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Japan to Help Reduce Tabriz Refinery’s Mazut Output

Japan to Help Reduce Tabriz Refinery’s Mazut OutputJapan to Help Reduce Tabriz Refinery’s Mazut Output

Serious negotiations are underway with Japan’s JX Nippon Oil & Energy Company to implement Tabriz Refinery’s mazut reduction initiative, a senior oil official announced.    

“Concurrent with the resumption of Japan Cooperation Center, Petroleum’s operation in Iran’s energy sector as a provider of development programs, a new round of talks has begun with JX Nippon to help lower Tabriz Refinery’s mazut production,” Saeed Mahjoubi, National Iranian Oil Refining and Distribution Company’s director for coordination and supervision, told Mehr News Agency.

The official confirmed ongoing negotiations with Inpex, Japan’s biggest oil developer, and Japan’s Marubeni Corporation, a major Japanese integrated trading and investment business conglomerate, to invest in the Persian Gulf state’s oil and gas upstream sectors.

Referring to plans for upgrading Tabriz Refinery with the help of foreign investment, Mahjoubi noted that feasibility studies to make the refinery’s gasoil output compatible with Euro-4 standards have already been conducted and as soon as the current negotiations come to fruition, the operational phase of the project will commence by attracting foreign investment.

According to Mahjoubi, improving the quality of oil byproduct, especially gasoline and gasoil, to meet Euro-4 standards tops Iran’s oil refining industry’s strategic policies.

“In spite of the fact that Iran’s refining capacity stands at 1.8 million barrels of oil and condensates, the excessively high production of mazut in Iranian refineries has substantially reduced their profit margin.”

Oil officials believe that due to the high production of mazut in refineries as their Achilles’ heel, most refining units across the country will go bankrupt unless they are supported financially by the government.

According to reports, notwithstanding Iran’s large refining capacity, the loss borne by refineries outweighs their profit as they are deprived of state-of-the-art technology to convert mazut into gasoline.

 Refining Capacity

Iran is ranked 11th, ninth and 13th in terms of oil refining, gasoline and diesel production capacity, yet when it comes to producing low-valued mazut, it ranks first in the world.

According to Abbas Kazemi, managing director of National Iranian Oil Refining and Distribution Company, the Iranian government is planning to disburse $14 billion to renovate and optimize refineries nationwide and improve the quality of petroleum products.

“Based on the plan, refineries should reduce mazut output to less than 10% and instead are expected to produce more gasoline that is compatible with international standards,” Kazemi added.

The Iranian government is pursuing a two-pronged policy in dealing with mazut: minimizing output and converting the fuel into products with higher value-added such as gasoline and diesel.

According to the NIORDC chief, plans call for disbursing $14 billion to renovate and optimize refineries nationwide and improve the quality of petroleum products.

Financialtribune.com