During years of international sanctions on Iran, the refining industry tried its best to take advantage of the sanctions for acquiring technical know-how. Construction and startup of advanced refining units in refinery development projects and the manufacturing refinery equipment and some catalysts required in the refining industry are examples of this success.

Guaranteeing domestic energy supply security and sustainable presence in regional and international markets, increasing value-added through completing value chain and raising the level of oil products’ exports, diversifying methods of selling, achieving a standing at the same level of top refining companies in the world for the purpose of sustained presence in regional and international markets, participation of the private sector, development of bunkering industry and enforcing “quality” as a requirement in fuel supply to vessels and convergence with energy producers and consumers with a view to creating effective and constructive interaction for the resumption of swap of oil products (gasoil, fuel oil and liquefied petroleum gas) from northern neighbors to Iraq and Afghanistan, expansion of gas supply network for power plants and remote areas in Iran and the possibility of more export of liquid petroleum products are among plans pursued by Iran’s refining industry for enhancing oil products’ exports.

Since the start of the current Iranian calendar year (21 March 2016), the volume of Iran’s gasoil exports has increased from 3.5 ml/d last calendar year to 13 ml/d, showing more than 430% growth.

Iran has also turned into one of the leading exporters of fuel oil in the world. Official figures show that Iran is exporting some 50 ml/d of this product to regional and global markets.

Liquefied petroleum gas is another product exported from oil refineries in Iran. With the expansion of rural and urban gas distribution networks in Iran, a new capacity has been created for the export of this product which is highly demanded in the market.

This big achievement has been made under the 11th administration and thanks to logical policies pursued by the Iranian petroleum ministry. After 110 years, Iran has become an exporter of oil products. Iran was importing petroleum products in 2014 and early 2015.

A review of data on the consumption of oil products this year shows that the consumption of the main four oil products – gasoil, liquefied petroleum gas, kerosene and fuel oil – has been on the decline in the country. Liquefied petroleum gas consumption has on average declined 1.5% a day to reach 5,290 tons.

Over the same period of time, kerosene consumption fell 7.5% to 3.5 ml/d, while fuel oil has registered a 65.4% decline to 9.1 ml/d.

Persian Gulf Star Refinery has the capacity to produce 36 ml/d of gasoline and 14 ml/d of gasoline in compliance with euro-4 standards. Besides these two strategic oil products, the refinery would also produce 2,000 tons a day of liquefied petroleum gas, 3 ml/d of aviation fuel (ATK and JP4) and 13 tons a day of sulfur. 

According to timeframe set for this refinery, the distillation unit of this facility is expected to become operational this year. Other processing units are expected to come online next year. In the first phase, the refinery would be producing 12 ml/d of euro-4 gasoline.

Shahrokh Khosravani, a senior refining and distribution manager, says the Rouhani administration has made plans over the past three years for maximum distribution of euro-4 gasoline. 

Noting that Iran’s euro-4 gasoline production capacity has reached 26.3 ml/d, Khosravani said: “Currently, 22 ml/d of euro-4 gasoline is being distributed in eight big cities in the country.”

“Our first plan is to construct a crude oil storage tank which would be financed by the private sector. In the first stage, 10 million barrels of crude oil will be stored to be exported,” he said. “We are waiting for attraction of investment in this sector.”

Construction of a refining facility and relocation of Bahman Ganou refinery from Bandar Abbas to Jask constitute another project which has so far won the approval of investor. The priority must be given to the development of existing refineries because they are potentially able to supply more oil products at lower costs and by using less amount of crude oil. Furthermore, products which are no longer used on the world could be avoided. That would be in compliance with a law on reduction of liquid fuel consumption at refineries.

“At present, we have a nearly 500,000 b/d of fuel oil production that we can convert to products of high quality,” he added.

In the current Iranian calendar year, $650 million has been earmarked for this project. Therefore, the projects related to the optimization of products have already started. This budget allocation will first serve the quality of gasoil and then other units will be served.

In case obstacles to the entry of equipment into the project are removed, commissioning will start. For the project to be profitable, foreign investment would be needed. Quality improvement at refineries requires between $2bn and $3bn, which applies to all refineries.

Expansion of energy interaction with energy-rich countries in the Caspian Sea, Persian Gulf and other regions in the world, construction of new refineries in the country with priority for private sector investment, construction of refinery in foreign countries or participation in refineries built abroad by supplying crude oil and gas condensate as feedstock, increasing gas condensate feedstock, upgrading refineries in order to produce products of higher value and reducing fuel oil production in compliance with Article 59 of the law on reforming consumption pattern, laying out pipelines for transmitting oil products to neighboring countries in order to reduce land and sea transport costs for transmission, establishing joint storage facilities for oil products in other countries by benefiting from the new refining capacities and presence in other markets through opening representative offices for the purpose of marketing petroleum products and following up on projects and bilateral cooperation are among objectives envisaged for Iran’s refining industry.

Courtesy of Iran Petroleum