Tehran is facing a race against time to reclaim its standing in the global energy market as producers plan to ramp up oil production through the end of 2022. President Ebrahim Raisi, who took office on Thursday, has said that he will seek to lift the “tyrannical sanctions imposed by America”.

Negotiations in Vienna to bring the U.S. back to compliance with the 2015 nuclear deal with Iran have been suspended since mid-June. Iran’s traditional customers are watching the talks with interest and some companies are said to have held discussions to resume purchases.

Outgoing Iranian Oil Minister Bijan Zanganeh said last month that some members of the Organization of Petroleum Exporting Countries (OPEC) were concerned about how a return of Iranian barrels to the market would affect the prices.

Zanganeh said he told an OPEC+ meeting on July 18 that Iran would not hesitate to fully regain its market share once the sanctions were removed.

On Thursday, Iran’s ambassador and permanent representative to international organizations in Vienna, Kazem Gharibabadi, reiterated the stance.

“Iran has always been an active and important founding member of the OPEC and we will continue our positive role in the Organization. However, we have always said that Iran will not accept any limitation on its oil production and export’ level when the situation is normalized,” he tweeted.

Iran has always been an active and important founding member of the OPEC and we will continue our positive role in the Organization. However, we have always said that Iran will not accept any limitation on its oil production and export’ level when the situation is normalized. 1

His remarks came in response to his Russian counterpart Mikhail Ulyanov’s tweet that hoped after the removal of the sanctions, “Iran will join efforts of OPEC+ to maintain the oil market stability”.

“This would be merely a national decision rather than a decision to be taken through joint efforts,” Gharibabadi responded.

In their meeting, OPEC and its Russia-led oil-producing allies agreed to unleash millions of barrels of bottled-up crude that would see oil output return to pre-pandemic levels by the end of 2022. Under the deal, oil producers would ramp up production by 400,000 barrels per day every month.

Iran has been exempt of cuts to global supply agreed between OPEC and non-OPEC members in recent years in order to shore up prices.

Oil ministry officials have said a removal of the sanctions could bring back 3.8 million barrels per day of Iranian oil to the market over time. They are confident of the country’s ability to increase production quickly. One senior official said recently that most output could be restored within a month.

Energy groups say the global oil market is able to absorb the additional supply relatively quickly, given rising demand for fuel as global economic activity recovers from the impact of the COVID-19 pandemic.

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“You know that higher oil prices will make everyone happy in the short-term but in the long-run it won’t be gratifying,” said Zanganeh on Sunday following a virtual ministerial meeting of an alliance of international oil producers known as OPEC+.

Zangaeh said that higher oil prices, as pursued by some oil producing nations, will encourage more activity in sectors like shale oil, where production is considered most expensive, while it would give a new momentum to the alternative sources of energy like the renewables.

“If we consider the combination of alternative energies and expensive productions, which become economical with higher prices, the surge would not be a good news for (producers),” the minister was quoted as saying by state TV’s news service IRIB News.

Zangaeh’s remarks came after the Organization of Petroleum Exporting Countries and allies finally reached an agreement to ease cuts on the global oil supply by 0.4 million barrels per day each month starting August and ending December.

The agreement came as the OPEC+ raised baseline production for several members, including the United Arab Emirates, to encourage them to sign off on the new supply deal.

Iran has been exempt from supply cut agreements agreed between OPEC and allies in recent years. Zanganeh said, however, that the OPEC+ would need to consider the impacts of Iran’s return to the markets once the country is relieved from sanctions targeting its oil sales.

“Iran’s return to the market will be a major development which would be influential and whenever this takes place I think OPEC+ will not be able to ignore it,” said Zanganeh.

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According to the NIDC’s Director of Renovation and Upgrading Shahram Shamipour, the renovation and upgrading operations are aimed at improving the performance of these rigs which are active in the country’s oil and gas field development projects, Shana reported.

Shamipour noted that the equipment going through renovation operations include fluid pumps, draw-works machinery, charting tools, pumps for cementing and acidizing trucks, tow trucks, cranes, piping machines, generators, hydrogen sulfide gas treatment systems, acid-coated storage tanks, and cement transport bunkers.

In this due, the company is going to sign deals with domestic companies for the renovation of more than 220 pieces of equipment related to drilling rigs, technical services, transportation, special services, tools in circulation, and safety, health, and environment, according to Shamipour.

The official noted that of the allocated figure, so far, 1.3 trillion rials (about $30.95 million) has been spent which has led to the signing of eight deals with domestic companies.

Considering the National Iranian Oil Company (NIOC)’s new strategies for strengthening the presence of domestic companies in the development of the country’s oil fields, NIDC, as a major subsidiary of the company, has been supporting such companies by lending them drilling rigs and other necessary equipment.

According to Babak Zanganeh, director of consolidated planning at NIDC, the company dug and completed the digging operation of 17 oil and gas wells during the first two months of the current Iranian calendar year (March 21– May 21), an official with the company said.

NIDC owns 70 light, heavy and super-heavy drilling rigs, including 67 onshore drilling rigs and three offshore rigs, Zanganeh said.

“Currently, 25 drilling rigs of the company are being relocated in the onshore operational areas of the country”, he added.

NIDC managed to carry out 10,182 meters of horizontal and directional drilling in 43 oil and gas wells across the country during the previous Iranian calendar year (ended on March 20), according to the Head of NIDC’s Special Operations Department Ali Daqayeqi.

Some 654 meters of core extraction drilling was also conducted in the mentioned period which was a huge achievement for assessing the condition of the country’s oil and gas reserves.

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Speaking to the press after attending the 18th OPEC+ ministerial meeting

which was held online on Friday, Zanganeh said: “At this meeting, I announced that if the sanctions are lifted, Iranian oil will return to the market as soon as possible; This is our official decision.”

“I announced Iran’s position in the meeting and emphasized that any decision made in this meeting will not affect our plans. We will return to the market with at least an amount equal to the pre-sanctions level,” he added.

The official noted that some OPEC members are in disagreement regarding their assigned shares for the cuts in the coming months and discussions are ongoing to settle the issue.

The 181st meeting of the OPEC conference was chaired by Angola’s Minister of Mineral Resources and Petroleum Diamantino Pedro Azevedo.

In the Friday meeting OPEC paid tribute to Zanganeh for his long-lasting contribution to the organization and the oil market.

Iran has repeatedly stated that the country is ready to come back to the oil market with full force after the removal of the U.S. sanctions.

Earlier in June, the National Iranian Oil Company (NIOC) Deputy Director for Production Affairs Farrokh Alikhani said that the company has taken all the necessary measures and is ready for boosting oil output to the pre-sanctions level within a month.

“Precise weekly, monthly, and quarterly planning has been made to restore oil production to pre-sanctions level, and if sanctions are lifted, most of the country’s oil production will be restored within a month,” Alikhani said.

“The average daily production of Iranian oil before the re-imposition of sanctions was 3.38 million barrels per day, and the National Iranian Oil Company has planned to return to the pre-sanctions production in the first step if the sanctions are lifted, and in the next step to increase production capacity to more than four million barrels per day,” Alikhani explained.

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As Shana reported, the 181st meeting of the OPEC conference was chaired by Angola’s Minister of Mineral Resources and Petroleum Diamantino Pedro Azevedo, via videoconference.

This was the last OPEC meeting in which Zanganeh would attend as Iran’s Oil Minister.

“I would like to begin by congratulating our esteemed colleague, His Excellency Bijan Namdar Zanganeh, who will be taking a bow from his post as Minister of Petroleum for the Islamic Republic of Iran,” Azevedo said in his opening speech.

“You have provided noble leadership, wise counsel, and technical knowledge to the OPEC Conference for many years, and have been instrumental in our organization’s many achievements,” he continued.

The official went on to say that OPEC has benefited immensely from the Iranian minister’s leadership and vital contributions to the declaration of cooperation from the very beginning in 2016, and notably in April 2020 when the participating countries reacted decisively to the global collapse of oil demand resulting from the COVID-19 pandemic.

“As the longest-serving OPEC minister, your wisdom and experience will be deeply missed.  It has been an immense pleasure to work with you, and I wish you and your family good fortune in the years to come,” the conference chair stated.

Azevedo further underlined the significant role that the production cut pact has played in the balancing of the oil market over the past two years and said: “Today begins the third month of the step-by-step upward production adjustments the participating countries agreed to undertake at the start of April.  The market continues to welcome these prudent and forward-looking steps to support sustainable stability, which in turn provide crucial backing for the economic recovery.  We will continue to remain proactive and vigilant in our actions on the back of our commitments and the success of the widely acclaimed Declaration of Cooperation.”

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I am happy that I have carried this huge burden of responsibility on my shoulder for years and I hope to put it down safely, properly and honestly. I asked all OPEC members to support next petroleum minister, he said.

About OPEC meeting, Zangeneh said it was an ordinary meeting of OPEC not an extraordinary one and we mostly focused on some paperwork such as approving financial reports and selecting the auditor. And, most technical reports are due to be presented in OPEC Plus meeting.

The decision on easing oil output cuts or increasing production is to be made in OPEC Plus meeting which will be held in hours, he added.

The OPEC’s decisions are mainly based on reaching consensus, he said, adding oil market condition has not created any differences.

Earlier Zangeneh spoke at the 181st Ordinary Meeting of the Organization of the Petroleum Exporting Countries’ Conference after he received OPEC’s remarks honoring him for his contributions to the organization. In his remarks, he said, “I would like to express my sincere appreciation to our distinguished Secretary-General, HE. Mohammad Barkindo and his able staff for this tasteful and humbling video documentary presentation. I thank you for all the kind words addressed to me.”

He continued, “Allow me to share with you, very briefly, my insight about the underlying reason for the success and durability of our Organization. In my view, OPEC is the only economic organization of the developing countries that directly and significantly impacts and shapes the world economy. OPEC was founded on the pillar of a golden principle. This golden principle was the key for OPEC to achieve unparalleled success in the last 60(sixty) years. Comprehension and acceptance of the need for cooperation within OPEC along with intra economic competition and even political conflict among OPEC member countries constitute that key golden principle.”

He added, “Agreeing to cooperate with one another within OPEC to secure national interests with overarching rule of wisdom in relations among OPEC members, despite tremendous ups and downs and major tensions and discords among member countries is the secret key to durability and success of our Organization in the last 60(sixty) years. In the meantime, we have all scored and benefited from being an OPEC member in the interest of our national development and our own peoples.”

He noted, “At the verge of being 70(seventy) years old, when the new government of President-elect His Excellency, Mr. Raisi, is about to be formed, I have decided to step aside from official public service and go to retirement. I ask all friends here and am confident that the same courtesies and cooperation that was accorded me during these long years will be accorded to my successor who will take office in less than two months from today.”

Meanwhile in a video message, the Organization of the Petroleum Exporting Countries (OPEC) praised Iran’s oil minister for his long presence in Iran’s Ministry of Oil at the 181st Ordinary Meeting of the OPEC Conference on Thursday.

The video message was recorded and played to honor Zangeneh’s final attendance at the OPEC ministerial meetings during the 181st Ordinary Meeting of the OPEC Conference held via videoconferencing on Thursday.

OPEC Secretary-General, Mohammad Sanusi Barkindo, said: “At this historic moment, I would like to take a few minutes of your time to reflect with deep appreciation and a touch of nostalgia on the historical contributions of his Excellency, Bijan Zangeneh of the Islamic Republic of Iran to OPEC during his long and illustrious career.”

“Indeed, we have a debt of gratitude to pay for his many years of dedicated service of excellence to this organization as head of the Islamic Republic of Iran’s delegation to OPEC,” the message reads.

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As reported, with the mentioned projects going operational, natural gas was supplied to 21 cities, 2,809 villages, and 4,664 industrial units in West Azarbaijan, Lorestan, Fars, South Khorasan, Kerman, and Khuzestan provinces.

The inauguration ceremony was attended by National Iranian Gas Company (NIGC) officials, as well as senior officials from the mentioned provinces.

The minister also inaugurated four units of gas pressure boosting facilities worth 65.86 trillion rials (about $1.56 billion) in Khuzestan and Fars provinces.

According to the Iranian Oil Ministry, over 88 percent of the country’s rural areas are supplied with natural gas through the national network, and more than 95 percent of the country’s total population is enjoying natural gas through the national network.

Currently, over 32,000 villages across Iran are enjoying natural gas through the national network and the number is planned to reach 40,000 by the end of the current fiscal year (March 2022).

Over the past seven years, more than 290 trillion rials (nearly $7 billion) has been allocated by the government to connect over 18,000 new rural areas with over 1.6 million households to the national gas network.

In Iran, where villages account for generating 20-23 percent of the value-added in the country, the development of rural areas has been always a top agenda of the governments’ activities.

Back in November 2020, the NIGC managing director had announced that gas will be supplied to 40,000 villages throughout the country by the end of the current year.

Hassan Montazer Torbati stated that gas supply has been developed in the cities and villages of the country since seven years ago due to the increase in gas production in the South Pars gas field (Iran shares with Qatar in the Persian Gulf).

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On Thursday, President Rouhani supervised inauguration of thousands of gas projects across the country via video conference, saying that the number of villages with gas supply network increased 25 times in comparison to the number eight years ago.

The figure of providing industrial sector with gas supply network also increased 10 times during the mentioned period, the chief executive added.

Rouhani expressed gratitude for the efforts have been done by Iranian experts, who have played key role in implementing gas projects throughout the country, noting that the great Iranian nation could overcome different hardships such as economic war imposed by the United States and COVID-19 pandemic in last three years.

Speaking on the occasion of 75th Thursday of inaugurating construction projects in his administration, Rouhani argued that the Iranian managers, engineers and workers could abide by their commitments despite the economic difficulties and finalize national projects.

Today, the gas supply network covers 95 percent of Iran, which is a unique figure at international level, he said, adding that this is a great source of pride for the 11th and 12th administration to go ahead with such big projects in the current situation.

He further pointed to the fact that gas supply projects have been implemented in 21 cities, 2,809 villages and 4,664 industrial units in Iran.

The Iranian government allocated more than 567 million dollars for the gas projects.

Meanwhile in the ceremony, Oil Minister Bijan Zanganeh emphasized that the gas supply coverage of the entire country reached 95%.

He said that Iran’s gas supply coverage had reached 95.1%; calling the figure unique in the world.

Speaking in the inauguration of the national projects of the Ministry of Oil, Zanganeh added: “The Ministry of Oil of Iran since 8 years ago (2013) has succeeded in increasing the number of villages benefiting from natural gas from 14,000 to about 35,000 villages, ie 2.5 times.”

In six provinces of Iran, gas supply projects were inaugurated by order of Iranian President Hassan Rouhani via videoconferencing on Thursday.

The inauguration ceremony of supplying gas to 21 cities, 2,809 villages and 4,664 industrial units in Iran was kicked off by the order of President Rouhani via video conference.

The gas projects conducted by the National Iranian Oil Company are being inaugurated on Thursday on the occasion of 75th program of production leap of the Ministry of Oil.

It is worth mentioning that gas supply to every point in Iran will help develop infrastructure and create supplementary industries in villages and remote areas.

In fact, the Iranian experts and workers have carried out the whole gas supply projects including construction of gas pipelines as well as gas transmission and distribution networks.

The implementation of gas supply projects by the use of Iranian workforce and technical know-how has help the domestic industry to substitute consumption of gas instead of Liquid fuel, which is another precious achievement of gas production in the South Pars Gas Field.

The president also ordered inauguration of four gas booster facilities in Khuzestan and Fars provinces and another gas project in Imam Khomeini port also in Khuzestan province.

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Addressing the opening ceremony of the Oil and Gas Industry Innovation and Technology Park, Zanganeh said almost 80 percent of remarks in the country are nonsense, reiterating that the most important factor in the industrial development is the entrepreneur and not the scientists because this is the entrepreneur and innovative person who makes an enterprise successful and this is seen among the youths.

He said in his days in the oil industry he has done a great deal for developing technology, and reiterated that the most important issue is the approach and vision.

Zanganeh went on to say that today the oil industry has no problem in the field of education and good forces are trained. He went on to say that start-ups are crucial in optimizing the oil industry in different fields of engineering and technology. He noted that the government pays annually $70b of subsidies for the energy sector.

He noted that 1.5m barrels of liquid fuel is consumed domestically which makes 540m barrels per year and with the current price of $65 for per barrel of oil, it will make $35b per year.

Zanganeh also said that gas consumption in the country is around 300b cubic meters per year and with the price of 16 cents per cubic meter of gas, it will cost the country $37b. He stated so the government just pays around $70b of subsidies for these two energy items and if the subsidy for electricity is added, the figure will be amazing.

He added that launching such parks and paying attention to the startups can boost the oil industry in the country.

Meanwhile on the sidelines of the ceremony, he once again reiterated that hiking the price of gasoline in November 2019 was not a unilateral decision by the government but it was decided by all three branches of the establishment and which was endorsed by the Leader and the establishment.

Meanwhile five cooperation agreements were signed between the Oil Industry Innovation and Technology Park with the Ministry of Science, Isfahan Scientific and Research Development, Shiraz University of Technology and Amirkabir University of Science and Technology.

The agreements were signed on Monday, on the sidelines of the opening of the Oil Industry Innovation and Technology Park.

The first agreement was the Technology Grant Agreement, which was signed between the Oil Industry Innovation and Technology Park and the Ministry of Science, Research and Technology.

Then, the agreement to establish a joint campus between the Park and Isfahan Scientific and Research Development and then, three agreements on the establishment of a joint innovation and growth center, were signed between the Park and Shiraz University of Science, and Amir Kabir University of Technology.

The Oil Industry Innovation and Technology Park, which was established with the support of the Ministry of Petroleum and with the aim of developing technologies and expanding constructive cooperation between ecological innovators and technologists related to this industry, was inaugurated this morning (Monday, June 14) in the presence of the Minister of Petroleum, Deputy Minister of Science and Technology and a group of senior oil industry executives and industrialists.

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The fund will support knowledge-based companies interested in the oil-related sector. “The ministry wants startups to propose new ideas and innovative plans to help cut production costs and improve productivity in the key sector.”

The ministry’s R&D department is tasked with expanding technological facilities for the rapidly expanding startup companies.

Zangan opened the first Oil Technology Park in Shahr-e-Rey in south Tehran last year that is providing researchers aid and equipment to implement their plans.

Iran’s oil industry is facing major challenges especially since 2018 and after the US unilaterally withdrew from the 2015 nuclear deal between Iran and six world powers, and reimposed economic sanctions, including on the oil, tech, banking and transport sectors.

The draconian sanctions have taken the form of an economic blockade and made it impossible for international companies to cooperate with Iran. As a result, local firms and startups have been emerging to help address the numerous challenges.

Startups have already produced and indigenized key catalysts and essential equipment and parts for the petrochemical and drilling sectors, Zanganeh noted.

According to Mohammad Sadeq Khayyatian, an official with Iran’s National Innovation Fund, due to overdependence on oil export revenue, the government did not pay enough attention to the revenue-generating potential of knowledge-based firm run and manned mainly by the youth.

Khayyatian said that has now changed and Iran is increasingly counting on the technology ecosystem for creating wealth and the government is also increasing its financial support to knowledge-based companies.

“The government is planning to offer hightech firms tax and customs exemption, ease the cumbersome process of issuing commercial licenses, cut social security insurance costs, reduce the obligatory military service duration and help empower innovative business.”

Of the 5,700 knowledge-based companies in Iran, 1,418 are involved in information and communications technologies, 1,267 in machinery and equipment and 1,111 in electronic products.

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