Refiners in Iran Playing Bigger Role in Economy

EghtesadOnline: Refineries in Iran are operating at full capacity converting two million barrels of crude oil into petroleum products a day, the secretary-general of Oil Refining Industry Cooperative Association said.

News ID: ۷۵۱۴۸۷

15 November 2020

“Domestic demand in its entirety is met by refineries inside the country and the surplus is exported. This helps generate revenue in the time of [US] sanctions,” the IRIB news agency quoted Nasser Ashouri as saying.

“Refineries now play an important role in the national economy producing gasoline, diesel, jet fuel and kerosene.”

While the US sanctions reimposed two years ago have deeply cut Tehran’s crude exports, the export of oil byproduct remains strong, according to shipping data.

Iran’s petroleum industry has been hit with the toughest ever sanctions since Donald Trump, the beleaguered US president, unilaterally pulled out of the six-nation Iran nuclear deal in 2018. He and his aides have often said that they want to bring Iran’s oil export to zero.

However, the tough restrictions have not harmed the export of oil products, primarily fuel oil used for power generation and ships, liquefied petroleum gas used for cooking and gas for petrochemical feed.

Boosting petroleum production is a declared policy of the government. Experts say increasing oil refining capacity is a viable option to evade the hostile US penalties in the short term. They point out that under the present conditions exporting oil derivatives is less challenging than crude oil because it cannot be traced and tracked.

Unlike crude oil, where the ultimate buyer is a refinery, fuel oil and LPG can find their way to thousands of small-scale industrial or residential buyers.

“In addition to the main products, the gas refineries produce 32 other items largely used by oil-related industries such as petrochemical companies,” Ashouri noted.

Regarding the role of refineries in employment, he said, “32,000 people are directly employed in this sector and the refineries are entirely run by local engineers without the need for foreign help.”

Big Consumer

He pointed out that Iran is among the countries that consume a large amount of refined products and referred to gasoline. “Despite the fact that domestic gasoline consumption reached 110 million liters a day in the past two years, we have not imported gasoline. Supplying this fuel is the function of domestic producers.”

Present daily gasoline production is 110 million liters, of which about 75 million liters of gasoline is consumed per day now and the rest is exported.

Iran used to import up to 30 million liters of gasoline a day to meet rising demand until the recent past. The pattern ended after the first phase of Persian Gulf Star Refinery in Hormozgan Province came online in 2018.

With completion of the second and third phases of PGSR, the country started exporting gasoline as supply outweighed demand for the first time in four decades.

Iran has been exporting gasoline for two years despite the ocean of sanctions that has affected almost all segments of the economy. Industry data show Tehran’s export of oil products has been rising in recent months.