The National Iranian Oil Refining and Distribution Company has resumed supplying premium gasoline, marketed as 'super', in large cities after a six-month gap, director of the state-run company said.
“Shazand Refinery in the central city of Arak, Markazi Province, and Persian Gulf Star and Bandar Abbas refineries in Hormozgan Province, as well as the Isfahan Oil Refining Company, had stopped producing premium gasoline due to overhaul operations, but now all of them are up and running and the mass production of the high quality commodity has restarted,” Jalil Salari was also quoted as saying by ISNA.
The distribution of premium fuel has gradually started in the capital, and other big cities and smaller towns will be supplied with the product in the near future, he added.
The official noted that demand for premium gasoline declined by 80% between March 2021 and March 2022, because of which NIORDC decided to reduce its output and halt supply in July when the refineries started to overhaul their equipment.
Due to low demand (around 2 million liters per day), premium gasoline production is not a priority for NIORDC, a subsidiary of the National Iranian Oil Company, he added, noting that NIORDC produces limited amounts of this fuel as “few station owners order because it must be sold at unsubsidized prices [10 cents per liter, twice as much as that of regular gasoline]”.
If the demand keeps declining, it is likely that the company may stop producing it again.
Premium gasoline has an octane level of 91 as opposed to regular fuel with an octane number of 87.
The higher the octane number, the less pollution it will cause upon use.
The NIORDC chief said each liter of regular gasoline costs 5 cents and most motorists prefer to buy the cheaper fuel and so filling stations are not interested in purchasing the premium grade.
Evaporation Losses
Salari noted that losses caused by evaporation of premium gasoline are high and it is not economically feasible to keep it in storage tanks for long periods.
Daily demand for gasoline and diesel in Iran has reached 104 and 115 million liters respectively.
“NIOC’s maximum gasoline production capacity is 105 ml/d. The current consumption will rise by at least 7% in 2023,” he said, adding that there is no quick fix for the fuel shortage because plans for building new refineries or manufacturing fuel-efficient cars are either unfeasible, or could only be materialized in the long run.
The official pointed out that to redress the imbalance, NIOC had to tap into the strategic gasoline reserves, which was a cause for concern.
Salari said Iran’s strategic gasoline reserves hold 4 billion liters and there is now a balance between supply and demand, however it will not last long as consumption is expected to surpass 120 ml/d in March 2023 when the Persian New Year starts and a large number of families embark on holiday trips.
Referring to alternatives for curtailing rising gasoline consumption and avoiding imports, Salari said, “Pinning hope on automakers to manufacture energy-efficient cars has been an exercise in futility. They have shown utter negligence and indifference when it comes to producing vehicles whose mileage complies with global norms [of less than 6 liters/100 km].”
Close to 800,000 new low-quality cars are added to Iran’s transport fleet annually, whereas old gas guzzlers are not sent to the junkyard.
Viable Option
According to Hashem Oraei, the head of Iran Energy Association, the most viable option to curb consumption is to accelerate the nationwide plan to convert 1.4 million gasoline-powered public transportation and commercial vehicles to compressed natural gas hybrids, which was launched in 2019.
“It is regrettable that despite its long-term financial and environmental benefits, the CNG conversion venture is moving at a snail’s pace,” he added.
Ali Mahmoudian, the head of the Alternative Fuels Union, said as per the long-heralded scheme, at least 1 million gas-guzzlers should have been retrofitted by now, but the figure has not exceeded 200,000.
“Even at this pace, the scheme has helped cut gasoline use by almost 1.5 million liters per day and if the government wanted to import the same volume, it would have to spend $500 million a day,” he added.
The official noted that if the project was implemented as scheduled, it could save close to 12 million liters of gasoline per day, which is equal to the daily output of Tehran, Shiraz, Lavan, Tabriz and Kermanshah refineries.
Mahmoudian said importing 12 million liters of gasoline would cost NIOC about $6.5 billion per year at the average international price of $1.5 per liter.
After the plan was approved by the Economic Council in 2019, NIOC started to equip CNG centers with the necessary kits and tanks. The retrofitting process made progress in the first two years but has stumbled in the last 12 months, due largely to economic constraints and the steep fluctuations in forex rates.
