National Iranian Oil Company approach in the country’s business environment

If we compare our hydrocarbon resources with each other before and after the Islamic revolution, it will be concluded that in spite of all products that we had in those years, the amounts of current reserves have been much more than before the revolution. It is because of the exploration of many reservoirs. Although the vast majority of them had already been identified and only had to be drilled. The investment of large companies in exploration section which is related to drilling is the point that should be considered. Many credible oil companies have concluded that not to merely invest in reservoir studies.

In addition to exploration, the other importance of drilling is related to development and maintenance of the field production capacity. Development in many fields of the world is stepwise and the duration of each step is important. Sometimes it takes 30 years for a field to reach its maximum output and sometimes the developer companies are trying to achieve the desired maximum output in a very short time. In such a case the drilling ability is so determinative. It means that every year several wells can be drilled in each field.

In a brief review of the sixth develop program, if we consider the annually investment up to 20 billion dollars, taking into account 140 drilling rigs that about 135 ones (105 onshore and 30 offshore units) are active, drilling costs of the total oil / gas field development costs will be about $ 5 billion in onshore and $ 4 billion in offshore. In fact, about half of the mentioned costs have been obtained and transferred to drilling section. This means that with 135 active drilling tools, we should dig 3.5-4 wells on average, while 2.5 wells are drilled for each drilling equipment. Accordingly, if the production objective at the end of sixth development plan is 4.5 million boe/d, it must be considered that it is necessary to create the potential of annual 300 thousand boe/d crude oil production with regard to the decline in production from reservoirs. It must be also noted that creating potential is exclusively for keeping the capacity of reservoir production, and we need to expand our activities in setting objectives for increasing the capacity of production. In fields half of which is spent, the capacity of well production is reduced to one fifth which means that we should at least access 400 wells annually so that the natural reduction driven by production is compensated. For this, it is only possible to reach four wells in a year, we need to enhance drilling operation indexes even with less drilling equipment. From another perspective, there is a direct relationship between crude oil price and the rate of renting rigs. Most of drilling companies are suffering from an adverse situation and they have laid off their staff and they have reduced their expenses. It must be noted that this issue does not exclusively happen in Iran and many drilling companies have announced their bankruptcy all over the world. Lack of cash flow in NIOC due to 50% decline of oil price and oil export at the same time and reduction in oil revenues can not meet the expenses of drilling contractors. This has led to the accumulation of debts to contractors. At the moment, the most appropriate way to survive domestic capabilities is to make the payments proportionate with the volume of demands so that we can allocate enough resources to all companies.

NIOC chain value is under the influence of drilling activities. Accordingly, it is of great importance to have planning, qualitative development, and increase of productivity. According to resistant economy policies, NIOC has put field-oriented plans and projects in its highest priority. It is done in a way that allocating budget to the approved proposals are done according to classification of production capacity maintenance in the framework of field-oriented projects and according to ranking of oil fields proportionate with the amount of investment for producing ever barrel production increase in terms of a middle-term plan and meeting the commitments of producers to keep the level of production.

Based on this, the production of each field is investigated well by well compatible with their drilling and with the vision of the highest production with the lowest expenses, they are given a priority for drilling operation. This will be done mainly by the workover of existing wells. As a result, focus on drilling services is of great importance. It means that domestic potential must be used for the required operations. Concerning development projects which are time consuming and require a lot of budget, NIOC chooses outsourcing and realizing new oil contracts.

Before this, allocating the necessary budget for NIOC affiliated companies was done with regard to the prioritized projects. It must be remembered that the current resources of NIOC are not enough for all the approved proposals. Therefore, budget allocation is with a focus on objectives, and strategies of developing common oil and gas fields and increase of export. For this reason, the major parts of NIOC resources is allocated to implementing common oil and gas fields especially South Pars and West Karun. Being a national company, national benefits are carefully considered in determining the priority of the projects.

At the moment new IPCs are on the contract table and domestic and foreign companies will attend these contracts definitely in order to use drilling services. We are encountering three issues in this field: HR, drilling equipment and drilling services. We are approximately self-sufficient in HR; most of drilling equipment is old, , but it is possible to upgrade them. After sanctions, a lot of capable companies have been established in drilling services scope of work; in other words, there are not any problems in terms of hardware, and only the technical part has remained as a challenge in need of contemplation. Without the increase of interactions at an international level and cooperation with foreign companies, it is not possible to tackle this problem.

Finally, with the prospects that have been assumed for NIOC field development, the identification of opportunities, challenges, continuous supervision and directing companies seem to be very important, and we should bear in mind long-term and short-term planning in order to realize the defined goals. It is important to consider production increase and more productivity so that a bright vision of future is depicted; this vision is definitely highly-dependent on the realities and capabilities of Iran drilling industry.

Since there are numerous incidents in drilling industry, it is considered as one of the hazardous occupations. Probable incidents in this industry, directly or indirectly, compromises the fundamental right of human life. These incidents put more peoples at risk by causing harms directly to rig staff, and indirectly to the environment. Besides peoples’ life, the natural resources, reservoirs, drilling rigs and related equipment are enormous investment materials which are put at risk if the safety precautions are not applied. Hence safety in order to provide protection and safety for human resources, tools and equipment, staff, contractor and client is a crucial matter.

Description of each section and evaluation of life and property costs of incident, especially with considering that an individual mistake can put others at risk, shows becomes obvious that the cost is very low. Evaluations reveal that when an incident occurs, the staff do not know what reaction to show due to lack of proper training.

One of the important issues in training is promoting the culture of safe behavior in family. This kind of training must not necessarily be professional; they can be done at schools, in family or in the society. In this way people may ask themselves if the action they are going to take would endangers others or not. In addition, repeated and specific courses are required. In this regard, each person can have one “safety passport” that fit in the context of operational requirements specified periods and with proper timing, the person will benefit from the training. These procedures can be applied in all firms in order to help the promotion of the oil industry and with the substitution of work force, it is not necessary to repeat training.

The mentioned items are more frequently observed in foreign companies compared to domestic private or public companies. Drilling Contractors expect that drilling equipment be used safely due to the fact that they are normally expensive and it seems difficult to replace them. This requires spending on training of human resources. It must be noted that the strength of contractor in terms of safety, makes the client improve standards of safety and greater respect for the standards..

As the final point, it must be mentioned that the development of a secure perspective in purchasing drilling tools can have important consequences in the prevention of incidents. Moreover, each behavior of has its own consequences; therefore, feeling responsible for the environment, equals concerning humanity.

Author: Abdolsamad Rahmati

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