PGSR Eyes Export of Crude Oil Derivatives

EghtesadOnline: The Persian Gulf Star Refinery in Hormozgan Province is holding talks with potential foreign customers to sell its surplus output of wide-ranging petroleum products, the chief executive officer of Persian Gulf Star Oil Company said.

News ID: ۷۷۹۱۴۹

13 September 2017

"Except Euro-4 quality gasoline, other products of the refinery, namely diesel, jet fuel, kerosene, sweet and sour naphtha as well as liquefied petroleum gas can be exported to target destinations as soon as the necessary licenses are obtained from the Oil Ministry," Morteza Emami, who recently took the reins of the company, was quoted as saying by ISNA on Monday.

According to Emami, the ministry has placed a temporary ban on gasoline exports to meet domestic needs.

Nonetheless, PGSR will be allowed to market the surplus amount of other oil derivatives to generate revenues, Financial Tribune reported.

Highlighting the fact that completion of two phases of the refinery requires $1 billion in investment, he noted that selling PGSR's quality products in domestic and international markets can help the complex cover a part of its operational expenses.

Asked about target destinations, the official noted that it is not clear which products will be exported to what countries, yet marketing and exports will be among major priorities.

Elaborating on offtake agreements, which are usually negotiated prior to the construction of a facility such as a refinery to secure a market for the future output of the complex, Emami said serious talks are underway with European and Far East Asian states to conclude deals for selling PGSR's future production and several memoranda of understanding have been clinched.

Pointing to formidable challenges to attract international energy majors' trust to invest in PGSR, Emami said, "Foreign firms urge us to provide them with either government or non-government guarantees, neither of which is possible for PGSR."

PGSR is owned by Oil, Gas and Petrochemical Investment Company (with a 49% share), Oil Industry Pension Fund Investment Company (33.1%) and National Iranian Oil Refining and Distribution Company (17.9%).

Categorizing PGSR's output into two groups, Emami added that the complex is provided with 95,000 barrels per day of quality condensates as feedstock, part of which is directly converted into products such as gasoline and diesel that can be transferred to ships in the Persian Gulf via pipelines to be exported.

"Other products are sent to adjacent refineries to convert into more value-added commodities," he said.

The official also said that an unnamed private firm is extending oil pipelines to transfer the refineries' products to the Persian Gulf for export.

Mazut, Diesel Exports

According to state news agency IRNA, Iran exported 22 million barrels of mazut to Asian states between June 22 and August 22. Diesel export in the same period reached 4 million barrels.

The UAE and Singapore are the biggest importers of diesel from Iran. The bulk of diesel exports is conducted via sea routes to Fujairah Port in the UAE as well as to Singapore.

Following a rise in gas supply to power plants and lower consumption of diesel as feedstock in power generation, the export of petroleum products, including diesel, has increased.

Officials say the launch of South Pars Gas Field’s new phases and the increase in natural gas output have led to a drop in domestic demand for diesel and increased outbound supplies.

According to Alireza Rajabpour, the deputy for exports and imports at the National Iranian Oil Products Distribution Company, the company has sold 10.3 million tons of mazut and diesel to Iraq, Pakistan, Afghanistan and Armenia via land borders by tanker trucks since 2013.