With the acceleration of flare gas collection projects across the country, particularly in the oil-rich regions of the South and West Karun, a new outlook for the economic utilization of wasted resources and a reduction in environmental pollution is emerging. Gases that were previously burned in flares are now being allocated to private sector applicants at a base price of zero, with some of this gas being injected into petrochemical complexes and the national gas grid.
As part of the latest planning by the National Iranian Oil Company (NIOC), three specific pathways for flare gas collection have been defined: short-term, medium-term, and long-term plans, each pursued with different tools. In short-term plans, gas is allocated to the private sector through auctions, and part of the associated gas has already been collected through this method.
Under the medium-term programs, the “Bidboland” and “Maroon” projects in the operational areas of the National Iranian South Oil Company have so far succeeded in collecting several million cubic meters of flare gas. The target for completing these projects is by the end of 2027. According to the provided statistics, the Bidboland project has made 75% physical progress, while Maroon has made 74%.
In the long-term plans, NGL complexes are the focus; including NGL 3100, NGL 3200, and NGL Khark. The NGL 3100 project will reach the initial startup phase within the next two months, and NGL 3200 entered the startup phase last year. The physical progress of these two projects is reported at 93% and 96%, respectively, and NGL Khark has made 73% progress.
A noteworthy point is that all of these projects are being implemented without relying on the budget of the National Iranian Oil Company. According to Article 48 of the Sixth Development Plan, the required investments for these projects are being provided through the private sector, individuals, the National Development Fund, and holding companies such as Persian Gulf.
On the other hand, the National Iranian Oil Company has decided to expedite the collection of these valuable resources by offering flare gases to qualified private sector companies at a base price of zero. Currently, a package of 700 million cubic feet of flare gas per day has been defined, which has been auctioned in 35 separate packages. According to the plans, this gas will be collected by the end of 2029. Additionally, in case of a delay in utilization, the possibility of contract extensions is also foreseen.
Alongside the implementation of these policies, the National Iranian Oil Company has stated that if there is a delay in executing collection projects, penalties in accordance with the Seventh Development Plan laws may be applied. This applies once the investing company has made an official commitment to carry out the project.
At an event titled “Transformation in Investment and Development in Iran’s Upstream Oil and Gas Sector,” the Deputy Production Manager of the National South Oil Company announced that nine contracts for flare gas collection have been signed so far. The overarching goal in this region is to collect 800 million cubic feet of flare gas per day by the end of 2026.
In West Karun, the Arvand Oil and Gas Company has plans to utilize 220 million cubic feet of sour gas associated with oil, of which 146 million cubic feet belong to the company itself. Three investment packages have been defined with two-year, more than two-year, and more than four-year timelines, allowing investors to export all produced products.
It has also been emphasized that negotiations regarding the transfer of these projects must be completed within a maximum of four months, and contracts should be finalized within two months thereafter. The gas sales price will be auctioned at a specified rate, aiming to attract investment while minimizing the environmental impacts of flare gas combustion.
A closer look at the details of these programs reveals that flare gas collection projects are designed not only to preserve national resources but also as part of a new approach for sustainable development, reducing pollution, and creating added value for downstream industries. If successfully implemented, this program could be one of the most significant transformations in energy efficiency in Iran in the past decade.
