Iran has traded 26 million tons of oil products worth $15 billion with other countries in the last six months, the head of the Board of Directors at the Iranian Oil, Gas and Petrochemical Products Exporters Union said.
“Exports included a wide range of oil, gas, petrochemical and chemical commodities,” ISNA also quoted Hamid Hosseini as saying.
Drawing a parallel with last year’s figures, he added that the volume of export has witnessed a 20% decline, while its value experienced a 40% surge compared to a year ago because of the rise in global prices.
Giving a breakdown, Hosseini noted that of the total exports, polymers accounted for 1.8 million tons worth $2.2 billion.
The export of bitumen, methanol and urea comprised 2.3 million tons worth $836 million, 4.7 million tons generating $1.3 billion and 1.5 million tons earning $957 million respectively.
Gas condensates made up 93,000 tons of the total exports, which almost doubled compared to a year ago.
Referring to the export of liquefied petroleum gas, he noted that 3.2 million tons of CNG and LPG have also been sold in international markets in the six-month period, although the country’s production capacity is more than 10 million tons per annum.
Expressing concern about decreasing volume of exports, he added that figures have not changed over the last 10 years as infrastructures have not developed.
According to the official, Iran exported $3 billion worth of gasoline in 2020 due to a decline in consumption when the pandemic had reached a peak.
“Presently, gasoline and diesel exports have reached zero and if consumption does not dip, the National Iranian Oil Company may have to import the commodity as of March 2023,” he added.
The Iranian Oil, Gas and Petrochemical Products Exporters Union is now selling mazut to neighboring states, but this cannot continue as the cold season is approaching and domestic demand will outweigh supply.
High Domestic Demand
Thanks to high domestic demand, the government will not be able to earn much by selling petroleum products.
According to Iman Nasseri, a senior consultant and manager for the Middle East Oil Research Department in London-based FGE, a global energy consultancy firm, increasing crude oil refining capacity can be seen as a viable option to help evade US sanctions in the short run.
"Under the present conditions, exporting oil derivatives, namely mazut and liquefied petroleum gas, is less challenging than crude oil because they cannot be tracked," he added.
The National Iranian Oil Company is reportedly selling 500,000 barrels of mazut and LPG per day.
"Exporting petroleum products is easier because the cargoes are smaller and, more importantly, are not necessarily purchased by refineries," Nasseri said, adding that there is a large global market for mazut and LPG as these are used in a variety of industries and buyers cannot be identified.
Iranian crude has its own specific features that can be easily recognized, but the same does not apply to other products.
According to the expert, the more oil processing capacity rises, the more oil derivatives will be sold and the easier sanctions can be evaded. However, he stressed that this can only be a short-term exercise simply because keeping refining capacity at higher levels for extended periods has its own drawbacks.
"First and foremost, the capacity of refineries should not rise more than 20%, otherwise the quality of output will decline," he added.
Furthermore, instead of being overhauled every four years, maintenance work must be carried out every two years, which again means an added financial burden.
Turnarounds typically cost significant sums of operational expense (opex) and capital expense (capex) to execute. They cause lost opportunity cost through lost production while the facility is shut down.
In addition to mazut and LPG, other commodities, namely diesel and gasoline, will be produced in distillation columns. Selling the latter is as difficult as crude.
