Iran is targeting Asia’s growing demand for refined oil products with a $2.8 billion project to add 480,000 barrels a day of processing capacity at the Siraf refinery on the Persian Gulf coast.
OPEC’s fifth-biggest crude producer plans to process condensate, a light oil extracted along with natural gas, into exportable products at the new refining units, Ali-Reza Sadegh-Abadi, managing director of Siraf Refineries Infrastructure Co., said in an interview in Tehran, Bloomberg reported.
The project is to be completed in three years, he said. Private Iranian companies will use their own funds to build eight processing plants, each with a capacity of 60,000 barrels a day, said Sadegh-Abadi, who is coordinating the project. The Siraf complex is in the coastal city of Assaluyeh near the South Pars offshore gas field. Iran is boosting gas output from South Pars to meet a growing domestic need for fuel. Sales of condensate from South Pars supplement Iran’s crude oil exports, which are constrained by international sanctions. Condensate exports face no such constraints so long as they go to buyers permitted under US sanctions to purchase Iranian crude.
Sales of condensate doubled last year to about 200,000 barrels a day and contributed to total Iranian oil shipments in April of about 1.3 million barrels a day, according to the International Energy Agency.
“In the long term, Iran wants to move more into selling refined products and having joint-venture refineries abroad,” Olivier Jakob, managing director of Zug, Switzerland based Petromatrix GmbH, said Tuesday. “It’s strategic for them.”
Diversifying exports beyond crude and into higher-value refined products will help Iran boost revenue, and owning geographically dispersed assets would help shield it from potential sanctions in the future, he said.
The country plans eventually to reduce exports of condensate to zero and use all of it in local refineries, Sadegh-Abadi said. As condensate production rises to more than one million barrels a day in the next few years, Iran will produce more naphtha for export to chemical-makers in Asia, he added.
Siraf will have capacity to produce about 270,000 barrels a day of naphtha, 140,000 of gasoil, 30,000 of liquefied petroleum gas (LPG) and 40,000 of kerosene, according to the official.
