Iran Oil And Gas Profile
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Introduction

  • Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), ranks among the world's top four holders of both proven oil and natural gas reserves. In 2012, Iran saw unprecedented drops in its oil exports as sanctions by the United States (U.S.) and European Union (EU) were tightened, targeting Iranian oil export revenues. Preliminary data show that Iran ranked fifth in terms of crude oil and condensate exports, which was in contrast to its third position only two years ago. Given the sanctions and resulting drop in production, export volumes likely will continue to be hampered.
  • Iran has the world's second largest natural gas reserves, but the sector is underdeveloped and used mostly to meet domestic demand. In contrast to the decreasing oil production, natural gas development has been slowly expanding. Nonetheless, natural gas production has been lower than expected as a result of a lack of foreign investment and technology.

History

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Regulation

  • The energy sector is overseen by the Supreme Energy Council, which was established in July 2001 and is chaired by the president of Iran. The council is comprised of the Ministers of Petroleum, Economy, Trade, Agriculture, and Mines and Industry, among others.
  • 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 Boyer Ahmad. Nominally, NIOC also controls the refining and domestic distribution networks, by way of its subsidiary, the National Iranian Oil Refining and Distribution Company (NIORDC), although functionally, there is a separation between the upstream and downstream sectors.

Upstream

  • According to Oil & Gas Journal, as of January 2013, Iran has an estimated 154 billion barrels of proven oil reserves, nine percent of the world's total reserves and over 12 percent of OPEC reserves.
  • Over 50 percent of Iran's onshore oil reserves are confined to five giant fields, the largest of which are the Marun field (22 billion barrels), Ahwaz (18 billion barrels), and Aghajari (17 billion barrels). Of those onshore reserves, more than 80 percent are located in the southwestern Khuzestan Basin near the Iraqi border. Iran's crude oil is generally medium in sulfur content and in the 28° to 35° API gravity range.
  • According to FACTS Global Energy (FGE), Iran also possesses reserves in the Caspian Sea totaling approximately 100 million barrels. Iran faces continued depletion of its production capacity, as its fields have relatively high natural decline rates (8-13 percent), coupled with an already low recovery rate of around 20-30 percent. Sanctions and prohibitive contractual terms have impeded the necessary investment to halt this decline. Moreover, sanctions enacted in late 2011 and throughout 2012 have accelerated Iran's production capacity declines.
  • For further information, see Exploration and Production in Iran

Active Companies

  • he Iranian constitution prohibits foreign or private ownership of natural resources, and all production-sharing agreements are prohibited under Iranian law. The government permits buyback contracts that allow international oil companies (IOCs) to enter into exploration and development contracts through an Iranian affiliate.

Crude Oils

Midstream

Domestic pipelines

  • Iran has an extensive natural gas pipeline system that includes trunklines, import/export pipelines, and gathering and distribution lines. The backbone of the domestic pipeline system is the Iranian Gas Trunkline (IGAT) pipeline series, which transports natural gas from processing plants to end-use consumers. Development of IGAT pipelines, fed by South Pars development phases, is important to Iran's natural gas transport. IGAT-8 will run nearly 650 miles to Iran's northern consumption centers, including Tehran. IGAT-9 and IGAT-10 are still in the planning and construction phase and are not likely to become operational before 2017.

Planned pipelines

  • There are a number of new export proposals, including the Iran-UAE contract (Iran-Pakistan Pipeline), as well as proposed projects such as the Iran-Oman cooperation project and the Iran-Iraq-Syria project.

LNG

  • Although Iran's LNG aspirations to build a liquefaction facility date back to the 1970s, the country has yet to build one. Despite ambitious plans, Iran has had to cancel or delay LNG projects because of U.S. and EU sanctions, which made it impossible to obtain financing and purchase necessary technology. Given the political constraints, Iran's LNG projects are years away.
  • The planned projects are Iran NIOC LNG Terminal, Pars LNG Terminal and Persian LNG Terminal

Downstream

  • Iran is the second-largest oil-consuming country in the Middle East, second only to Saudi Arabia. Iranian domestic oil consumption is mainly diesel and gasoline. Total oil consumption was approximately 1.7 million bbl/d in 2011, about 1.5 percent lower than the year before.
  • In the past, Iran had very limited domestic oil refining capacity and was heavily dependent on imports of refined products, especially gasoline, to meet domestic demand. In response to international sanctions and the resulting difficulty in purchasing refined products, Iran expanded its domestic refining capacity. As of January 2013, its total refining capacity was nearly 1.5 million bbl/d, with all nine of its refineries operated by the National Iranian Oil Refining and Distribution Company (NIORDC), a NIOC subsidiary.
  • Iran plans to increase refining capacity to become self-sufficient in gasoline production. Over the last several years, Iran's gasoline import dependence has decreased significantly as a result of increased domestic refining capacity and lower demand. According to FGE, Iran's gasoline imports will cease sometime in 2013 as some upgrades to refineries take place. Furthermore, following the installation of crackers, fuel oil upgrading facilities, and upgrades to existing refineries post-2015, fuel oil exports are expected to decline.
  • Abadan is Iran's oldest refinery and is the biggest in the country. It has been operating since 1913, although it was destroyed during the Iran-Iraq war. It was rebuilt and since then has undergone a number of expansions and modernizations. In 2011, a new gasoline unit was added, but it was destroyed in an explosion during the commissioning ceremony. Subsequently, this unit had to be rebuilt and it began operating in February 2013.
  • Isfahan, Iran's second largest refinery, has been in operation since 1980 and has been upgraded at least three times since it first began operating. Currently, additional capacity is being added to boost the refinery's gasoline output.

List of Iranian Refineries

Relevant Links

  1. Iran, EIA
  2. Google Earth map of the oil and gas infrastructure in Iran
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page revision: 7, last edited: 16 May 2014 13:42
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