A development project to expand and renovate Abadan Refinery in Khuzestan Province has registered 80% progress and its completion is expected in 2022.
Costing $3.2 billion, the venture includes the installation of a new crude distillation unit to replace three old units built 70 years ago, ISNA reported.
The new unit will have a production capacity of 210,000 barrels per day, which is 40,000 less than the combined capacity of the three decommissioned units but will elevate gasoline and diesel quality to the Euro-5 standard.
The production and distribution of gasoline compliant with Euro-5 standards have been prioritized, the Oil Ministry said.
The development project will help reduce mazut output in refinery to less than 25% from the present 40%.
Iran's mazut output, a heavy low quality fuel oil, is either delivered to the southern port of Mahshahr in Khuzestan for export or sent to power plants to run their turbines in case of emergency, as more than 90% of power stations in Iran are gas-powered.
Other refineries that earlier started to implement the “zero-mazut plan” include Tehran, Isfahan, Tabriz and Shazand.
Built in 1912, Abadan refinery is the first of its kind in Iran and once was the largest in the world.
The refinery was heavily damaged during the 1980-88 Iran-Iraq war. It is now operating with a daily capacity of refining 400,000 barrels of crude.
In December 2017, China’s Sinopec Engineering Company signed a deal with the National Iranian Oil Engineering and Construction Company to contribute to the development of the Abadan Refinery.
The Chinese group was supposed to invest approximately $2 billion in the project.
Oil refining companies in Iran are doing well, as gasoline production and export have been of the ascending order in the past 14 years.
The National Iranian Oil Refining and Distribution Company, a subsidiary of the National Iranian Oil Company, imported 30 million liters of gasoline per day in 2006 to meet domestic demand that was around 55 ml/d at the time.
After inauguration of the first phase of Persian Gulf Star Refinery in Hormozgan Province in 2018, the import of the strategic fuel was consigned to history. With the completion of the second and third phases of PGSR, NIORDC started exporting gasoline as supply outweighed demand for the first time in four decades.
Domestic refineries produced 120 million liters of gasoline per day in 2019, whereas demand was 98 ml/d and the surplus was exported to neighbors, namely Iraq (mostly the Iraqi Kurdistan Region) and Afghanistan.
Gasoline export is being promoted to manage the expanding inventory of the fuel largely due to falling domestic demand, thanks to the Covid-19 pandemic.
Similar to most nations struck by the plague, gasoline demand in Iran continues to fall as people avoid travel and family and social gatherings to help fight the highly contagious disease.
Iran has been exporting gasoline for about three years, despite the tough US sanctions.
After the US under Donald Trump walked away from the historic nuclear deal in May 2018 and vowed to drive Iran's oil exports to zero, the Tehran government has been doing all it can to counter the hostile US moves and continue exporting oil.
