National Iranian Oil CompanyActivities in the 11th

GovernmentA Review

In the Nameof God

National Iranian Oil CompanyActivities in the 11th

GovernmentA Review

NIOC Public RelationsMay 2017

Preface National Iranian Oil Company (NIOC) has been in charge of

organizing, policy-making of oil industry including exploration,

drilling (excavation), production, research, development and oil

and gas export.

Having huge hydrocarbon reserves, this company is considered as

one of the world’s largest oil company. National Iranian Oil Compa-

ny upgraded due to the progress of science and technology in oil in-

dustry and the complexity of political and economical events. Thus,

national and regional policies, and cooperation of the important in-

dustrial countries in the field of energy provision and stabilization in

oil markets have been included in the company’s agenda.

National Iranian Oil Company is an organized collection of the

administrative departments, headquarters and organizational units,

production companies and technical service companies. Also, ac-

cording to the Article 44 of the constitution and authorizing var-

ious departments, this company has effectively acted in business

establishment in addition to monitoring the activities of oil indus-

try. Moreover, by financing and providing the inquired items of

development for updating knowledge and technology in the field

of exploration, excavation, and production, this company has taken

great strides with confidence in Iranian experts and staff.

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The Main Mission of National Iranian Oil CompanyNational Iranian Oil Company is the main component of econom-

ic production as a symbol of national independence and the pillar

of oil and gas preservation. The production of petroleum, natural

gas and liquid hydrocarbon, processing, transmission, and its sale

and marketing as a part of national wealth and also the protec-

tion of this public asset is the major mission of this company.

To fulfill this mission, the installations and design of industrial

and manufacturing units, training of indigenous human resources,

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maximum use of the national capabilities for the efficient use of

national wealth is also considered as missions and duties of this

company.

Objectives and Organizational Policies of National Iranian Oil CompanyThe objectives and policies of NIOC are subject to the basic

policies of the Islamic Republic of Iran. Furthermore, the

company’s vision is within the framework of national mac-

ro-economic policies and is consistent with valid and import-

ant documents like future perspective and 5-year develop-

ment plans. Therefore, NIOC has always tried to operate its

production and development plans within 20-year-old future

perspective.

Due to the significance of Iran’s oil industry, its perspec-

tive is of great importance in a way that different objectives

have been taken into account. The reduction of country’s

energy, maintaining the position of the second largest crude

oil producer in OPEC, which requires maintaining proper

distance of the other competitors in terms of production ca-

pacity, and also achieving the second position of the world

in natural gas production due to the necessity of common

repositories use, is of the important cases in the perspective

of oil industry.

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Future Perspective of National Iranian Oil Company’s ActivitiesBased on the future perspective of the Islamic Republic of Iran by

the year of 1404, “Iran is a developed country with the first eco-

nomical, scientific and technical rank in the region with Islamic and

revolutionary identity, inspired in the Muslim world and possessing

constructive and effective interaction in international relations”.

Based on the development program, the activities of NIOC has

focused on establishing development-based view maintaining the

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highest added value at the level of national economy, human re-

source and quality improvement with meritocracy approach as

a basic prerequisite of development, improving the productivi-

ty of production factors and orientation for optimal utilization.

Moreover, the company has concentrated on the development of

investment practices with a win-win approach, creation and de-

velopment of management systems and processes for converging

decision-making and making decision at different levels along with

the company’s objectives, establishment of economical institution

and relations of subsidiaries with this system, strengthening pres-

ence in the global energy market and planning for entering the mar-

ket of gas and oil equipments and services.

NIOC’s Performance in the 11th Government Oil industry in its growth path in the past century has spent days

with ups and downs, but undoubtedly, has experienced its climax

within the past three years and in the 11th Government (The gov-

ernment of Wisdom and Hope).

The increase of more than 1.5 times of oil, gas and condensates

average production from the beginning of the 11th government

until the end of 1395, reformation of contracts and fulfillment of

the major part of NIOC’S development objectives in the form of

memorandum of understanding and new agreements, the open-

ing of eleven standard phases of South Pars in the 11th govern-

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ment, which is more than half of the operational phases in the

past three years, two-fold increase in crude oil export, and also,

a three-fold increase of production in the joint fields of West

Karoun, supporting the production of domestic products within

the framework of resistance economy and empowering Iranian

contractors, Amak plan and daily collecting of more than eight

million cubic meters of the associated gas at Khouzestan Oil-

field are clear examples of the power of oil industry in the 11th

Government.

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mentWith the start of 11th government along with the achievements

of the government on the road to a comprehensive joint program,

which is the turning point of Iran’s political development, the

mechanism of Iran’s oil industry have changed a lot; and with the

opening of doors of this huge industry to the foreign investors, the

production process and development have been accelerated.

The Policy of Oil Ministry in contracts’ reformation and the defi-

nition of new contracts led to the attraction of foreign participation

and therefore, their presence of coalition with local companies ac-

celerated; and thereby, in addition to the conveyance of technolo-

gy and experience of world oil industry’s top companies, with the

provision of funding, the ground for the progress of oil industry’s

developmental objectives, particularly the increase of the produc-

tion from the joint fields have been provided.

During the year of 1395, NIOC signed multiple developmental

memorandums and agreements with top companies of oil indus-

try in the world and after passing from the breathtaking sanctions,

could enter oil industry into the mainstream.

According to the oil minister, Mr. Bijan Zanganeh, these memoran-

dums and agreements are so significant since they can create up to a

hundred thousand jobs in Iran and from this point of view; oil industry

would be responsible for the major part of job creation in the country.

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with the purpose of modernization of rotating machines

new capacity.

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- Agreement of NIOC and a consortium of TOTAL Companies

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-leh.

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of South Oil-Rich Regions and Pergas Consortium of eleven

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th Government Joint field of South Pars is regarded as determination of Iran’s oil

industry and winning card of The 11th Government in oil industry

efflorescence.

This field is considered as Iran and world’s largest gas repository,

which individually accommodated half of the gas repositories of

Iran; and its significance is due to the fact that the main part of NI-

OC’s developmental plans have been devoted to this field.

Based on the last estimations, the gas volume of this part is about

14, 2 trillion cubic meters; and also, it has a reserve of over 19 bil-

lion barrels of condensates.

It is predicted that with full development of phases defined in South

Pars, gas production capacity of this joint field is amounted to over

eight hundred million cubic meters per day and the condensate capac-

ity is amounted to one million barrels per day; all this will be in line

with the increase of oil and gas production plan (as one of the special-

ized axis of resistance economy in the field of oil and gas).

Although the development trend of this huge gas field has been faced with

lots of buts and ifs in the period of sanctions, with the start of The 11th

Government, main part of production goals of this gas field was achieved.

Within the three last years, the operation of eight nominal phases of

12, 15, 16, 17, 18, 19, 20, and 21 (equivalent to 11 standard phases)

has had a 2.5 times jump in gas production of South Pars, and there-

fore, has been an important part of The 11th Government successful

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performance in oil industry due to the fact that it has not only created

jobs, removed the problem of gas shortage in winter, but also provided

the possibility of gas export, condensates and LNG to other countries.

HydrocarbonsThe amount of 66 trillion cubic feet of gas exploration and 15 bil-

lion barrels of in-placed oil by the end of Dey 1395 suggest the

brilliant performance of NIOC in the realm of exploration.

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Furthermore, over the past few years, NIOC could actualize much

of the production goals in a way that the daily production of crude

oil has increased from 2, 65 million barrels in 2013 to about 4 mil-

lion barrels in late 2016.

In addition, the daily output of gas from the fields over the coun-

try has increased from 490 million cubic meters in 2013 to 840

million cubic meters; in this regard, the production of South Pars

indicates a jump of nearly 2.5 times increase from 240 million

cubic meters per day to 570 million cubic meters. Meanwhile,

NIOC have been able to promote the daily output of South Pars

condensates from 325 thousand barrels in 1392 to 680 thousand

barrels.

Also, the increase of crude production in joint fields from 184

thousand barrels per day in 1392 to the amount of 380 thousand

barrels in 1395 is considered as another winning card of the 11th

Government.

Continuing its policies, NIOC could achieve the export amount of

two million and 985 thousand barrels of oil and condensates which

is twice higher than before JCPOA (Joint Comprehensive Plan of

Action).

Although most of Iranian oil purchasers are Asian customers, it

can be said that about 700 thousand barrels of oil are sold daily to

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European customers as well; whereas, Asian customers as major

purchasers of Iran receive nearly to one million and 740 thousand

barrels per day and considering the fact that Asia is the world’s

largest energy consumer, NIOC has given priority to this region

based on 63-percent of oil export.

Yet, the record of 8 million barrels of daily export via eight tank-

ers has been registered in 1395 in Iranian Oil Terminals Company

which is regarded as another honor document for The 11th Gov-

ernment.

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Oil Fields Due to the overlapping hydrocarbon resources of Karoun’s joint

fields with Iraq, the development of these fields has been another

developmental goal of NIOC, which has considerably increased

crude oil production capacity and will enhance the country’s posi-

tion in international energy markets.

Based on the targeted plans, crude production of Karoun’s joint

fields including five fields of North Azadegan, South Azadegan,

North Yaran, South Yaran, and Yadavaran with the capacity of 64

billion barrels of oil will increase up to 700 thousand barrels per

day by 1397; however, the climax of West Karoun fields’ develop-

mental plans can be searched in the opening of the first phase of

three fields of Yadavaran, North Azadegan, and North Yaran.

The President Dr. Rouhani has simultaneously inaugurated the first

phases of Yadavaran, North Azadegan, and North Yaran project on

Aban 23, 1395 and the daily output of Karoun’s fields reached over

260 thousand barrels per day.

The development of Yadavaran, North Azadegan and North Yaran

fields has been performed in the form of mutual-purchase con-

tracts; in the meantime, the first phase of Yadavaran project with

three billion dollars investment had been placed on Chinese Sy-

popeck Company’s agenda; and the first phase of North Azadegan

project has been finalized with 2 billion and 550 million dollars

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investment by the leadership of China National Petroleum Corpo-

ration (CNPC). Also, North Yaran field has been developed with

less than 600 million dollars by Persia Oil and Gas Company.

The development of West Karoun’s field is strongly followed up as

one of NIOC’S major developmental plans and has had noticeable

achievements too. While the production volume of West Karoun’s

joint fields has been about 70 thousand barrels per day in June

2013 upon inception of The 11th Government, now the output of

these fields shows a record of 300 thousand barrels per day.

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mentOne of the NIOC’s achievements in the Post- JCPOA period is the imple-

mentation of second phase of collecting associated gas in Kuzestan. This

is a great step in line with the cleaning air of Ahvaz and Khuzestan. Al-

though Amak project as one of the most prominent NIOC’s environmental

action has been presented over a decade ago, it has been encountered with

many obstacles due to sanctions and in Post- JCPOA period, these prob-

lems be removed and with the presence of well-known companies in this

field, people of Khuzestan could gain clean air in The 11th Government.

Increment of the Storage Capacity of Crude Oil in Iran Oil Terminals With the increase of oil production in Post- JCPOA period, crude

oil storage as one of NIOC’s strategies gained more importance.

Therefore, the construction of 10 million-barrel storage tanks for

crude oil has started in Genaveh and is swiftly in progress.

The implementation of this project, which is in line with the supporting

plan of crude oil export from Khark Island, is considered as strategic

action for the continuity of stable crude oil production and promoting

the oil industry value of the country.

Also, it is supposed that part of West Karoun oil output be reserved

in these tanks; that is, in addition to the crude oil storage of rich-oil

regions, West Karoun Oilfields will also be stored.

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Concentration on the Development of South Pars Oil Layer The development of South Pars oil layer as one of the most important

NIOC’s plans is another great achievement of The 11th Government.

In the first phase of this project, which simultaneously opened with

five phases of South Pars in April 2017 with the presence of the

President, the daily production of 35 thousand barrels is fulfilled.

Still, the primary estimations suggest that in the second phase, the

production of 70 thousand barrels from this field will be possible.

Following the 11th Government policies of oil industry, the ini-

tial production of South Pars oil layer started in March 2017 and

the export of 550 thousand barrels of crude oil became possible.

Moreover, this strategic project has provided the possibility of 700

thousand oil barrels storage as well.

Resume of Crude Oil SwapIn the years that crude swap operation had stopped due to some

reasons, Iran Oil Terminals Company has renovated the full equip-

ments of the existing discharging platforms and there is no prob-

lem for anchoring tankers at the moment. In the case of resuming

the swap operation, North Oil Terminal is able to do this operation

with maximum power (of 120 thousand barrels per day).

Presently, for the improvement of swap infrastructures, the project of

pond construction is going to be implemented; with the implemen-

tation of this project in three phases, the discharge capacity of crude

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oil can be increased respectively from 120 thousand barrels per day

to 500 thousand barrels, one million, and 1.5 million barrels per day.

-petitiveness ApproachIn the second year of The 11th Government, Oil Minister explicitly or-

dered that the production of 10 groups of oil industry consumer goods be

assigned to domestic manufacturers and industrialists; this was a valuable

step in operationalize the policies issued by resistance economy, non-in-

flationary exit from recession, and support of domestic production.

For the purpose of domestic production support, these items consist-

ed of 10 priority goods needed for oil industry including well-head

equipments, full down-hole equipments, down-hole and well-head

pumps, types of drilling, types of control valves, safety equipments,

pipes, explosion-proof electric motors, rotating machines, alloy

steels Cryogenic, drilling measurement tools, and smart Pigs.

Operation of 401 Social Responsibility Projects of Oil Indus-try in the 11th GovernmentNIOC’s honors are not limited to the developmental activities of oil

and gas industries; this company is in charge of financing and imple-

menting major parts of social responsibilities in southern provinces

of the country, in particular.

NIOC’s management has monitored the development projects of

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oil-rich regions since the beginning of The 11th Government and

supervised the completion and utilization of 401 projects in differ-

ent areas of social responsibilities in this industry.

To this end, more than 385 billion Tomans has been assigned to a

number of public works and has been defined and implemented in

various areas of education, sport, hygiene, services, and road.

Among these 401 projects, the number of 144 educational plans,

115 sport projects, 90 hygienic plans, 44 services plans, and 9 road

projects has been operationalized.

In addition, due to the importance of social responsibilities in oil

industry within the past three years, individual work packages has

been defined for the CSR activities in South Pars and West Karoun

and has been approved by Economic Council. In the case of final-

izing and implementing these packages, three percent of approved

credits by Economic Council for the developmental projects of

these regions will be devoted to the social responsibility area.

NIOC has definitely taken great steps in recapturing the world mar-

kets on the way of achieving goals in resistance economy, apply-

ing its considerable capacity and interactive policies of The 11th

Government; the steps, which due to the productive performance

of the world’s second largest oil company in the 11th government,

will take the train of oil industry to destination much earlier than

it looks.

Address: 3rd NIOC Hq., No; 18, Roudsar St., Hafez Ave., Tehran, Iran Tel: (+9821) 88946390, (+9821) 61627415, Fax: (+9821) 88943601

www.nioc.ir