Iran's energy sector review

Since November 2015, when Iran introduced its newly designed oil and gas agreement model, called Iran Petroleum Contract (IPC), the country hasn’t issued any tender yet due to domestic challenges and criticism. Iran had planned to offer 49 oil and gas projects worth $100 billion (80% of which projected to be attracted from foreign funding) to foreign companies based on IPC. Meanwhile, IPC is yet to be approved by the National Supreme Security Council. According to IPC, foreign companies can become the projects’ operators and own a percentage of produced oil as far as the field is active. IPC is very similar to Iraq’s oil agreements, which pay cash money per an extracted barrel for foreign company as far as the field produces oil. During 2007-2017, Iraq’s oil output increased by 2.5 times to 4.4 million barrels per day (mb/d) thanks to new oil contract model, while Iran’s output remained the same at 3.85 mb/d. The most complicated issue for Iran is that about 80 percent of its active fi...

Iran increased gas production by 25 billion cubic meters (bcm), or 9 percent to 285 bcm, during the last fiscal year (ended March 21), but its domestic demand growth rate has increased as well. Almost the entire growth occurred in the second half of the year on phases 17-21 of the South Pars gas field, that Iran shares with Qatar. The total nominal capacity of these phases is 54 bcm and they are expected to become full operational in the first half of the current fiscal year. Mehdi Jamshidi Dana, dispatching director of National Iranian Gas Company told Shana news agency May 9 that during the last fiscal year, Iran increased gas delivery to power plants by 7 percent, while the same growth happened in gas supply to housing and industrial sectors. Iran should have increased gas usage in power plants by 14 percent to 65 bcm, but it supplied only 61 bcm due to gas shortage in the housing sector, especially because of cutting Turkmen gas flow to Iran since January 1, 2017 due to lo...

Iran inaugurated the first phase of the Persian Gulf Star Refinery last week. The project consists of three phases, with 120,000 barrels per day (b/d) of oil processing capacity each one. Recently, Seyyed Ebrahim Raeisi, the Iranian President Hassan Rouhani’s major rival in upcoming elections, said the refinery should have become fully operational in 2014 and the delay cost billions of dollars to Iran. He claimed that the refinery was completed by 70.4 percent when Rouhani took office in mid-2013. Oil Ministry released a report Apr. 4, saying the progress in the project in mid-2013 was only 47.9 percent. The ministry accused Raeisi’s advisors of giving him false information. "Raeisi’s advisors were in ex-president Mahmoud Ahmadinejad’s administration and they should clarify why the project started in 2007 and was completed by less than half in 2013," the Oil Ministry said. Why Iran started the project? Iran started construction of the refinery in 2007, after UN Sec...

Iran's total oil, gas petrochemical industry worth is $400 billion. According to an official document, prepared by national Iranian Oil Company and seen by Trend, the Opex (operating expense) of Iran’s oil and gas industry reaches $20 billion annually, about 2.5 times more than the global averages. Esmaeil Jabbarzadeh the Governor of East Azerbaijan Province also announced on Apr.27 that the province has high capability to supply oil and gas industrial equipment for projects in the country. "Currently there are about 200 companies in the province, which have had cooperation in the country’s oil and gas projects and Oil Ministry plans to meet with representatives of these companies in summer to evaluate their capabilities to take more share in maintaining, supplying equipment and repairing the oil and gas projects," he said. According to IRNA, Jabbarzadeh added that the Opex of Iranian oil and gas projects stands at $20 billion. The official document also confirms his ann...

Iran was allowed in November 2016 to increase its oil output by 90,000 barrels per day (b/d) in 1H2017 to 3.797 mb/d, based on OPEC’s oil cut deal. Other OPEC members had to decrease output by 4 percent to 1.2 mb/d, compared to October output, while Libya and Nigeria were exempted from cut. Oil price in 1Q2017 increased by 56 percent, compared to the same period last year as the OPEC compliance was 82 percent, 94 percent and 95 percent in three months of current year and the compliance of eleven Non-OPEC producers to cut 558,000 b/d was about 60 percent. The Cartel members are preparing to hold a meeting in May to discuss the extension of the OPEC deal for 2H2017. Kuwaiti Oil Minister Issam Almarzooq said on Apr.19 that Iran will probably be allowed to keep its oil production unchanged if OPEC decides to extend its six-month agreement on output cuts beyond June, Bloomberg reported earlier. According to an official document, prepared by Iran’s Oil Ministry and seen by Trend, ...

Iranian petrochemical plants produced 50.61 million metric tons (mn mt) of petrochemical products during last fiscal year that ended March 20. According to an official document prepared by the National Petrochemical Company (NPC) and seen by Trend Apr. 18, Iran’s actual petrochemical production level was 82 percent of the total nominal capacity. In other words, the country’s plants worked at 82 percent capacity during last fiscal year. Statistics in the document indicate that 96 percent of the planned production was realized. About 17 of Iran’s total 52 petrochemical plants worked at above 100 percent projected production level, including Nouri, Urmia, Tabriz, Qaed Basir, Mehr, Bisstoon, Carbon Iran and Shiraz, which worked at up to 110 percent projected output level. Iran’s petrochemical sector is one the country’s rapidly growing industrial sectors, which experienced a 7 percent growth in nominal capacity during last fiscal year. Iran’s actual production level during the pre...

Iran’s domestic electricity sales decreased by more than 21 terawatt-hours (TWh) to 206.3 TWh during the last fiscal year, according to Energy Ministry. The statistics of the annual report, released on the Ministry’s website indicate that the country increased the power generation capacity by about 2.64 GW, but the actual gross electricity generation decreased by 5.218 TWh during the last fiscal year, compared to the same period of the previous year. Iran’s fiscal year started on March 21. Electricity consumption Last fiscal year TWh Y/Y change TWh Share of total consumption Number of consumers (1000) Housing sector 70.587 -5.516 34.2% 27,220 Public sector 19.587 -2.609 9.5% 1,570 Industrial sector 64.535 -7.692 31.3% 222 Agriculture sector 32.712 -3.377 15.9% 396 Commercial sector 15.047 -1.633 7.2% 4,280 Street light 3.839 -0.178 1.1% - Total 206.308 -21.003 100 - The country increase...