Indigenization Becomes Top Priority for Oil Equipment Sector

EghtesadOnline: More than 12,000 parts and equipment used in the oil industry have been indigenized, managing director of the National Iranian South Oil Company said Friday.

News ID: ۷۸۵۱۳۴

15 December 2019

Ahmad Mohammadi made the remark at the inauguration of the 11th Khuzestan Specialized Exhibition of Petroleum Industry Equipment Manufacturing and the 17th Drilling Industries Equipment Manufacturing Exhibition in Ahvaz, the Oil Ministry news agency Shana reported.

“Machinery and equipment for the oil industry, which in the past were imported, are being manufactured domestically by private companies with the help of knowledge-based firms and state organizations, especially the National Iranian Oil Company,” he said.

The Oil Ministry has called on domestic manufactures to mobilize their resources and prioritize production of equipment and parts required by the petroleum industry, according to Financial Tribune.

“We have provided a list of 7,500 more items on a compact disc, which should be made by local companies and knowledge-based firms,” Mohammadi said.

US economic sanctions have made procurement of key equipment and parts for the oil and gas sector very difficult if not impossible. Restrictions on banking, shipping and insurance are an added dilemma for local oil companies and manufacturers of heavy industries.

On the sidelines of the expoistion, 11 key items made by domestic companies with NISOC help were displayed.

The NISOC, a subsidiary of the National Iranian Oil Company, is involved in several industrial and civil construction projects, including oil desalination units, gas collection and injection stations, oil pumping station, setting up pipelines and wellhead facilities, green spaces and environmental protection, roads and medical centers in oil-rich Khuzestan.

Collecting APG

One of the major obligations of the Oil Ministry is to collect associated petroleum gases, Mohammadi noted.

“Around 80% of the project will be carried out in Khuzestan and is estimated to cost $1.2 billion,” he was quoted as saying by Shana.

Flaring is the burning of natural gas that cannot be processed or sold. APG collection is an important safety measure at oil and gas sites because it prevents industrial plant equipment from over-pressuring and exploding.

Mohammadi said NISOC wants to further reduce flaring and burning of APG in the southern and southwestern regions, including Bushehr, Khuzestan and Kohgilouyeh-Boyerahmad.

“Contracts have been signed that will have positive economic and environmental consequences for the nation and the region”.

According to a World Bank report, large volumes of gas is flared at oil production sites across the world, burning approximately 140 billion cubic meters of gas annually and releasing over 300 million tons of carbon dioxide into the atmosphere.

Net Loss

Around 17 bcm of gas is burned in Iran annually, which means a $4-6 billion net loss.

The Oil Ministry has adopted measures to reduce gas flaring, namely collecting APG for injection into oil and gas wells, converting it into petroleum products like natural gas liquids and using the flare gas for generating electricity.

From 2008 onwards Iran has prevented the flaring of 12 bcm of APG, a source of global warming and a waste of valuable fuel. Despite the measures, Iran has the highest rate of energy waste in the form of APG in the Middle East and ranks third in the world in terms of gas flaring after Russia and Iraq.

Gas flaring is a global problem that is getting worse. The World Bank reported a 3% increase in gas flaring on a global scale last year.

The two oil exhibitions are underway with 260 exhibitors in attendance at the International Trade Exhibition of Ahvaz. It will run until December 16.