Fuel Policy Saves Iran $57.5b
National Iranian Oil Products Distribution Company (NIOPDC) was established in 1928. It has since been distributing petroleum products across the country. NIOPDC owns 92 tank farms for storing more than 12.5 billion liters of petroleum products and 49 aviation refueling centers. The company manages and/or supervises more than 3,000 gasoline and gasoil stations, more than 1,996 compressed natural gas (CNG) stations and some 12,000 oil and gas tankers. The company is distributing more than 250 ml/d of petroleum products across the country.
In order to meet growing fuel supply demand, particularly in winter, NIOPDC has established nine new crude oil storage facilities and 59 storage tanks with a capacity of 6.1 billion liters. The company has raised its storage capacity to 18 billion liters.
NIOPDC, which has 9 directorates, has worked out mechanisms to become the top petroleum products distributor in the region.
Iran Petroleum has conducted an interview with Nasser Sajjadi, managing director of NIOPDC.
Q: How much has petroleum products consumption grown in the current Iranian year, which started in March, compared with the previous year?
A: At present, most power plants, industries, factories and some petrochemical plants are using liquid fuel and this issue has made the role of NIOPDC more important in this sector.
Although in the current [ Iranian calendar] year, natural gas supply to power plants has increased, nearly 14.5 billion liters of liquid fuel, including 7 billion liters of gasoil and 7.5 billion liters of fuel oil, was delivered to the power plants.
In 1996, 30 ml/d of kerosene was distributed on average all over the country. This amount has declined gradually as natural gas production has increased. In 2013, 12 million liters on average has been produced, falling by more than half. Kerosene consumption is falling and natural gas consumption has increased 8 percent since March. Kerosene consumption is forecasted to reach 11 ml/d across the country by March 2015. Gasoil consumption has grown 2.5 percent during the first eight months of the current year with power plants accounting for the biggest share in the growth.
Gasoline consumption growth during the same eight-month period was less year-on-year. Last year, gasoline consumption grew some 7.7 percent, but this year it grew 2.3 percent. This fall in consumption is due to trips in public transportation vehicles and high price of gasoline.
Fuel oil consumption during the eight-month period declined 30 percent year-on-year with the surplus being exported. CNG consumption rate has not changed and it stood at 18.5 ml/d.
Q: How much petroleum products is currently consumed in the country?
A: Gasoline consumption was 68.4 ml/d last year and it reached 70 ml/d after eight months this year. Only 4.4 ml/d was imported. Up to the end of the eighth month of the current year, 8.2 ml/d of kerosene has been consumed, below 8.9 ml/d last year.
During the same period, gasoil consumption reached 102 ml/d, up from 99.5 ml/d last year. The transportation sector is delivered 9 ml/d of euro-4 gasoil.
Fuel oil consumption stood at 36.8 ml/d, down from 51.5 ml/d last year during the same eight-month period.
Q: Would you please tell us about Iran’s export of oil products?
A: Up to the end of the eighth month of the calendar year, 10 ml/d of fuel oil has been allocated to bunkers , up more than 32% from a year ago. Moreover, some 30 ml/d of fuel oil has been exported. Currently, 2 ml/d of gasoil is being exported to Iraq. Petroleum products are also exported to Armenia and Iraq’s Kurdistan territory.
Given plans for increasing natural gas production in the country, large amounts of gasoil and fuel oil will be exported to neighboring countries like Iraq and Afghanistan as of next calendar year. In other words as natural gas production rises in Iran; we will witness the peak of exports next year. In the meantime, selling fuel at borders is considered by NIOPDC so that the smuggling of products would be averted. Exports in this sector are growing. During the second month of summer, 11.5 ml/d of gasoil was sold at border stations. The figure recently reached 19 ml/d.
Iran enjoys a geographically strategic position and it can focus on swap besides exports. Exports are currently focused on liquefied gas, kerosene, gasoil and fuel oil and there are plans for entry into regional markets. Exports to neighbors are being done by NIOPDC, while exports in greater volumes are being done by the Directorate for International Affairs of National Iranian Oil Company.
Q: How about under-construction fuel storage facilities?
A: Currently, fuel storage facilities with a capacity of 700-800 million liters are under construction. They are expected to come on-stream by the end of the calendar year. There is a 300-ml storage tank in Mahshahr, which is in the final stages of construction. A 200-ml storage tank in Shiraz would come on-stream by the end of the year. The storage facilities are mainly located in Mahshahr, Shiraz and Urmia. Mahshahr and Shiraz facilities are to become operational before the end of the year, while Urmia facility would come on-stream with delay.
Q: How many CNG units are currently active in the country?
A: Already, 2,242 CNG stations have been launched and 150 others are under construction. Soon, we will have nearly 2,400 CNG stations in the country. Since there are abundant CNG fuel resources in the country, it can be a good substitute for gasoline. When more CNG is added into basket mix, gasoline imports could be avoided. At present, 24 CNG stations are being constructed by the private sector. Over recent years, the number of CNG stations has risen, but consumption of this product has not increased. In 2011, 18 ml/d of CNG was consumed in the country. In 2012, it was 19 ml/d and in 2013 it was 18.5 ml/d. During the first eight months of the current calendar year, CNG consumption has remained at 18.5 ml/d. CNG pricing for next year is to be such that the gasoline price would increase more than the CNG price so that people would be more willing to use CNG.
Q: What are the incentives for the private sector’s investment in CNG?
A: In order to motivate private investment, special privileges have been envisaged and 1,000 CNG stations are planned to be constructed by the private sector. To that effect, service fees have doubled. Furthermore, in terms of purchase of equipment and parts, there is no obligation for purchase from inside or outside. Potential investors may buy their required equipment at home or abroad.
Q: You referred to the CNG industry development and gasoline rationing. What achievements have they already had and will have for the country in the future?
A: Had the CNG industry not developed and gasoline not rationed, gasoline consumption would have reached 144 ml/d. Due to rationing, our gasoline domestic consumption is 70 ml/d. With the implementation of these two projects, nearly $57.5 billion was saved up to March 2014.
Q: Is it possible for foreign investors to invest in Iran’s CNG sector?
A: Since one of advantages of Iran is its access to huge gas reserves, foreign investors can team up with Iran’s private sector for investment in the CNG sector. Moreover, domestic and foreign investors can also be active in the construction of storage facilities. In the past, NIOPDC ran most of these activities, but now private companies have become more active than before.