A look at the National Iranian Oil Company,s

report in 2018

A look at the National Iranian Oil Company,s

report in 2018

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n PrefaceSince its inception in the solar year 1951, The National Iranian Oil Company as one of the largest oil companies in the world and main member of OPEC, at the forefront of regional cooperation in the Middle East and the world has always tried to develop exploration, drilling, gas and oil production, research and development, refining and distribution of oil, gas and oil products and exports; with all these efforts, the company has established its historic and unique role in the field of production and export.The existence of rich hydrocarbon resources in oil and gas has led NIOC to become the second largest oil company in the world. According to the latest exploration, the country›s oil reserves are estimated at more than 712 billion barrels and the recoverable hydrocarbon reserves of 160.12 billion barrels. Meanwhile, Iran›s natural gas reserves account for 16.6 percent of the world›s reserves, 49 percent of Middle East reserves and 38 percent of the reserves of oil exporting countries, of which more than 33.3 trillion cubic meters are among the extracted natural gas reserves of the country.The accumulation of Iranian oil and gas reserves shows that Iran has the first rank in the world,s hydrocarbon reserves and therefore, plays a role in providing world,s energy. The existence of this volume of hydrocarbon reserves has led the country›s oil industry to be under the attacks and political pressures of some Western governments, henceforth has always had a major mission in promoting, developing and self-esteem both inside and outside the country. Nevertheless, a brief look at the performance of NIOC in 2018 states that, thanks to the efforts of its elites and experts, it succeeded in resolving sanctions once again and serving a large part of the objectives of its development prospect.

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n South Pars; Manifestation of self-esteemThe joint square of South Pars is manifestation of determination in the Iranian oil industry, and the win-win letter of the 11th Government. This joint field, as the largest gas reservoir in the country, holds alone half of Iran›s natural gas reserves. Due to its significance, this square has become the major part of developing plans of NIOC. With all efforts, South Pars› development has been completed in the first five years of the 11th Government. And by the end of phase 14 in the first half of 1398, the development case of this strategic region will be closed.Since the beginning of the 11th Government, the plan has been based on the principle that older phases should be prioritized to achieve results. The solution was completed in 2014, and at the end of this year, phase 12 was officially launched at the presence of the president as the largest South Pars phase with the capacity of producing three standard gas stages. Subsequently, phases 15 and 16 have been launched in 2015, and in the final year of the 11th government, phases 17, 18, and 19, 20, 21 (equivalent to 6 phases) were set up together. Since then, Iran›s production has been equaled with rival country,s (Qatar) after twelve years.

4 n Launching four phases of South ParsIn the course of the development of South Pars gas field, phases 13, 22, 23 and 24 were also launched with the assistance of Iranian experts and artisans on the last days of March 2018 in the presence of the president and a number of military and civilian officials; and this caused Iran to get ahead of Qatar in gas daily production from this important strategic area. Also, the opening of these phases increased the country,s gas production capacity by 110 million cubic meters per day; this was an event that brought gas daily production closer to 750 million cubic meters and gas condensate to one million barrels (other than phase 11). This was the target, which, according to the predictions, will be realized by the first half of 2019 with the full operation of Phase 14. And thus, one of the outlines of NIOC,s program will be actualized with the fulfilment of resistance economy and maximum production from the joint field of South Pars.

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n Production of more than 1,000,000 cubic meters of gas in the near futureBy completing Phase 14 as the last phase of the South Pars and another part of the gas field development projects, Iran,s daily gas production will pass through a thousand million cubic meters per day. The average real gas production in the first 10 months of 2018 was 841 million cubic meters per day, which is predicted to increase to 880 million cubic meters in 1398 according to demand, and to 950 million cubic meters per day in 2020 and hence, the production of this valuable hydrocarbor will go through a thousand million cubic meters per day in the near future.

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n West Karoon development in the framework of Resistance EconomyDue to the overlap of its hydrocarbon resources with Iraq, the development of joint fields in West Karoon, is another major developmental goal at NIOC, which will dramatically increase the country›s crude oil production and strengthen the country›s position in international energy markets.The oil production trend in West Karoon has been followed according to the initial plan in 2018, and the production capacity of this hydrocarbon gained from oil fields in the region reached 350 thousand barrels per day. This trend continues to reach the goal of producing 700 thousand barrels of crude oil per day until 2020.Among other priorities of NIOC for increasing the capacity of oil production, transportation and export in the western part of Karoon are the development of the first phase of the South Azadgan Fields, Southern Yaran and the second phase of Yadavaran fields and North Azadegan, the design of pipelines and associated facilities, and the construction of the Gore-Jask Oil Terminal and Jask Terminal with an estimated investment of $ 15 billion.

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n The mobile processing plant at the service of West Karoon oil productionSince the realization of increasing oil production in the western part of Karoon was not possible without the use of processing plants, the use of skid-mounted was, for the first time, considered in the development of the area in 2018.As a result, part of the increase in the oil daily production of South Azadegan was achieved using a mobile processing plant in the amount of 40-50 thousand barrels; this method could be operated on other joint fields. n The increase of crude oil storage capacityWith the increase in oil production and the anticipation of rising Western political pressures, crude oil storage has been on the agenda for a long time as one of the strategies of NIOC. In this regard, the contract for the construction of 10 million barrels of crude oil storage tanks in Genaveh and its lateral facilities at Jask port in 2018 was finalized.These storage tanks receive the sent crude oil from the 42-inch Gore-Jask pipeline at the end of the line and, while

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storing and maintaining the export oil, pumps it to the marine pipelines and floating ballons at the Jask export terminal.The design of oil storage tanks in Jask port is part of the Gore-Jask oil pipeline project, which will lead to the development of the country in the southeastern part. In addition, the diversification into oil export and supply of downstream units is also targeted at this project.The project, which supports the export of crude oil from Khark Island, is a strategic step towards the continuation and sustainability of crude oil production and the completion and enhancement of the value chain of the country›s oil industry.With the completion of storage facilities construction and Bushehr›s condensate metering stations in 2018 it is possible to store gas condensate produced by a number of South Pars refineries with a nominal capacity of 640 thousand cubic meters equivalent to four million barrels, as well as supplying the pumping tubes to provide feed to condensate refineries of Persian Gulf and Pars, respectively to 360 thousand and 120 thousand barrels per day; also, there is possibility to send gas condensate to floating balloons (SPMs) 1 and 2 up to 600 thousand barrels per day.

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n West Karoon Pumps in Operation CircuitThe plans for the construction of West Karoon and Omidieh tunnels are among the comprehensive plans of NIOC, which has become operational by the end of 2018. This great national plan was considered to transfer 254 thousand barrels of light petroleum and 280 thousand barrels of heavy oil of west Karoon to Omidieh, 280 thousand barrels of heavy oil from Omidieh to Gore and Bahregan›s oil terminal, as well as the average of 220 thousand barrels of heavy oil and 150 thousand barrels of light oil from West Karoon to Bahregan›s oil terminal.The scope of this project starts from 30 km southwest of Ahvaz city with the implementation of the West Karoon Tunnel Project, and then continues through the construction of light and heavy oil transportation pipelines to the east; the implementation of the heavy oil pipeline from Ahvaz pumping station (ABS) stretches to the southeast and Omidieh city; and with the implementation of the new pumping station in Omidieh and passing through it to the reservoirs of Gore, it continues to the export terminal of Bahregan.

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n Oil exploration in AbadanThe discovery of an oil field in Abadan was another achievement in 2018 at NIOC. The exploration of Iran›s National Iranian Oil Company at a depth of 3,800 meters on Mino Island in Abadan reached light oil of API grade 34, which is light and sweet oil. It is worthy to note that oil exploration in Abadan has been carried out for the first time and the information on oil availability in this area promises the discovery of new fields in Abadan and Darkhwin. n Collection of burning gas and clean air in the oilfieldIn addition to preserving the environment, the use of significant amounts of hydrocarbon resources is being saved through the collection of burning gases in the major plans of oil industry that have been vigorously pursued over the past few years.Effective measures have been taken by NIOC in this regard. After the opening of the second phase of the project to collect gas from the oil (AMAC) in Khuzestan, the operation

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of Hengam Island›s gas processing complex was on the agenda, which allowed the daily production of eighty million cubic feet of gas. It should be noted that previously, the amount of gas equivalent to 14.000 barrels of oil was burnt per day on Hengam, but after the operation of the complex, burning of this volume was prevented and it has been economical for more than 700 thousand dollars a day and was also a valuable service for the environment.In addition, NIOC is planning to collect 90% of oil from southern oilfields; to achieve this goal, 23 small factories with all-Iranian equipment are in the program, which is an effective step in job creation for the indigenous forces in the region.Significant advances in other projects such as NGLs 3100, 3200 and Khark, Hengam Refinery and Bid-Bland 2 indicate that the project to reduce the pollution of gas flares in Khuzestan is approaching the final station.Also, by signing a Memorandum of Understanding on recycling and consumption of gas flares in one of the South Pars refineries among NIOC, Sofreh Gas Co. of France and Saze Samin Industry Co., the national plan of gas collection has already been implementing in South Pars in Iran.

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The most important achievements of this plan is to prevent the loss of national wealth by recycling 450 thousand cubic meters of gas a day and to prevent the annual release of 500 thousand tons of carbon dioxide. The design studies were carried out by Engineering and Planning Group for the Sustainable Development Plan of South Pars, using field information from the Phase 2 and 3 refinery. If this plan succeeds, this technology is used to collect gas flares in Ahvaz as well as equip other South Pars gas refineries. According to the plans of Pars Oil and Gas Companies and South Pars Gas Complex, by the first half of 2019, more than 50% of the current flaring in the new refineries will be reduced, which is a huge success. Besides, all the main burners will be shut off by the end of the twelfth government and prevent the burning of petroleum gases.

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n The use of collective wisdom in the development of oil industryNIOC has finalized the negotiation about contracts for 21 oil and gas fields and agreements with some international companies and domestic oil exploration and production companies (E & P) during and after JCPOA, from which some have faced problems with the start of a new round of sanctions in recent months; and all these have been led to more than 60 free studies and proposals of development and operation of oil and gas fields. In the continuation of these agreements, 40 technical studies are under way and will be completed soon. Based on these proposals, the roadmap for development and operation of oil and gas fields of the country will be drawn up.

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In addition, during the year 1396 and 2018, three important development and exploitation contracts from Phase 11 (among Total Companies, CNPCI and Petropars), development and operation of the Aban and Sustainable West fields (between Oil Zarvigh and Dana Energy) and the contract for the development and operation of fields Sepehr and Jeffeir (with Pasargad Energy Development Company) have been finalized and signed; In the Phase 11, after withdrawal of Total from the contract, negotiations are under way to continue working with CNPCI China and Petropars. n Signing 10 maintenance contracts and increasing oil productionThe signing of ten contracts for maintaining and increasing oil production was another significant event in 2018, These plans, which are defined in the operational area of the

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Southern oilfields (six projects), central areas (three projects) and offshore oilfields (one project), include the total direct and indirect investment of about $ 1 billion.The plans for maintaining and increasing oil production from oilfields and job creation with an estimated investment of over $ 6.2 billion have been defined over three years. The national plan consists of 33 projects, including 29 plans in the land sector and four in the offshore sector.With the implementation of these 33 projects in the geographical area of the seven oil-rich provinces of the country (Khuzestan, Bushehr, Fars and Hormozgan, Kermanshah, Ilam and Kohkiluyeh and Boyer Ahmad), crude oil production increases by an average of 280 thousand barrels per day which will have an additional daily income of $ 14 million. n Using the power of Iranian artisansNIOC has also committed itself to implementing its policy of increasing and improving the technical level of domestic artisans, tenders for 10 packages of maintenance plans and increasing oil production capacity with an investment volume of around $ 1 billion. These tenders are followed by their final stages, and their contracts will soon be signed.

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n Self-sufficiency in production: one of the most practical equipment of the oil industryNIOC, in an effort to raise the technical level of domestic artisans, has signed a contract for the construction of corrosion-resistant pipes worth approximately 556 million Euro with a consortium of TUBACEX companies in Spain and Isfahan Steel Co., providing 600 kilometers of CRA tube for Pars Oil & Gas Company through the involvement of domestic and foreign manufacturers.The contract, which was the greatest contract for the construction of petroleum products in Post-Barjam, allows to fully exploit the technical knowledge of manufacturing alloy pipes, in particular CRA pipes, into the country; and this way, Iran will become one of the producers of this strategic product in the world.The first domestic drill was made with the efforts of the National Company of South Oil Fields and Jahad University of Khuzestan. This drill is a strategic and high-consumption good used by the oil industry, and its construction with new technology is in the exclusive monopoly of a few countries. National South Oil Company has defined the design and development of this type of drill for the purpose of using domestic power and disconnect from outside.

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n Installing Iran›s first SRP and increasing oil productionIn April 2018 the first SRP pump was installed in Abtimur oilfield. This equipment, which was designed and constructed as one of the 10 basic items of the Ministry of Oil by National South Oil Company and Shahid Chamran University of Ahvaz is considered to be a turning point for localization of the equipment and goods of the oil industry in the country.According to the plans, the next 13 pump sets of this project will be delivered by the end of 2018. The advantages and strengths of this equipment include: increasing the production capacity of the well, the possibility of installation at a lower depth, the design and construction of an intelligent advanced control system. n Unveiling of two designs of Amirkabir UniversityThe other achievements of NIOC in 2018 were the launch of two research projects MWD and GYRO designed by Amirkabir Faculty of Physics and Engineering with the aim of localization of strategic goods of the oil and gas industry. The MWD has the ability to measure the drill guiding to the drilling platform and is compatible with external types.

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With the support of NIOC in the construction of 10 groups of domestic goods, Iranian manufacturers have been able to localize many of the commodities needed by the country›s oil and gas industry in recent years. n The ban on the purchase of 84 foreign oil products similar to Iranian,sFor the purpose of establishing the activities of domestic technical companies, the Ministry of Oil announced the ban on the purchase of eighty-four items of foreign goods and equipment required by the oil industry, which had the same Iranian types, during the year of 2018. This announcement was to implement the policies of the Supreme Leader in order to «maximize the use of production and service capability in meeting the needs of the country and reinforcing them in the field of exports».

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n Research in the service of the oil industryThe National Iranian Oil Company has taken a major step in the field of research and technology advancement and its efforts have led to positive impacts. The company has signed research contracts in the field of exploration with five universities of Shahid Beheshti, Chamran, Ahvaz, Kharazmi, Ferdowsi, Mashhad and Shahrood to improve the power and technical knowledge in the exploration of oil and gas fields. These 10-year contracts have been signed considering the resistance economy and base knowledge of operational affairs and the development of research and technology cooperation at the National Oil Company, in which the technology network and the use of domestic and foreign partners are included in this field. These contracts have been concluded in connection with the exploration of new geochemical technologies, the development of new technologies for carbonate reservoirs, subterranean imaging

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technologies from the earth›s layers and geophysical methods and new geomechanical technologies in drilling and engineering of reservoirs.With the implementation of these contracts and the establishment of relevant science and technology centers, after the transfer of modern technologies and localization of them, it is possible to carry out designs or manufacture of related devices in the country, and the product is competitive with the same product as the foreign companies.These contracts will reduce the cost and risk of future oil exploration plans at NIOC. In addition, the established centers of technology, independently and without funding from NIOC have the ability to perform exploratory work; and also, as economic enterprises, they will play an important role in advancing the long-term goals of the resistance economy.

21 n A major step in optimizing fuel consumptionIn 2018, NIOC concluded a contract for the expansion of two thousand new wagons to the metro fleet of metropolises in the country to support clean air and the development of the public transport fleet.The signing of cooperation agreements between the Fuel Conservation Company, the municipalities and the urban train organizations of Tehran, Isfahan, Tabriz, Shiraz, Ahvaz, Kermanshah, Mashhad, Karaj and Qom, led to the project of «development of passenger transportation with urban trains in Tehran and eight metropolitan areas». With the full implementation of this project worth two billion and six hundred million dollars, by the end of the year 2021, a total of 1,000 new wagons will be added to Tehran Metro fleet and a thousand new wagons to the Metro fleet of eight metropolises of Isfahan, Tabriz, Shiraz, Ahvaz, Kermanshah, Mashhad, Karaj and Qom.

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n Oil bourse and preparation for private sector participation in the energy sectorThe measures taken by NIOC in supplying crude oil in the Energy Bourse are a major step towards the maximum participation of private sector in upstream oil and gas industries. The first consignment of Iranian light crude was presented at the International Energy Bourse in November 2018; According to the plans, the gradual and regular supply of this valuable Hydrocarbon cargo was provided in the bourse.The facilities by NIOC for supplying crude oil on the bourse led to the sale of eight shipments of 35,000 bpd of crude oil on the same day, at $ 74.85 per barrel through three brokerage firms, and this provide background for the next supplies.Iran›s oil industry would benefit from setting up the oil bourse to tackle oil sales sanctions in the long run; that is, new markets will open against Iran›s oil, and even small foreign companies will be able to purchase oil from Iran. Since 2018, crude oil and gas condensate is supplied to the oil bourse once a week, which will continue in 2019 according to the

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approval of the Islamic Consultative Assembly. n Oil export from Makran and Sriraf refinery planConstruction of Jask export terminal is one of NIOC›s project which is in progress according to the pre-scheduled plans, and it is expected to be finalized by the end of 2020, and for the first time oil will be exported through Makran.With the finalization of the SIRAF refinement plan as one of the most important plans of the 11th Government, the private sector will be more involved with direct investment in the oil industry in the near future.The Siraf refinery project, aimed at implementing eight refinery gas condensates in the Pars Special Economic Zone with a capacity of 480 thousand barrels of gas condensate (60,000 barrels per refinery), will have a utility company and support. n Acting on social responsibilities, along with the development of oil and gas industriesNIOC has a special focus on doing beneficial works along with its upstream activities in the field of oil exploration,

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drilling, and production from oil and gas fields.The management of the monitoring oilfield development projects is the main core of this activity at NIOC. Since its inception, this management has been the source of valuable achievements in various fields of education, sport, health, road and urbanism, services, culture, health and medical, infrastructural and environmental area. Accordingly, 3744 projects have been conducted in 1270 educational plans, 1105 sports plans, 580 health plans, 46 road plans and 743 service plans with a credit of 16,556 billion Rials at NIOC.In the meantime, the allocation of four percent of the $ 7 billion resource for oilfields development has been significant and could be a source of positive impacts.In 2018, this management has completed construction of 48 educational units in Khuzestan province with funding from NIOC. The construction of the 2000-unit Mehr housing complex of Ahvaz, including 6 schools and 2 mosques with 125 billion Rials, is from among other projects under way in 2018.The operation of the 175-bed Specialized Hospital of Petroleum Industry Martyrs of Azadegan is another practical measure in this area that is scheduled to take place in 2018.

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