Allowing petrochemical plants to produce gasoline is the worst strategy to overcome the deficit caused by growing consumption, said former managing director of the National Iranian Oil Refining and Distribution Company.
"The state-run National Iranian Oil Company produces close to 105 million liters of gasoline per day, of which 100% are burnt locally and the demand is on the rise incessantly," Abbas Kazemi was also quoted as saying by ILNA.
There are effective alternatives to tackle the issue, the least viable of which is producing gasoline in petrochemical plants, he added.
Kazemi noted that what they make is not gasoline, but pyrolysis products that undergo thermal degradation, without interacting with oxygen or any other oxidants.
“Burning the product instead of gasoline is a recipe for disaster as it inflicts irreparable damage to the environment,” he said, stressing that it can heavily contribute to air pollution and cancer.
Petrochemical companies are capable of manufacturing more value-added products that can be sold more expensively than pyrolysis products, so gasoline production in petrochem facilities is a waste of resources.
“As long as the government is involved in energy supply chain, gasoline and diesel cannot be sold at real prices,” he said.
The only way to sell gasoline at international prices is to let the private sector play a role, otherwise the gap between real tariffs in Iran and global markets will widen and changing local prices will get more and more complicated.
“NIOC has been providing people with cheap gasoline for about 50 years, which explains people’s addiction to to low fuel prices. Breaking such a horrible habit and replacing it with a new paradigm will need at least 20 years,” he said.
CNG Sector
Gasoline demand in Iran will surpass supply in the foreseeable future and the most effective strategy to help prevent NIOC from becoming a gasoline importer again is developing the loss-making CNG sector.
Despite having one of the most expanded natural gas networks in the world, CNG demand in Iran is less than 25 million cubic meters per day while CNG filling stations can supply more than 40 mcm of the clean fuel per day, he added.
However, the cost of setting up a CNG station has increased tenfold in five years, while the profit margin remains as low as 3,000 rials (1 cent) for 1 cubic meter and has not increased since 2018.
According to Abdolali Rahimi Mozaffari, a member of Majlis Energy Commission, as long as gasoline demand is not managed efficiently, other strategies on the supply side such as importing the fuel, building new refineries or upgrading old facilities will not yield the desired result.
“Not only do supply-oriented policies like increasing the number of crude processing firms require massive investment, but they are also long-term solutions and cannot address gasoline shortage in the short run,” he said.
“Supply-side management approaches, including plans to import the fuel, should be replaced with demand-oriented management plans, such as getting rid of dilapidated gas guzzlers that have outlived their usefulness.”
Mozaffari said the more refineries are built, the more demand will be created and the vicious cycle will never end.
On the other hand, focusing on the demand side, raising public awareness, promoting wise consumption patterns, taking advantage of advanced knowhow to manufacture fuel-efficient cars, upgrading urban transportation systems, accelerating CNG conversion schemes and increasing fuel prices are more likely to help prevent NIOC from importing gasoline.
