A Brief Profile of National Iranian Oil Company

Introduction to Oil and Gas-(Assignment)

a brief profile of the NIOC the third largest producer of oil

Name Institute Roll No. Date Of submission Faculty

Abhimanyu Kumar Singh Rajiv Gandhi Institute Of Petroleum Technology M0001 10.10.2008 Mr. Vinay Singh (RGIPT,Rae Bareli)

IOG-Assignment-1 .Profile of NIOC –A report by Abhimanyu Page 1 of11

A Brief Profile of National Iranian Oil Company

1. Introduction and a brief history: An economic view

Type Founded Headquarters

State-owned 1948 Tehran, Iran Gholam Hossein Nozari, Minister of Petroleum, Seyfollah Jashnsaz,

Key people

Managing Director; Abdol-Mohammad Delparish, COO; Abbas Allahdad, CFO

Industry Products Revenue Website

Petroleum industry Oil, Gas, Petrochemicals $51 bn USD (2007) www.nioc.com

Iran’s economy is dominated by its industrial sector, which represents about 45% of the country’s GDP and includes oil and gas, petrochemicals, steel, textile, and automotive manufacturing. The services sector accounts for another 43% of Iran’s economy, while agriculture about 11%. Agriculture continues to be one of the economy’s largest employers, representing onefifth of all jobs based on a 1991census. 1. A Oil and Gas Iran boasts the world’s third largest proven petroleum reserves following Saudi Arabia and Canada and the second largest gas reserves after Russia. Oil and gas undoubtedly constitute the most important industrial sector to Iran’s economy. The oil sector’s share of nominal GDP has declined from 3040% in the 1970s to 10-20%,largely due to destruction of production facilities during the war and OPEC output ceilings. Nevertheless, oil revenue accounts for the majority of export earnings and presents the bulk of government revenue (about 40%). This sector also receives the majority of domestic and foreign investment. The oil and gas sector is heavily state-dominated. Oil and gas production and exploration are handled by the state-owned National Iranian Oil Company (NIOC).A NIOC subsidiary, the National Iranian South Oil Company (NISOC), represents the majority of local oil production.

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A Brief Profile of National Iranian Oil Company

1. B Oil. Iran accounts for an estimated 10% of global proven oil reserves (approximately 136 billion barrels). Most of the crude oil reserves are in the southwestern region near the Iraqi border. Among the Organization of the Petroleum Exporting Countries (OPEC) members, Iran is the second largest oil producer following Saudi Arabia. In 2006, Iran produced about 4.2 million barrels per day (mbd), approximately 5% of total global production. Iran also is the fourth largest exporter of crude oil worldwide, after Saudi Arabia, Russia, and Norway.Net crude and product exports in 2006 totaled 2.5 million barrels per day and $54 billion revenues. Top export markets for Iran are Japan, China, India, South Korea, and Italy. More than 40% of the world’s oil traded goes through the Strait of Hormuz, a channel along Iran’s border. The Strait of Hormuz is considered a global “chokepoint” because of its importance to global energy security. It is a narrowchannel with a width of only 21 miles at its widest point through which largevolumes of oil are shipped.While oil export revenues have spiked in recent years due to a surge in oil prices, Iran’s oil output has remained essentially flat. The government has set a goal of 5 mbd, which is still below the 6 mbd prerevolution capacity. Oil production has been hindered by a number of factors. First, the oil industry faces the high rate of natural decline of mature oil fields; the decline rate is 8% for onshore fields and even greater at 10% for offshore fields. Second, oil recovery rates in Iran average between 24% and 27%, much less than the world average. It is believed that millions of barrels of oil are lost annually because of damage to reservoirs and these natural declines. Additionally, structural upgrades and access to new technologies, such as natural gas injections and other enhanced oil recovery efforts, have been limited by a lack of investment and access to new technology, due in part to U.S. sanctions. The United States is restricted from oil development investments in Iran, but other countries, until recently, have actively invested in Iran’s oil and gas sector development. Internally, oil export revenues are used to finance government subsidies and cash handouts to the poor. Of primary concern to the United States and the international community is the use of oil export revenues to finance Iran’s nuclear program and support for terrorist groups. Surplus oil earnings are directed to the Oil Stabilization Fund. to William Knox D'arcy by Mozaffarol din- Shah of Qajar for production of crude oil across Iran- except in five northern provinces. Hence, Iran became the first country in the oil-rich Middle East region to start the oil operations. Iran’s oil industry is now preparing to enter the second century of its life cycle. 1. C History Iran’s oil industry, as a technical and industrial phenomenon, opened the doors of the modern sciences for the Iranians in the past century. It also acted as a foundation for political, economic and social development of the country. To examine each event, we need to take a look at what has been going on in the country in the past century. Some of the events which are of prime importance in NIOC history are: Production of crude oil from the first well drilled in Masjed Soleiman field in 1908; construction of Abadan oil refinery in 1913; unsuccessful revision of the D'Arcy concession in 1933; oil nationalization in 1950 and finally inconclusive talks with a consortium of oil firms in 1945 which led to domination of

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A Brief Profile of National Iranian Oil Company

foreigners on Iran’s oil reservoirs and the wasteful utilization of the country's oil resources in 1961 Victory of Iran’s Islamic revolution in 1979 put an end to some of the tragic events faced in the oil industry. It also led to replacement of foreign workforce with Iranian one in the industry following the heavy damages inflicted on the country’s oil industry during the eight-year Iran-Iraq war, the reconstruction job started to compensate for the damages. 2. Production and Reserves 2. A Production The year 2003 and early 2004, in the period after Islamic Revolution, are considered to be the period with the highest production rate. Out of this production, 18 percent was from offshore and 82 percent from onshore oil fields. This is the first time in the last 25 years that such a production ceiling has been achieved. The year 2003 and early 2004, with respect to natural gas production is a significant period. This is due to a 12.6 percent growth compared with 2002 and the daily production rate reached to 378 mmscm/d. It can be also seen that natural gas liquid (NGL) and condensates production, in 2003, has enjoyed a 24 percent growth rate compared with the previous year. The daily production rate which has been recorded in NIOC production fact sheet , amounts to 42.27 thousand cubic meters/day (266 mb/d). 2. B Oil and gas Reserves The total amount of the liquid hydrocarbon and gas recoverable reserves in early 2007 is as follows:
Rank Field Name Formation Initial Oil in Place Initial Recoverable Reserves Production

Billion Barrels Asmari & Bangestan Asmari Asmari & Bangestan

Billion Barrels

Thousand barrels per day

1 2 3

Ahwaz Maroun Aghajari

65.5 46.7 30.2

25.5 21.9 17.4

945 520 200

4

Gachsaran Asmari &

52.9

16.2

560

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A Brief Profile of National Iranian Oil Company

Bangestan 5 Karanj Asmari & Bangestan 11.2 5,7 200

2. C Gas Injection and Recovery Enhancement It can be seen that, in 2003, gas injection operation compared with the previous year has enjoyed a 7.5% growth rate. In this year, 77.88 mmscm/d gas was injected into onshore oil fields and it played an important role in increasing recovery and extraction efficiency. 3. R & D and Training 3. A Research and Development (R&D) R&D directorate of NIOC is a body which has been established to institutionalize and promote research culture and lead scientific researches to be fruitful in oil upstream industries. Major Activities of this directorate are as following: Implementation of 22 research projects on recovery enhancement, oil reservoirs and operation (IOR&EOR projects) Supervision of 14 projects implemented by "Research Institute of Petroleum Industry" on recovery enhancement and operation Conducting the projects for reducing operation costs Establishment and improvement of upstream laboratories-PVT and Core Local Scientific Centers Research Institute of Petroleum Industry (RIPI) Sharif Industrial University Amir Kabir Industrial University Petroleum Industry University Sahand University (Tabriz) Bahonar University (Kerman)

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A Brief Profile of National Iranian Oil Company

International Scientific Centers Consulting companies such as Zeef and M.I.I Universities such as Calgary of Canada, Imperial College of UK, Texas of America, Harroit watt of Scotland and Torenheim of Norway Through formation of scientific and research consortiums and recovery enhancement, R&D directorate has done desirable activities, chief among them are: National Japanese Oil Company Shell, Statoil and Total Fina Elf. 3. b Human Force In order to recruit and maintain its skilled human force, NIOC has steadily developed and performed comprehensive policies and plans. In the year 2003, NIOC staff have had 52096 and 3470790 man hour on-thejob training respectively abroad and at home. One of the other training activities on human force is scientific links with some reliable local and overseas universities. To receive the required training and update various arenas of petroleum industry, such industry techniques, such as administration, finance, services, operation and upstream industry techniques, staff have been dispatched aboard. It is worth mentioning that in 2003, through coordination with Petroleum Industry University, 41 and 155 employees attended Bsc, Msc and Phd courses respectively at local and overseas universities. The per capita training for NIOC staff, in 2003, amounted to 81.7 man hour that compared with the same figure in previous years, has enjoyed a suitable growth rate 4. C Recruitment of the Elite Graduates of Universities Based on the principle of engaging efficient and competent staff in the petroleum industry whose managerial, operational, technical and engineering complexes require presence of competent and capable staff, in the preceding years some persuasive policies have been adapted to absorb the top and elite graduates of reliable industrial universities such as Amir Kabir Industrial University and Sharif Industrial University. So far,

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A Brief Profile of National Iranian Oil Company

some of these elite graduates of universities have been recruited by NIOC and at present work with the company. 4. Upstream Activities 4. A Exploration In NIOC, exploration is considered to be the main axis of activities for exploring new sources of oil and gas and is a firm backing ofproduction. A brief of these activities are as follows : Drilling 7 offshore and onshore exploration wells totally amounting to 20467 meters. Implementation of appraisal operation in koushk and Hosseinieh fields to determine the amount of oil and gas reserves. Exploration of lavan gas field with 258 bcm gas- in – place and 130 mmbls gas condensates- in- place. Continuation of exploration activities in Mehr, anaran, Zaware Kashan, Monir and Farsi exploration blocks. Joint study in abadan plain, northern Persian Gulf, Jurassic Cretaceous oil system in Dezfoul embayment and 4 projects in the Persian Gulf Implementation of seismic operation in the Caspian sea, by early 2004, amounted to 256 square kilometers.

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A Brief Profile of National Iranian Oil Company

NIOC Oil Discoveries Since 1995.

Field's Name

Oil In Place

Recoverable Oil

Billion Barrel

Billion Barrel

Azadegan

33.2

5.2

Yadavaran (Kushk+Hosseinieh) 17

3

Ramin

6.28

NA

South Pars Oil Layer

6

NA

Mansour Abad

4.45

NA

Azar

2.07

NA

Paranj

1.6

NA

Andimeshk

1.1

0.233

Changoleh

0.944

NA

Mansouri-Khami layer

0.760

NA

Jofeyr-Fahliyan layer

0.750

NA

Asaluyeh

0.525

NA

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A Brief Profile of National Iranian Oil Company

Arvand

0.500

NA

Tusan

0.470

NA

Arash

0.168

NA

Total

71.458

NA

NIOC Natural Gas Discoveries Since 1995

Gas in Place Field's Name Trillion cubic feet Billion cubic meters

Recoverable Gas Reserve

Trillion cubic feet

Billion cubic meters

Kish

59

1,700

47

1,300

Tabnak

30

850

NA

Farsi (B-Structure)

NA

11-23

310-650

Ghir (Sefid Zakhur)

11.4

320

8.5

240

Yadavaran-Gas Layer

9.75

276

NA

Lavan

9.1

260

NA

Balal-Dahroum Formation

8.8

250

NA

Homa

7.6

220

NA

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A Brief Profile of National Iranian Oil Company

Marun Gas Layer

6.2

180

NA

Gardan

5.7

160

NA

Day

4.4

120

NA

Binak Gas Layer

3.5

99

NA

Karanj Gas Layer

2.9

82

NA

BiBi hakime Gas Layer

2.4

68

NA

Zireh

1

28

NA

Kuh-e-Asari

1

28

0.739

20.9

Arash

0.79

22

NA

Kheyr Abad

0.17

4.8

NA

Masjed Soleiman

0.985

27.9

0.739

20.9

Total

164.8

4,670

NA

4. B Operational Activities in Caspian oil Basin In order to perform operation activities in Caspian sea basin, design and construction of semi-submersible drilling platform with capability of drilling in deep water was on the agenda, whish has progressed 82% by early 2004. construction of multi- purpose supporting boats and tugs has progressed 25% by early 2004. 4. C Drilling National Iranian Drilling company (NIOC) is one of the companies affiliated with NIOC which has enhanced ist own capabilities through growth and development and has paved grounds for its overseas
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A Brief Profile of National Iranian Oil Company

activities so that bidding in international and local tenders, the company has been awarded various drilling projects . In 2003 and early 2004, through installing advanced systems on drilling rigs and equipping them with top drive and also renovation of many rigs, the company has managed to drill 127 wells totally amounting to 278,666 meters. It is worth mentioning that as a result of this operation in yeas 1997-2003, more than 880 exploration, delineation and development wells, amounting to 1,730,000 meters were drilled. Since its establishment in 1979 till 2003, NIDC has managed to drill 2 million meters wells.

Current affairs about NIOC: Iran’s oil reserves increased to 6 billion barrels and the country's discovered gas rate reached 11700 billion cf. NIOC and India: ONGC Videsh Ltd (OVL), the overseas arm of India’s largest oil producer, Oil and Natural Gas Corporation (ONGC), is holding talks with the Iranian government for exploring an oil block in the northern part of the country References:
1. http://www.nioc.ir/index.html 2. PIW Ranks The World's Top Oil Companies 3. OPEC Annual Statistical Bulletin 2006

4. http://www.eia.doe.gov/emeu/cabs/Iran/pdf.pdf

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