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EghtesadOnline: With the aim to produce quality machinery and equipment for the oil and gas industry, the National Iranian Oil Company is to sign an agreement with a Spanish consortium to manufacture special pipelines using corrosion resistant alloys (CRAs).

The contract, estimated at around $550 million, is slated to be signed between the NIOC, Spain-based industrial group Tubacex and Iran's Sepahan Steel Company to provide Pars Oil and Gas Company (POGC) with 600 kilometers of CRA pipelines in three years.

According to Shana, the Oil Ministry news agency, the deal would be the most significant measure toward self-sufficiency in production of oil and gas equipment at home after the state-owned Oil Turbo Compressor Company was established in 2001 to manufacture gas compressors and turbines.

As per the terms of the agreement, Tubacex, in collaboration with Japan's JFE, will transfer the knowhow to produce corrosion resistance alloys used in manufacturing oil and gas pipelines to its Iranian business partner, Sepahan Steel Co., Financail Tribune reported.

Oil Minister Bijan Namdar Zanganeh had recently said that Iran was close to indigenizing the technology for producing CRAs—materials used for cladding pipes and equipment that increase resistance against corrosion and wear. They are essential for providing long term resistance to corrosion for many components exposed to oil and gas production environments.

Components using CRAs include downhole tubing and safety critical elements, wellheads, valves, pipelines, vessels, heat exchangers and many other pieces of equipment in facilities.

Reportedly, producing such pipelines requires cutting-edge technology and only a handful of companies in the world, including JFE -- Japan's second-biggest steelmaker -- have the knowhow.

CRA pipelines are among widely-used equipment in the petroleum sector that cannot be produced by domestic companies yet. CRAs can be characterized by their resistance to specific environments. If carefully selected, these pipes permit safe containment of oil and gas process fluids. Their durability ensures improved efficiency and long life.

Tubacex, is an industrial group founded in 1963, specializing in the manufacture and sale of special seamless stainless steel tubes, exporting to more than 60 countries.

---- Domestic Capacity

According to Zanganeh, domestic companies have the potential to manufacture 85% of  equipment needed by oil and gas industry.

"Nearly two-thirds of demand for oil and gas equipment is now met by domestic manufacturers," Zanganeh said in a recent statement.

The Oil Ministry has taken measures to boost domestic manufacturing of oil equipment in an effort to curb outflow of scarce foreign exchange. In 2014, a committee was set up to pursue the production of 10 major categories of equipment for the key sector, including turbines and compressors.

Essential items in oil and gas exploration/production, including various types of drill bits as well as wellhead and downhole equipment, are being produced by Iranian firms.

Iran wants to also expand the production of other equipment, such as control valves, pipes, rotating machines (turbines and compressors), smart pigs used in cleaning the pipes, oil and gas measurement tools as well as equipment associated with health and safety.

The country was deprived of advanced technology to develop its oil and gas sector after the tightening of international restrictions in 2011 and 2012 that targeted Tehran’s nuclear program but undermined its oil exports, foreign trade and banking relations with the outside world.

NIOC Iran gas Iran oil Iran-Spain cooperation Tubacex Group Iran pipeline