Khuzestan Province’s tenth exhibition of domestically manufactured petroleum industry and drilling equipment was held November 22-25 in the provincial capital Ahvaz. At this exhibition, 220 Iranian companies showcased their achievements. Nearly 70% of exhibitors were manufacturers of oil equipment and commodities and the rest were knowledge-based companies and suppliers of commodities to petroleum industry.

A major objective pursued in this exhibition was to domestically manufacture basic and essential commodities of petroleum industry. Ahmad Mohammadi, CEO of National Iranian South Oil Company (NISOC), said more than 10,000 essential items of petroleum industry have been domestically manufactured over the 10 years since launching Khuzestan exhibition.

Mohammadi, recently appointed as the CEO of NISOC, said the exhibition has improved its quality each year. He added that manufacturers of petroleum industry equipment and commodities have managed to commercialize most of their products and reach mass production stage.

Referring to US sanctions targeting Iran’s oil sector, he said: “In cooperation with all those involved in the petroleum industry and other sectors, we will be able to skirt around sanctions. Holding such exhibitions would put on display the capabilities of Iranian companies towards self-sufficiency.”

Mohammadi said that drills were among strategic and widely used items in the drilling sector, some of which have so far been domestically manufactured under NISOC support.

He added that NISOC was planning to manufacture all necessary drills.

Referring to the development of domestic manufacturing of petroleum industry equipment, he said: “Development of manufacturing of commodities and indigenization of commodities and equipment needed in the petroleum industry have to be done gradually. However, we have no restrictions with regard to the development of domestic manufacturing of commodities and we even support the manufacturers.”

Client-Manufacturer Cooperation

About 80% of Iran’s crude oil production and 16% of its gas production are handed by NISOC which is based in Khuzestan Province. Proximity to the main oil production zones and close relations with operators and producers always motivate domestic companies to attend the Ahvaz exhibition. Although the annual Iran Oil and Gas show is largely welcomed by petroleum industry actors and a large number of Iranian and foreign companies participate in the annual show, the companies that were present at the Ahvaz exhibition highlighted their close ties with the buyers of their commodities.

During the 10^th Ahvaz exhibition, eight domestically manufactured strategic items including lifting valve, seamless line pipes, gas compressor rotor and rock drills were unveiled.

Seamless Line Pipes

Mohammad Reza Mohebi is the manager of an Iranian company producing pipes.

He said until recently seamless pipes were not being manufactured in Iran and “oil companies had to purchase these pipes from European and even Chinese firms.”

Due to the high sulfur content of oil and gas extracted from wells, pipes made of special alloys need to be used in order to prevent the corrosion of pipes.

Despite such needs, Iranian companies had not managed to manufacture seamless line pipes to carry oil and gas.

Finally Luleh Gostar of Esfarayen (LGE) developed seamless line pipes with the thickness ordered by National Iranian Oil Company (NIOC).

“NISOC has expressed its readiness to conduct field tests on these pipes. We are assured that this stage will be passed successfully and we can enter the phase of commercial production,” said Mohebi, CEO of   LGE.

He said Iran’s petroleum industry needed nearly 120,000 tonnes a year of such pipes, adding that his company would be able to manufacture about 100,000 tonnes a year.

Touching on the US sanctions on Iran’s petroleum industry, Mohebi said: “Manufacturing such pipes has been in line with countering petroleum industry sanctions.”

“Under the present circumstances, in light of our potentialities we will be able to meet petroleum industry needs to a large extent,” he added.

Boost in Quality

Petroleum industry equipment manufacturers were very active in the 10^th Khuzestan exhibition. Some of them expect the Ministry of Petroleum to offer full support to domestic manufacturing companies; some are worried about the consequences of the sanctions while some others view the sanctions as an opportunity for Iranian companies to prove themselves.

Asked how they felt now that foreign rivals are out of Iran’s market and possible decline in the quality of Iranian-made products, they say Iranian manufacturers of oil equipment have made good progress in recent years.

In their view, many domestically manufactured commodities are of high quality. The Iranian Ministry of Petroleum has been very tough with the quality of equipment and does not authorize any sales of low-quality products made in Iran.

Reza Mohammadnejad, chairman of an Iranian manufacturing company, gave an upbeat assessment of his company’s presence at the Khuzestan exhibition. He said: “Our production pertains to equipment used in storage facilities and columns as well as rotary equipment.”

“We entered this market in 2010 and we have now 30% of the market in our hands,” he added.

Asked about sanctions, he said: “We manufacture parts for the oil industry. We grew during the previous round of sanctions. We won the Petroleum Ministry trust. Now in light of tough sanctions imposed on the petroleum industry we can manufacture the commodities needed by the petroleum industry.”

“Of course we have to acknowledge that sanctions would pose a challenge to the entry of modern technology to Iran. However, we will go ahead definitely although it is difficult,” said Mohammadnejad.

He said that Iran is 20 years ahead in petroleum industry equipment than in other sectors like car manufacturing.

“Of course, Minister Zangeneh’s tough policies with regard to the importation of equipment and commodities have not been ineffective. However, in order to stay in the oil market we have to cooperate with companies that own petroleum industry modern technology,” he said.

Javid Kianfar, whose company started manufacturing valves under a European license, said: “We managed to indigenize the technology for the manufacturing of these valves in two years.”

Valves are among vital equipment in the petroleum industry. Therefore, their manufacturing in the country is of paramount significance for this sector.

The US re-imposed sanctions on Iran’s petroleum industry in early November. Earlier, during the previous round of sanctions imposed in 2010, Iranian manufacturers developed some equipment, which was used in the development of the giant South Pars gas field as well as in jointly owned oil fields in West Karoun.

Most of commodities whose manufacturing was monopolized by foreign companies were produced in Iran after sanctions were imposed on Iran.

International sanctions threaten foreign investment and technology transfer into Iran’s petroleum industry, but in 2010 that empowered Iranian companies to fill the void left in Iran’s lucrative petroleum industry market. The Ministry of Petroleum’s support was also instrumental in this regard.

The new round of US oil sanctions against Iran comes at a time the Ministry of Petroleum sticks with the policy of domestic manufacturing of widely used commodities. A number of manufacturing companies present at the Khuzestan exhibition said some commodities had just recently been manufactured in Iran. That means the Iranian Ministry of Petroleum has realized its objective of empowering domestic manufacturers to rely on upgrading the quality of products and break the monopoly over some equipment regardless of all restrictions imposed on Iran’s petroleum industry under US President Donald Trump.