Gas production started from South Pars field by commissioning the development phase 2 in December 2002 to produce 1bscf/d of liquid gas.

Last Iranian calendar year, ended March 20, 2007, proved a prosperous year for both the Oil Ministry and government of President Mahmoud Ahmadinejad. The oil sector will undoubtedly see better years ahead if the trend continues to prevail, according to Fars News Agency.

Petrol and Diesel
One of the most debated topics continues to be determining fuel prices, particularly petrol.
However other issues of the previous year concerned cancellation of a contract to export natural gas to the United Arab Emirates, putting aside Japan’s Impex as a major contractor in the development project of Azadegan Oil Field due to complexities of American pressure and certain other disputes, changes in the notes of buyback deals as well as the development project of South Pars Gas Field.
Petrol prices have remained stable over the past two years or so at a price of 800 rials per liter.
According to the latest report released by the Oil Ministry, three proposals have been made regarding petrol prices over the past five years, concerning gradual price increase and continuing the current rationing system.
Majlis Energy Commission has also proposed some suggestions like selling petrol at 2,500 or 5,000 rials per liter, rationing or paying price differences between those produced within the country and those that are imported.
Meanwhile discussions are being held at the parliament regarding decision to sell petrol at 1,000 rials per liter, rationing and selling diesel at 450 rials per liter.

North Pars, Golshan, Ferdows Gas Fields
An estimate of over $16 billion is needed to develop all the upstream and downstream gas fields.
Contract has been finalized by the National Iranian Oil Company
(NIOC) and China’s Sinouk Company.
North Pars Gas Field will be developed in four different phases, the final product of which will be LNG. Half of the produced gas will be taken by Iran and the rest by the Chinese contractor.
Contract to develop the gas fields of Golshan and Ferdows has been inked between the NIOC and the Malaysian company of SKS Ventures. The gas fields are expected to produce 20 trillion tons of LNG per year.
The development project of upstream gas fields which are in the form of buyback deals will be implemented by the NIOC. The downstream gas fields which have 25-year development contracts will likewise be executed by the NIOC. All investments will be procured from the Malaysian company of SKS Ventures.
The investment capital for upstream projects is $5 billion, for downstream projects it is between $10-11 billion and for the transportation sector around $5 billion.

South Pars Gas Field
The South Pars/North Dome Gas field located in the Persian Gulf is the world’s biggest gas field and is shared between Iran and Qatar. It was discovered in 1990 by NIOC.
The South Pars is the name of the northern part, which is located in Iranian waters and the North Dome is the name of the southern part, located in Qatari waters.
Reserves have been estimated variously at 53.8 billion cubic meters gas in place and 56 billion barrels of condensate and at 34 trillion cubic meters (Tcm).
The field consists of two independent gas-bearing configurations, Kangan and Upper Dalan. Each structure is divided into two different reservoir layers separated by impermeable barriers. The field thus consists of four independent reservoir layers K1, K2, K3 and K4.
The estimates for the Iranian section are 500 Tcf (14 Tcm) of gas in place and around 325 Tcf (9.2 Tcm) of recoverable gas.
Gas production started from South Pars field by commissioning the development phase 2 in December 2002 to produce 1bscf/d of liquid gas.
Gas from this field is conveyed to shore via pipeline and is processed at Assaluyeh.
Development projects of Phases 1 and 2 have been inked among NIOC, Shell and Rapsol.
Liquid gas production will be sent to the Persian LNG factory for further processing before it turns into LNG.
Completion of the development project will make Iran owner of the biggest LNG factory in the world with a capacity to produce 16.2 million tons of LNG per annum.
The estimated initial investment to develop these fields is around $4.3 billion and $5.5-$6 billion for upstream and downstream sectors as well as the LNG unit respectively.

Azadegan Oil Field
Azadegan is Iran’s biggest oilfield with in place reserves of 26 billion barrels. Japan’s Impex Holdings Inc. which lost control in 2006 retains a 10 percent stake.
After years of deliberation between NIOC and Impex over the field’s
development as well as American pressure, the Japanese company failed to deliver on its promises and the project was handed over to the companies of Nikou and PetroIran.
Besides this, other Iranian companies are also involved in establishing and building necessary infrastructure, installations, wells and also initial production of crude oil.
The field is considered an entity that provides more than economic gains as well as an opportunity for development of international cooperation at a more extended level.
It opens new horizons towards the realization of the ideals involved and paves the way for global development while providing a worthy site of subsistence for present and future global inhabitants.

Buyback Deals
Some fundamental changes made within the framework of buyback deals are as follows:
Devising a comprehensive reserves development plan by Iranian experts and comparing it with proposals made by foreign partners; determining the ceiling of CAPEX after the process of “feed“; offering tenders to lift barriers in the way of foreign investment due to oil price disparities and their impact on implementing oil development projects; establishing a specialized organization at NIOC to control oil reserves and manage production of fields that are handed over to domestic or foreign contractors; technical supervision over buyback deals; handing over development projects to contractors through gradual process to reduce likely risks; maintaining quality throughout production process; preventing unnecessary investments; financial supervision over entire processes; as well as long term presence of contracting companies in the development of oil fields.

There was no other option but to ration fuel since government needs to import more fuel and refineries have little capacity to meet growing demand.

Boosting Production
Last year the country also signed several contracts to build new oil refineries across the nation. Some of these projects include improving the quality of oil products as well as boosting production capacity of Shazand Oil Refinery in Arak, contract to establish refinery units at Tehran Oil Refinery, setting up a petrol producing complex in Isfahan between Iran and foreign companies of Hyundai (South Korea) and AKPG (India), in addition to the contract signed between Iranian and the German company of ABB Lummus to boost petrol production capacity at Bandar Abbas Oil Refinery.
Iran also signed a contract with China worth $20 billion to implement Note 13 of the Budget Law for the current year.
The aim is to reinforce old infrastructure in major cities and towns, develop the car manufacturing industry and national railway network as well as encourage taxi and van drivers to use CNG instead of petrol.

Smart Cards
An important measure adopted last year was the introduction of smart cards in anticipation of a petrol rationing scheme. Till date over 7 million cards have been issued and delivered to car owners nationwide. The same number of cards has also been issued for motorcyclists.
While the National Iranian Oil Refining and Distribution Company (NIORDC) recently announced that gasoline consumption reached the level of 90 million liters a day, the Majlis approved a bill introducing gasoline rationing to curb rising gasoline imports.
There was no other option but to ration fuel since government needs to import more fuel and refineries have little capacity to meet growing demand.
Any attempt to end heavy fuel subsidies and bring domestic fuel price in line with the prevailing international price will create an upheaval in the country.
Several petrol stations in Tehran have been equipped with smart card systems and efforts are underway to install more facilities countrywide.
Rationing will be implemented as soon as an adequate number of petrol stations have been equipped with the smart card system.