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IRANIAN GOVERNMENT WANTS USD200 BILLION IN OIL & GAS INVESTMENT BY 2025

Iran 2017 | ENERGY | VIP INTERVIEW

TBY talks to Amir Rostami Safa, Managing Director of SAFA Rolling & Pipe Mills Co., on a quarter of a century in operation, varying production, and the lifting of sanctions on Iran.

How do you assess the contributions of SAFA Rolling & Pipe Mills Company in the 25 years it has been operating?

In terms of macro-economic data, we have contributed to Iran's economic growth in three different ways. One of them is job creation, as we have been able to create around 1,500 jobs. Another aspect to consider is that we have indulged ourselves in high magnitude investments in the downstream oil and gas industry. The same goes for the steel industry, for which we produce the highest quality using state-of-the-art technology. The third aspect is the economic value of SAFA Rolling & Pipe Mills. The 2015 GDP figure of Iran was USD425 billion, of which around 40% was comprised by the industrial sector. With our production capacity of around 1 million tons, our contribution to Iran's GDP is roughly USD1 billion, which means our contribution to the industrial share of GDP is more than 0.5%. These three aspects illustrate our contribution to the domestic economy.

What are the competitive advantages of SAFA Rolling & Pipe Mills compared to other companies?

We have a diversified product portfolio and can handle most of the requirements of our customers in terms of technical specifications. All the major international companies have their own standards and sets of rules. We are among the few companies that have been evaluated by international companies and have been approved as their vendors because of our technical know-how and quality. This is our main advantage currently. Next to this, our group has excellent research abilities in terms of marketing. We have positive credit ratings in the financial sector. Financially, we are healthier than our competitors in Iran. Also, we are experienced in outsourcing raw materials with steel mills in Europe, China, South Korea, and Japan. We have achieved to establish and maintain supply channels with our dedicated supply sourcing policies.

How do you improve your technology and increase the variety of steel products you produce?

SAFA Rolling is the result of a diversification strategy within SAFA Industrial Group. We sought more diverse applications than only the oil, gas, and energy segment. Hence, we expanded and diversified our products into different applications, particularly for the upstream segments. We have added value by producing, for example, OCTG casing and tubing pipes, a unique and highly added value product for drilling applications. Next to this, we are targeting refineries and petrochemical plants, surface facilities, field developments, offshore projects, LPG/LNG/NGL plants, pump stations, water treatment desalination projects, and trunk and flow lines.

In which infrastructural projects are you currently involved?

In order for the country to expand its pipeline infrastructure and networks, there is a need to construct around 40,000km of pipelines in both upstream and downstream. These include offshore subsea sour gas transmission, onshore networks, refineries, NGL, LPG and LNG plants, field developments, surface facilities, and crude oil trunk lines and flow lines.

How do you seek to unleash the potential of new business opportunities after the lifting of sanctions and political continuity?

The world's demand for energy is increasing with roughly 2% annually. It is essential to have a reliable energy supplier that can provide sustainable and affordable energy. Therefore, Iran as the holder of the world's largest gas reserves and the fourth in oil production, is focusing on magnifying its potential and seeking to attract investors in the exploration and development of its hydrocarbon fields. The National Iranian Oil Company (NIOC) has developed a new scheme called Iranians Petroleum Contracts (IPC), a modified form of the 'buy back scheme' that offers additional incentives to investors. Combined with political stability, this will create a safe environment for international companies to invest in Iran's hydrocarbon fields. In terms of geographical proximity, it is an advantage to have a pipeline factory near the projects. About 90% of our products still go to the oil and gas industry. We also have capacity dedicated to other segments, such as the automotive and construction segments; however, this is still relatively small. The government has articulated a plan to attract around USD25 billion of investment in the oil and gas sector annually, and by 2025 the aggregate investments shall be USD200 billion. This underlines the importance of this market for us. Therefore, oil and gas will be the driving force of economic development, not only in Iran but in the region as a whole.

Which markets do you currently supply to and what is your strategy to grow your global footprint and increase exports?

Based on our positive outlook for Iran, we will focus on the domestic market. Still, we want to diversify and expand our market positions in the region. We seek market niches that cannot be reached by our competitors. This will help us to outmaneuver the competition and become the number one player in the energy sector. We have targeted this market and have managed to obtain a substantial market share in the selected areas. For the next two years we will continue with our strategy, mainly focusing on the domestic market.


 

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