Iran’s oil industry as a reliable bed for investment

Dec 21, 2011 12:00 AM

by Mr Hedayat Omidvar, National Iranian Gas Company

Preamble
The existence of 32 tcm of natural gas reservoirs in the Islamic Republic of Iran beside the other capabilities in the oil and gas industry and also the experience in continuous activities of this field for more than one century has made the National Iranian Gas Company one of the most reliable active companies in the natural gas arena.
Iran offers plenty of advantages, such as abundant reservoirs, existing infrastructures and the codification of the required laws and regulations in accordance with the development plans. This means that adequate conditions do exist for the investment and participation of international companies in the Iranian gas industry. This includes the necessary preparation for the participation and investment in the natural gas production, transmission and underground storage sectors and also the sale and export of gas through the pipelines or as LNG and other commodities.

It is completely obvious that with the discovery activities related to the common energy carriers such as oil, coal, nuclear and solar energy etc. for at least next 40 years, the dominant energy will be supplied by natural gas.
At the present time, the average consumption and production of this invaluable energy carrier has the required stability on the international level and its continuation is predicted and hence, the National Iranian Gas Company having followed the prevailing national viewpoint in the country is ready to participate and interact with all the active national and international companies in the natural gas industry.

Overview of NIGC’s administration and organization staffs
The National Iranian Gas Company is comprised of eight directorates as follows:

1-Financial Affairs Directorate
2-Planning Directorate
3-Research and Technology Directorate
4-Human Resource Development Directorate
5-Gas Distribution Directorate
6-Natural Gas Distribution Coordination and Supervision Directorate(Dispatching)
7-Production Coordination and Supervision Coordination Directorate
8-International Affairs Directorate

In addition to the mentioned directorates, there are twelve departments which directly report to the managing director as follows: Public Relations, Legal Affairs, Inspection and Complaint Consideration Affairs, Internal Affairs, Security, Assembly Affairs, Executive Affairs of Violation Investigation, Technical Inspection, Health, Safety and Environment (HSE), Information and Communication Technology, Commercial Expertise Affairs and Designation Affairs.

The subsidiary companies of the National Iranian Gas Company
The National Iranian Gas Company is also comprised of 54 subsidiary companies that each of them is active in different fields of natural gas industry with independent directorates.
These companies are as follows:

a) Provincial gas companies
At present, there are 31 provincial gas companies throughout Iran which are responsible for gas delivery to the cities, villages, power plants, industries and commercial centers.

b) Iranian Gas Engineering and Development Company
The Iranian Gas Engineering and Development Company is one of the subsidiaries of the NIGC. Based on the executive system of oil industry projects, the company is responsible for the implementation of National Iranian Gas Company master plans.
In terms of the volume of under implementation projects, the company is the biggest one in the NIGC and is responsible for over 70 % of the total planned investments.

The company is authorized to deal with the following tasks:

  • Carrying out economic and feasibility studies of the projects left to the company.
  • Carrying out fundamental and detailed engineering affairs and implementing all the projects left to the company.
  • Design, supervision and implementation of all the engineering and constructionoperations such as construction and development of oil and gas production, collection and transfer systems, wellhead facilities, processing plants and dehydration facilities, underground gas storage, transfer pipelines and gas supply, gas pressure booster and reducer stations and CNG, telecommunication systems, pumping stations, infrastructural and building tasks and kinds of marine structures and the related installations inside and outside of the country.
  • Performing the required material procurement operations to provide the goods from inside and outside of the country.
  • Performing the scientific, technical, financial, commercial and service activities needed to develop the company operations and the value of the plans under implementation is more than $ 20 bn and the total approved credit of the company was about $ 4 bn in 2010.


c) Iranian Gas Transmission Company
The most important task of the company is receiving natural gas, ethane, LPG and gas liquids from domestic and foreign production sources and transferring it to domestic production terminals and export terminals.
The Iranian Gas Transmission Company is comprised of 7 managerial districts and 10 operational zones. The company is responsible for operation management of about 33,000 km gas pipelines all over the country.

d) Gas processing companies
Gas processing companies act under the supervision of the production coordination and supervision directorate. This directorate supervises and utilizes thirteen gas processing companies. It is projected that through implementation of the development projects by 2025, the number of the gas processing companies is enhanced and based on this prediction, the total gas processing capacity of NIGC will add up to 1,200 mm cm per day, provided that all processing plants development projects are realized by 2025.

 

The gas processing companies which work under the supervision of this directorate are as follows:

  • Bidboland I and Masjed Soleyman Gas processing plants with the capacity of 23.5 mm cm per day
  • Parsian Gas processing plant with the capacity of 81 mm cm per day
  • Ilam Gas processing plant with the capacity of 6.8 mm cm per day that regarding its enhancement, the capacity will add up to 10.2 mm cm per day by 2012
  • Fajr Jam gas processing plant with the capacity of 110 mm cm per day
  • Sarkhun and Qeshm Gas processing plant with the capacity of 14.4 mm cm per day
  • Shahid Hasheminezhad Gas processing plant with the capacity of 44.5 mm cm per day
  • South Pars Gas processing plant with the capacity of 190 mm cm per day
  • Bidboland II Gas processing plant with the capacity of 57 mm cm per day that is expected to be launched in 2012

 

e) Iranian Underground Gas Storage Company
Iranian Underground Gas Storage is one of the other major subsidiary companies of the NIGC established in 2008 aiming at building and maintaining balance between the natural gas production and consumption in specific circumstances (sudden temperature drop) and also organizing, expanding, developing and speeding up underground gas storage activities in Iran.
The company is responsible for continuing the current projects and defining new projects. It started momentum for surveying and studying in various parts of the country to identify potential underground structures suitable for gas storage; and studied 217 reservoirs over a year. At present, the company is implementing numerous projects namely Sarajeh, Shoorjeh, Yortsha, Nasrabad, Ghezel Tapeh, Mokhtar, etc.

f) Iranian Gas Commerce Company
Iranian Gas Commerce Company as one of the other NIGC subsidiary companies was established on January 21, 2008 in line with the macro objectives and policies related to energy especially oil, gas and petrochemicals to carry out the important and critical projects in order to extract, produce, process, transmit and distribute energy and its products in various sectors including household, industry, power plant and export ones and replacement of clean and inexpensive fuels with other energy carriers to fulfill the following detailed tasks:

  • Commerce activities including marketing, purchase, sales, import, export, goods and equipment commissioning and some hydrocarbon derivatives including natural gas, Liquid Petroleum Gas (LPG), Liquefied Natural Gas (LNG), gas liquids, gas condensates, sulfur and other gas processing products
  • Carrying out goods-related tasks including warehouse keeping, customs formalities, and other relevant activities
  • Rendering technical and expertise services, goods technical inspection, updating and classifying goods, developing vendor lists and some other relevant activities


g) Iranian non-industrial gas services
Iranian Non-industrial Gas Services Company is operating adjacent to Fajr Jam and Parsian gas processing plants and Asaluyeh giant gas processing plant which are being constructed and utilized in line with providing services to gas residential towns located in Jam.
The company is responsible for providing, developing and implementing Construction plans and maintenance operations (electricity, mechanics, utilities, civil and greenery), company's residential houses, public places and non-industrial facilities. It is also involved in conducting activities including cultural, sports, training and welfare ones such as transportation services (ground and air), clubs, restaurants, and managing cultural, sports and religious centers in the NIGC subsidiary companies.

h) National Iranian Gas Export Company
Since the oil industry policy is the turning of our dear country into an important factor in the global gas market, the National Iranian Gas Export Company was founded in 2002 with the mission of natural gas export project development and in May 2010, the gas export activities via the pipelines was separated from the National Iranian Oil Company and transferred to the National Iranian Gas Company.

NIGC’s strategic objectives
The NIGC major objectives can be surveyed in two different sections: national and international. In both sectors, the main principle is customer satisfaction and maximum productivity achievement. In line with this and based on the outlook document (2025 horizon), the NIGC aims at ranking the third among natural gas producers in the world to achieve 8 % to 10 % of the global gas trade share.
The second objective of the NIGC is ranking the first in the region in terms of gas technology.

Plans and policies of the NIGC in international level and ranking the third in the world; and achieving a share of 10 % of natural gas trade in the world as follows:

  • Processing about 1,200 mm cm per day of natural gas
  • Enhancing production capacity while prioritizing joint reservoirs, especially South Pars
  • Enhancing natural gas share in the energy basket of the country by 70 %, through substituting liquid oil products for natural gas
  • Making efforts to export natural gas to neighboring courtiers through pipeline, other countries in the world and Far East through Liquefied Natural Gas production
  • Attracting foreign investment through capital markets and/or joint projects
  • Economic firms running vision and improving structure to maximize profitability and competition in international markets
  • Maximization of the added value through using gas in energy consuming industries and/or establishment of industries like GTL
  • Reinforcing private sector in downstream and gas distribution industries
  • Cooperation with the countries in the region in production and transmission affairs
  • Impressing gas management status in the region
  • Benefiting from natural gas adjusted pricing system
  • Complete privatization of natural gas industry in Iran
  • Creating the required infrastructures for the development of gas industry in its upstream and downstream sectors, especially in the regions. The company has foreseen plans including interaction with the countries and companies which own advanced technology, establishment of a center for the promotion and improvement of modern oil, gas and petrochemical industry technologies in the Persian Gulf region and strengthening research and development institutions of domestic research centers.


Iran’s special advantages to enter the global gas market:

  • The shortest route to global markets
  • Has huge infrastructures for transferring gas abroad
  • The minimum required investment
  • Possibility of transit to Turkey, Europe and Persian Gulf region countries
  • Possibility of gas swap to the adjacent countries
  • Existence of potential major consumers
  • Owning 33 tcm proven gas reserves and ranking the second among gas owning countries with the current trend by the next hundred years
  • Ranking the fourth among producers that will rank the third in twenty years
  • Having necessary infrastructures for gas export and swap and transit to Europe, East Asia and Persian Gulf region countries


Pioneer investment opportunities
The private sector participation enhancement in carrying out the infrastructural projects of the Iranian gas industry has been one of the strategic approaches of the National Iranian Gas Company during the recent years. In this regard, utilizing the capabilities of the domestic and foreign private sector in supplying the financial sources of the gas industry plans has created a new environment for the National Iranian Gas Company to interact with the private sector and has formed a win-win relationship for both parties.
Along these lines, relying on its successful experiences in the joint investment with the private sector and trusting the reliable capabilities and capacities in this sector, the National Iranian Gas Company has offered a vast range of investment options for the energy field investors in several sectors of this strategic industry including processing, transmission, underground storage and distribution ones.

What follows introduces some of the most important investment opportunities in the form of the National Iranian Gas Company plans and projects which are ready to attract the financial resources.