2021-08-10Jask Diversifying Iran Oil Export MarketsTEHRAN (NIOC) _ The first phase of implementation of crude oil export from Jask Port is starting against the backdrop of Iranian officials realizing their dream of diversity in the crude oil export markets, as well as security of energy supply in Iran. The idea of construction of an oil terminal in Jask was first brought up in 1980s, but the project started under the administration of President Hassan Rouhani. To that effect, necessary planning was made and meetings were held. Since domestic manufacturers could not build some equipment and commodities in the country, they were planned to be purchased from foreign companies. The foreign firms did not keep their promises and once the US re-imposed sanctions on Iran in 2018, foreign firms quitted any cooperation with Iran.
Touraj Dehqani, CEO of Petroleum Engineering and Development Company (PEDEC), has over the past three years, been regularly visiting construction of pipeline in Jask and is well aware of the extent the project has progressed.
He told "Iran Petroleum" that during a specific period of time despair dominated in such a way that the project was close to coming to a halt. But PEDEC experts finally decided to trust the private sector as sanctions were in effect and for the first time, 200-250 domestic manufacturers were engaged. Therefore, the project which had less than five percent progress by 2018 now has progressed over 80%, which would allow for Iran to export crude oil from the Sea of Oman, Makran coasts and Jask Terminal.
In his interview with "Iran Petroleum", Dehqani spoke about advantages of the project to carry crude oil from Goreh to Jask and tough days of sanctions and efforts made by domestic manufacturers.
Diversity in Crude Oil Export Markets
Among the advantages of implementation of the Goreh-Jask megaproject, I may highlight diversification of terminals for Iranian crude oil exports. In light of ongoing developments in the international oil markets, competition between crude oil and energy suppliers has become tougher than ever. Therefore, competing oil rivals need to have some advantages in a bid to get a higher share of the market to outdo their rivals.
One of the most important competitive advantages of Iran in operating the crude oil export terminal in the Strait of Hormuz is that customers of Iran’s oil would have more choice and can use this route to receive their crude oil. On the other hand, oil exports from Jask terminal would provide easier access to potential oil buyers across the Indian Ocean and bring us closer to Southeast Asian markets. Access to market would be one of the pillars of development in coming years.
In addition to international advantages, Iran’s eastern provinces that have remained underdeveloped in recent years would enter a path of economic growth and development and strategically we will witness prosperity in Iran’s eastern regions. Development of this part of Iran has been envisaged in the government documents, and even in the 25-year agreement between Iran and China, the Makran coast has been considered as one of the economic advantages of the country. With the operation of Jask oil terminal, we will see the construction of downstream chains in this industry, including refineries. Currently, 5,000 hectares of land have been allotted for the construction of downstream units, which we expect to see a boom in economic activity in the region with the engagement of the private sector. Of course, the private sector must also make an effort.
The petroleum industry, as a parent industry, has paved the ground for the development of Makran coasts. Iran's Petroleum Ministry has been able to fulfill its main mission in this regard. The next phases of development of this region will be completed with the active presence of the private sector and domestic and foreign investors.
Sanctions and Restrictions
Implementation of the Jask terminal project was on the government's agenda in 2013. But over recent years, the project has seen vicissitudes. In 2017-2018, we focused on pipeline supply because the plan to transfer crude oil from Goreh to Jask is a 1,000-kilometer pipeline project, for which the pipes need to be of special type and the sheets should be corrosion resistant. Iranian manufacturers did not have much experience in this field, so its supply by Chinese and Korean companies was on the agenda. Unfortunately, they deferred this contract for two years and did not deliver any sheet to us until the United States withdrew from the JCPOA in 2018, which led these companies to refuse to respect the terms of agreements they had entered into with Iran. This caused us to face complete frustration in the sheet supply section of this project at some point, and in 2018 we almost came to the conclusion that if we could not supply the sheets, the other parts of the project would no longer matter.
But after some time, we held several meetings and then we decided to study the problem of supply of sheets, we even thought of using alternative sheets, for example, we even went to foreign manufacturers which were able to supply sheets, but because it was an internationally recognized project and we needed 400,000 tonnes of sheets, under sanctions, it was not easy to supply this amount of sheets. Naturally the few manufacturers across the globe were not ready to cooperate with us as they feared penalties. Then Iranian experts said such sheets could be sourced domestically and a new horizon opened for us. Our expert departments studied the issue in terms of metallurgy, supply of pipes and sheets, and even during visits to the factories of the main parent company in Iran that operated in the field of steel, we made initial assessments and managed to reach a conclusion in this regard. In late 2018, we achieved promising prospects in this regard that we can probably build slabs at Mobarakeh Steel Mill with a series of process modifications and expert decisions and risk-taking. Our hopes were very high, and finally, with the deployment of experts from PEDEC at Mobarakeh Steel Mill, and after making several months of efforts, in 2019, we noticed that Mobarakeh Steel Mill could build the slab, which is the first link in the chain, thereby raising our hopes to continue working.
The next step was to turn the slabs into wide sheets, which also have complex mechanical and chemical processes. To do so, we made a series of process modifications in the production line of the Oxin Steel plant. In the presence of consultants, the production line of Oxin Steel plant was modified in accordance with our needs, and the concern of the second link of this chain was also removed.
The third phase of this project was in the field of pipe construction. In this sector, good capacities had been developed in the country during the past years, and we needed a series of minor modifications, which we completed anyway, and since the beginning of the summer of 2019, it was ensured that we could supply the pipes required for this project 100% domestically. In this way, all the elements and components of the plan went on in line with the new vision, and following this work the implementation process of the plan accelerated even more.
Working More Courageously
We held about 20 tenders in 2018, and executive contractors in the section of pipeline area, pumping stations and storage tanks were selected on BOT basis, and in the offshore section, construction of offshore installations and jetties and loading facilities was pursued by Pars Oil and Gas Company. They, in turn, completed the chain, so that in the middle of the summer of 2019, the implementation of the project started. The achievement made in the pipe supply sector boosted our confidence to move more boldly in other parts of the project.
More than 95% or almost 100% of the foundation of this project goes back to steel, steel pipes, steel valves, and steel tanks. Now I go one step higher and I believe that the steel sector is an important part of the implementation of petroleum industry projects. If we can make the connection between the steel industry, which is an old industry and one of the top ten industries in the world, and the petroleum industry, which is 110 years old in Iran, we may claim that we have done a great job. I think we are among the few countries in the world that have been able to establish a close relationship between these two sectors during this period. Naturally, with the cooperation and synergy of these two key industries, we may play a more effective role in the development of the country's macro-economy and stimulate other development chains that are a little further away from this industry to play the role of drivers of economic development in the true sense of the word.
In the sector of electric pumps, we have signed contracts with three major and top manufacturers in the country, and the construction process of 50 electric pumps is underway. Currently, 25 pumps have been built, some of which are installed and are in the testing phase. I hope that it would be a new chapter in the pump industry to be able to complete its completion stages. We did not limit ourselves to using local capabilities in the implementation of this project only because of instructions; rather, we committed ourselves to empowering the domestic sector in order to help local developers to upgrade themselves. The petroleum industry has gone beyond its organizational commitment in this direction, and the effects of this support will certainly be seen in coming years.
Heavy Valves Built
In the construction of a thousand-kilometer pipeline, about 85 valves weighing dozens of tonnes are used, some of which can reach seven to eight meters in length. That required integrated work, which required in turn new technologies which we had not mastered in the country. We have numerous companies in Iran working in metallurgy and casting. They worked in different sizes, but they could not supply our needs and we had to buy them from abroad. The achievement we made in pipe construction gave us the sense of self-confidence that we can manufacture such pipes in the country. We held meetings with big manufacturers of valves and we asked them to make necessary modifications. We promised to buy their products in case they could fill our orders on time. They properly responded to our needs.
You should also keep in mind that it takes at least five to eight years for such a project to take shape with such a scope of activity. We had not been able to make necessary progress in the job during certain periods for various reasons and therefore we had to redouble our efforts. That was a real cause of concern for us. We had to honor the schedule and supply commodities in the shortest possible time. Meantime, we had to assume the risk of working with local companies for the first time. Local firms were doing a big job which required big volumes of commodities. Assuming such risk proved to be helpful to a large extent. In some sectors we faced problems as some manufacturers failed to honor their schedule, but we had accepted the risks and my colleagues made sure the project would go ahead. However, I believe that this project proved that sanctions had turned from a threat into an opportunity for us. Regardless of any slogan and despite all shortcoming, we have to do expert work in the implementation of projects.
At present, the first phase of this project has had about 96% progress and the project is an accelerated one in terms of speed of implementation and progress of the project, and has set unprecedented records. A group of 250 domestic manufacturers from all over Iran are manufacturing and supplying various items for this project. The synergy in this project and the project management style are other significant achievements in this project. The result of this synergy and integrated management caused this project to progress by more than 80% in less than two years, while 95% of the equipment used in this project is supplied by domestic manufacturers. The standards are also in line with international standards. Fortunately, I have to say that in the pipeline section, which is one of the key components of this huge project, we did not fail in a single case by doing all the relevant tests. The three elements: cost, time and quality have been honored in making the items we needed, and beyond that, we were able to save on several hundred million dollars.
Up to 350,000 b/d Transferrable
As you know, the purpose of this project is to transfer 1mb/d of oil from Goreh to Jask, which means that approximately 25% of the oil produced in the country would be exported from this terminal. In the first phase, with the same existing facilities, i.e. 80% complete, we may carry between 300,000 and 350,000 b/d of crude oil from Goreh to Jask and then to export destinations. We hope that by the end of 3Q2021, all associated facilities, including 8 stations, will be put into operation so that we can transport 1mb.d of crude oil from Goreh to Jask.
Courtesy of Iran Petroleum