Iran's energy sector review

The Iranian government has proposed to increase the gasoline price by 50% to 15,000 rials per liter (around 43 US cents or $1.62 per US gallon) in the budget bill for next fiscal year, starting on March 21. The price of diesel is also set to increase by 33% to 4,000 rials per liter, or 10 cents per liter or 38 cents per gallon. According to a report published on December 19, on the official government website, the rise in fuel prices would add $4.8 billion to the government’s revenues next year to help it invest in job creation, to reduce Iran’s high unemployment rate. The report also says raising fuel prices to a more realistic level will reduce gasoline and diesel smuggling to neighboring countries, where the prices are much higher. The fuel price hike will come into force once the parliament and the Guardian Council approve it. Fuel prices, like many other necessities, have been heavily subsidized in the Islamic Republic’s closed and controlled economy. Also, hundreds of

Iran has prioritized seven major oil fields for development - in West Karoon Block and South Pars gas field’s oil layer. During the first seven months of 2017, Iran launched Azar field and South Pars’ oil layer, while the statistics, prepared by Iran’s Oil Ministry and seen by Trend, indicate, that the other five fields, placed in West Kroob Block were also in development. Currently, Iran produces 20-25 thousand barrels per day from the oil layer of South Pars, while the production level at Azar field reached 15,000 b/d. Iran plans to double the oil output of South Pars and increase the Azar’s output to 65,000 b/d. Azar field, whith 2.5 billion barrels of in-situ oil reserves, and 16 percent recovery rate has been completed by 69.92 percent in July, compared to 68.52 percent in June. One of the major projects in Iran’s upstream oil sector includes the first phase of five fields (West Karoon Block) in Iranian western regions with 66.7 billion barrels of in-situ oil reserves, jo

Iran has prioritized seven major oil fields for development - in West Karoon Block and South Pars gas field’s oil layer. During the first seven months of 2017, Iran launched Azar field and South Pars’ oil layer, while the statistics, prepared by Iran’s Oil Ministry and seen by Trend, indicate, that the other five fields, placed in West Kroob Block were also in development. Currently, Iran produces 20-25 thousand barrels per day from the oil layer of South Pars, while the production level at Azar field reached 15,000 b/d. Iran plans to double the oil output of South Pars and increase the Azar’s output to 65,000 b/d. Azar field, whith 2.5 billion barrels of in-situ oil reserves, and 16 percent recovery rate has been completed by 69.92 percent in July, compared to 68.52 percent in June. One of the major projects in Iran’s upstream oil sector includes the first phase of five fields (West Karoon Block) in Iranian western regions with 66.7 billion barrels of in-situ oil reserves, jo

The energy intensity in Iran is four times more than global average, Deputy Head of the Iran Power Generation and Transmission Company (TAVANIR) Mahmoud Reza Haghifam said, Aug. 14. He also mentioned that peak demand of power in Iran increased by 7 percent during the current fiscal year, Tasnim reported. Measured as energy consumption per unit of gross domestic product (GDP), Iranian energy intensity is very high, which was led to vast energy waste and inappropriate consumption due to high governmental subsidies. Iran ranks first in the allocation of the fossil-fuel subsidies ($60 billion in 2016) in the world, according to the International Energy Agency. According to official statistics, energy intensity in Iran increased significantly during last decades, while the statistics of the US Energy Information Administration indicate that the index in the world decreased by nearly one-third between 1990 and 2015. Iran had allocated $13.556 billion worth of subsidies to electric

The pace of Iran’s power export growth is decreasing as the warm season pushed the domestic demand up. According to the latest weekly statistics, published by Iran's Energy Ministry, the country’s cumulative electricity exports increased during the three months of spring by 143%, 330% and 85% respectively to 2.363 terawatt-hours (TWh) at the end of season. However, the warm weather has slowed down the power export. Iran’s power demand increases in summer, mostly due to rising consumption in housing sector. Fiscal year, started March 21 Cumulative Exports Change Yearly Cumulative imports Change Yearly Cumulative generation 1st month 491 143% 379 -23% 22327 2nd month 1293 330% 741 -16% 45509 3rd month 2363 85% 1203 -8% 80235 Three weeks of 4th month 2991 56% 1458 -3% 102832 Based on Energy Ministry’s weekly reports (GWh) Iran also decreased electricity imports by 23 percent in the first month of s

Iran is preparing for the second winter after Turkmenistan cut the supply of gas to the Islamic Republic in January 1, 2017, due to long-delayed $2 billion debts. It is preparing to complete a pipeline to north east region, increasing underground gas storage facilities capacity as well as developing new fields in area. Mohammad Mam Beygi, the head of East Oil and Gas Production Company (EOGPC), a subsidiary of Iranian Central Oil Fields Company (ICOFC) said on July 14 that the company is preparing to develop Tous field to produce 3-5 million cubic meters per day (mcm/d) of gas. The field contains 60 bcm of gas reserves, of which 75-80 percent is recoverable. However, the field wouldn’t add to gross gas production level of EOGPC, which stood at 15.8 bcm during the last fiscal year (ended at March 20). It would compensate and replace the gas fall in the very old Mozdoran field, a very rare field with 3.5 percent sulphur and 6.5 percent Co2 content. The demand of north east region

A week after signing a deal between National Iranian Oil Company and a consortium, consisting of French Total (with 50.1% share), Chinese NCPC (30% share) and local Petro Pars (19.9% stake), the pressure from inside the country started to rise, especially from hardliners and the Islamic Revolutionary Guard Corps (IRGC). Iran’s Oil Ministry and officials have repeatedly explained the benefits of the signed deal with Total, based on newly designed contract model, called Iran Petroleum Contract (IPC), but the critique was growing further. The deal is aimed to produce 56 million cubic meters per day (mcm/d) of gas as well as 80,000 barrels per day of gas condensate from the phase 11 of South Pars gas field in a 20-year period, extendable for further five months. Brigadier General Ebadollah Abdollahi, the commander of IRGC's Khatam al-Anbia Construction Base recently called the deal “really unjustified”. What went wrong? According to the $4.8-billion deal, some 335 bcm of

French Total, with 50.1 percent stake, signed a $4.8 billion worth agreement with Iran to develop the phase 11 of South Pars gas field. CNPC and Iran’s Petro Pars have 30 percent and 19.9 percent stakes as well. The 20-year deal, based on newly designed contract model, called Iran Petroleum Contract (IPC), can be extended for 5 years further, and would become operational in two stages. The first stage will cost $2 billion, of which Total would invest 50 percent. The project includes construction of two 32-inch pipelines with length 270 km total, as well as drilling 30 wells (including 28 production wells), construction of two 1,500 tons platforms as well as construction of 4.5-inch pipeline (136 km) to transit ethylene glycol from land to offshore project for dehydration of gas and another 4.5 km 36-inch pipeline and a mooring buoy to transit gas condensate there for loading to tankers. Total CEO Patrick Pouyanné said earlier that the revenues from the $1 billion investment preponde

The share of fuel oil (mazut) in the final output of Iran’s refineries reached 23.25 percent during the last fiscal year (ended on March 20). According to an official report, prepared by Iran’s oil ministry and seen by Trend, Iran’s total refined oil products output was 1.74 million barrels per day, of which 23.25 percent was fuel oil. Iran produced oil products at nine refineries (six of which are very old), during last year and the first phase of Persian Gulf Star refinery also started work in limited mode as well. The share of fuel oil in the final products basket of some Iran refineries is very high: Refineries Fuel oil Gas oil Gasoline LPG Kerosene Total major products Abadan 21,603 16,517 9,737 2500 1,866 52,223 Kermanshah 1,210 908 620 60 281 3,079 Tehran 6,558 13,450 6,382 1,351 800 28,541 Shazand 6,050 9,914 14,917 1,206 2,864 34,951 Tanriz 3,330 6,351 3,464 579 583 14,307 Isfah

Iran sold less petrochemical products in volume during the first two months of the current fiscal year (started on March 21), but the revenues increased. The country exported 3.431 million tons of petrochemicals, 58 tons less than March21-May 22, 2016. However the revenues increased by $103 million to $1.673 billion, the statistics of an official document, prepared by Iran’s National Petrochemical Company and seen by Trend, indicate. Coming to the domestic sales, both the volume and revenue increased by 2.3 percent and 32.7 percent in first two months of the current fiscal year, compared to the same period of last year. Iran sold 2.742 million tons of petrochemical products (including the selling products between plants to be used as feedstock) with worth 53.5 trillion rials ($1.54 billion). The net domestic petrochemical products sale stood at 1.237 million tons with worth $713 million. Iran produced 8.95 million tons petrochemical products, of which 1.5 million tons was us