The output of two major products of Fajr Jam Gas Refining Company had a significant growth in the first quarter of the current Iranian year (March 21-June 21), the managing director of the company said.
“The amount of liquefied petroleum gas production at the refinery during the 3-month period was 4,300 tons, which increased by 142% compared to the same period last year,” the Oil Ministry news service Shana quoted Seyyed Mohammad Mahdi Hashemi as saying.
The company also produced 582,000 barrels of gas condensate in the period, which shows a 49% growth compared with the same period of last year, he added.
The official noted that the timely overhaul of the refinery and technical measures taken by the employees are the most important factors in increasing production.
Speaking about the refinery’s gas sweetening statistics, Hashemi said 4.2 billion cubic meters of gas were sweetened in the first quarter of the current year.
Located in Jam County, Bushehr Province, Fajr Jam is one of the biggest gas refineries in the country. It receives gas from the South Pars Gas Field and after sweetening, the output is injected into the national gas grid. Its gas condensate is also sent to Siraf Port.
About 25% of the gas used in the country are supplied by Fajr Jam Gas Refining Company.
Iran’s monthly LPG output stands at about 360,000 tons, of which close to 50,000 tons are distributed in the domestic sector and the rest is exported, showing a 50% rise compared to 2020.
There are around two million households, mostly in the southern and southeastern provinces of Kerman and Sistan-Baluchestan, which are not linked to the national gas grid and need LPG for cooking and heating.
The liquid gas can also be used for vehicles in the public transportation sector instead of diesel. Its advantage is that it is a cleaner fuel.
LPG accounts for 2% of the fuel used in the domestic transportation sector. There are at least 1.2 million cars equipped with LPG kits across the country.
LPG Export
Although adding LPG to the fuel basket will reduce gasoline consumption by 15 million liters per day, which can be exported, the Oil Ministry is against it.
Since each ton of LPG can be sold at $500 in international markets and there is high international demand for it, it is more profitable to export it.
Iran's LPG exports have been around 310,000 tons per month recently. Iranian exporters aim to increase LPG exports when the US administration lifts sanctions that have limited shipments from the country's petrochemical plants and gas refineries.
Assuming the US completely removes sanctions in the first half of 2024, Iran can export 3.73 million tons during the period.
Removal of sanctions, should the US reenter the Joint Comprehensive Plan of Action, could also allow Iran to export condensates, an ultra-light crude that yields better profit margins and put pressure on Asia's naphtha market.
South Pars condensate is expected to be competitively priced, allowing petrochemical makers to obtain cheaper feedstock naphtha from cracking this condensate.
Iran had previously exported condensates to South Korean users, where splitters switch between using condensate and various naphtha grades, depending on economics.
Iran used to export a high volume of condensates for splitters like Hyundai, Hanwha and others in South Korea, and if this were to resume, then demand for heavy paraffinic naphtha will definitely decline.
Restored Iranian LPG exports would add to abundant Middle East supply this year, with major producers regularly accepting lifters' monthly term nominations without cuts or delays, while Kuwait and Qatar consistently sell spot cargoes.
Whenever the US arbitrage window opens, ample supply in Asia would render LPG cheaper than naphtha, making propane and butane a favored cracker feedstock.
Other than Fajr Jam Gas Refinery, LPG is also produced by Bandar Imam Petrochemical Company in the southwestern Khuzestan Province.
