Zanganeh Denies Scale of Attacks on Aramco Facilities

EghtesadOnline: The government of Saudi Arabia has apparently exaggerated the scale and scope of drone attacks on its oil processing facility on Sept. 14.

News ID: ۷۴۸۵۹۰

01 October 2019

“Their reaction was a political tactic.”

Oil Minister Bijan Namdar Zanganeh made the remark on the sidelines of a ceremony Monday in Tehran to sign a contract between three domestic firms to expedite work on extending a 1,100km 42-inch diameter pipeline to supply oil to the southeastern port of Jask in Hormozgan Province, IRNA reported.

"We are exporting oil irrespective of the Aramco attacks," he said without providing details, Financial Tribune reported.

Saudi Arabia shut down half its oil production two weeks ago after drone attacks on its oil infrastructure claimed by Houthi fighters in Yemen.

Drone and missile attacks on the facilities that process mainly light crude knocked down about 5.7 million barrels per day, that was about 5% of the world’s daily oil production.

Saudi Arabia, together with several other Arab nations, launched a military campaign in 2015 that aimed at rolling back advances made by Houthi fighters after they overran much of the country, including the capital, Sanaa, in 2014.

The US-backed Saudi-led intervention initially consisted of a bombing campaign and later saw a naval blockade and the deployment of ground forces into Yemen.

The UN describes the situation in Yemen as “the worst man-made humanitarian crisis” in the world, with the ongoing conflict making an already dire situation worse.

Zanganeh told reporters that building two petrochemical complexes in Jask in Hormozgan Province is on the agenda.

"Compressors, electro-pump units and turbines are key aspects of the oil sector and that is why indigenizing such equipment is a priority," he was quoted as saying.

As per the agreement between the Petroleum Engineering and Development Co., a subsidiary of the National Iranian Oil Company and two local companies, namely Pump Iran and Petco, the latter will supply PEDEC with 50 electro-pumps by next September to help complete the Goureh-Jask pipeline project.

"In addition to laying the pipeline, the project, which will come on stream in 2021, includes building 20 crude oil storage facilities, one oil export terminal as well as five pumping stations, each of which will be equipped with 10 electro-pumps," Touraj Dehqani, the PEDEC chief said.

Pump Iran company has been tasked with building 20 pumps costing $21 million, and the agreement with Petco entails the manufacture of 30 pumps at an estimated cost of $32 million.

Maintenance of the pumps will be the duty of manufactures. Both companies specialize in manufacturing heavy duty pumps and turbines.

Tech Constraint

Referring to other needs such as steel pipes, Dehqani said prior to the second round of US sanctions announced in May, PEDEC had to procure 20,000 tons of [API 5L X60 and NACE] steel plate sheets from Germany and China because it has been deprived of the technology to produce it inside the country.

Due to financial constraints the remaining sheets could not be imported and domestic companies indigenized the platform to manufacture the pipes.

"Ahvaz Industrial Pipe Company, Isfahan-based Mobarakeh Steel Company and Khuzestan Oxin Steel Company will produce the special steel sheet and pipes."

As per a deal between NIOC and the three firms, the three will supply PEDEC 550 kilometers of pipes, of which 60km have been manufactured and are being moved to Bushehr Province.

Regarding the workforce, he said native workers and engineers in Bushehr, Fars and Hormozgan provinces have priority in terms of employment.

Pipe laying started in July to supply a million barrels of oil from Goureh Oil Terminal in the northwest of Bushehr Province to the west of Jask region off the Sea of Oman.

Estimated cost of the project is $2 billion and is scheduled to be completed in 2021.

In addition to laying the pipeline, the project includes building 20 crude oil storage facilities, pumping stations and one oil export terminal.

Upon completion Jask Oil Terminal will have the capacity to store up to 30 million barrels and export one million barrels per day, the company said. According to the official, the new terminal will help ease tanker traffic at Kharg Oil Terminal off the Persian Gulf that presently handles 90% of Iran’s oil exports.

Moving the main oil export terminal from Kharg to Jask will have the advantage that Iranian tankers will not have to straddle the busy Strait of Hormuz. The strategic strait is the world’s most important chokepoint through which 20 million barrels of oil passes every day.