The slowdown of Iran’s petrochemicals exports has allowed Tehran to become self-sufficient in gasoline production two years ahead of schedule.
On 17 September, Abdolhossein Bayat, Deputy Oil Minister said Iran has halted the export of petrochemicals after implementing a programme to boost the country’s gasoline production, state-run Mehr news reports.
A day later, Oil Minister Masoud Mirkazemi told Iranian media that no Iran had not signed any gasoline import contracts over the last month.
Since late July petrochemical plants have been switched to producing gasoline in an attempt to reduce Iran’s vulnerability to international sanctions. Tightened economic sanctions imposed in June have seen Iran lose a number of key gasoline suppliers (MEED 15:4:10).
The plants produce 14 million litres a day (l/d) of gasoline according to National Iranian Oil Refining and Distribution Company (NIORDC), just over 20 per cent of total production, which has now reached 66.5 million (l/d), more than enough to supply Iran’s current demand.
It is difficult to tell whether the announcement is just posturing. Iran has built up significant strategic gasoline reserves over the last year making an assessment of its production difficult until these draw down.
“It is more likely demand destruction. Industry is not running at the same rates as a year ago, so demand is down”, says Hassan Ahmed, head of research at New York-based consultants, Alembic Global Partners.
Average daily consumption on 3 September according to the Oil Ministry dropped to 53.6 million (l/d), down 5 per cent on the previous week, according to NIORDC figures.
Tehran originally hoped to reach self sufficiency by 2012, through a large refinery expansion programme. But the projects are running well behind schedule and sources in Iran tell MEED they doubt the target they want can be reached before 2014 at the earliest.
“Given the recent history of serious delays to projects across all sectors, “It is almost inconceivable to think that they could be two years ahead of schedule”, says Ahmed.
With the eventual phasing out of fuel subsidies, Mirkazemi believes Iran could even become a net gasoline exporter.
With petrochemical exports down, capacity has been freed at the plants for gasoline production. But this will not be a sustainable option for Iran. Tehran may be taking credit for making Iran gasoline self sufficient now, but its conversion programme will have a major impact on the prospects for its petrochemicals sector in the long term.