Iran has completed the first phase of its $4bn-plus Shazand refinery expansion in the central city of Arak, adding some 12,600 barrels a day (b/d) to the country’s gasoline production capacity.

Subsequent capacity expansion phases are expected to raise gasoline production by 63,000 b/d, and a further 100,000 b/d, state-owned Shana news agency reports.

The expansion will also boost refining capacity from 170,000 b/d to 250,000 b/d.

Products produced by the refinery is also being adjusted, as Iran seeks to produce higher quality fuels. Fuel oil production will be reduced to 15,000 b/d from 38,000 b/d, freeing up the crude feedstock to be refined into higher value products, including propylene for the first time in the Islamic republic.

The contract for the expansion was awarded to a consortium of the local Oil Design & Construction Company, Sazeh Engineering and China’s Sinopec Engineering in 2006.

State-owned National Iranian Oil Products Distribution Company plans to increase its fuel storage capacity to more than 100 million barrels by the end of 2015 from 72 million barrels currently.

Iran has been seeking to become self sufficient in gasoline production following new US and UN sanctions on its energy sector.

Oil Minister, Masoud Mirkazemi said in July 2010 that the country would be a gasoline exporter within four years, with production reaching more than 1 million b/d by 2014. Current domestic demand stands at only 400,000 b/d a figure, which is expected to fall as gasoline subsidies are phased out (MEED 19:10:10).