Iran can develop energy sector by offering better terms
Published in Senior Living Features
Iran can develop both upstream and downstream oil and gas sector, but it depends on the details of the new fiscal terms, the new designed Iran Petroleum Contract, said Wood Mackenzie's senior experts.
Iran says it needs $185 billion investment in oil and gas sector by 2025.
The country introduced a new designed agreement, called Iran Petroleum Contract in November, and proposed 49 oil and gas projects to foreigners.
Homayoun Falakshahi, Middle East upstream research analyst at Wood Mackenzie, told Trend on Jan. 26 that the need for capital investment in Iran's upstream sector is high, not only in new developments but also on the older fields.
"In order to keep producing at a high level, mature fields like Ahvaz, Gachsaran or Marun, will need important capital investment to upgrade current facilities and build new capabilities," said Falakshahi. "Offshore projects are typically more capital-intensive, especially if Iran decides to go ahead with the development of the deepwater Sardar-e-Jangal field in the Caspian."
Falakshahi added that whether Iran will be able to attract enough investment will depend on the details of the new fiscal terms, the Iran Petroleum Contract.
Tehran is yet to unveil the exact mechanism of the cost recovery and remuneration fee, noted the expert.
"In a low oil price environment, companies are more capital-stretched, and some will be scrutinizing the IPC and other political and business issues before deciding to enter Iran," he noted.
He also said that considering the list of 49 oil and gas developments on offer, the National Iranian Oil Company is looking to attract around $70 billion of foreign direct investment (FDI) in its upstream oil and gas sector by 2025.
"Such investment could help the country increase its crude oil production above 5 million barrels per day from 2.8 million barrels per day in 2015. But the fiscal terms remain the key for Tehran to reach this number," he said.
Iran also has to offer tens of projects in downstream sector to foreigners, including $70 billion investment plans in petrochemical sector.
Johnny Stewart, senior downstream research analyst at Wood Mackenzie, told Trend that Iran is actively investing in upgrading its domestic refining operations over the next decade -- a number of projects to existing plants are underway, including a gasoline production improvement project at Bandar Abbas, and a new refinery train project at Abadan refinery.
"We expect both projects to be on-stream before 2022 and improve the quality of oil products produced," he noted.
He added that beyond upgrades, Iran is expanding its refining capacity with a focus on monetizing domestic condensate barrels.
"The Persian Gulf condensate refinery, with processing capacity of 360 kb/d, is expected to complete mid-2017. The project, built in three 120 kb/d phases, will help move Iran to a balanced gasoline position and alleviate the use of petrochemical, or ersatz, gasoline".
Stewart added that the second project, SIRAF condensate refining park, is planned for later in the decade.
"Eight modular refineries, with 60 kb/d capacity each, are due for construction and will be funded by eight private local Iranian firms. Each company will be responsible for marketing their own oil products production," he said.
Below is the list of major investment opportunities in Iran's oil refining sector.
Projects
Capacities
Investments
Persian Gulf Star refinery
360,000 barrels of condensate
800 million euros
Pars refinery
120,000 barrels of condensate
$1.8 billion
Anahita refinery
150,000 barrels of heavy crude
3.1 billion euros
SIRAF refining complex
480,000 barrels of condensate
$2.4 billion
Jask refinery
300,000 barrels of heavy crude
$7.5 billion
Revamping Isfahan refinery
120,000-barrel distillation unit
Three billion euros
Revamping Abadan refinery
120,000-barrel distillation unit
$3.4 billion
Reducing Bandar Abbas refinery's fuel oil production
57,000-barrel unit
$1.2 billion
Reducing Abadan refinery's fuel oil production
60,000-barrel unit
$1.5 billion
Six oil transfer pipelines
One million barrels
Seven billion euros plus 23 trillion rials (about 703 million euros)
Oil transfer terminals
10 oil transfer centers and terminals
1.8 trillion rials (about $50 million)
(c)2016 Trend News Agency (Baku, Azerbaijan)
Visit Trend News Agency (Baku, Azerbaijan) at en.trend.az
Distributed by Tribune Content Agency, LLC.
(c) Trend News Agency, Baku, Azerbaijan
Comments