Crude refining capacity in Iran, including gas condensates, is 2.3 million barrels a day, director of the National Iranian Oil Refining and Distribution Company said.
“The capacity shows 43% rise compared to 2001 when it was 1.6 million barrels a day,” Alireza Sadeqabadi was quoted as saying by ISNA.
The high capacity notwithstanding, so long as mazut output is not curbed in refineries, the loss borne by refineries will outweigh their profit, he said.
Iran is ranked 11th, ninth and 13th in terms of oil refining, gasoline and diesel production capacity. However, when it comes to producing low-value and environmentally-hazardous mazut, it tops the list.
“Implementing projects to convert excess low-value and eco-unfriendly mazut into value-added products should be a priority.”
Negotiations were underway with Japan, China and South Korea to implement fuel quality enhancement projects in old refineries in Abadan, Lavan and Bandar Abbas refining companies, all of which came to a sudden end in 2018 due to the new US sanctions.
Commenting on constructing efficient refineries, he noted that refineries are considered economical if their mazut production is less than 10% and the quality of oil products is compatible with Euro-4 standards.
Energy expert Abbas Kazemi, a former head of NIORDC, says investing in refineries is viable on the condition that their minimum output is 150,000 barrels per day. “Refineries with daily capacity of 5,000 barrels are not recommended.
Mazut is a heavy, low quality fuel oil, used in power plants and factories.
The other major problem is that the current levels of sulphur in mazut produced in Iran is 3.5% and cannot be sold in international markets due to the new regulations set by the International Maritime Organization.
According to the IMO’s new rule, which came into effect last month, global sulphur cap for marine fuels must not exceed 0.5%.
Although some petrochemical and refining firms, namely Nouri Petrochemical Company in Bushehr will start producing low-sulphur fuel in March, the mazut currently produced in Iran is used largely in power plants.
