samedi, septembre 16, 2000

Iran, Oil and Buy-Back Contracts

Tazehaye eqtesad, Monthly Magazine, No. 92, Sep. 2000, Page 37 - 49
By : Dr. Bahram Arman & Ali Zamani

Natural gas consumption growth in Iran during last decade has always preceded international consumption growth. Natural gas consumption in Iran during the decade 1370-80 has enjoyed a medium annual growth of 12% whereas the annual growth of global consumption in the same period has only been. 1.8% vast attempts has taken place to develop gas transmission in the wake of realizing the policy of substitution of natural gas with other energy carriers. Iran National Gas Company (N.I.G.C.) has undertaken maintaining this objective.

The oil & gas reservoir in Iran, have been estimated to be 270 b.b. of crude oil in 1381 (2003).37% of which is allocated to crude oil and 63% to natural gas.

At the time being. Iran has 26.6 T/M3 natural gas a bout 52% of which is in offshore zones and 48% in onshore. lran natural resources have mostly been located in southern parts of the country and in adjacent of Persian Gulf.

Production of natural gas, as a response to local demand or for export is mainly produced from independent gas resources and associated gas produced from common oil and gas resources are mainly used to inject in oil zones.

Utilizing relative advantages of natural gas to maintain local energy demand as well as expansion of international natural gas exchanges in the wake of promotion of Iran stand in international markets are of strategic objectives of gas industry in the future.

Heading the trend of consumption of natural gas in Iran. The share of natural gas in consumption energy basket has advanced from 26% in 1370 (199 I) to 46% in 1380 (2001) and the share of oil production in the same period has been diminished from 64% to 47% in lieu.

Natural gas consumption growth in Iran during last decade has always preceded international consumption growth.

Natural gas consumption in Iran during the decade 1370-80 has enjoyed a medium annual growth of 12% whereas the annual growth of global consumption in the same period has only been. 1.8% vast attempts has taken place to develop gas transmission in the wake of realizing the policy of substitution of natural gas with other energy carriers. Iran National Gas Company (N.I.G.C.) has undertaken maintaining this objective.

Peculiarities of gas transmission system is affected from geographical particular peculiarities of oil and gas zones. Thus, Iran enjoys a vast connected gas transmission system. Developing this system in the wake of realizing the objective of substitution of natural gas with the basket of energy carries to maintion security in presenting energy, is strongly needed in the future programs.

Natural Gas Transmission System

Gas transmission system consists of high pressure transmission lines and booster pump stations which has had a remarkable increase during the past decades, so that, transmission lines has reached 15300 km at the end of 1380 with medium annual growth rate of 8.2% Iran, at the time being, has three main high pressure all-over lines (IGAT I, II & III) and establishing of the 4th & the 5th all-over line is under construction, meanwhile, studies for establishing the 6th all-over line has been started.

Furthermore, in the north-east and the north-west parts of the country two high pressure gas line, SarakhsNeka-Rasht with 36" & 30" diameter and also Azarbaijan gas transmission lines with 48" & 30" diameter has beet established to transfer gas for the mentioned districts.

Establishment of 5000 km new high pressure gas line has been predicted in the third development plan (1379-83) (2000-2005), thus, upon realizing such plan, the total gas transmission lines in Iran will reach 18300km.

Some of transmission line projects in the third development plan are as follow:
Establishing the third 56" all-over transmission line for 870 km. Establishing the fourth 56" all-over transmission line for 815 km.

Establishing the fifth 56" all-over transmission line for 500 km. Establishing the Azarbaijan second 48" transmission line for 440 km.

Establishing the sarakhs-mashad 36" transmission line for 145 km.

Design, provision & establishing 30 booster pump stations with total power of 2400 hp.

Natural Gas Distribution System

Natural gas distribution system in Iran has noticeably expanded during the last decade (1370-80) (19922002). Natural gas ramification has reached to 69000 km at the end of 1380 having the medium annual growth of 10.3% Installed gas branches has enjoyed a medium annual growth of 10.4% and has fetched over 3.72 m branches at the end of 1380.

Gas distribution system in Iran has covered 392 cities and 416 villages at the end of 1380 and at the same time the number of industrial consumers has reached 3500 units and the number of ramified industrial estates has reached 30 in this period, 7.4 m houses (equivalent to 32m. persons) have utilized natural gas.
Transferring gas to power plants has always been a major policy in energy section and, at the time being, 36 power plants are covered by gas transfer system.

Buyback Plan in Gas Industry

Based on sanctions of Islamic assembly in 1377, utilizing buy-back facilities to expedite expansion of gas transmission operation (1 st phase) was started. Increasing 44m/m3 refining daily cpacity, establishing over 2000 km of natural gas high pressure, establishing 6 booster pump stations with total capacity of376000 hp, installing 1.1 m residential branches (approx. 2m houses), transferring gas to 1800 industrial units are of the important objectives defined in this project.

Realizing this project and substituting natural gas in energy consumption basket. In adition to crating new jobs in different sectors, has annually saved about $1.3b. and with complete realization of the project, 2 m house have been covered by gas transfer system.

The achievements of the project has been as follow: Augmentation of 1.5 m new subscribers to gas trans for system Augmentation of 2m gas fuel houses (equivalent ot 10m persons).

Augmentation of natural gas annual consumption to 20 b/m3 (consisting of 8.2b/m' in commercial residential section, 8.6b/m3 in industry section and 4.2b/m3 in power plant section.
Following success in the first project of gas transfer through buy-back The second phase of the project was evaluated in 1380 and was approved by economy council. Based on programs, the project will be accomplished during 2002-2006. The main activities of gas transferring in this project will be as follow:
Augmentation of gas refining daily capacity to 50m/m3

Establishing about 4500 km of high pressure transmission line increasing new capacity for booster bump stations to 1.1 m/hp.

Natural gas consumption in Iran will be augmentated to 25b/m3 upon completion of the second phase of gas transferring through buy-back (30% in power plant section, 40% in industry section and 30% in residential commercial section).

Noticeable technical and operational capabilities of Iranian experts to accomplish several gas transferring projects particularly buy-back projects are of particular peculiarities of Iran natural gas industry. It has affected the operation id addition to affecting the project economy.
Specification of the 4th All-Over Line

The 4th all-over, transmission line with diameter of 56" has been established to transfer 50m/m2 per day, of refined gas in Asalooyeh refinery and 60m/m3 per day, of refined gas in Parsian refinery. The line starts at Asalooyeh refinery and is extended for 815 km through Persian refinery/Khonj/Jahrom/Sarvestan/Abadan and Montazery power plant in Isfahan. Operational pressure on the 4th line in 1305 psi. and transferring 11 Om/m3 of gas as a final result necessitates establishing 7 or 8 booster pump stations.

Making use of the 4th line is necessary in 1383 and in this regard, designing the line was started at 1379 and the layout of the first phase of the line (from Asalooyeh to station No.4 in Sarvestan for 396 km) was prepared in 1380, the completion of which has been started. Also the lay-out of the second phase (from Sarvestan to the end of line for 450 k) is in hand and will be completed in the fourth quarter of the current year.

Offering natural gas will be augmentated for IIOm/m3 per day (40b/mJ/per year) upon establishing the 4th transmission line and related booster pump stations. Substitution of such amount of natural gas in consumption energy basket during the next year mainly by reducing oil products, will have great economical and environmental impacts.

Studies show that equivalent to 257 m/barrel of crude oil products can be substituted by natural gas.

And it will take place by non-importing oil products and making ground for exporting crude oil or oil products which will make a huge amount of profits to strengthen the economy.

Economical profits made by substituting natural gas, has been estimated at $ 1747b. per year, heeding the medium value of the basket establishing the 4th line and the other expenses relating to offering natural gas ($343m. in residential and commercial section, $ 650 m. in industry section and $ 754 m. in power plant section). In addition to that, accomplishing the project and increasing substitution speet of gas with other energy carriers, spread of environmental pollutants made by energy combustion i.e.12.7m/ton (Co2) and 90,600 tons (Nox) can be averted.

Introduction to N.I.G.C Installation and Industrial Complexes

Existence of oil & gas sources in related fields and necessity of collection, refining, producing, transferring, delivering and distributing gas to consuming centers, which are kilometers far from production sources. Spread of gas transfer network, exploitation and running huge gas installation, has caused N.LG.C. to establish such installations in different places of the country. These centers and installations the major part of which consists of collecting centers, refineries, separating centers and dehumidification, pipeline, workshops and maintenance centers, booster pump stations, corrosion protection, valves, pressure reduction centers, telecommunication stations, measuring and control, input stations, reservation and loading centers for liquefied gas, meter & regulator plants, residential and industrial estates and administration complexes are located in operation districts, for more acquaintance to some of which are briefly pointed:

Hashemi Nejad Gas Refinery (Khangiran)

Hashemi Nejad gas refinery being considered as one of the greatest gas refineries, is located in 35km from Sarakhs and l65km from Mashad in the north-east of Khorasan province. The area of the refinery is 100 acres and construction operation of the refinery was started in 1356 and was put on stream on 1362 aiming at maintaining gas and fuel for the greatest power plant in the country i.e.Neka power plant as will as gas transfer to Khorasan & Mazandaran provinces. The refinery which has been designed to refine sour gas of Khangiran independent gas resources, has been formed by 3 gas refinery units with daily capacity of 21 m/m3 (expandable to 5 units) which is equivalent to thermic value of 140,000 barrel of oil as well as 2 sulphur recycling units (expandable to 3 units) with daily capacity of 1300m/t also fixing units of gas liquid and a sour water reduction and other collateral installation. In addition to the gas obtained from mentioned sources, the sweet gas from Shoorijeh field reservoirs are transferred to consumption circuit through a pipeline to Mashad after dehumidification the sulphur obtainet from processing gas is used in local and foreign markets.

The Gas extracted from sour gas well in the region, are delivered to refinery after control, collection and primary preparation through a pipeline, sweet gas extracted from Shoorijeh and Gonbadli are injected to the pipeline after dehumidification and passing through dehumidification tower and getting dried by special process.

The water required for refinery and Mohajer estate is maintaioned through 4 deep water wella and a treatment plant with capacity of 580 m3fh. Electricity for refinery and Mohajer estate is maintained by 4 generators the motor of 3 of which is gas turbine and a steam turbine and the capacity for each unit is 7500 k.w.h (total equivalent to 30m.w). A diesel generator with of 1.5m. w'. has been installed for emergencies. Required steam for refinery is produced by 4 boilers producing 3600t/h high pressure steam and 2 boilers producing 150t/h medium pressure steam.

Laboratory in refinery is responsible for controlling impurities as well as accurate supervision over quality and quantity of gas and consumable material and the persons in charge of control room are controlling the routine process of operation in the refinery.

Hormozgan Operational Center
Separation and dehumidification installations in Queshm island was put on stream on 1357 aiming at drying sweet gas extracted form Gavarin field to supply gas for Bandar abbas power plants also to fix and obtain gas liquids for local consumption or export purposes via laft harbour. Mentioned installations can prepare 2m/m] of gas daily and deliver it to the pipeline to be transferred to Bandar abbas power plant. Two similar install lations in 2 phases the operation of the first phase of which was terminated in 1365 with 4 refining and dehumidification, units has been installed in Sarakhoon located at 25 km in north-east part of Bandar abbas. This installation has been installed to refine Sarkhoon field gas, supply and completion of gas for Bandar abbas power plant, transferring gas to Sarcheshmeh copper complex, Kerman province. All cities in the route and Kerman power plant as well as obtaining 6000 drums of gas liquids per day for consumption. The second phase of Sarkhoon refinery the construction operation of which is in hand will double the capacity of gas delivered into pipeline as well as obtained gas liquids. Rry complex, also water and electricity supply installation Queshm Camp, pipeline maintenance center, telecommunication stations as well as Fajr administration - residential estate with about 200 residential units are all located in Hormozgan operational district.


Natural gas refining & dehumidification capacity has reached 211m.m] in 1380 (2001) enjoying a 9% growth during the past decade. Heeding noticeable concentration of gas fields in southern part of the country, refining and dehumidification possibilities have mainly been located in this area. Bid Boland Refinery with daily capacity of 22.5.m.m3, Fajr Refinery with daily capacity of 110m/m3, Sarkhoon Refinery with daily capacity of 7.1 m/m3 for dehumidification in southern districts, and Hashemi Jejad Refinery with daily capacity of 44.5 m/m3 located in North-eastern district of Iran are considered as the most important refining installation of the country.

Based on forecasts in 5 years development plan, capacity of refining and dehumidification of refieries has reached 345 m/m3 per day with medium annual growth of 18%, herebelow are the best of some refining plans to be accomplished during the third 5 years development plan.

Establishing Asalooyeh Refinery with daily capacity of 75m.m3 for explotation of 1st, 2nd and 3rd phase of southern pars, out of which, exploitation of 2nd and 3rd phase is on stream and for the 1 st phase will be startedup before the end of the current year.

Establishing another refinery in Asalooyeh with daily capacity of 50 m/m3 for ixploitation of 4th and 5th phase of southern pars which in hand and will be put on stream in 1384 (2006).

Establishing the 2nd Bid Boland refinery with daily capacity of 56 m.m3 to refine gas exploited from pazanan, Bibi Hakimeh & Gachsaran fields. This project will be put on stream in 1384 (2006).

Establishing (first phase) parsian Refinery with daily capacity of 55 m.m3 to be put on stream in 1384 (2006).

Establishing (first part of the 2nd phase) parsian Refinery with daily capacity of 21 m.m3 to be put on stream in 1384 (2006).

Establishing (2nd part of the 2nd phase) parsian Refinery with daily capacity of 20 m.m3 to be put on stream during the 4th 5 years development plan.

Establishing l am Refinery with daily capacity of 6.8 m.m3 to exploit Tang Bijar gas resources. These refinery will be put on stream in 1381 (2003).

Establishing southern Gashou Refinery with daily capacity of 14 m.m3 which is under study.

N.I.GC. Financing Projects

Establishing Bid Boland-2 refinery and the 4th all over gas transmission line was suggested by economy council in the form of sanctioned bill. According to 3rd part of L stanza of N.B.29 relation the 1379 budget law and 1 st part of, J stanza article no, 85 relating to the third cultural, social, economical and development plan and the law of making use of technical, engineering, manufacturing and industrial capabilities in execution of projects and providing facilities to export services.

Establishing Bid Boland-2 refinery and the 4th all-over transmission line was sanctioned with the budget of max.$ 1844 m net or $ 2777.1 m gross (including taskmaster,s profits and other expenses) through financing. According to predictions, those two projects will be accomplished in five years (1380-84), and the facilities received will be amortized in 8 years by selling products including liquefied gas products, liquid gas, ethane, natural petrol (except natural gas) or the texts mentioned in A stanza of article no 120 relating to the third 5 years cultural, social, economical and development plan.

Bidboland-2 refinery will be established for sweetening and processing about 56m/m3 of gas per day to obtain ethane and liquids with more gravity than pazanan gas and also associated gas in Gachsaran and Bibihakimeh gas fields. This installations, in addition to producing sweet gas, will also produce 3.83 m tons of C2+ liquefied products per year, out of which the produced ethane in used to feed Arvand petrochemical plant (8th Arvand), and the butane and natural petrol is exported abroad via mahshahr harbaors. The income obtatine through sales of aim products will fetch $ 500 m. per year.

Timetable of project accomplishment

According to timetable and in case of maintaining required financial credits the first sweetening unit will be statted up in the second half of 1384 upon signing contract and the remaining units will be started up every two months.
Project of Establishing 5th All-Over Line (Asa looyeh-Aghajari)


Establishing the 5th all-over line to develop phases 6,7, and 8 of southern pars has been defined in he framework of the sanctioned bill No. 34/1/744 dated Mar/15/2000 generalities of the project consists of 30 developing wells, establishing sub-sea pipeline to transfer produced gas to onshore installation. Refining gas including gas separation from liquids, dehumidification, fixing gas liquids, establishing 504 km 56" pipe line for transferring gas from Aghajari for injection to oil zones.

The project was sanctioned for $ 5469 m. gross budjet (consisting of profits for taskmaster and other expenses) and net budget of$ 2870 m. based on the part 1-3 of L stanza NB. 29 relation to 1378 budjet law emphasizing on observing the law of utilizing the maximum technical, engineering, manufacturing and industrial capabilities to execute projects and facilitating exporting services.

According to the bill sanctioned by oil board of directors dated Jan/14/2002 execution of AsalooyehAghajari 56" pipeline along with booster pump stations and related telecommunication system was ceded to N.LG.G on behalf of N.LO.C.

Project Peculiatities

The 5th all-over gas transmission line has been established to transfer 100 m/m3 per day (3500 m/f3) of sour gas produced in phase 6,7 and 8 installations of southern pars in Asalooyeh also Salman
oil field to Aghajari gas installation to be injected to the field wells with 56" diameter. The line starts in Asalooyeh and will be extended for 504 km through Bandar Genaveh-Aghajari.

Designing pressure for Asalooyeh-Aghajari has been foreseen to be 100 bar and 4 booster pump stations with power of 284000 k.w is required for the whole route.

Establishing the aforementioned pipeline has a high grade of urgency and should be put on stream until 1383, therefore designing the line has been started in 1380 and various stages of design, line execution, telecommunication system and booster pump stations are accomplished to the attached timetable.

Bidboland Gas Refinery

Bidboland gas refinery is located in km-22 west of Behbahan and km-40 north of Aghajari in Khouzestan proVInce.

Designing the refinery has initially been for refining sour gas in Aghajari field and export it abroad, and primary construction of the design consisting of5 refining units (with 240 mm scf/d for each unit and expandable to 9 units) was started in 1374 and was put on stream on 1349 Upon existence of Ahwaz and Maroon oil field and dispatching sweet gas from these field to transfer to all-over pipeline via Bidboland booster pump the export volume has been incrased and installation of next units wee abolished.

Immediately, dehumidification unit was put in service to adjust dew-point of Maroon & Ahwas gas. Aghajari field sour gas associated with 3% total acid gas are delivered trom 100,200,300 N.G.L. plant of N.LO.C. to Aghajari martyrs booster pump station (Mandanizadeh, Makvandifar & Yousefi) and it is transferred to refinery through 40" pipeline.

Sour gas are sweetened in contact towers of refining units by monoethanolamine 15% (M.E.A.). or diethanolamine 30% and in 38 oC temperature and after washing by distilled water, it is dehumidified by alumina (activated aluminum oxide) or silica-gel in dehumidification towers, Finally, sweetend and dried gas is transferred to all-over line via Maroon-Ahwaz sweet gas line and martyr kavehpishe booster pump station (Bidboland station). Design of refinery was carried out by Pritchard company and construction of the building was accomplished by coslain & press under supervision of1.M.E.G.

Upon existence of Ahwaz & Maroon sweet gas fields and commutation of sweet gas in these fields with sour gas percentage of associated acid gas in fluctuationg between 0.3%-1.2% at the time being.

Development Plan
Bidboland-2 refinery

Processing Pazanan sour gas is carried out by four sweetening units with capacity of 500 m/D per day for each unit (more than 14 m/m3 per day) in Bidboland-2 refinery in this plan, two sulphur recycling units and ethane and higher slice obtaining units with capacity of 3 m/tons per year and collateral services will completely be established. Exploitation of the plan has been programmed to be on 1384.

New refinery unit

Establishing a new refining unit with normal capacity of 7m/m3 per day in Bidboland refinery is in agenda.

First stage of the plan.

Hashemi Nejad gas refinery aiming at exploitation of Khangiran Sarakhs gas reservoirs supplies 15% of consuming gas in the country for about 700,000 subscribers making use of 3 refining units with total daily capacity of25 m/m3.

The gas feeding the refinery contains 10% of acid gas consisting of 5 and 3% H2S as well as 5 and 6% CO and is considered as one of the most perilous gas reservoirs in the world. It is mentionable that since 1379, the operation of refinery is carried out in the framework of Hashemi Nejad refining co. as one of the affiliated companies of N.I.G.C.

Second stage of plan

N.1.G.C. designed and established two refinery units and a sulphur recycling unit in 1377 aiming at augmentation of exploitation network-establishing these units has increased the daily capacity of the refinery for 42 m/m3 which is equivalent to 22% of total consumption in the country. Credit used for this project has been $ 83m, in hard currency and 240 b/Rls.

Valiasr Gas Refinery

Valiasr huge gas refinery is located in 300 km south east of Bandar Boushehr and 200 km south of Shiraz adjacent to Khass city and 70 km of Banabar Kangan in mountainous district ofNar & Kangan.

The area of the refinery apart from surroundings is 70 acres the construction operation of which was started aiming at exploitation of Nar & Kangan independent gas fields, completion, and supplying required gas for local consumption and exporting gas liquid via Bandar Tahery, The first phase of the refinery which has 4 similar refining units and adjustment of dew point was put on stream on 1368 with daily capacity of 38 m/m3 equal to thermal value of about 290,000 barrel of oil and the feed of which is supplied from Nar field sour gas.

The Second phase of the refinery established to refine Kangan field gas. And the construction operation of which is in hand, will increase the final daily capacity to 80 m/m3 equivalent to thermic value of 600,000 barrels of oil, which will have an effective role in remedying deficiency of energy, economical and social objectives.

Sarkhoon Gas Refinery

This refinery Located at 25 km north-east of Bandar abbas And 2 phases of each has been completed And started up, has a daily capacity of producing 14.4 m/m' standard gas, 1200 barrels of fixed gas liquid and 90 tons of liquid field gas.

Exploitation of the first phase has taken place in 1365 and of the second phase in 1375.
Natural gas required for this installations are supplied by 13 wells in Sarkhoon field which are transferred for consumption after segregation and dehumidification. Accomplishing the main process, in designing of which the latest technology has been used, can apply by glycol recycling, refrigerating by propane, liquid fixing and LPG production units. Generating electricity in the installation takes place bye gas turbines which have a total capacity of 7.2 m.w.

Produced natural gas, in addition to supplying Bandar Abbas power plant, Bandar Abbas oil refinery and Hormozgan province factories, it also supplies gas for industrial and residential complexes, like Sarcheshmeh copper complex, Sirjan, Kerman and Rafsanjan cities.

Gas liquids fixed in this refinery is transferred to Bandar Abbas oil rafinery to feed some parts of installation Liquified gas as a new product in this refinery, is producedin gas liquid fixing unit and is delivered to oil products distribution company.