Iran Plans to Promote CNG to Curb Gasoline Demand

Cutting the price of compressed natural gas for domestic consumers is imperative to reduce gasoline consumption and imports, despite the rise in fuel production in recent months, the head of Alternative Fuels Union said on Sunday.

“The share of CNG among the fuels for transportation is between 21% and 23% currently, but it can increase to 45-50% if consumers are encouraged to use more of the clean fuel by giving incentives such as price cut,” Ali Mahmoudian was also quoted as saying by ISNA.

State-owned Alternative Fuels Union was established earlier this year to speed up plans to promote the consumption of cleaner fuels, such as CNG.

“The price of CNG at filling stations is three times higher than gas supplies to the residential sector, thus the union has asked the Oil Ministry for a 1,500-rial (4.5 cents) per cubic meter price cut in CNG prices,” he said.

If the ministry endorses the proposal, the CNG price will be cut to around 9 cents from the approximately 12.6 cents per cubic meter.

Mahmoudian forecast that CNG consumption will increase by 7-9 mcm/d within three months of implementing the scheme.

"Average consumption of gasoline since the beginning of the present fiscal year in March has reached 80 million liters per day, indicating an 8.5% rise compared with the corresponding period of last year," he said.

The official noted that Iran imports between 10 and 12 million liters of gasoline per day to meet the soaring demand.

It comes as gas production capacity has reached 885 million cubic meters per day, as the higher output can help increase CNG supplies at filling stations and ease gasoline demand.

Tehran seeks to raise gas production capacity to 1 billion cubic meters per day by March 2018 on the back of bigger supplies from South Pars, the world's largest gas field shared with Qatar in the Persian Gulf.

Mahmoudian said that currently, about 2,400 CNG stations are operational nationwide, with a capacity to supply 40-50 mcm/d. Actual daily supply of the fuel at filling stations is about 20-21 mcm/d on average.