Photographer: STR/AFP/Getty Images

Iran Plans Oil-Refinery Expansion to Cut Gasoline Imports

  • Country needs $14 billion to upgrade five processing plants
  • Iran raising refining capacity to 3.2 million barrels a day

Iran plans to increase its refining capacity for crude and condensate by more than 70 percent within the next four years as it works to improve the quality of fuel sold on the domestic market and wean itself off imported gasoline.

The Persian Gulf oil producer will raise capacity to about 3.2 million barrels a day by 2020 from 1.85 million currently by building five plants, Abbas Kazemi, managing director of National Iranian Oil Refining & Distribution Co., said in an interview in Tehran. The country also needs about $14 billion in investment to upgrade units at five existing refineries to produce gasoline that burns more cleanly than grades currently available in the country, he said.

Iran, OPEC’s third-largest oil producer, is boosting energy output after international sanctions curbing its access to oil markets were eased in January. Since then, Iran has restored oil production near to pre-sanctions levels and raised output of natural gas at the offshore South Pars field, part of the world’s largest deposit.

One of the new refineries, the 360,000 barrel-a-day Persian Gulf Star, is scheduled to start operating by March, Kazemi said. The refinery will process condensate, the light oil found in gas deposits. Iran is seeking to use its condensate to make gasoline for transportation or naphtha for use in chemical plants.

New Refineries

Private companies are developing the Siraf condensate refinery complex at the southern port of Assaluyeh. The planned complex of eight units, each with a capacity of 60,000 barrels a day, will process condensate from South Pars into naphtha.

“The only product they’re short is gasoline,” Tushar Tarun Bansal, an oil analyst at consultant FGE in Singapore, said Thursday. Transforming condensate into gasoline will help Iran cut imports starting in the second quarter of 2017, he said.

The refineries to be upgraded are at Isfahan, Tabriz, Tehran, Bandar Abbas and Abadan, Kazemi said in the interview on Wednesday. The government will pay for Abadan plant’s modernization and is seeking investors to fund the others, he said.

Feasibility Study

Japanese engineering company Chiyoda Corp. is conducting a feasibility study with Mitsui & Co. on the Bandar Abbas project, said Masaru Akamatsu, a Chiyoda spokesman. Japan’s Ministry of Economy, Trade & Industry is paying for part of the study, which is scheduled for completion by the end of March, Akamatsu said. The modernization contract is worth about 300 billion yen ($2.8 billion), Japanese broadcaster NHK reported in February. Akamatsu declined to comment on the value of the potential upgrading project.

Daelim Industrial Co., based in South Korea, and Marubeni Corp. and Mitsubishi Corp., both with headquarters in Japan, are also interested in working on refinery projects in Iran, Kazemi said. A spokesman for Daelim declined to comment, asking not to be identified because of company policy. Marubeni and Mitsubishi didn’t immediately reply to requests for comment.

Iran plans also to build three new refineries: the 300,000 barrel-a-day Bahmangenoo plant at the port of Jask, a 150,000 barrel-a-day facility at Anahita in western Kermanshah province, and the Pars refinery, which will process 120,000 barrels a day of condensate.

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