National Iranian Oil Company


The National Iranian Oil Company is a government-owned national oil and natural gas producer and distributor under the direction of the Ministry of Petroleum of Iran. NIOC was established in 1948 and restructured under The Consortium Agreement of 1954. NIOC ranks as the world's second largest oil company, after Saudi Arabia's state-owned Aramco.
The NIOC is exclusively responsible for the exploration, drilling, production, distribution and export of crude oil, as well as exploration, extraction and sales of natural gas and liquefied natural gas. NIOC exports its surplus production according to commercial considerations determined by the Organization of Petroleum Exporting Countries and at the prices prevalent in the international markets. In early 2015 NIOC's recoverable liquid hydrocarbon reserves was and recoverable gas reserves were 33.79 m3. Current NIOC production capacities include over of crude oil and in excess of 750 million cubic meters of natural gas per day. Iran's overall export crude oil was valued at US$85 billion in 2010.

History

Background: 1901–1951

In May 1901, William Knox D'Arcy was granted a concession by the Shah of Iran to search for oil, which he discovered in May 1908. This was the first commercially significant find in the Middle East. In 1923, Burmah employed future Prime Minister, Winston Churchill as a paid consultant; to lobby the British government to allow the Anglo-Persian Oil Company to have exclusive rights to Persian oil resources, which were successfully granted.
In 1935, Rezā Shāh requested the international community to refer to Persia as 'Iran', which was reflected in the name change of the Anglo-Persian Oil Company to the Anglo-Iranian Oil Company. Following World War II, Iranian nationalism was on the rise, especially surrounding the Iranian natural resources being exploited by the foreign companies without adequately compensating Iranian taxpayers. AIOC and the pro western Iranian government led by Prime Minister Ali Razmara, initially resisted nationalist pressure to revise AIOC's concession terms still further in Iran's favour. In March 1951, Ali Razmara was assassinated; and Mohammed Mossadeq, a nationalist, was elected as the new prime minister by the Majlis of Iran.

NIOC: 1951–1979

In April 1951, the Majlis nationalized the Iranian oil industry by a unanimous vote, and the National Iranian Oil Company was formed, displacing the AIOC. The AIOC withdrew its management from Iran and organised an effective worldwide embargo of Iranian oil. The British government, which owned the AIOC, contested the nationalization at the International Court of Justice at The Hague, but its complaint was dismissed.
By the spring of 1953, incoming US President Dwight D. Eisenhower authorised the Central Intelligence Agency, to organise a coup against the Mossadeq government, the 1953 Iranian coup d'état. In August 1953, the coup brought pro-Western general Fazlollah Zahedi to power as the new PM, along with the return to Iran of the Shah Mohammad Reza Pahlavi from his brief exile in Italy. The anti-Mossadeq plan was orchestrated by the CIA under the code-name 'Operation Ajax', and by the British SIS as 'Operation Boot'.
In 1954, the AIOC became the British Petroleum Company. The return of the shah had not meant that British Petroleum was able to monopolise Iranian oil as before. Under pressure from United States, British Petroleum reluctantly accepted membership in a consortium of companies, founded in October 1954, to bring back Iranian oil to the international market. It was incorporated in London as a holding company called 'Iranian Oil Participants Ltd'. The founding members of IOP included British Petroleum, Gulf, Royal Dutch Shell, and Compagnie Française des Pétroles. The four Aramco partners – Standard Oil of California – Standard Oil of New Jersey – Standard Oil Co. of New York – Texaco – each held an 8% stake in the holding company.
All IOP members acknowledged that NIOC owned the oil and facilities in Iran, and IOP's role was to operate and manage them on behalf of NIOC. To facilitate that, IOP established two operating entities incorporated in the Netherlands, and both were delegated to NIOC. Similar to the Saudi-Aramco "50/50" agreement of 1950, the IOP consortium agreed to share profits on a 50–50 basis with Iran, "but not to open its books to Iranian auditors or to allow Iranians onto its board of directors". The negotiations leading to the creation of the consortium, during 1954–55, were considered a feat of skillful diplomacy.
In Iran, IOP continued to operate until the Islamic Revolution in 1979. The new regime of Ayatollah Khomeini confiscated all of the company's assets in Iran. According to the company's Web site: The victory of the Islamic revolution annulled the Consortium Agreement of 1954 and all regulations pertaining to it. The taking of power in Iran by the new Islamic Republic led to the withdrawal of foreign employees from Iran's oil industry, and Iranians took full control of its affairs.

NIOC's Oil Reserves

According to OPEC, NIOC recoverable liquid hydrocarbon reserves at the end of 2006 was.
NIOC oil reserves at the beginning of 2001 was reported to be about, however in 2002 the result of NIOC's study showed huge reserves upgrade adding about of recoverable reserves to the Iranian oil reserves.
After 2003 Iran made some significant discoveries which led to addition of another of oil to the recoverable reserves of Iran.
The vast majority of Iran's crude oil reserves are located in giant onshore fields in the south-western Khuzestan region near the Iraqi border. Overall, Iran has 40 producing fields – 27 onshore and 13 offshore. Iran's crude oil is generally medium in sulfur and in the 28°-35 °API range.
As at 2012, 98 rigs are in operation in onshore fields, 24 in offshore fields and a single rig is in operation in the Caspian Sea. Iran plans to increase the number of its drilling rigs operating in its onshore and offshore oilfields by 36 units to reach 134 units by March 2014.
Table 1- The biggest NIOC oil fields;
RankField NameFormationOil in Place
Recoverable Reserves
Production
Thousand barrels per day
1Ahvaz FieldAsmari & Bangestan65.525.5945
2Gachsaran FieldAsmari & Bangestan52.916.2480
3Marun FieldAsmari46.721.9520
4Azadegan oil fieldBangestan & Khami33.25.470
5Aghajari FieldAsmari & Bangestan30.217.4300
6Rag Sefid oil fieldAsmari & Bangestan16.54.49180
7Abteymour oil fieldBangestan15.22.660
8Soroush Oil FieldAsmari & Bangestan14.29.146
9Karanj Oil FieldAsmari & Bangestan11.25.7230
10Bibi Hakimeh oil fieldAsmari & Bangestan7.595.6120

Strategic petroleum reserves

began in 2006 with plans to create a global strategic petroleum reserve with the construction of 15 crude oil storage tanks with a planned capacity of. The storage capacity of oil products in the country is around 11.5 billion liters, but it will reach 16.7 billion liters by the end of the Fifth Five Year Development Plan. As of 2012, Iran is capable of storing crude oil in the Persian Gulf for a period of 10–12 days. The figure should hit 30–40 days after the construction of new storage facilities are completed.

Gas reserves

NIOC holds about of proven Natural gas reserves of which 36% are as associated gas and 64% is in non-associated gas fields. It stands for world's second largest reserves after Russia.
NIOC's ten biggest Non-Associated Gas Fields;
Field's NameGas in Place TcfRecoverable Reserve Tcf
South Pars500322
North Pars6047
Kish Gas Field6045
Golshan Gas Field5525–45
Tabnak Gas FieldNA21,2
Kangan Gas FieldNA20,1
Khangiran Gas FieldNA16,8
Nar Gas FieldNA13
Aghar Gas FieldNA11,6
Farsi FieldNA11–22

Recent discoveries

Since 1995, National Iranian Oil Company has made significant oil and gas discoveries, standing for some of oil in place and at least of gas in place, which are listed below.
Field's nameOil in PlaceRecoverable oilDiscovery year
Billion BarrelBillion Barrel
Azadegan Oil Field33.25.2
Yadavaran Oil Field173
Ramin Oil Field7.3981.112007
South Pars Oil Layer6NA
Band-E-Karkeh Oil Field4.5NA2007
MansourAbad Oil Field4.45NA2007
Changoleh Oil Field2.7NA
Azar Oil Field2.07NA2007
Paranj Oil Field1.6NA2007
Balaroud Oil Field1.10.2332007
Binalood Oil Field0.7760.0992008
Mansouri Oil Field0.760NA
Jofeyr Oil Field0.750NA2008
Asaluyeh Oil Field0.525NA2008
Arvand Oil Field0.500NA2008
Tusan Oil Field0.470NA2006
Arash Gas Field0.168NA
Total83.967NA

Organizational structure

The company is completely owned by Iranian government. NIOC's General Assembly consists of:
The GA is its highest decision making body, determining the company's general policy guide lines, and approving the annual budgets, operations and financial statements and balance sheets. The company's board of directors has the authority and major responsibilities to approve the operational schemes within the general framework ratified by the General Assembly, approve transactions and contracts, and prepare budgets and Board reports and annual balance sheets for presentation to the General Assembly.
The Board supervises the implementation of general policy guidelines defined by the General Assembly, and pursues executive operations via the company's Managing Director.

Members of the board

NamePositionBoard's Position
Bijan ZanganehMinister of PetroleumChairman
Masoud KarbasianCEOVice Chairman
Bijan AllipourCEO of NISOCMember of the board
Karim ZobeidiManager of Integrated PlanningMember of the board
Mohsen GhamsariManager of International AffairsMember of the board
Mohammad BilkarDirector of FinanceMember of the board
Asghar HendiExploration ManagerMember of the board

Subsidiary companies

With appropriate division of tasks and delegation of responsibilities to subsidiaries- affiliates, NIOC has been able to establish acceptable degrees of coordination within its
organizational set up. In fact, NIOC's Directors act primarily in policy making and supervision while subsidiaries act as their executive arm in coordinating an array of operations such as exploration, drilling, production and delivery of crude oil and natural gas, for export and domestic consumption.
The NIOC's subsidiaries are as follows:
Company NameActivities
Iranian Offshore Oil Company in charge of offshore oil fields in the Persian Gulf offshore oil and gas fields with the exception of South Pars. It focuses mainly on production platforms, ancillary facilities, and installations. Massive corruption in the lease of offshore platforms reported by the Iranian media in 2015.
Iranian Central Oil Fields Company supervises all upstream activities in the central oil and gas regions of the country, i.e. everything, excluding the oil-rich southern Khuzestan province, Caspian and offshore. As of 2015, it is the largest natural gas producer in Iran.
National Iranian Gas Export Co. in charge of gas exports for the National Iranian Gas Company. Until May 2010, NIGEC was under the control of the NIOC, but the Petroleum Ministry transferred NIGEC, incorporating it under NIGC in an attempt to broaden responsibility for new natural gas projects. See also: Persian pipeline and Peace pipeline.
National Iranian South Oil Company in charge of onshore oilfields in southern Iran. Focuses on onshore upstream activity in the province of Khuzestan. As Khuzestan is the main oil and gas-producing province, this entity is among the most significant in the NIOC family. It produces approximately 80 percent of all crude oil produced in Iran.
Khazar Oil Exploration and Production Companyin charge of Iran's Caspian Sea sector
Karoon Oil and Gas Production Company Operating in Khouzestan, the company operates 538 wells and delivers natural gas to NIGC.
Petroleum Engineering and Development Company is the most important NIOC offshoot company. The responsibility for all buy-back projects under operation, study or negotiation has been given to PEDEC. This company enjoys full authority to manage the projects. Further information: Foreign Direct Investment in Iran
Pars Oil and Gas Company National Iranian Gas Company does not play a role in awarding upstream gas projects; that task remains in the hands of the National Iranian Oil Company. Pars Oil and Gas Co. is in charge of the offshore North and South Pars gas fields and responsible for awarding the contracts for the different phases. Since 2010, it has been raising capital on the domestic and international markets in order to finance its projects.
Pars Special Economic Energy Zone Co.handles and organizes all activities in the Pars Special Economic-Energy Zone, located near the South Pars gas field
Iranian Oil Terminals Companyhas four transport hubs including facilities on the three islands of Kharg, Lavan and Sirri consisting of 17 jetties capable of berthing tankers of all sizes to lift and export its crude oil that load more than 2,000 oil tankers per year. 2,000 of them dock in Bandar Abbas Port, 1,000 in Khark Island. Iran earned nearly $2 billion in 2009 from bunkering ships in the Persian Gulf. Projected bunkering sites by 2015: Bandar Abbas, Kish, Qeshm, Bushehr, Mahshahr, Assalouyeh, Khark and Chabahar. Fujairah bunkering hub, UAE is Iran's main competitor in the Persian Gulf. The country's terminal storage capacity should soar to 100 million barrels by 2015 from the current 24 million barrels.
National Iranian Drilling Company in charge of all offshore and onshore drilling activities. NIDC provides more than 90 percent of drilling services needed by the oil companies inside the country. In 2011, NIDC, drilled or completed 192 oil and gas wells, drilled 454 thousand meters of wells and provided more than 8 thousand expert or technical services to customers. As at 2012, 123 drilling rigs are in operation in Iran's offshore and onshore.
Ahwaz Pipe Mills Companymanufacturing oil and gas pipes and has a capacity of up to 420,000 tons per year. It operates three plants.
Iranian Fuel Conservation Organizationregimenting the fuel consumption in different sectors through review and survey of the current trend of consumption and executing conservation measures nationwide. See also: 2007 Gasoline Rationing Plan in Iran
National Iranian Tanker Companycontrols the second largest fleet of tankers in OPEC. Despite having domestic manufacturing capacity, NITC purchases many VLCC abroad for unknown reasons.
Exploration Service Company responsible for providing operational services in all facets of exploration and production activities within NIOC onshore regions.
Kala Naft Ltd.in charge of carrying out the procurement needs of the NIOC that cannot be met domestically. However, NIOC organizations can in theory also purchase directly from suppliers.
Kala Naft Ltd.in charge of carrying out the procurement needs of the NIOC that cannot be met domestically
Naftiran Intertrade Co. handles trading & swaps operations on behalf of NIOC. Iran has swap arrangements with Azerbaijan, Turkmenistan, and Kazakhstan, under which it ships crude from the Central Asian producers to its Caspian ports in Neka. In exchange Iran delivers the equivalent barrels of crude on behalf of the three Central Asian producers to their customers in the Persian Gulf. In October 2010, Iran asked for the terms of the contract to be re-negotiated because it claims it has lost money because of it. On 2 July 2011, NIOC resumed oil swaps with Caspian states. NaftIran also buys the vast majority of Iran's gasoline imports. Naftiran is a key player in Iran's energy sector.
PetroparsGeneral contractor for the oil & gas industry
Petroiran Development Company General offshore contractor. PetroIran was initially formed to be the Iranian partner of foreign contractors with a 10% share in each buy-back contract.
Iranian Oil Company in charge of Rhum gasfield
Iranian Offshore Engineering and Construction Company First Iranian general contractor to the oil and gas industries. Joint venture with IDRO
Arvandan Oil & Gas Company responsible for the development of the Arvandan oil & gas fields. AOGC was established in 2004 working as the main operator in oil and gas production from Azadegan, Yadavaran, Darquain, Jufeyr, Moshtagh, Khorramshahr, Arvand, Susangerd, Band-e-Karkheh, Omid and other fields which are located in west of Karun River.
Research Institute of Petroleum Industry NIOC will implement 69 research projects between 2010 and 2015 which include topics as enhancing recovery rate, modeling, control and management of reservoirs, production and exploitation, exploration, promotion and technology in drilling operations, establishment of an integrated data bank, industrial protection and environment, optimizing energy consumption, materials and equipments manufacturing, strategic and infrastructure studies, productivity and specialized maintenance. Iran is expected to launch its first gas to liquids plant by 2018. As of 2019, NIOC was conducting 25 major research projects worth nearly 700 billion rials. As of 2019, 300 knowledge-based companies were active in the field of oil industry in Iran. See also: Science and technology in Iran.

Production costs and investments

The cost of producing each barrel will rise to $30 or more from $7 in 2012.
Iran currently allocates $20 billion a year to develop fields and $10 billion on maintaining output. In the next decade, maintaining production will cost $50 billion, with a similar sum required for development. This does not include development and investment costs in related fields such as Petrochemicals.

NIOC's major domestic contractors

Although usually neglected and overlooked, Iran also has a number of very active private companies in the oil sector. The growing private sector activity is mainly active in projects involving the construction of oil field units, refinery equipment, tanks and pipelines, as well as engineering. Iranian manufacturers will supply oil industry with $10 billion worth of domestically-made goods and equipment in 2012.
Iran's Press TV claimed in 2011 that Iranian companies are outperforming foreign firms in South Pars. NIOC produces 60–70% of its industrial equipment domestically including refineries, oil tankers, oil rigs, offshore platforms and exploration instruments. Iran is also cooperating with foreign companies to transfer technology to Iranian oil industry. The objective is to become self-sufficient by 85% before 2015. The strategic goods include onshore and offshore drilling rigs, pumps, turbines and precision tools. Domestic production of 52 petrochemical catalysts will be started in 2013. As of 2015, Iran had reached most of its above mentioned objectives in manufacturing.
In 2019, the government sub-contracted projects worth 6.2 billion to domestic contractors. Pending projects include domestication of wellhead equipment, desalinating packages, anti-corrosions, sulfur recovery catalysts, wellhead control panels, among others. According to NIOC in 2019, Iran was manufacturing 12,000 components and complicated equipment of the petroleum industry.

Participations in foreign gas fields

According to geographer Richard Heede, is 3rd on the list of companies with the highest level of CO2 emissions globally with in 2013, amounting to more than 3.1% of worldwide anthropogenic emissions.