The idea of establishing oil startups was first raised less than a year ago by Petroleum Minister Bijan Zangeneh. The minister gave instructions to the Office of Deputy Minister of Petroleum for Engineering, Research and Technology to follow up on the formation of oil startups. To that effect, Petroleum Ministry has now allotted 18,000 of land for knowledge-based and startup companies involved in the oil sector.
Addressing a group of 250 oil startups and knowledge-based companies, Zangeneh said permission had been given for the establishment of the Petroleum Industry Research and Innovation Fund with an initial capital of IRR 1,000 billion to support startups.
The minister expressed hope that startups would bring about changes in the petroleum industry and resolve many problems including energy efficiency.
Iran has more than 700 billion barrels of oil in deposits with a recovery rate of below 30%. Zangeneh said with oil price at $50, a 1% increase in the recovery rate of reservoirs would earn the country $350-400 billion. Therefore, we should not let it go so easily because this wealth belongs to people and we can’t abandon it, he added.
According to him, over recent years the Petroleum Ministry has sought to attract investment and develop technical knowhow for enhancing recovery rate from oil reservoirs. However, US sanctions have barred transfer of cutting edge technologies to Iran. Under such circumstances, startups and knowledge-based companies can resolve the problems of Iranian oil firms seeking to boost their productivity.
Over the past one year, Petroleum Ministry has moved to support action for oil startups. Less than one year has passed and the number of startups willing to be active in the oil sector is increasing.
Oil production companies and contractors have asked startups and knowledge-based companies to present their solutions for the existing problems.
During the gathering, contractors and oil production companies made clear their technological needs to startups and knowledge-based companies, and asked them to meet their technological needs. They guaranteed persistent cooperation in case the startups and knowledge-based companies manage to provide suitable solutions.
Ali Vahdat, manager of Innovation and Prosperity Fund, said the fund’s financial instruments had been completed.
He added that over the past one year, IRR 21,000 billion had been injected into knowledge-based companies while IRR 11,000 billion had been issued in banking guarantees for knowledge-based companies and startups.
The fund offers such services as guaranteeing purchase and quality, providing leasing facilities and financial instruments, as well as investment and issuing innovation bonds for knowledge-based companies and startups.
Minister as Mentor
Minister Zangeneh has over the past one year focused on the activity of startups. Addressing the gathering, he said he was making efforts to help startups and knowledge-based companies as mentor.
He said he would share his experience with these companies so that the future generation would hopefully work for the development of the country.
Over this [past one-year] period, I have realized that many mechanisms have been worked out for supporting knowledge-based companies and startups. But as there was no customer, knowledge-based companies failed to benefit from these mechanisms effectively, he added.
Zangeneh’s support for the development of ideas and technology is not limited to startups and knowledge-based companies in the oil sector. During his term in office in 1997, Zangeneh introduced upstream oil disciplines at universities. That was followed by the establishment of oil institutes at universities.
The minister recalls how painful was the task of linking the petroleum industry with universities, saying: We are currently witnessing oil and university linked up. Gone is the time when universities accused the petroleum industry of being non-cooperative or the oil industry staff say ‘they are just university professors and know nothing of practical work’.
Zangeneh said engagement of researchers at the Research Institute of Petroleum Industry (RIPI) and formation of knowledge-based companies and startups were among supporting measures undertaken by the Petroleum Ministry.
The MOU recently signed for sponge and needle coke was like knowledge-based companies in nature. Two strategic products for aluminum and steel production will be supplied with an investment of about $1 billion by the Bandar Abbas and Imam Khomeini oil refineries, he added.
Zangeneh said: When I focused on the issue of knowledge-based companies, I thought of holding numerous joint meetings with them and my colleagues in order to learn from them.
The most significant thing I learnt from them was the necessity of creating a suitable ecosystem for knowledge-based companies, he said. He added that an ecosystem would give identity to knowledge-based companies and bring them together to learn more than science and technology.
Problems Not Limited to Engineering
Zangeneh said working with knowledge-based companies would give rise to major developments in the petroleum industry.
Some may think that our problems in the petroleum industry would be limited to engineering. That is while our problems are mainly related to non-engineering rather than engineering issues. Startups can of help to us in this regard and they resolve many of our problems, he said.
Zangeneh cited the example of fuel smuggling as a challenge unrelated to engineering. He said: We have to find a remedy. The issue of energy efficiency is unlimited and we are very weak at it.
Petroleum Ministry Measures for Startups
Zangeneh also outlined the measures taken by his ministry in support of knowledge-based companies.
He touched on the allotment of 18,000 ha of land for the construction of a park of technology in Shahr-e Rey to house knowledge-based companies and startups, setting up the Petroleum Industry Research and Innovation Fund with an initial capital of IRR 1,000 billion in partnership with the Ministry of Science, Research and Technology, Innovation and Prosperity Fund, presenting oil companies’ technological needs to knowledge-based companies and startups, credit allocation to knowledge-based companies and activating the system of commodity and equipment purchase guarantee.
Zangeneh said 100 startups and knowledge-based companies would be soon set up in Shahr-e Rey.
What Did Startups Want?
Zangeneh visited 200 booths of companies which have been present at the exhibition for three years. On the sidelines of the event, 40 panel discussions were held for interaction and acquisition of knowledge on technological supply and demand.
Following his visit, Zangeneh said he was happy with the big activity of knowledge-based companies.
Some startups and knowledge-based companies complained that the process of qualification for cooperation with the petroleum industry was long.
In response, Zangeneh said the petroleum industry required compliance with high standards. He, however, said, that should not lead to inconclusive administrative procedures.
The risk caused by any beginning was also among concerns raised by knowledge-based actors. In this regard, Zangeneh said the Petroleum Ministry would hedge such risks as part of its support for startups and knowledge-based companies. He noted that risks should not be transmitted to consumers, in which case, the consumer will evade any cooperation.
But we want to encourage consumers to come and strike agreements without having to worry about risks, he said.
Facilitating Startup Activity
Saeed Mohammadzadeh, deputy minister of petroleum for engineering, research and technology, said research and innovation constituted the most significant practical tool for supporting startups and knowledge-based companies.
He said instructions for that purpose had been promulgated, adding that this instrument was expected to hedge risks and present models for guaranteeing purchase in a bid to pave the ground for the presence of various sectors.
He highlighted the Petroleum Ministry’s effective and serious measures regarding standards, saying: The issue of updating standards and upgrading the body issuing quality certificate in the petroleum industry is seriously being followed up on.
Hassan Montazer Torbati, CEO of National Iranian Gas Company (NIGC), said 28 gas industry items had been identified to be manufactured domestically. He said the Petroleum Ministry was trying to supply the technical needs of companies through knowledge-based companies and startups.
He called on knowledge-based companies to present their technological ideas on consumption management to NIGC, noting that domestic and industrial gas consumption in Iran was high due to the low price of this energy commodity.
Ali Pajoohan, CEO of Petrochemical Research and Technology (PRTC), said his company was ready for any type of cooperation with knowledge-based companies and startups to meet petrochemical industry needs.
He said good connections had been made with researchers in various sectors.
In light of our appropriate infrastructure and facilities at PRTC centers in Tehran, Arak and Mahshahr, we will test the achievements and products of knowledge-based companies and startups at our centers and introduce them to the petrochemical industry in compliance with standards, he added.
Pajoohan said numerous agreements were signed with petrochemical companies to supply their needs and facilitate the presence of knowledge-based companies and startups based on new instructions and in light of the needs of petrochemical plants.
On the sidelines of the event, four MOUs were signed with the Persian Gulf Park of Science and Technology, Isfahan Park of Science and Technology, Khorasan Razavi Park of Science and Technology and Khuzestan Park of Science and Technology. The MOUs were signed in the presence of Minister Zangeneh and Minister of Science, Research and Technology Mansour Gholami.
These MOUs were mainly aimed at a better use of scientific potential and capacities of these centers with a view to achieving oil, gas, refining and petrochemical technologies and commercializing them in favor of meeting petrochemical needs.
Meantime, an MOU was signed between petrochemical companies for the establishment of knowledge-based companies in Kish Island. This memorandum was signed to help petrochemical industry development with domestic capabilities.
It was signed between Ali Vatani, senior presidential advisor for scientific and technological affairs, Jafar Rabiei, CEO of Persian Gulf Petrochemical Industries Company, Gholam-Hossein Mozaffari, CEO of Kish Free Zone Organization, Hojjatollah Seyedi, CEO of Bank Saderat Iran, and Majid Mohammadpour, CEO of Society of Iranian Petroleum Industry Equipment Manufacturers (SIPIEM).
Seyedi has said the MOU would allow for the allocation of IRR 25,000 billion to domestic manufacturers.