Iran's priority: gas export or fields re-injection

Iran's priority: gas export or fields re-injection

By Dalga Khatinoglu

At least 24 Iranian oil fields, which share above 80 percent of the country's total crude oil output, have been needing gas re-injection since the beginning of Islamic Republic, 1979, but the re-injection amount was far below the demand.

According to two official documents obtained by Trend, Iran has re-injected about 580.810 billion cubic meters (bcm) of gas to oil fields from 1996 to 2015, while the needed amount was 1,270 bcm.

Some 17 of the mentioned 24 fields, prioritized for gas re-injection, were producing 3.7 million barrels per day (mb/d) in 1979, but the figure plunged to 1.75 mb/d in mid 2000s and continued to decline. Currently the country's total oil output stands at 3.65 mb/d, about 2.3 mb/d less than in mid 1970s.

*According to official documents

As mentioned above, 80 percent of Iran's active oil fields are in their second half-life and lose 8-12 percent of their output naturally each year. Iran needs extra 942.795 bcm of gas (or 287 mcm/d) re-injected to the current oil fields during 2016-2024, which is about three times more than the current level.

* According to the official statistics

Currently, Iran is producing about 735 mcm/d of raw gas, of which 97 percent is methane and the country's net gas export stands at zero. Iran has planned to increase the level to 1000 mcm/d, while the demand would remain flat by late 2019.

The reason of no increase in gas demand is because Iran is wasting 200 mcm/d of gas due to flaring, low efficiency rate of power plants, etc. The country though has a $20-billion worth package to curb gas waste in coming 5 years.

Then the country would have at least extra 200-250 mcm/d of gas to export.

Currently, Iran has contracts and MoUs with Turkey, Iraq, Oman and Pakistan to export 126 mcm/d. Iran exported 23 mcm/d of gas to Turkey and imported 24.7 mcm/d of Turkmen gas in 2015.

The country is planning to commence an LNG plant with 10.4-million tons/year capacity by early 2019 to export its gas to distant markets in Asia and Europe.

Therefore, in case if Iran realizes all of these projects, the country would have 60-100 mcm/d of extra gas to add to the re-injection level in coming years, but it is still far less than the demand for re-cycling.

Currently the recovery rate of the country's active oil fields stands at 22.5 percent, namely it can extract a little more than a fifth of its up to 700 billion barrels of oil reserves naturally.

In other words, Iran's recoverable oil reserves currently stand at 158 billion barrels, but increasing each percent at recovery rate would add 7 billion barrels to this level. One of the effective methods of increasing recoverable amount of oil fields as well as preventing the fall pace of output is gas injection.

According to official statistics, with re-injection of 4 trillion cubic meters of gas to oil fields, Iran can add 44 billion barrels to its recoverable oil reserves.

It seems that Iran prioritized the gas export to re-injection at least by 2021, but the country has planned to increase gas output to 1,300 mcm/d by 2025 and can increase the recycling volume significantly in the first half of 2020s.

Dalga Khatinoglu is the head of Trend Agency's Iran news service, follow him on Twitter: @dalgakhatinoglu

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