Energy
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Discount on Feedstock

Discount on Feedstock Discount on Feedstock

The oil ministry has plans to give a 10-percent discount on feedstock to refineries, planning director of the National Iranian Oil Refining and Distribution Company (NIORDC) said, Shana News Agency reported on Monday.

To develop the existing and establish new refineries, the oil ministry will allow refineries to purchase feedstock with a 10-percent discount, in line with Note 2(G) of the present year budget law,  Shahaboddin Mataji announced. He reiterated the measure would not only enable refineries to increase savings to pay their debts to financial institutions but also provide the fund to expand refining units. The note establishes the investment framework for the oil ministry, allowing it to invest up to $100 billion in oil and gas projects.

The official added that the discount will also apply to the yet-to-be-built Hormoz Oil Refinery. Initially planned to be built in the port city of Bandar Abbas, the refinery was later decided to be part of an industrial zone in Jask in Hormozgan Province to benefit from the installed infrastructure, discount in price of feedstock as well as a complete value chain.

At an estimated cost of $4 billion, the Hormoz Refinery will produce around 300,000 barrels of oil per day once completed. The project was given the green-light in 2006 and scheduled to be finished within six years. However, its construction site is still a matter of contention.

Plans also call for natural gas to replace both mazut and diesel fuel as feedstock in refineries to curb pollution. The government has instructed power plants in addition to refineries to use gas instead of more polluting feedstock such as mazut due to abundance of gas resources in Iran and the rise in gas extraction in the South Pars gas field in the Persian Gulf.

 

Financialtribune.com