Refining/Distribution Thriving Despite Sanctions
Iran’s daily growing need for fuel in the transportation sector, the necessity of self-sufficiency in fuel production, sitting atop huge oil and gas reserves the urgent need for the refining industry to upgrade its quality and quantity have transformed Iran’s refining and distribution industry a sensitive sector within the Ministry of Petroleum. This industry tried its best to blunt the impact of unjust sanctions targeting the petroleum industry; rather it has taken benefit sanctions as a bridge to develop technical expertise. Design and construction of advanced refining units, manufacturing of refinery equipment and in some cases catalysts are all achievements of resilience during years of sanctions.
Iran has moved from the position of being a gasoline importer to become a leading exporter of gasoline in the region. Iran’s gasoline production has hit 115 ml/d.
Oil Products Exports Grow 4-Fold
Last calendar year Iran saw a four-fold increase in its petroleum product exports. Iran joining the club of gasoline exporters and the key role of the refining industry under sanctions and concomitant reduction in oil exports would mean the year of prosperity for the refining industry. The refining industry earned Iran good hard currency revenue although the country had to cut its oil exports due to sanctions.
National Iranian Oil Refining and Distribution Company (NIORDC) made step-by-step planning for self-sufficiency in the production of petroleum products. Iran is no longer an importer of gasoline; rather it earned more than $1.4 million from petroleum product exports, a major step in the refining industry.
In fact, it could be argued that the simultaneous and coordinated growth and development of all links in the refining industry chain – from production to pipelines, storage and distribution – have been the strengths of development of this industry over recent years.
Refining Capacity at 2.3mb/d
During the previous round of sanctions, Iran’s refining industry was an importer of gasoline. That made the industry an easy target for sanctions. However, with concentration on refinery development projects over recent years, particularly completion and commissioning of four refining phases of the Bandar Abbas Gas Condensate Refinery (known as the Persian Gulf Star refinery), the refining industry in the country became self-sufficient in petroleum products’ production. Furthermore, this self-sufficiency served as a bridge for enhancing petroleum products’ exports. For several years in a row, the country’s refining capacity had remained unchanged at 1.8 mb/d, but it jumped to 2.3 mb/d by the end of last calendar year in March.
Iran has increased its petroleum products exports four times to become the top exporter of petroleum products in the Middle East. Therefore, the quantitative and qualitative growth and development of petroleum products at refineries across Iran vacated the country’s need to import products; rather Iran’s refining industry has recorded a 16% growth over eight years.
40mt Export Capacity
Development of the Mahshahr and Shahid Rajaei ports, both key refining projects, became possible last calendar year by relying on domestic potential, while Iran was under sanctions. The ceremony for the inauguration of the Mahshahr project was delayed on several occasions due to increased export capacity, this important step in the refining industry could not be ignored. With the implementation of development projects and construction of new jetties in these two strategic ports, Iran’s export capacity in the two ports increased from 26 million tonnes to 75 million tonnes a year while the operating capacity of the jetties went from 18 million tonnes to 50 million tonnes a year.
Qualitative Growth
In addition to quantitative growth in gasoline and gasoil production, the refined petroleum products have experienced significant growth in quality in recent years. Iran was producing only 60 ml/d of gasoline in 2013, which reached 115 ml/d in 2020, 80 ml/d of which is up to Euro standards.
The refining industry has made steps closer to supplying products of higher value-added.
4 Transmission Lines
Last winter, four key pipelines used for transmitting oil and petroleum products came online. With the growth and development of these pipelines and the operation of more than 1,000 km of pipes over the past two years, the capacity for the transmission of oil and petroleum products grew significantly.
In addition to increasing the transmission capacity, development and operation of the four pipelines of Naein-Kashan-Rey, Shazand-Qom-Rey, Tabriz-Khoi-Urmia and Abadan-Ahvaz for the secure transmission of oil and petroleum products, Iran saved IRR 40,000 billion annually, according to Ali-Reza Sadeq-Abadi, CEO of NIORDC. These pipelines dispensed with the daily need for 3,000 oil tankers carrying oil, while consuming 178,000 liters of gasoil.
Storage Capacity under Covid-19
Several key oil storage facilities came online last calendar year. Two important ones among them were the Urmia facility with a capacity of 120 ml and the Malayer facility with a capacity of 68 ml.
That along with other storage facilities helped NIORDC enhance its storage capacity of petroleum products significantly.
This capacity increase came against the backdrop of the covid-19 pandemic and the subsequent decline in the consumption of gasoline and petroleum products.
According to Sadeq-Abadi, Iran was among few refiners in the world to not have decreased its refining capacity under covid-19.