. Now, Iran says the country needs $25 billion worth of investment in power sector (including grid expansion, distribution sector, etc) for realizing an annual 5.5-percent growth by 2021. Deputy of Energy Minister Houshang Falahatian said that about $17 billion worth of investment is needed for power plants and $7.5 billion is needed in distribution and network sector, IRNA reported Oct.24. According to an Energy Ministry’s document obtained by Trend, Iran is preparing to increase its nominal power generation capacity to 91.254 GW by March 2020. The document didn’t include the statistics of a fiscal year to March 2021, but in case Iran wants to have a 5.5 percent yearly growth, the power output should stand at 95.33 GW. Currently, Iran’s nominal power generation capacity stands at 75.9