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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 Abhimanyu Kumar Singh


Institute Rajiv Gandhi Institute Of Petroleum
Technology
Roll No. M0001
Date Of submission 10.10.2008
Faculty Mr. Vinay Singh (RGIPT,Rae Bareli)

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A Brief Profile of National Iranian Oil Company

1. Introduction and a brief history: An economic view

Type State-owned

Founded 1948

Headquarters Tehran, Iran

Gholam Hossein Nozari, Minister of


Petroleum, Seyfollah Jashnsaz,
Key people Managing Director; Abdol-Mohammad
Delparish, COO; Abbas Allahdad,
CFO

Industry Petroleum industry

Products Oil, Gas, Petrochemicals

Revenue $51 bn USD (2007)

Website 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 one-
fifth 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 30-
40% 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 pre-
revolution 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:

Field Initial Oil in Initial Recoverable


Rank Formation Production
Name Place Reserves

Billion Thousand barrels


Billion Barrels
Barrels per day

Asmari &
1 Ahwaz 65.5 25.5 945
Bangestan
2 Maroun Asmari 46.7 21.9 520
Asmari &
3 Aghajari 30.2 17.4 200
Bangestan
4 Gachsaran Asmari & 52.9 16.2 560

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A Brief Profile of National Iranian Oil Company

Bangestan
Asmari &
5 Karanj 11.2 5,7 200
Bangestan

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-the-
job 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 Recoverable Gas Reserve

Field's Name
Trillion cubic Billion cubic Trillion cubic Billion cubic
feet meters feet 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
8.8 250 NA
Formation

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


2.4 68 NA
Layer

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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