The Iranian Oil Ministry has stated plans to work with universities and research centres to develop 42 major oil projects. According to Saeed Mohammadi, Deputy Oil Minister for engineering, research and technology affairs, the projects will cover various parts of the oil sector including upstream, downstream, and oil-related industries.
This week, Mohammadi told the Tehran Times, “The purpose of these projects and research cooperation is for the universities and research institutes to work alongside the oil industry on a long-term basis.”.
As well as establishing several research collaborations, licences have been approved for the creation of the Oil and Gas Industry Innovation and Technology Park, linking Iran’s technological and commercial sectors. We can also expect to see an Oil Research and Innovation Fund as part of the development.
“The purpose of this technology park is to communicate with the country’s knowledge-based companies, especially science parks, and also to support startups,” explained Mohammadi.
The announcement comes following Iran’s greater investment in the area of research and development over the last year. In September, National Iranian Oil Company (NIOC) signed 13 major research-based deals valued at over €178.6 million ($215 million).
The research projects focused primarily on improving the recovery factor of oil and gas fields across the country, a key ministry aim over the last five years.
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Between 2014 and 2020, the ministry awarded universities and research centres with over €80 million ($96.5 million) to carry out research to enhance the country’s oil and gas sector.
Greater investment in collaboration between domestic companies comes largely in response to U.S. sanctions on Iran, which have been a repeated challenge to foreign investment since 1979.
However, with the new American political Administration, Iran is hopeful for the future prospects of its oil industry. To this end, U.S. firm Fitch Solutions Incorporation is predicting a 6.8 percent growth forecast for Iranian oil exports in 2021, so long as the U.S. re-joins the 2015 nuclear deal.
The company’s new Iran Oil and Gas Report states, “The prospects for the Iranian oil sector have brightened significantly following Joe Biden’s victory in the U.S. presidential election on November 3. President Biden has indicated that he will seek to re-enter the U.S. into the Iranian nuclear deal, paving the way for a roll-back of secondary sanctions and recovery of around 2.0 million barrels per day (bpd) in oil production”.
However, according to the report’s analysis, Iran needs to develop better regional export opportunities to maximize the potential for greater output capacity.
We have recently seen promising developments for the U.S.-Iran relationship as Korea started to release funds in February that had previously been blocked by U.S. sanctions. The country released the first $1 billion of a total $7 billion in funds earmarked for Iran oil, suggesting Iran must speed up oil negotiations with neighbouring countries to solidify its position.
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The combination of building a strong domestic oil sector by developing collaborations across different industries, as well as improving Iran’s export potential to benefit from the anticipated shift in U.S.-Iran relations, is highly promising for an oil giant that has been restricted from meeting its full potential for decades.
By Felicity Bradstock for Oilprice.com
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Therefore, Iran could benefit from an improved recovery factor of oil and gas fields across the country in view of fast-declining reserves.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London