Iran is planning to invest $14 billion to upgrade its aging refining industry as part of efforts to rebuild and expand the petroleum industry despite low crude prices and volatility in global markets, managing director of the National Iranian Oil Refining and Distribution Company said.
“Construction and renovation of refineries is still economically viable despite the plunge in oil prices. With the help of modern technology, investment in refineries would be rewarding,” Abbas Kazemi was quoted as saying by Mehr News Agency on Wednesday.
Kazemi said in line with policies to reduce the export of hydrocarbons such as oil and natural gas per se and boosting output of petrochemicals that generate higher value added, Iran wants to upgrade its dilapidated refineries and build new ones. For this it requires $14 billion in investment. Underscoring the fact that domestic refineries produce undesirably high levels of mazut, the official said curbing mazut production and raising output of high-value liquid fuels in the refineries are among the priorities of the Oil Ministry.
Talks With Asians
“Following the easing of international sanctions, foreign investors, including South Korean and Japanese companies, have welcomed participation in Iranian refinery upgrade projects,” he said.
Kazemi stressed that negotiations are underway with South Korea's Daelim on reducing mazut production at Esfahan Refinery, and added that several Korean and Japanese corporations are in talks with NIORDC on implementing similar projects at refineries in the southern port city of Bandar Abbas and in Tehran.
“Two Japanese firms, namely Japan Corporation Center, Petroleum and JGC Corporation, have held talks on mazut output reduction in some Iranian refineries,” he said, noting that Iran is in the final stages of negotiations with China over the reduction of mazut production in the huge Abadan Refinery in Khuzestan Province.
It is the oldest refinery of the country launched in 1912 by the Anglo-Persian Oil Company that is one of the antecedents of the modern BP Plc.
Kazemi said that the unnamed Chinese company is obtaining permits from the Chinese government for opening a line of credit to fund the Abadan Refinery development plan.
"Abadan Refinery's rehabilitation is expected to begin in a few weeks," he added.
If the $14 billion investment comes to pass, the quality of domestic petroleum products will also improve further to meet Euro-4 and Euro-5 standards, in addition to reducing the share of mazut output in refineries to less than 10%.
Kazemi pointed out that a new round of negotiations was recently held with a consortium of German companies on renovating oil facilities in Iran.
Gholamreza Soleimani, the managing director of Ghadir Investment Company, told IRNA on Tuesday that Italian oil and gas servicing companies, Saipem and Tecnimont, are planning to build a 120,000-barrel per day gas condensate refinery in Fars Province, saying the preliminary agreement with the companies is due to be finalized in the near future.
According to reports, Iran's nine major refineries process an estimated 1.8 million barrels of crude oil per day.
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