Iran is planning to diversify its petroleum offerings by blending and producing different types of oil, the head of Iranian Oil Terminals Company said on Tuesday.
Pirouz Mousavi added that a European company is poised to team up with the Research Institute of Petroleum Industry—the research and development wing of Iran's Oil Ministry—to produce customized crudes as per the customers' order. Production is expected to commence in two years, IRNA reported.
"One of the advantages of leading international oil terminals is their capacity to process different crudes," Mousavi said.
Refineries that process and produce several kinds of crude oil can earn higher profit. The move is an effort to drum up competition with rival oil producers in the region and gain a stronger foothold in Asian markets and elsewhere.
The fluctuation of oil prices over the past two years has prompted many companies to redesign their refineries to process different blends of oil.
Following the steep decline in oil prices from a high of $115 per barrel in mid-2014 to below $27 in January, many higher-cost producers, especially US shale oil drillers, were forced to halt operations.
This led to a huge dent in global shale oil output—a light, sweet crude—and forced many companies to restructure their processing facilities for heavier crudes.
For instance, while many US refineries were built to process heavy blends of oil, over $85 billion have been spent in the past quarter century to reconfigure US refineries to process heavier crudes imported from Venezuela, Mexico and Canada, according to US information company HIS Inc.
Iran's oil and those of most Middle East nations are among heavy crudes.
Oil production for Iran and Saudi Arabia has a breakeven point of around $10 per barrel, while shale oil production, particularly in Canada and the US, costs $35-50 a barrel.
Iran's refining capacity for crude oil and gas condensates sits at around 1.8 million barrels a day, but many refineries are posting losses or unconvincing profit margin due to aging infrastructure and high output of mazut, a heavy, low-quality derivative of little financial value.
