The Petroleum Ministry of the Islamic Republic of Iran was formed to enforce the principle of Iran's ownership and national sovereignty over the oil and gas reserves and resources, while separating the sovereignty duties from the affairs for management and development of the country's oil and gas industries. Since petroleum industry has been reserving a special status in the country's economy and has been playing an essential role in materialization of the macro goals of the national economy, the function of the Ministry of Petroleum is of high significance.
Since the country's economy relies on the oil revenues (fortunately the amount of such dependence has been less in the past years), Iranian Petroleum Industry has been serving as the driving force of the economy. Through expansion of international transactions, it has been playing an effective role in promotion of the economic diplomacy goals and guaranteeing the country's national security.
Enjoying 836.47 billion barrels of the in-situ liquid hydrocarbon (crude oil, liquids and gas liquids) reserves and about 34 trillion cubic meters of gas reserves and as a country reserving the top rank in terms of hydrocarbon reserves, Iran maintains a splendid position in terms of energy security worldwide. Such advantages as geopolitical location and powerful human asset have further strengthened the standing.
The Ministry of Petroleum comprises four main companies, including National Iranian Oil Company (NIOC), National Iranian Gas Company (NIGC), National Iranian Oil Refining & Distribution Company (NIORDC) and the National Petrochemical Company (NPC). The Ministry follows long-term strategic goals in line with the economic, social and cultural development plans of the Islamic Republic of Iran.
National Iranian Oil Company (NIOC)
National Iranian Oil Company (NIOC) was formed after nationalization of the Iranian oil industry and is now one of the biggest oil producing companies worldwide. The NIOC's position is getting promoted in tandem with advancement of the oil industry knowledge and technology and as the economic and diplomatic relations get further complicated. The NIOC has on its agenda national and regional policies and cooperation with the important industrial states in energy supply and establishment of stability in the world oil markets.
National Iranian Oil Company has taken effective measures in line with Article 44 of the Constitution for establishment of economic foundations by delegating authority to different sectors, while having high-level supervision over the oil industry activities. Furthermore, by providing necessary financial resources and needed items, the NIOC has taken giant strides towards development and progress so as to update knowledge and technology in exploration, drilling and exploitation, relying on capacity of the Iranian experts and personnel.
The NIOC article of association was approved and communicated in June 2016 and certain points of it underwent changes. Since then, it has had stronger position in terms of sovereignty and de-monopolization. Compilation of new model of oil contracts and expansion of international engagements and the goals for implementation of projects and plans, using a varying basket of oil contracts (buy-back, IPC, EPCF and the like) served as the ground for the NIOC turning the subsidiary manufacturing companies into E&P companies in the future. It cares for further strengthening domestic potential, while paying more attention to the private sector. Among other fresh approaches of the NIOC is giving more share to the private sector in the NGL, LNG, etc. projecs.
The NIOC charter act comprises 84 articles and 31 notes. President Hassan Rouhani communicated the charter late May 2016. The Islamic Public of Iran had studied related bill since May 2014. It was approved by the 9th parliament in the final days of its performance. It marks one of the constructive measures of the 9th parliament in economy and production.
Production from joint fields is the top priority of the Ministry of Petroleum and the NIOC. During tenure of the Government of `Hope and Prudence' (current government), extraction from South Pars Joint Gas Field (common with Qatar) has increased by about 300 million cubic meters a day and Iran is getting to have its gas extraction from the field equal with that of Qatar. Also the capacity of oil production from West Karoon joint fields has increased dramatically. Now the capacity of production from the fields has reached more than 300,000 barrels per day.
Enhanced Oil Recovery from oil fields is no longer the priority of the NIOC and it is expected to compile new oil contracts, while benefiting from the new knowledge and technology that are used by international oil companies. It tries to transfer the knowledge and technology to the contract within framework of contracts, thus materializing the dream of EOR of the Iranian oil fields. Now the EOR of collection of the country's liquid hydrocarbon reserves is 28.5 and the EOR of crude oil in Iran is on the average 24.5 percent. The coefficient does not exceed five percent in certain fields.
There are 170 oil fields and 50 gas fields in Iran. Also, number of the oil and gas reserves in Iran stands at 358: Out of the total, 163 reserves are developed and 195 are non-developed.
National Iranian Gas Company (NIGC)
National Iranian Gas Company (NIGC) was established in 1965 and since then, it has moved in line with the country's economic and social development goals. It now stands as one of the 10 major gas supply companies in the Middle East.
Processing natural gas output of the country; increasing the share of natural gas in the country's energy basket through substituting consumption of the liquid oil products with gas; raising export of natural gas to the regional and international markets using pipelines and other methods; attracting foreign investment through capital markets or joint projects; and improvement of structures for gaining maximum profits; competition in the international markets; maximum use of value-added of natural gas through diversification of products and gas transfers; cooperation with regional countries in all parts of the chain of natural gas supply and gas trade and transit; and influencing gas management in the region are among the defined duties of the NIGC.
In 2016, the NIGC celebrated the 50th anniversary of its establishment. That time, about 90 percent of the country's population, including 98 percent of the urban civilians and more than 67 percent of the villagers, were covered by the gas supply networks.
Gas consumption in Iran stood at 2.5 billion cubic meters in 1979, which rose to 4.5 billion cubic meters in 1989, to 46 billion cubic meters in 1997, to 100 billion cubic meters in 2005, and to 145 billion cubic meters in 2013. The population covered by the country's gas supply network was less than one percent in 1979, which rose to nine percent in 1989, 27 percent in 1997 and 61 percent in 2005. It stood at 87 percent in 2013 and at 90 percent in 2015. Ministry of Petroleum tries to bring the percentage of population covered by the national gas supply network to more than 95 percent by end of the Iranian calendar year of 1396 (2017-18). Regarding the fact that the parts benefiting from gas in the country are scattered, the percentage of more than 95 percent means gas supply to the entire part of the country.
In terms of gas exports, Iran is now exporting gas to Turkey only; the Ministry of Petroleum, however, has set as its priority increase in the gas exports to the level of 200 million cubic meters a day. Export of gas through pipeline to the neighboring countries and Iran LNG projects are given the priority. Iran is now has a share of two percent in the world gas market and gas share in Iran's energy basket is about 70 percent.
National Iranian Oil Refining & Distribution Company (NIORDC)
National Iranian Oil Refining & Distribution Company (NIORDC) was established in March 1991 per the principle of separation of the upstream (exploration and production of the crude oil and gas) from the downstream (refining, transfer of crude oil and its products, exports, imports and distribution of the oil products) activities. It launched its official activities as of 1992.
The company has served as one of the four main companies of the Ministry of Petroleum. Regarding growing need to oil products, the NIORDC has on its agenda the joint development program, updating and improving refineries and the huge project of construction of new refineries. The NIORDC activity is also reflected in its subsidiary companies like National Iranian Oil Engineering & Construction Co. (NIOEC), Iranian Oil Pipelines & Telecommunication Co. (IOPTC), and Oil Refining Industries Development Co. (ORIDC).
The most important duties of the NIORDC are as follows: Feedstock (crude oi and gas condensates) supply and transfer to refineries from the initial point of production in the country and from the initial point of the import; crude oil and gas condensate refining and processing of the liquids; production of different kinds of main and side oil products; transfer and displacement of oil products from the refineries, oil inventories and the initial point of imports and their delivery to the storage centers for distribution, the industrial units and the points of exports; transit, change, sale and exchange of oil products and crude oil (swap and bankering); supply, maintenance and expansion of the industrial communication networks; and transfer of data locally, regionally and nationwide; feasibility assessment; technical and economic studies; and designing, implementation, operation and supervision over the projects for establishment and development of refineries, oil inventories, points of supply, pipelines, transfer pumping stations, construction facilities, marine structures and telecommunication networks inside and outside the country.
Among other duties of the NIORDC are: Planning for supply and procurement of the parts and equipment needed for the development projects; mixing operational, financial and commercial programs of the subsidiary companies and comparing them with the communicated policies and guidelines; implementation of the laws and standards of the development projects; preparing specialized guidelines to keep and preserve and promote the standards of health, sanity, safety, environment and civil defense in the downstream section of the oil products refining and distribution; and policy making, planning, supervision, investment and international contribution into the refining, transfer and distribution of the oil products and substitute fuel inside and outside the country.
Since one of the main and important priorities of the NIORDC is upgrading quality of the oil products to the euro 4 standards to have cleaner weather and more healthy environment, the potential of euro 4 gasoline production in Iran has reached 26 million liters a day. By 1396 (2017-18) and as phases of the Persian Gulf Star Refinery come on stream, Iran is expected to join the club of gasoline exporters worldwide. Operation of the Persian Gulf Star Gas Condensate Refinery is among priorities of the country and based on the plans made, the first phase of the project will be operational by end of the current Iranian calendar year of 1395 (2016-17).
Presently, Iran has turned into a well-distinguished exporter of all oil product items, excluding gasoline, in the region and internationally. The Iranian refining industry now stands as a reference supplier of domestic needs as well as key regional and international player after gaining the model of profession totally different with that of the past years.
Iran is now getting to emerge as the major refiner in the Middle East in terms of refining capacity. It is one of the six major states in terms of exports capacity. So the fresh role of the industry in Iranian economy on the one hand and the economic diplomacy based on energy internationally, on the other hand, have provided Iranians and whole the world with a new and totally different image of the Iranian oil industry capacity.
The National Petrochemical Company (NPC)
The National Petrochemical Company (NPC) was established in 1963 with government owning it. It served as subsidiary to the National Iranian Oil Company (NIOC) initially. It focused on all activities relating to establishing and development of oil industry. Petrochemicals served as the main component of Iranian oil industry. It marked as an important and mother industry in Iran. As an important choice for the non-oil exports, the NPC strives for economic flourishment of the country, while caring for development and indigenization of technology and expansion of the side industries, including the downstream industries or the industries supplying the technical and engineering and research needs of the country. It has taken into consideration fundamental indices and factors, including reliance on the country's advantages in feedstock supply, attention to attraction of foreign capital and resources, while carrying for promotion of national technology, employment and development of the downstream sector and lifting up the standing of the Iranian petrochemical industry both in the region and the world through relative increase in volume and value of the production as the key to sustainable development. These all have been in proportion with the country's strategic and master plan for development of the country's petrochemical industry, which has been in force since 1997.
In the course of the country's development plans, the NPC has been trying to its best to gain superior standing and make maximum use of the country's comparative advantages to have more effective presence in the region and the world. The symbol of such a presence is change in the economic variables and indexes like production, exports, investment, value-added and share in the national production, regional contributions and expansion of the target markets for the exports.
With implementation of the Article 44 of the Constitution and extensive privatizations in the petrochemical industry, the NPC has turned into the policy maker and custodian of development, designing the development programs and facilitating their well implementation and preparing conditions for coming and activity of the private sector. The sector has been active in implementation of the development projects in the petrochemical industry, being in charge of such measures as making high investment and enduring related risks.
The Iranian petrochemical industry development road map points to increasing level of production by the current petrochemical facilities to their nominal production capacity; implementation and completion of the half-finished projects remaining from the fourth and fifth five-year plans; implementation of new projects; and preparing the ground for balanced development of the downstream petrochemical industries with an aim to complete the value chain (per the law on oil and in cooperation with the Ministry of Industries, Mines and Trade).
Based on the devised plans, the petrochemical production capacity should reach 50 million tons by end of the year 1395 (to end on March 20, 2017) and that of exports to 20 million tons.
By 2025, the NPC targets achieving top position in the region in terms of petrochemical production and value of the new projects implemented.