Upgrades have been approved for Arak, Isfahan and Bandar Abbas refineries and approval has been given for a new grassroots condensates refinery at Assaluyeh. Outside NIORDC's remit is another upgrade programme for Tabriz and Tehran refineries, to improve the Caspian Republics Oil Swap (CROS) project. In addition, there are studies under way for further upgrades of Tabriz and Tehran, as well as for Abadan, Shiraz and Kermanshah. Under the approved parts of the expansion programme, refining capacity will rise to 2.2 million barrels a day (b/d) from 1.6 million b/d.

The cost of the Arak, Isfahan and Assaluyeh projects will total about $4,500 million, while the Bandar Abbas upgrade project is estimated at around $3,000 million. The CROS project has been budgeted at about $500 million and the remaining projects are likely to come to a further $2,000 million.

The Arak upgrade will lift capacity by 80,000 b/d to 250,000 b/d through the installation of a new fluid catalytic cracker (FCC) and hydrotreater units. Japan's JGC Corporationis now carrying out the front-end engineering and design (FEED) for the project. The Bandar Abbas project will increase capacity by 390,000 b/d to 640,000 b/d. Italy's Snamprogettihas recently carried out a feasibility study for the project.

The Isfahan upgrade will not increase the 375,000-b/d capacity, but will improve quality specifications. France's Beicip-Franlabis carrying out the FEED.

The grassroots Assaluyeh refinery was the subject of a feasibility study carried out by the UK office of Foster Wheelerand a local company. The project will involve the installation of three trains of 120,000 b/d each to produce light gas fuels. The project will be offered to the private sector for full ownership, but will be pursued by the government if there are no takers, says Mikaeili.

Iran's refineries are in dire need of a substantial overhaul. The Islamic republic has for years been a net gasoline importer despite holding the world's fifth largest oil reserves. Gasoline production also needs to be made cleaner and more efficient in line with 'Europe 2005' specifications, which the government has said it will adopt during the fourth five-year development plan starting in March 2004. The country is also switching much of its power production to gas-fuelled from oil-fuelled plants, necessitating a shift in the production of light and heavy products.