Gasoline inventories are full and the National Iranian Oil Refining and Distribution Company needs to export the fuel, a spokesman of the Petroleum Products Exporters Union said.
“Gasoline storage facilities are full and the excess must be sold to international buyers (even at low prices),” Hamid Hosseini was quoted as saying by ILNA on Wednesday.
Demand for gasoline has declined in neighboring countries due to the coronavirus outbreak and the lockdowns that have ravaged big and small economies.
Despite low prices (which have made exports economically nonviable), NIORDC, a subsidiary of the National Iranian Oil Company, has no other option but to export, Hosseini admitted.
“Selling the commodity in the country would make more economic sense as the pump prices are 17 cents a liter. Current export prices are less than 17 cents, but to get rid of the surplus, refineries should continue selling gasoline via the Iran Energy Exchange and sometimes at big discounts.”
The pandemic has hammered oil demand and prices have crashed. All (energy) export prices are calculated on the basis of international crude oil prices. Oil futures for June fell to below zero last month for the first time in history as demand almost vanished. It improved later falling to the lowest since 1999.
Close to 100 million liters of gasoline is produced in domestic refineries every day, of which 70 million liters is consumed and the rest should be either stored or sold.
Demand plummeted (between March 15 and April 15) to less than 35 million liters/day due to the virus leading to bulging gasoline inventories unheard in the past century.
The Oil Ministry started offering oil products, namely gasoline and diesel, on IRENEX in 2019 after the initiative to sell crude oil on the bourse flopped.
Role OF IRENEX
With dwindling oil export revenue due to the new US economic sanctions, selling oil byproducts via IRENEX has helped the government to some extent.
As per a report by Tehran Chamber of Commerce, Industries, Mines and Agriculture, the government generated $85 million by selling gasoline and oil gas during the last calendar month (March 20-April 19).
According to Hosseini, export of petroleum products including mazut, diesel and gasoline that was interrupted in the past several weeks is gradually getting back to normal.
Neighbors, including Iraq, Afghanistan and Pakistan, had suspended imports due to the infectious disease. They have reopened the border-crossings with Iran and trade in fuel and other goods have resumed.
Diesel, kerosene, jet fuel and liquefied natural gas, including LNG and LPG, are exported to Iraq, Pakistan, Afghanistan and Armenia via land borders.
Pointing to the annul value of exports, the official said, "Close to $25 billion worth of petrochemicals, petroleum products, natural gas and power is sold to the four neighbors."
Giving a breakdown, he said of the total, $12 billion is from petrochemicals. Petroleum byproducts account for 33% ($8 billion) and the balance comes from electricity and natural gas export.
