Iran Oil & Gas Market Forecast 2015-2019 Leaflet + Contents

Iran Oil & Gas Market Forecast 2015-2019energy business insight

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31

Iran Oil & Gas Market Forecast 2015-2019

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Chapter 4 : Drilling & ProductionKey Onshore Projects

Location: Kuzestan, Southwest IranProduct: Oil

Onstream Year: 2015 & 2008Operators: CNPC International,

Arvandan Oil & Gas Company,

Petroleum Engineering & De-velopment Company, National

Iranian South Oil CompanyReserves: 33.2 bboeProduction Capacity: 750 kbbl/d

Key Details

North & South Azadegan

The Azadegan field is located in the southwestern province of Khuzestan, and is Iran’s largest oil field. Azadegan is shared between

Iran and Iraq, with the latter having started producing 210 kb/d from the field in April 2014. There are two key ongoing projects in

the Iranian portion of the field: North Azadegan and South Azadegan.

North AzadeganAt the time of writing, Phase I development of the North Azadegan field by China’s CNPC is almost complete, with some units hav-

ing reportedly come onstream. Initial production is expected to reach 75 kbbl/d, with output forecast to rise to 150 kbbl/d once the

field is fully operational.South AzadeganThe South Azadegan field has been producing since 2008 – increased investment expected with PEDEC aiming to boost production

from 50 to 80 kbbl/d in Q1 2016. It is also aiming to boost total output to 600 kb/d.

INPEX Holdings Inc. was originally due to develop the field, however, talks were halted in 2006 due to high investment costs. A $2.5

billion agreement to develop the field was signed with China’s CNPC in 2009, however, the company was removed from the project

in May 2014 due to lack of progress.

Overview

Location: Kuzestan, Southwest

Iran

Product: Oil

Onstream Year: 2012Operators: Sinopec, Petroleum

Engineering & Development Company, Arvandan Oil & Gas

Company

Reserves: 17-34 bboeProduction Capacity: 300 kbbl/d

Key Details

Yadavaran

The Yadavaran field is also located in the Khuzestan Province and shared between Iraq and Iran. Production from the Iranian portion

of the field commenced in March 2012, while Iraq has yet to start production.

China’s Sinopec is currently producing 50 kbbl/d from the field, and is aiming to achieve production of 85 kb/d from the first phase of

development. A further two development phases are currently being planned, with output expected to rise to 180 kb/d following the

second phase of development. The field is expected to produce 300 kbbl/d by the end of the expansion program.

During the first phase of development of the field, seven rigs drilled a total of 49 production wells, three appraisal wells, and three

injection wells. Total investment required for the expansion programs at the Azadegan and Yadavaran fields is expected to be around

$20 billion.

Overview

• Prospects• Technologies• Markets


41



Chapter 5 : Onshore Rig & Oilfield Services

Onshore Rig Market Forecast

Iran’s active fleet size is expected to

increase at a CAGR of % from

units in 2015 to units in 2019.

The total number of operational units

is forecast to increase by % through

to 2019.

Drilling utilisation is expected to re-

main at around % over the forecast

period.

The total capable fleet size is expected

to rise by % from units in 2015

to in 2019.

Figure 15: Iran – Rig Fleet and Implied Utilisation

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Dril

ling

Util

isatio

n

Num

ber

of R

igs

Drilling Utilisation

Rigs Operational

Rigs Drilling

Table 2: Iran – Rig Fleet and Implied Utilisation

Onshore rig demand

Onshore drilling activity in Iran is forecast to

rise over 2015-2019, with the total number

of onshore wells drilled (including explora-

tion and appraisal wells) expected to

increase at a CAGR of % through to 2019.

This rise will be driven by projects such as

the development of the North and South

Azadegan, Yadavaran and Azar fields. No-

tably, Iran has recently accelerated drilling

activity at the South Azadegan field in order

to compensate for delays in the develop-

ment, following the cancellation of CNPC’s

contract in May 2014.

Following this trend in onshore drilling

activity, DW expects to see a rise in the

demand for onshore rigs over the next

four years, with the number of active rigs

forecast to increase at a CAGR of % from

units in 2015 to units in 2019. % of

the additional units to the active drilling rig

fleet over 2015-2019 are expected to have

a rating of above 1,250 HP. The operational

fleet size is also forecast rise by % from

units in 2015 to units in 2019.

While the majority of the wells drilled in

Iran’s maturing fields were vertical, due

to the complex geological structures of

the newly developed fields, there is an in-

creased demand for deviated and horizontal

drilling. Therefore, DW expects demand for

high horsepower, high specification rigs to

remain significant over the forecast period,

with sustained drilling utilisation at around

%.

The majority of Iran’s onshore oil & gas

fields are either undergoing or have passed

their first phase of development, and will

require IOR and EOR activity in order to

maintain or increase their production. This

is also expected to drive demand for high

specification, high horsepower rigs over the

forecast period.

The rise in drilling activity expected over

the forecast period, in addition to the high

demand and fleet attrition for higher speci-

fication rigs, is expected to result in a rise in

the overall capable fleet size over the next

four years. The total drilling rig population is

forecast to increase by % from units

in 2015 to in 2019.

This increase is slightly lower compared to

the previous five years, with the capa-

ble fleet size having risen by % over

2010-2014. Notably, it was announced

in mid-2013 that Iran was planning to

import ten new drilling rigs from China in

a $ m agreement. The National Iranian

Drilling Company also announced plans to

construct a further rigs in cooperation

with the Academic Centre for Education,

Culture and Research in December 2014.

“Around % of old fields in Iran were

drilled by vertical wells and % by devi-

ated wells. But in the newly developed

fields, due to their geological structure

and location, high deviated and horizontal

wells are the most common.”

Upstream Operator

“All exploration wells are drilled

vertically, and most appraisal wells

are vertical, while development

wells would be horizontal or highly

deviated.”

Upstream Operator

“The top priorities of the Petroleum

Ministry are Enhanced Oil Recovery

of oilfields and drilling and produc-

tion of near-border and newly

discovered projects.”

Upstream Operator

Units

20142015

20162017

20182019

Onshore Total Wells Drilled

Capable Fleet

Rigs Operational (DW)

Rigs Drilling (DW)

Rigs Drilling (DW), <1250HP

Rigs Drilling (DW), >1250HP

Drilling Utilisation

Drilling Utilisation, <1250HP

Drilling Utilisation, >1250HP


50



Chapter 7 : Onshore & Offshore InfrastructureFixed Platforms Market

Figure 23: Iran Fixed Platform Installations

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Num

ber

of F

ixed

Pla

tform

s

LargeMedium

SmallExtra Small

Figure 24: Iran Fixed Platforms Market Capital Expenditure

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Cap

ex (

$ bn

)

Compressor PackagesControl Systems

Electrical

Heat Exchangers

Pipes, Bends, Flanges & Fittings Power Generation Package

Pumps

Tanks & Vessels

Turbines

Valves

Others

The number of fixed platform instal-

lations is expected to remain at a

relatively high level in 2015, with a

total of units installed.Number of installations expected to

rise by % to units in 2016, before

stabilising at units per annum over

the forecast.

Platforms market Capex is expected

to rise at a % CAGR from $ bn in

2015 to $ bn in 2019. Expenditure on power generation

packages and turbines is forecast to

represent % of total Capex over

2015-2019.

Iran has focused in recent years on

developing the technology required

to construct offshore platforms

indigenously.

Installed fixed platformsFollowing a significant increase in 2014,

DW expects the number of fixed platform

installations in 2015 to remain at a relatively

high level, with a total of units installed.

The majority of these platforms will be

attributed to phases of the South Pars

development project, including Phases 13

and 20-21. A large proportion of the South

Pars platforms due to be installed in 2015

are either extra-small (wellheads/flares) or

small (less than 1,000 tonnes).Due to the limited visibility resulting from

short lead times of fixed platform instal-

lations, DW has assumed a number of

installations over the forecast period in line

with Iran’s production profile. Post-2015,

the number of platform installations is ex-

pected to rise by % to units in 2016,

before stabilising at units per annum

over the remainder of the forecast period.

In addition to South Pars, projects such as

the Forouzan field development are also

expected to contribute to new installations

and drive growth in expenditure over the

forecast period. Extra-small and medium

platform installations are expected to see

the strongest growth over the next four

years.

Fixed platforms market Capex

Capital expenditure on equipment, including

both new (greenfield) platforms and retrofit

replacements, is expected to increase

significantly over the forecast period, with

spending to rise at a % CAGR from just

under $ bn in 2015 to $ bn in 2019.

Total Capex is expected to peak at $ bn

in 2018.

Expenditure on power generation pack-

ages and turbines is expected to dominate

the market, with these two components

forecast to represent an estimated % of

total expenditure over 2015-2019. Tanks,

vessels and electrical components will also

account for a significant proportion of total

expenditure, with a combined market share

of % in 2014. Expenditure on valves is

expected to see the strongest growth over

the 2015-2019 period, with Capex forecast

to increase at a % CAGR from $ m in

2015 to $ m in 2019.Market developmentsIran has been focusing in recent years on

developing the technology required to con-

struct offshore platforms indigenously. No-

tably, in September 2014, it was announced

that Iran’s Offshore Engineering and Con-

struction Company would construct five of

the platforms for the various phases of the

South Pars development.Currently all fixed platforms in Iran are

operated by subsidiaries of the NIOC.

However, IOCs such as Shell and Total have

expressed interest in returning to Iran pend-

ing the removal of sanctions. An agreement

has also reportedly been reached between

Iran and Norway’s government-backed

trade body Intsok to increase cooperation

in offshore projects.


44



Chapter 5 : Onshore Rig & Oilfield Services

Iran Onshore Oilfield Services Expenditure

Figure 19: Iran Onshore Oilfield Services Expenditure Breakdown, 2015-2019

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Expe

nditu

re (

$ bn

)

Onshore oilfield services is expected

to grow at a CAGR of % over 2015-

2019, with total expenditure reaching

$ bn in 2019.

Coiled tubing services is expected to

see the strongest growth over the

2015-2019 period, with expenditure

forecast to rise at a CAGR of %.

Table 4: Iran Onshore Oilfield Services Expenditure Breakdown, 2015-2019

Onshore oilfield services market

to continue expanding following

2015 drop

Total onshore oilfield services expenditure

in Iran increased significantly at a CAGR

of % over the 2010-2014 period, driven

predominantly by a % increase in the

number of onshore wells drilled over the

same period. Despite a % decline in

2015, the market is expected to grow at a

CAGR of % over 2015-2019, with total

expenditure reaching $ bn in 2019.

The introduction of the sanctions has had a

significant impact on the markets for oilfield

service lines such as directional drilling and

MWD & LWD, which require access to

technology previously provided by large

international companies such as Schlum-

berger and Weatherford. Iran has been

able to access some oilfield equipment

via China. Notably, some Iranian compa-

nies are currently utilising Chinese LWD

technology, however, the market in general

remains relatively undeveloped due to the

sanctions. The competitive landscape for

providers of these services has subsequently

been impacted, with only a small number

of companies able to provide high quality

equipment.

Onshore rig and crew services accounts for

the largest proportion of expenditure, with

an estimated % share of the market over

the 2010-2014 period. This market share is

expected to remain stable throughout the

forecast period.

Demand for coiled tubing services is

expected to see the strongest growth over

the 2015-2019 period, with expenditure

forecast to rise at a CAGR of %. This

corroborates with the growing utilisation

of coiled tubing seen in shallow onshore

drilling operations in the Middle East. Many

of Iran’s onshore fields have passed their

first phase of development, and will require

intervention to reach their target levels of

production.

The markets for production and surface

well testing are also expected to see strong

growth over the next four to five years.

Total onshore expenditure for each of these

service lines is forecast to rise at a CAGR of

% through to 2019.

The lack of access to high quality comple-

tion equipment is expected to result in

onshore wells requiring additional testing at

the production stage.

“We have many problems in

providing good quality completion

services in Iran and using low quality

equipment in completion will cause

problems in production wells in the

future.”

Oilfield Services Provider

“Right now they are using mud

motors for directional drilling, and

MWD. Some companies are using

Chinese LWD.”

Oilfield Services Provider

$ millions

20142015

20162017

20182019

Casing & Tubing Services

Cementing

Coiled Tubing Services

Completion Equipment

Directional Drilling Services

Drill Bits

Drilling Fluids

Fishing

Mud Logging

MWD & LWD

Perforation

10

Production Testing

Rig & Crew

Slickline Services

Solids Control Equipment

Stimulation

Surface Well Testing

Waste Management

Wireline Logging

Wireline Services TOTAL


10



Chapter 2 : Introduction to Iran & the Wider Macroeconomic Overview

Iran: Historical Production & Exports

Iran’s oil & gas infrastructure sustained

heavy damage during the 1980-1988

Iran-Iraq War.

Oil production remained stagnant over

1995-1999 following the introduction

of a US trade embargo.Successive phases of the South Pars

gas and condensate field came on-

stream over 2003-2014, contributing

to rising natural gas production.Oil production stagnated over 2005-

2008, following the introduction of

UN and EU sanctions.Oil production fell by 17% in 2012 and

9% in 2013, following the tightening of

the sanctions.

Oil production rose by 6% in 2014,

following the interim agreement

reached between Iran and the P5 + 1

group in late-2013.

N.B. Oil export data unavailable for 1980-1985

Key events Iran-Iraq war (1980-1988)Average daily hydrocarbon production over

the 1980-1988 period was approximately

2.3 mmboe/d, compared to around 5.5

mmboe before the 1979 Revolution. Iran’s

oil & gas infrastructure sustained heavy

damage as a result of the conflict. Notably,

the Abadan refinery was shelled and largely

destroyed in September 1980. Facilities at

Kharg Island and Lavan Island were also

targeted during the conflict, including the

Salman, Resalat and Reshadat fields. US trade embargo (1995)

In March 1995, the Clinton Administration

issued an executive order prohibiting US

companies from investing in Iran’s oil & gas

sector. This was followed in May 2015 by the

introduction of a trade embargo banning US

trade with and investment in Iran. US purchas-

es of Iranian crude oil in 1994 amounted to

an estimated $4 billion, or approximately one

fifth of Iran’s oil revenues. Iran’s oil production

subsequently stagnated over the 1995-1999

period, falling marginally from 3.7 mmbbl/d in

1995 to 3.6 mmbbl/d in 1999.Development of South Pars Iran’s giant South Pars gas and condensate

field was first discovered by the National

Iranian Offshore Oil Company in 1990. The

field is being developed over 24 phases,

with first production from Phases 2 & 3 of

the project having been achieved in 2003.

Successive phases of the project came

onstream over the 2003-2013 period,

including Phases 1, 4 & 5 in 2004, 6, 7 & 8

in 2007 and 9 & 10 in 2008, contributing to

rising natural gas production.Introduction of UN and EU sanctions

(2006-2008)In December 2006, the UN introduced its

first round of sanctions on Iran, involv-

ing a trade embargo on nuclear- related

materials and technology. These sanctions

were strengthened in 2007 to include asset

freezes on individuals and institutions linked

to Iran’s nuclear program, and in 2008

to include sanctions on Iranian banks. In

April 2007, the first round of EU sanctions

was introduced, involving an expanded

list of frozen assets relating to the nuclear

program. Iran’s oil production remained

stagnant over this period, falling marginally

from 4.24 mb/d in 2005 to 4.18 mb/d in

2008. Oil exports also declined from 2.62

mb/d in 2007 to 2.30 mb/d in 2009.Tightening of the sanctions (2012)

In January 2012, the US introduced sanc-

tions on Iran’s Central Bank. The EU also

broadened its sanctions to include a ban on

importing Iranian crude oil, and a freeze on

the assets of Iran’s Central Bank. Subse-

quently, oil production fell significantly by

17% in 2012, and by a further 9% in 2013.

Oil exports also declined significantly in

2012, falling by 36% from 2.2 mb/d to 1.4

mb/d.

Interim agreement and sanctions relief

(2013)Oil production rose by 6% to 3.38 mb/d in

2014, following the preliminary agreement

reached in November 2013 between Iran

and the P5 + 1 group to curb Iran’s ura-

nium enrichment in exchange for sanctions

relief.

Figure 2: Iran Historical Oil & Gas Production & Exports 1980-2014

Sources: EIA, Douglas-Westwood

1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Prod

uctio

n an

d Ex

port

s (m

mbo

e/d) Oil ProductionGas ProductionOil ExportsGas Exports

April 1980 The US and Iran end diplomatic ties due to the

US hostage crisis.Sept. 1980 Iraq invades Iran.

Aug. 1988 Iran and Iraq agree a ceasefire.

May 1995 US imposes a trade embargo on Iran.

Dec. 2006 First round of UN sanctions are

imposed on Iran.

April 2007 First round of EU sanctions intro-

duced.

Jan. 2012 US tightens sanctions on Iran.

© 2015 Douglas-Westwood 56Iran Oil & Gas Market Forecast 2015-2019By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood

Chapter 8 : Downstream Facilities

Gas Processing Capital and Maintenance Expenditure

Figure 31: Iran Gas Processing Maintenance Expenditure and Cumulative Capacity

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Expe

nditu

re (

$ m

)

Cum

ulat

ive

Cap

acity

(m

mbo

e/d)

Cumulative Capacity

Expenditure

Figure 32: Iran Gas Processing Capital Expenditure

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Cap

ex (

$ bn

)

Compressor Packages Control SystemsElectrical Heat ExchangersPipes, Bends, Flanges & Fittings Power Generation PackagePumps Process UnitsTurbines Valves

Significant growth is expected as Iran’s

large gas fields are further developed

and associated gas processing plants

are brought onstream.

Considerable upside potential exists

from gas processing, with nine facilities

yet to receive an FID.

Relatively robust growth in gas pro-

cessing expected, with Capex to rise

at a CAGR of % from $ bn in 2015

to $ bn in 2019.

Large population of existing infrastruc-

ture means that Capex for the retrofit

market will be greater than greenfield

Capex.

The overall maintenance expenditure

of natural gas treatment facilities is

forecast to reach $ bn between

2015-2019.

Iran’s gas processing overviewIranian natural gas processing facilities set

a record in the first month of the Iranian

year (starting on 21st March 2015) by

processing mcm of natural gas on a

daily basis. Last year, Iranian gas processing

facilities produced bcm of gas, mcm

of gas condensate, million tonnes of

sulphur, million metric tons of liquefied

petroleum gas (LPG) and million metric

tonnes of ethane.

There are more than operating gas

treatment facilities in Iran, with a total

processing capacity of billion cubic feet

per day ( mcm/d). Currently nine facili-

ties are awaiting Final Investment Decisions

(FIDs) in the country. of them are

not expected to come online until the end

of 2019.

The overall maintenance expenditure of

natural gas treatment facilities is forecast

to reach $ bn during the 2015-2019

period. Maintenance expenditure in 2019 is

expected to be % higher compared with

2015, exceeding $ m.

Gas processing market CapexThe installation of gas processing facilities is

mainly led by the South Pars and Kish gas

field developments. The giant South Pars

field comprises over % of Iran’s and %

of the world’s proven gas reserves. Iran

could be one of the main suppliers to the

EU, but significant infrastructure upgrades

are needed to achieve this goal.

Capex on gas processing facilities is

expected to see steady growth over this

period increasing from $ bn in 2015 to

$ bn in 2019, at % CAGR, exhibiting

strong growth among the markets. Expendi-

ture is expected to peak in 2017 at around

$ bn. Total expenditure over 2015-2019

is forecast to amount to $ bn, compared

to $ bn over 2010-2014.

According to DW’s forecast, Iran’s gas

treating and dehydration capacity will

substantially increase to over mmboe/d

(cumulative capacity) by the end of the pe-

riod. High value equipment such as turbines,

electrical products and power generation

packages will account for the largest pro-

portion of the market spend.

Expenditure on pipes, bends, flanges and

fittings will also represent a significant share

of the market.

With a number of large gas fields such as

South Pars and substantial domestic gas

demand, Iran’s gas processing industry is

fairly established, driving the retrofit market,

namely the Khuzestan plant which was

originally completed in 1969 and has seen a

number of expansion projects since. Other

than the South Pars facilities, the main gas

treatment centres are the Fair Jam, Parsian

and Bisboland I-II facilities. As a result, the

gas processing sector is the only market to

see a greater proportion of expenditure on

the retrofit market over the forecast period.

Courtesy Statoil

Iran’s oil & gas sector has been heavily impacted by the introduction and tightening of international sanctions in recent years, and the signing of the Joint Comprehensive Plan of Ac-tion (JCPOA) represents a significant step forward in terms of normalising the country’s relations with the global community. Douglas-Westwood’s (DW) NEW publication the Iran Oil & Gas Market Forecast provides detailed analysis of key markets within Iran’s oil & gas sector, including historical and forecast drilling and production, oilfield services expenditure, and onshore and offshore rig demand. Highlights include a forecast 10% compound annual growth (CAGR) in onshore oilfield services spend (to reach $2.25bn in 2019), a 6% CAGR in the active onshore rig fleet and a 6% CAGR in gas processing Capex (to reach $6.6bn in 2019).

The anticipated lifting of the international sanctions poses sig-nificant upside potential for Iran’s oil & gas production, with the country having set ambitious targets for increasing its output in the coming years. Analysis in the Iran Oil & Gas Market Forecast includes historical and forecast onshore and offshore oil & gas production over 2005-2021, as well as onshore and offshore oil & gas development wells drilled. This analysis is based on a thorough project-by-project review of upcoming field develop-ments and a conservative assessment of the timing of activity. The report contains a detailed overview of the key onshore and offshore E&P operators, as well as key planned or ongoing projects.

An anticipated rise in drilling activity will lead to an increase in demand for both onshore and offshore rigs. The Iran Oil & Gas Market Forecast contains a detailed overview of historical and forecast rig demand over 2010-2019, as well as the current identified fleet and competitive landscape. Drilling activity also has a significant impact on the oilfield services market, and the Iran Oil & Gas Market Forecast provides historical and forecast

oilfield services expenditure for 20 oilfield service lines in Iran, including rig & crew, cementing, and fishing.

In its analysis of key production infrastructure, the report includes coverage of the fixed and floating platforms market, including historical and forecast installations, as well as historical and forecast capital expenditure over 2010-2019. Analysis of the onshore pipelines market includes an overview of the installed length and product type of identified pipelines in Iran over 2010-2019, as well as historical and forecast capital expenditure and kilometres installed for the Middle East.

The report also provides coverage of key downstream facili-ties, including refineries, gas processing facilities and petro-chemical facilities, as well as the liquefied natural gas (LNG) market. DW’s market analysis for refineries, gas processing, and petrochemicals includes historical and forecast cumulative capacity, as well as maintenance expenditure, over 2010-2019. For refineries and gas processing, the report also includes historical and forecast capital expenditure segmented by equipment type.

The Iran Oil & Gas Market Forecast contains:• Macro-economic overview specific to Iran – The

report contains a detailed macro-economic overview, tailored specifically to Iran’s oil & gas sector. This includes analysis of the impact of the recent interna-tional sanctions, as well as a post-2015 outlook, and overview of Iran’s current hydrocarbons policy.

• Coverage of a range of markets – The report provides in-depth coverage of key markets within Iran’s oil & gas sector, including oilfield services, onshore and offshore rig, onshore pipelines, and downstream facilities (refin-eries, gas processing, petrochemicals and LNG).

Iran Oil & Gas Market Forecast 2015-2019energy business insight

e: [email protected] t: +44 (0)203 4799 505

www.douglas-westwood.com

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• Detailed analysis – Analysis of key markets included in the report is based on data generated in-house using models exclusive to DW, including DW’s own D&P models for production and wells drilled. The report also utilises a multitude of data sources, including DW’s upstream & midstream construction and rig fleet data, drawing on a range of established DW reports and insight, including the World Drilling & Production Forecast 2015-2019, the World Onshore Pipelines Market Forecast 2015-2019, and the World Oilfield Services Market Forecast 2015-2019.

• Focus on key projects – The report provides a detailed overview of key onshore and offshore oil & gas projects which are expected to drive growth in the rig and oilfield services markets, as well as onshore pipelines projects planned or under construction.

• Expenditure forecasts – The report contains forecasts for onshore rig upgrade and newbuild expenditure, on-shore and offshore oilfield services expenditure, fixed platforms capital expenditure, maintenance expendi-ture for refineries, gas-processing and petrochemical facilities, and capital expenditure for refineries and gas processing facilities.

Why purchase the Iran Oil & Gas Market Forecast?The potential uplift in Iran oil & gas activity is viewed as a major opportunity for the international operator and service sector. This new study from Douglas-Westwood brings to-gether a full appraisal of the ‘size of the prize’ in key identified sectors, upstream, midstream and downstream.DW’s market forecasting is trusted by sector players worldwide, with clients including the world’s top-10 oil & gas companies, top-10 oilfield services companies and

top-10 private equity firms. DW is renowned for its work in difficult to access geographies and markets including the Middle East and onshore & offshore oilfield services and equipment.

The report is essential for financial institutions, equipment manufacturers, engineering contractors, oilfield services providers, operations & maintenance companies and con-tractors, oil & gas companies, and government departments wanting to make more informed investment decisions.

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key points throughout.

"Douglas-Westwood are the sector study experts"- Oil & Gas Operator

2015

Iran Oil & Gas Market Forecast

Prospects, Technologies, Markets

2015-2019

Courtesy Statoil


Contents

Table of Contents

1 Summary & Conclusions ..........................................6Summary ......................................................................................................................................... 7Conclusions .................................................................................................................................... 8

2 Introduction to Iran & the Wider Macroeconomic Overview ............................9

Iran: Historical Production & Exports .................................................................................... 10Iran’s Economic Sanctions: Details of the Sanctions ............................................................ 11Iran’s Economic Sanctions: Impact on the Iranian Economy .............................................. 12Iran’s Economic Sanctions: Outlook Post-2015 .................................................................... 13Oil Price Volatility ....................................................................................................................... 14Natural Gas .................................................................................................................................. 15Iran vs. Rest of MENA: Breakeven Prices .............................................................................. 16Iran’s Current Hydrocarbons Policy ....................................................................................... 17

3 Methodology ............................................................ 18Methodology – Drilling & Production ..................................................................................... 19Onshore Rig Demand Methodology ....................................................................................... 20Offshore Rig Demand Methodology ....................................................................................... 21Oilfield Services Methodology .................................................................................................. 22Oilfield Services Barriers and Limitations .............................................................................. 23Onshore Pipelines Methodology & Limitations .................................................................... 24Methodology: Onshore Rigs, Fixed Platforms and Downstream Expenditure ............... 25Downstream Methodology ....................................................................................................... 26

4 Drilling & Production............................................. 27Summary of Key Projects .......................................................................................................... 28Onshore Drilling & Production Overview ............................................................................. 29Key Onshore E&P Operators .................................................................................................. 30Key Onshore Projects ............................................................................................................... 31Offshore Drilling & Production Overview ............................................................................. 33Key Offshore E&P Operators .................................................................................................. 34South Pars Gas & Condensate Development Project ......................................................... 35

Key Offshore Projects ............................................................................................................... 36Further Projects & Upside Potential ....................................................................................... 38

5 Onshore Rig & Oilfield Services ......................... 40Onshore Rig Market Forecast .................................................................................................. 41Identified Land Drilling Rig Fleet: Competitive Landscape ................................................. 42Land Drilling Rig Market: Upgrade & Newbuild Capital Expenditure .............................. 43Iran Onshore Oilfield Services Expenditure .......................................................................... 44

6 Offshore Rig & Oilfield Services ......................... 45Offshore Rig Market Forecast .................................................................................................. 46Identified Offshore Rig Fleet: Competitive Landscape ........................................................ 47Iran Offshore Oilfield Services Expenditure .......................................................................... 48

7 Onshore & Offshore Infrastructure ................... 49Fixed Platforms Market .............................................................................................................. 50Onshore Pipelines Market......................................................................................................... 51Key Pipeline Projects.................................................................................................................. 52

8 Downstream Facilities ........................................... 54Refinery Capital & Maintenance Expenditure ........................................................................ 55Gas Processing Capital and Maintenance Expenditure ........................................................ 56Petrochemicals Maintenance Market ...................................................................................... 57Liquefied Natural Gas Market .................................................................................................. 58

9 Appendix .................................................................. 59Project Listings: Fixed Platforms .............................................................................................. 60Project Listings: Fixed Platforms .............................................................................................. 61Project Listings: Onshore .......................................................................................................... 62Project Listings: Offshore .......................................................................................................... 63Project Listings: Downstream .................................................................................................. 64Onshore Rig Data, Analysis & Assumptions .......................................................................... 65Oilfield Service Line Cost Inclusions ....................................................................................... 66Data and Text Conventions ...................................................................................................... 67


Contents

Figures & Tables

Figure 1: Total Hydrocarbons Production ..........................................................................................................7Figure 2: Iran Historical Oil & Gas Production & Exports 1980-2014 ............................................. 10Figure 3: Iran GDP per Capita and Unemployment Rate ....................................................................... 12Figure 4: Iran Imports, Exports (year-on-year % changes) and Inflation Rate............................... 12Figure 5: Historical Brent and WTI Oil Prices, January 2010-July 2015 ........................................... 14Figure 6: Brent Annual Average Spot Price Forecasts, 2010-2017 .................................................... 14Figure 7: Levelised Cost of Energy ($/MWh) in 2020 .............................................................................. 15Figure 8: Natural Gas Prices ($/mmBtu), 2000-2020 ................................................................................ 15Figure 9: MENA Oil Exporters’ Fiscal Breakeven Oil Price .................................................................... 16Figure 10: MENA Oil Exporters’ External Breakeven Oil Price ........................................................... 16Figure 11: Iran Onshore Production ................................................................................................................. 29Figure 12: Iran Onshore Development Wells Drilled ............................................................................... 29Figure 13: Iran Offshore Production ................................................................................................................. 33Figure 14: Iran Offshore Development Wells Drilled ............................................................................... 33Figure 15: Iran – Rig Fleet and Implied Utilisation ....................................................................................... 41Figure 16: Iran – Identified Drilling Fleet HP .................................................................................................. 42Figure 18: Iran Onshore Rig Upgrade & Newbuild Expenditure ........................................................ 43Figure 17: Iran Onshore Rig Upgrade and Newbuild Expenditure by HP Category 2015 ... 43Figure 19: Iran Onshore Oilfield Services Expenditure Breakdown, 2015-2019 ........................ 44Figure 20: Iran Contracted Offshore Rigs ....................................................................................................... 46Figure 21: Iran Offshore Rig Dayrates and Utilisation 2010-2015 (Year to Date) ..................... 46Figure 22: Iran Offshore Oilfield Services Expenditure Breakdown, 2015-2019 ........................ 48Figure 23: Iran Fixed Platform Installations ..................................................................................................... 50Figure 24: Iran Fixed Platforms Market Capital Expenditure ............................................................... 50Figure 25: Total Onshore Middle East Pipeline Capex and Km Installed 2010-2019 ............... 51Figure 26: Pipeline Split by Product Type in Iran 2010-2019 ................................................................ 51Figure 27: Installed Length of Identified Pipelines Split by Diameter Size in Iran 2010-2019 51Figure 28: Percentage of Onshore Km installed in Iran versus Rest of Middle East .................. 51Figure 29: Douglas-Westwood Refinery Maintenance Expenditure and Cumulative Capacity 55Figure 30: Douglas-Westwood Refinery Capital Expenditure .............................................................. 55Figure 31: Iran Gas Processing Maintenance Expenditure and Cumulative Capacity ............... 56Figure 32: Iran Gas Processing Capital Expenditure .................................................................................. 56Figure 33: Douglas-Westwood Petrochemicals Maintenance Expenditure ................................... 57Figure 34: Douglas-Westwood Gas Processing Cumulative Capacity .............................................. 57

Table 1: Comparison of Iran’s Hydrocarbon Contract Systems .......................................................... 17Table 2: Iran – Rig Fleet and Implied Utilisation ........................................................................................... 41Table 3: Iran – Rig Fleet and Implied Utilisation ........................................................................................... 42Table 4: Iran Onshore Oilfield Services Expenditure Breakdown, 2015-2019 ............................. 44Table 5: Iran Current Identified Offshore Rig Fleet .................................................................................... 47Table 6: Iran Offshore Oilfield Services Expenditure Breakdown, 2015-2019 ............................. 48Table 7: Identified Iranian LNG Projects .......................................................................................................... 58Table 8: Iranian Fixed Platform Projects ........................................................................................................... 60Table 9: Iranian Onshore Projects ....................................................................................................................... 62Table 10: Iranian Offshore Projects..................................................................................................................... 63Table 11: Iranian Gas Processing Projects........................................................................................................ 64Table 12: Iranian Refinary Projects ...................................................................................................................... 64Table 13: Iranian LNG Projects ............................................................................................................................. 64

Figures Tables


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