Lack of investment has severely impaired the National Iranian Oil Company’s ability to process crude, which explains the firm’s declining refining capacity over the past eight years.
According to ISNA and based on data from the Oil Ministry and NIOC, failure to capitalize on the private sector’s experience, absence of rehabilitation plans and the focus on sale of low value-added products have reduced oil processing capacity by 231,000 barrels per day since 2013.
Refining complexes across Iran processed 2.331 million barrels of crude per day in 2013. Nonetheless, the capacity has now dwindled to 2.1 million, registering an 11% decline.
Abadan, Bandar Abbas and Isfahan refining facilities have experienced the largest decline of 68,000 barrels, 48,000 barrels and 44,000 barrels in processing capacity respectively over the eight-year period.
The capacities of refineries in Tehran, Kermanshah, Hormozgan and Tabriz have also dipped by 25,000 barrels, 19,000 barrels, 18,000 barrels and 9,000 barrels per day respectively.
On the other hand, the inauguration of the Persian Gulf Star Refinery in Bandar Abbas in southern Hormozgan Province in 2018 helped boost its gas condensate refining capacity.
An estimated 400,000 barrels per day of gas condensate are supplied to the complex from the giant South Pars Gas Field off the Persian Gulf.
According to Oil Minister Javad Owji, raising the quality and output of oil refineries and building new refineries are on the agenda to help increase Iran's oil refining capacity by 1.5 times in five years.
“Development programs are underway to bring the country’s refining capacity, including crude oil and gas condensates, to 3.5 million barrels per day from the current 2.1 mb/d,” he said.
“Investors have been identified for generating and developing refining capacity, and they have signed agreements with the Oil Ministry in this regard.”
Tehran Refinery
Referring to Tehran Refinery, located 15 kilometers south of the capital, Owji noted that with a nominal crude refining capacity of 250,000 barrels per day, it produces 7 million liters of unleaded gasoline with octane ratings of 87 (regular) per day while its daily diesel output is 8 million liters.
“The refinery accounts for about 13.5% of the country’s refining capacity. The Oil Ministry is ready to tap the potentials of domestic and foreign investors in oil and gas projects, such that joint oil and gas fields have priority,” he added.
The minister said some of the joint fields are in Khuzestan and shared with Iraq, which account for 74% of the country’s oil production.
Owji further said several ongoing programs are aimed at enhancing the country’s refining capacity.
“We have two plans in this regard: the first one is to boost the capacity of its refineries [those fed by crude oil and gas condensate] in terms of quality and quantity of products, and the second plan is to build new refineries,” he added.
Pointing to the strong market for petroleum products and fewer problems for exporting them while the country is still facing unfair US sanctions, Owji said, “According to the demand of neighboring countries and the region, investment in the field will be profitable, create jobs and prevent crude sales.”
Gas Production
Commenting on gas production and consumption during winter, the oil minister said, “Gas consumption in the domestic, industrial and power sectors is expected to rise by 10% in the cold season compared to last year. However, since the volume of gas production has not changed, we expect a deficit of 200 million cubic meters of gas per day in winter.”
Consumption in household and commercial sectors accounts for 70% of the total output and close to 260 mcm/d of gas are delivered to power stations and petrochemical plants.
Gas output capacity currently stands at 1 billion cubic meters per day, which is similar to that of last Iranian year (March 2020-21), but it is expected to increase by 10% by the end of the current fiscal year (March 2022) and reach 1.1 bcm.
“In order to prevent problems in different sectors, plans have been devised to compensate the gas shortage by supplying liquid fuel,” he added.
Regarding gas diplomacy, Owji said, "One of the issues we are pursuing is the issue of gas diplomacy with neighboring countries, including Turkmenistan. We will do our best to increase the current 2% share of Iran's gas trade. We will also hold talks with Turkmenistan, Iraq and other neighboring countries to increase gas exports and trade.”
Iran exports close to 75 million cubic meters of natural gas per day to neighboring states, namely Iraq and Turkey, although the exports have declined this summer due to the rise in domestic consumption.
Armenia and Azerbaijan also buy gas via swap deals.
