NIORDC Centered on Upgrading Ageing Refineries

Planning is in the final phase to rehabilitate refining infrastructure whose design and construction are more than half a century old, a senior oil official said Saturday.

"The base design for Iranian refineries dates back to 1965. They produce high amount of low-value mazut and preliminary measures were taken in the beginning of the last decade to recondition the refineries. But the international economic sanctions put a break on our efforts," Abbas Kazemi, the managing director of National Iranian Oil Refining and Distribution Co. (NIORDC), said, IRNA reported.

"We need to invest $14 billion to refurbish nine major refineries and cut their mazut output from 26% to 7%," the official said.

The country's oldest crude processing plant in the city of Abadan in southern Khuzestan Province is the first refinery to get a overhaul, according to Kazemi.

Commissioned in 1912, the Abadan Refinery is one of the world's oldest refineries still in operation. Its production capacity was beefed up to 600,000 barrels per day in 1977, but the 1980-88 Iraq-Iran war inflicted heavy damage on the plant. Kazemi said $3 billion is being invested in the Abadan Refinery "to cut its mazut output to 20% from the present 40%."

National Iranian Oil Company and China Petroleum and Chemical Corporation (Sinopec) have signed a deal to revamp and expand the Abadan Refinery in two phases. The plant's development will cost about $1.3 billion in the first phase.

Improving the quality of oil byproducts by upgrading the production process plus raising production capacity of gasoline and diesel, compliant with Euro-5 standards, are also incorporated in the agreement with the Chinese.

According to the managing director of Abadan Refinery, Esfandiar Daemolzekr, negotiations are underway with Japan’s JGC Corporation to invest in the Abadan Refinery.

"We are in talks on providing nearly €2 billion in finance to further reduce Abadan Refinery's mazut output to less than 10% in the long-term in collaboration with the Japanese company."

  Star Refinery

The NIORDC chief referred to the second phase of the Persian Gulf Star Refinery which is slated for launch in the third quarter of this year. "Iran will export gasoline after the launch of Star refinery's second phase," the official noted. Iran presently imports gasoline to meet high and rising domestic demand.

Located in Hormozgan Province, the refinery will produce 36 million liters per day of high-octane gasoline and 14 million ml/d of diesel. The first phase is expected to come on stream later this month.

The refining capacity of domestic refineries is around 1.8 million barrels per day but plans are in place to raise it by 40%.

"The launch of refinery projects in Shiraz and Jask as well as the Anahita Refinery in Kermanshah Province are part of plans to expand refining capacity," Kazemi said.

According to reports, a $3.3 billion agreement has been signed with South Korea's Daelim Corporation for improvement and optimization of Isfahan Oil Refinery, but work has not yet started.