Exporting liquefied petroleum gas helps the Oil Ministry earn at last $5 billion in foreign currency revenues, because of which it opposes any plans to add the fuel to Iran’s energy mix, a lawmaker from Tehran said.
"Although adding LPG to the fuel basket will reduce gasoline consumption by 15 million liters per day, which can be exported, the Oil Ministry is against it," Malek Shariati-Niasar was also quoted as saying by Mehr News Agency.
“The ministry’s share of exporting gasoline and diesel is 15%, which share increases to 100% when it comes to LPG, so the Oil Ministry and its subsidiaries are willing to sell liquefied gas more than gasoline,” he said.
“Although oil officials maintain that adding LPG to the fuel basket is not good economics, calculations show that gasoline and diesel are more expensive than LPG in international markets and replacing gasoline with LPG definitely makes economic sense. Nevertheless, Oil Ministry authorities ignore the simple fact as they are worried about losing their foreign revenue resources.”
Drawing a parallel between Iran and Turkey, the lawmaker noted that the neighboring state is a gasoline exporter, but it keeps importing LPG so that it can boost its gasoline exports.
Around 20,000 tons of LPG are produced in Iran per day, 30% of which are sold in regions that still do not have piped gas, such as the southern provinces of Sistan-Baluchestan and Kerman, and the rest is exported.
“Each ton of LPG can be sold at $500 in international markets. LPG accounts for 3% of the energy mix in Iran while that of natural gas exceeds 70%,” he said.
Rejecting the notion that adding LPG to the fuel basket will negatively affect compressed natural gas market, Shariati-Niasar said many countries, including the US, Australia, the UK and Russia, provide motorists with a diversified energy mix that has always been beneficial.
Economic Sense
As against Shariati-Niasar’s contention, Ardeshir Dadras, the head of the Iran Compressed Natural Gas Association, believes that Iran has some of the world’s largest natural gas resources and grids in the world, therefore substituting CNG with LPG in the energy mix does not make economic sense.
“As long as cars can run on CNG, LPG should be used for more useful purposes,” he said.
According to the official, LPG should only be used as an alternative to heating oil and electricity in regions lacking gas pipelines.
“In the last decade, more than $2.5 billion were invested to expand CNG use. CNG kits, tanks and compressors are manufactured domestically,” he said.
Dadras noted that the share of the environmentally-friendly fuel in public transport sector has reached 20%.
CNG use has reached 25 million cubic meters per day, up 25% compared to 2019.
CNG stations are ready to provide at least 40 mcm of fuel per day, he added.
Referring to other benefits of CNG, Dadras said natural gas-based car engines have lower maintenance costs compared to other fossil fuel-powered vehicles, and greenhouse gas emission from CNG-run cars is 80% less compared to that of gasoline-powered vehicles.
Natural gas disperses easily in the air and is not flammable, hence CNG vehicles are safer than gasoline vehicles.
According to Hashem Oraei, a faculty member at Tehran's Sharif University of Technology, boosting the CNG share in the fuel mix has multiple advantages, especially in cutting gasoline demand, improving the environment, reducing air pollution and exporting fuel.
“Low-carbon and clean fuel can help export liquefied fuels, namely diesel and gasoline,” he said.
People's interest in natural gas vehicles notwithstanding, carmakers have done almost nothing to manufacture gas vehicles because they have “enough customers for their poor quality gas guzzlers”.
Although Iran has an impressive gas grid and CNG is much cheaper than gasoline, domestic carmakers continue to make poor quality gasoline-powered vehicles that contribute terribly to air pollution in the rapidly expanding urban areas.
The main disadvantage of CNG is its low energy density compared to liquid fuels. A gallon of this fuel has only a quarter of the energy in one gallon of gasoline.
