PremiumIran’s oil sector review in 2011

Head of the Trend Persian service Dalga Khatinoglu

Passing 103 years from the exploitation of Iran's first oil well in Masjed Soleyman field, today there are 40 producing oil fields including 27 onshore and 13 offshore ones in the country with 3.553 mbd of crude oil production capacity. Iran's crude oil is generally medium in sulfur content and in the 28 degree to 35 degree API range. Iran produces almost prospectively heavy and light crude.

Iran's oil reserves and production level

According to the latest official statistics and statements, Iran holds 550 billion barrels of crude with 27.29 production coefficient (Some Iranian experts say the figure is 20).

Iranian Oil Minister Rostam Ghasemi said in November 2011 that a new oil field with 5 billion oil reserves was discovered in the country and Iran's recoverable proved crude reserves have a total of 154.8 billion barrels.

In July 2011, OPEC released its 2010 Annual Statistical Bulletin which raised Iran's proven reserves to more than 151 billion barrels of crude. Iran has not carried out any exploration operations in two thirds of the country, yet. Country's onshore fields comprising 71 percent of Iran's total reserves. Of those onshore reserves, 85 percent are located in the southwestern provinces.

Earlier, Hormoz Ghalavand, Managing Director of National Iranian South Oilfield Company (NISOC) said that the company has produced three million barrels of oil per day during the first nine months of the current Iranian calendar year (started on March 21).

According to the OPEC's December report, Iran's oil production decreased by 15,000 barrels compared to November.

Iran's crude oil production based on secondary sources, mbd

Companies in Iran's upstream projects:

The state-owned National Iranian Oil Company (NIOC), under the supervision of the Ministry of Petroleum, is responsible for all upstream oil projects, encompassing both production and export infrastructure. The National Iranian South Oil Company (NISOC), a subsidiary of NIOC, accounts for 80 percent of oil production covering the provinces of Khuzestan, Bushehr, Fars, and Kohkiluyeh and BoyerAhmad. Karun, Marun, Aghajari, Masjed Soleiman and Gachsaran companies are subsidiaries of NISOC. Iranian Central Oilfields Co. is responsible for the western, central oil fields.

Chinese companies SINOPEC, SINOC and CNPC have about $41 billion oil and gas contracts with Iran.

In 2010, expanded U.S. sanctions on Iran have prompted four of Europe's five biggest oil companies - Total, Statoil, Eni and the RD/Shell - to stop investing in Iran. Later, in October 2010, Inpex, Japan's top oil explorer, announces withdrawal from Iran's Azadehgan oil field project to avoid U.S. sanctions. Inpex has invested $153 million in this giant project.

Russia's Gazprom Company has been dropped from the Azar oilfield development project on Oct. 9. National Iranian Oil Company has set aside the Polish Oil and Gas Company (PGNiG) from developing Lavan gas field due to its repeated delays since four years ago on Dec. 19 as well.

Status of the projects to be implemented by the Chinese companies in Iran:

Iran's major oil producing fields based on official stats

joint

Iran has at least 15 joint oil fields with neighbors. Most of joint fields oil comes from Iraq. Iranian officials have not mentioned the exact oil production from each associated fields with Iraq, including Dehloran, Naftshahr, Arvand, Yadavaran, Azar, Azadegan and West Paydar, but Galebani said earlier that Iran produces about 155,000 barrels of oil per day from joint oil fields with Iraq.

On average, Iran exported 2.583 mbd of crude worth $71.571 billion in 2010. However, according to the OPEC report, Iran has been exporting 2.25 mbd of crude, up until now.

Iran's refinery capacity risen by 18 percent in 2010 to 1,741 mbpd. Iran's refineries are Abadan, Arak, Tehran, Isfahan, Tabriz , Shiraz, Kermanshah, lavan and Bandar Abbas, with prospectively 421, 181, 245, 350, 111, 60, 22, 29, 322 thousand barrels refinery capacity.

Some 80 percent of Iran's oil wells are in their second half-life and according to official statistics their production capacity decreases about 400, 000 (8-13 percent) barrels per day each year.

Iran says it tries to keep crude production level by injecting gas, CO2 and special microbes into the wells, recovering the old wells, digging 350,000 meters oil wells in current year, alongside installing more pumps into the wells.

Before, Iran averagely produced 26,000 barrel of oil from each well, but now this figure has decreased to 20,000.

According to OPEC's statistics, Iran had 54 active rigs in 2010. However, Iran says totally 15 new drilling rigs were launched during 2011 and according to the National Iranian Oil Company's managing director Ahmad Qalebani's statement, totally 98 drilling rigs exist in the country today.

Iran plans to increase the number of its drilling rigs operating onshore and offshore oil fields by 36 units until 2013. Some 2,500 oil and gas wells should be drilled and commissioned during Iran's five-year economic development plan (2010-2015).

During the past ten years, 39 drilling rigs had been operating in the area covered by NISOC, 6 new drilling rigs has been added during the past 9 months and this is planned to increase to 50 until the end of current solar year. Some 1352 producing oil wells are in the area covered by NISOC.

According to OPEC's annual report, some 10 oil wells in Iran became inactive in 2010. Iran says it is preparing to reactivate 20 inactive wells in a few months. Iran had 2,064 producing wells in 2010.

The country completed 186 wells in 2010 and managing director of National Iranian Drilling Company (NIDC), Heidar Bahmani, announced in August that a total of 190 oil and gas wells have been drilled in the current Iranian calendar year.

The lack of gas for injection into oil reserves has led to decline of oil production, currently 30 oil fields in Khozestan province require gas injection, whereas gas is being injected to 10 oil reserves including Gachsaran, Aghajari, Bibihakimeh, Ramshir, and Parsi.

Earlier, Production Manager of National Iranian South Oil Company Abdol Amir Hoveizavi said that Iran injects more than 90 million cubic meters gas per day into southern oil reserves.

Iran planned to inject CO2 and special microbes into the old oil wells as well. According to National Development Plan, Iran should increase gas injection to the oil wells to 330 mcm/d.

On average, Iran injected 67 mcm of gas and 414,000 barrels of water per day to old oil wells in 2010.

Iran has planned to develop oil fields as well. Savestan-Sa'd Abad oil field is developed by 69 percent, 10 wells have been digged and it's predicted that some 15,000 bpd be produced from this field, Khesht oil field is devepoped by 65 percent by digging 5 wells to produce 30,000 bpd. Iran planned to increase Cheshmeh Khosh oil field's production from 64,000 to 80,000 bpd, Dehloran's from 7,000 to 25, 000 bpd and West Paydar from 24,000 to 42,000 bpd.

Some other oil fields including Yadavaran, North Azadegan, Azar, Arvand, Aban, Arash, , Esfandyar, Farzam, Mobarak, Reshadat, Binak and others are scheduled to develop.