Iran heading towards self-sufficiency in oil equipment manufacturing

EghtesadOnline: Iran's decisive petroleum industry plays an important role in the country's Economy of Resistance that its implementation was reiterated by the Supreme Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei in the motto chosen for the current Iranian calendar year.

News ID: ۷۷۷۱۷۲

21 June 2017

In his New Year message on March 21, the Leader named this year as the Year of Economy of Resistance; Production and Employment.

Major steps have been taken for manufacturing of a great deal of strategic equipment in order to reach self-sufficiency in oil equipment industry. Therefore, Iran's Ministry of Petroleum is the clear manifestation of the Economy of Resistance, IRNA reported.

National Iranian Oil Company's Directorate of Commodity Manufacturing and Procurement has been one of the organs that shouldered the burden of tackling sanctions, domestic manufacturing of commodities, self-sufficiency in oil equipment manufacturing and creating related jobs at the level of the Ministry of Petroleum, as well as other industrial and economic bodies in the country.

Ramin Qalambor Dezfuli is the head of the NIOC directorate that was in charge of indigenizing the manufacturing of many commodities in the previous years.

The directorate was established in 2015 after the dissolution of Kala Naft Company which was tasked with supplying commodities required in the petroleum industry, Qalambor said.

After sanctions were tightened against Iran since 2009, Kala Naft faced serious restrictions with regard to opening letters of credit (LC) and money transfer.

Qalambor said despite all these problems leading in months-long delays, no halt happened in the supply of equipment and items to petroleum industry.
'This trend continued up to 2014 and the equipment and items needed by the subsidiaries of NIOC were being supplied,' he added.

Qalambor said the task upon Kala Naft was not limited to the procurement of commodities, noting that supporting domestic manufacturing was also up to Kala Naft.

'Today, 90% of the responsibility of this Directorate is centered on the domestic manufacturing of commodities needed by the petroleum industry ,as well as equipment which have not yet been manufactured domestically,' the official said.

He added that the directorate’s current objective is “to transfer state-of-the-art technology and technical knowhow for the manufacturing of commodities through partnership between qualified domestic manufacturers and well-known foreign companies,' a policy which is pursued both by the Minister of Petroleum Bijan Zangeneh and the staff of the directorate for the materialization of the Economy of Resistance.

'In the wake of the formulation of this new policy by Zangeneh, in the [calendar] year 1393 named by the Supreme Leader as Year of Resistance Economy; Plan and Action, Ministry of Petroleum devised 10 projects for the domestic manufacturing of strategic commodities and equipment…It was a right example of implementation of Resistance Economy in the Ministry of Petroleum.'

The 10 projects included “wellhead equipment manufacturing, downhole completion string, wellhead pumps, downhole pumps (a hi-tech project which will help boost production; when pressure fall-off happens and wells stop production these pumps can help extract 1,000 to 3,000 barrels), drilling bits, control and safety valves, seamless pipes for stream and drilling pipes, explosion-proof electro-motors with variable rotation, rotary machinery including turbines, pumps and compressors, alloy steel, drilling measurement tools and intelligent PIGs.”

Qalambor said that four of the projects were finalized in the calendar years 1394 and 1395, adding that 52 contracts worth IRR 6,000 billion were signed with domestic manufacturing companies, some of which were totally independent and some others worked in partnership with foreign firms.

He added that the four finalized projects included wellhead equipment manufacturing, downhole completion string, wellhead pumps, downhole pumps drilling bits and drilling measurement tools.

He added that all activities related to the project for the manufacturing of seamless pipes had been finished. Qalambor described the project as the most important one in terms of investment and consumption.

He said that the contract for the project was to be signed with domestic companies soon.

Regarding intelligent PIGs project, Qalambor said, 'It was decided that we hold an international tender again. The condition is that foreign companies would have to find a domestic partner because it is a hi-tech project and is of high significance to us.'

[Pigging in the context of pipelines refers to the practice of using devices known as 'pigs' to perform various maintenance operations.]

'The Ministry of Petroleum is not to pay someone to build a factory. We try to create motivation through purchase in order to attract investment,' said the official adding, “As far as control valves and explosion-proof electro-motors are concerned, we are in talks with several major contractors to cooperate” with Iran.

He added that the implementation of the 10 projects had created 1,000 direct and 3,000 indirect job opportunities in the petroleum industry's private sector. The jobs would double or triple if more contracts were signed, Qalambor said.

'All this indicates that the Ministry of Petroleum has always been one step forward of the motto of the year, and I can say that once other contracts have been finalized more than 75% of our commodities and equipment would be manufactured at the Ministry of Petroleum. Then, domestic manufacturing would create more than 5,000 job opportunities,' the official estimated.

He added, “After three years, we will be fully self-sufficient in commodity manufacturing.'

Qalambor also referred to hard currency saving in Iran as a result of the domestic manufacturing of commodities.

'We used to buy these pipes at twice their price. In case we reach an agreement in the pipeline sector, we will be saving around €800 million,' he said.

The official stressed that Iran’s domestic manufacturers “are almost as qualified as foreign manufacturing companies and the same tests conducted by foreign companies are conducted in domestic companies by techno-engineering inspection offices that fully monitor quality production.'

'Due to US sanctions imposed on Iran, our companies cannot receive API certificates and our solution for this problem was to win international certification for [our domestically issued] certificates from top European inspection companies for our production line and engineering departments,' said Qalambor.

He reiterated that Iran's Ministry of Petroleum had been one of the most successful ministries of the government in terms of materialization of the Economy of Resistance despite all problems including financial shortages.

Source: Latest edition of Mashaal magazine, National Iranian Oil Company