TEHRAN (Shana) – The CEO of the National Iranian South Oil Company (NISOC) said his company would be prepared for 3 million barrels per day of crude oil output by the end of the current calendar year, which began on March 21.
Outlining NISOC's main activities over the past 3 months, Alireza Daneshi announced preparation and presentation of a five-year plan for NISOC and its submission to the National Iranian Oil Company (NIOC), adding NISOC is prepared for 3 mbd of crude oil output by the end of the current calendar year, which began on March 21 and foreign investment has joined operations.
"We expect that by methods such as oil bartering and investment attraction, in addition to maintaining the annual production decline by about 500,000 barrels, enhance output by roughly 300,000 barrels per day. Foreign investors have joined the projects and good negotiations have taken place."
Alireza Daneshi, as one of the stouchest critics of the preceding administration in the southern oil-rich regions, believes: "Oil output of the regions has not been at the level they were supposed to, however, we have no problem in this regard and would take actions as soon as possible."
The NISOC CEO stated that the current production capacity of the company is about 3 million barrels per day, and said that NISOC is ready to produce 3 million barrels by the end of the current calendar year, which began on March 21. "Fortunately, we have obtained a permit to receive $200 million in funds to renovate our facilities next year."
The first exclusive interview of Alireza Daneshi, CEO of the National Iranian South Oil Company (NISOC), with the mouthpieces of the Iranian Ministry of Petroleum (Shana, Mashal and Iran Peroleum) follows:
As a first question, three months have passed since you took over as CEO of NISOC. Please explain what were the most important measure you have taken during these three months?
The first thing to do was to monitor the organization. Although we have been working inside the complex for many years, there was a need for re-monitoring, which fortunately has been taken care of. Maintaining and enhancing production is also an integral responsibility of NISOC, for which we first had to look for independent and reliable financial resources so that we could organize the numerous projects that were planned by the expert system, which was planned.
Paying attention to the value chain in the activities of the upstream sectors was also one of the tasks that has been considered. Now that I'm talking to you, a five-year plan based on maintaining and enhancing output has beening compiled and submitted to the National Iranian Oil Company, which is very important and valuable. Another important task we did during this period was to redefine the oil-rich areas of the South and restore some of the lost authority of the company. Unfortunately, NISOC had been seen as an organization, not a company. In this regard, one of the things that was done during this period was the return of powers in the human resources department of the company, which fortunately, with good cooperation and interaction between the south and Tehran, these powers have been transferred to the oil-rich regions of the south. Also, the procedure for carrying out major repairs of rotating machines, which was not a good procedure, was amended during this period, and there are problems regarding financial resources in the circulation of activities and payments, which we are consulting and, God willing, corrections will be performed in this regard.
Where are the reliable financial resources you mentioned supposed to be provided from?
Some of it will be provided from oil bartering that we have not had access to so far, but some of the services we provide have been sourced. For example, in return for the services we provided to petrochemicals, they also helped in some areas. Foreign investors have also joined some projects and good negotiations have taken place.
Is NISOC fully authorized to do this?
We (NISOC) coordinate with the National Iranian Oil Company in everything we do. On the issue of oil bartering, in coordination with the International Affairs Department of the National Iranian Oil Company, it was decided to identify resources so that there is no parallelism. This is important for the National Iranian Oil Company and us.
How much resources do you need?
Financial elasticity varies in the activities of the oil industry. We have a lot of work to be done. We must get the oil industry back on track of prudence and rationality after years.
What are pillars of the five-year plan that you have presented to the National Iranian Oil Company?
A five-year plan has been drawn up in the southern oil-rich regions to achieve the country's crude oil production capacity, despite oppressive sanctions, numerous financial problems and a lack of youth recruitment in recent years, and we expect methods such as oil bartering and investment attraction, in addition to maintaining an annual production decline of about 500,000 barrels, increase production by about 300,000 barrels per day. The goal of this goal is that even if we do not reach the final goals of increasing production, because the organization's efforts double, certainly part of this increase in production will be realized. For this project, repairing more than 500 wells and drilling more than 200 wells have been planned and it is planned to increase the desalination capacity and pipelines to 3.4 million barrels per day, which is a very difficult and heavy task. If resources are provided, God willing, these plans will be implemented over time. This program has been developed taking into account the conditions of the embargo and its financial calculations are underway. On the other hand, due to the high percentage of decline in reservoir production, one of the important goals of this program is to consider independent gas resources for the oil reservoirs of the National Iranian South Oil Company. Currently, 12 fields operated by NISOC are being injected with gas to maintain their output, but in the current situation, a very small volume is being injected into these fields.
You mentioned the details of the five-year plan. The main goal of the 28-reservoir project package is to enhance and maintain production. Does the new five-year plan contradict it or will it be accompanied by reforms?
The natural drop of our reserves is about 500,000 barrels per year, which is not a small figure. We must make up for that decline while maintaining existing production level. We are now talking about compensating for this decline to reach the production ceiling of 3 million barrels per day.
The drop in production was previously announced at 400,000 barrels. Has it increased?
The drop has exacerbated, because we have not had a proper injection in our reserves for three years.
Will the 28-reserves project package be pursued?
This plan will be followed by amendments. We will abide by the contracts and commitments of the previous administration, and we will follow these plans by making reforms and more seriously than before, because these are the obligations of the country.
In the three months that have passed since our appointment, the progress of the 28-reservoir projects has improved due to cooperation with contractors and developers, in areas such as supply of goods and financing. I would also like to add that in these projects, we face various problems such as prioritizing, implementing projects and managing them. The main drawbacks have been how they are implemented and managed. At the National Iranian South Oil Company (NISOC), we enjoy development-related structures, while according to the 28-reservoir plan, a separate management structure has been defined, which is a major drawback and has caused the organization to become unmotivated and sluggish.
If you had a position in that period, would you not have implemented the 28 reservoir plan?
I did not perform them like this.
Do you agree with its layout?
The whole plan is one of the requirements of the National Iranian South Oil Company (NISOC) and there is no doubt about that. The plan of 28 reservoirs has been the wish of us and all experts.
In terms of timing, when will the first projects of the package be completed with the new amendments?
The commitments of the National Iranian South Oil Company to the contractors remain in place and will be fulfilled. So far, 25 projects have been handed over to contractors, of which three projects, Nargesi, Kaboud and Lali Asmari, will be fully operational in the first six months of the next calendar year. The rest of these projects, which are scheduled to be launched in the next two and three years, have a progress of up to 34%.
Given the slow progress of some of these projects, it is decided to accelerate the projects by restructuring the southern oil-rich areas and redistributing forces within the employer organization; moreover working groups such as the Finance and Commodity Working Group have been formed to monitor, identify and resolve the problems in a radical manner. In addition to the mentioned projects, negotiations with foreign investors are being finalized and the project is being awarded to the developers. With the implementation of these projects, in addition to maintaining the production capacity of the company at 300,000 barrels per day, the increase in production is also aimed at the same amount.
Another goal of this plan is to activate domestic producers of goods and oil and gas contracting companies, because the contracts emphasize maximum use of Iranian goods and services as one of the requirements for implementation of production maintenance and enhancement projects. Also, with the permission of the Economic Council, 4% of the project implementation cost will be allocated to social responsibilities.
Given the mission given by the CEO of the National Iranian Oil Company to subsidiaries, including NISOC, to increase oil production, what plans and actions are being taken in this regard?
In previous years, due to sanctions, oil production at NISOC has not been as desired, but fortunately we have no problem to fulfill the mission and reach the oil production ceiling of the National Iranian Oil Company and we will act in the shortest possible time. To achieve this goal, the main problem of NISOC is in the facilities and processes sector, for all of which projects have been defined which require financial support, and whenever it is announced, we will be able to reach the desired production ceiling.
What is the current production capacity of NISOC?
Our production capacity is now about 3 million barrels per day, but its full realization will take some time.
In what period of time can you reach maximum production?
NISOC is ready to produce 3 million barrels of crude oil by the end of the current calendar year to March 20.
NISOC
Daneshi