With the help of development projects at the Fajr Jam Gas Refining Company in southern Iran, the production of liquefied petroleum gas has increased at the refinery, managing director of the company said.
“The refinery now produces 130 tons per day of LPG, which is higher than last year,” Abdolsamad Najafi was also quoted as saying by the Oil Ministry’s news agency Shana.
“Currently, more than 35 million cubic meters of gas are received from the South Pars Gas Field and will reach 50 mcm soon,” he added.
Located in Jam County, Bushehr Province, Fajr Jam is one of the biggest gas refineries in the country.
Other than LPG, the refinery produces gas condensate that is sent to Siraf Port as well as natural gas that is injected to the national gas grid.
About 25% of the gas used in the country are supplied by Fajr Jam Gas Refining Company.
Currently, about 26,000 tons of LPG are produced in the country daily, a member of Tehran Chamber of Commerce, Industries, Mines and Agriculture said.
“Of this amount, about 6,000 tons are distributed daily in the domestic sector and the remaining 20,000 tons [equivalent to about 27 million liters of gasoline] could be used either as fuel in cars or exported. Because of limitations in their usages in cars, the surplus should better to be exported,” ILNA also quoted Hamidreza Salehi as saying.
There are two million households, mostly in the southern provinces of Sistan-Baluchestan and Kerman, which are not linked to the national gas grid and need LPG for cooking.
Regarding the use of LPG in cars, the TCCIM member said, “The liquid gas can only 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 transportation sector of Iran. There are at least 1.2 million cars equipped with LPG kits across the country.
Export of LPG, Condensates
Each ton of LPG can be sold at $500 in international markets and there is high international demand for it.
Iran's LPG exports have been around 500,000 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 2022, 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 product 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.
