2 Refinery Rehab Projects Awaiting Funds

Feasibility studies on Tehran and Bandar Abbas refineries' rehabilitation program, including cutting back their mazut and sulfur production, have been completed, the deputy head of National Iranian Oil Refining and Distribution Company said Tuesday.

“Now that feasibility studies are over, the refineries are awaiting funds to be reconditioned based on EPC (engineering, procurement, and construction) contracts," Shahrokh Khosravani was quoted as saying by ISNA.

Khosravani said that talks are underway with multinationals, namely Italy's Tecnimont, China's Sinopec, Japan's Marubeni, JGC Corporation, JX Nippon Oil & Energy as well as South Korea's Daelim to fund the venture.

Iran signed a memorandum of understanding with two Japanese companies, namely Marubeni and Chiyoda, last year to lower mazut output in Bandar Abbas Oil Refinery in the southern Hormozgan Province, the official recalled.

According to Khosravani, Bandar Abbas Refinery’s mazut production will be reduced to less than 10% of the total while sulfur output will fall to less than 1%.

Located in the southern port city of Bandar Abbas, the refinery accounts for 22% of the country’s total crude refining capacity, which stands at 1.6 million barrels per day, but can be expanded to 1.8 million barrels depending on demand.

Asked about the Abadan Refinery, he said the state-run China Petroleum and Chemical Corporation (CNPC) has started work on rehabilitating the giant complex.

China Export and Credit Insurance Corporation, or Sinosure, has reportedly opened a credit line, worth $1.3 billion, to finance the development of Iran's oldest crude oil processing unit.

Once the biggest in the world, the refinery was severely damaged during the initial stages of the 1980-88 Iraq-Iran war.

On Tabriz Refinery’s development plan, Khosravani said the South Korean engineering conglomerate SK Group is carrying out feasibility studies and is yet to present a development plan.

Pointing to optimization of Isfahan Oil Refinery, the NIORDC official said that Tehran finalized a $2 billion agreement with South Korea's Daelim Corporation in January to renovate and expand the unit.

The government of President Hassan Rouhani has earmarked $14 billion to recondition and improve some of the major refining facilities, including in Tehran, Tabriz and Bandar Abbas.

Asian companies have actively sought downstream projects in Iran's emerging petroleum industry after the easing of international sanctions in January of last year.