Star Refinery Mulls Investment Strategies

Star Refinery Mulls Investment StrategiesStar Refinery Mulls Investment Strategies

The completion of two phases of the Persian Gulf Star Refinery in Hormozgan Province requires $1 billion in investment and PGSOC, the operator of the refinery, is mulling over different scenarios to attract the much-needed funding, chief executive officer of the Persian Gulf Star Oil Company said.

"Tapping into the National Development Fund of Iran, increasing the number of shareholders, using foreign finance and direct investment, as well as signing offtake contracts with potential customers, are various options under consideration," Morteza Emami, who recently took the reins of the company, was also quoted as saying by Shana on Friday.

Elaborating on offtake agreements, which are usually negotiated prior to the construction of a facility such as a refinery to secure a market for the future output of the complex, Emami said serious talks are underway with European and Far East Asian states to conclude deals for selling PGSR's future production and several memoranda of understanding have been clinched.

Pointing to formidable challenges to attract international energy majors' trust to invest in PGSR, Emami said, "Foreign firms urge us to provide them with either government or non-government guarantees, neither of which is possible for PGSR."

PGSR is owned by Oil, Gas and Petrochemical Investment Company (49%), Oil Industry Pension Fund Investment Company (33.1%) and National Iranian Oil Refining and Distribution Company (17.9%).  

Emami noted that the refinery had been intended to be up and running with $1.4 billion, although $4.2 billion have been expended and more investment is required.

"Not all shareholders have met their financial commitments," he added. Referring to the long delay in the first phase that had been planned to be completed by November, Emami said in addition to technical defects in the process of developing refineries that is quite natural, no cash has been injected into the project in the last two months.

  PGSR Output

Total gasoline output of PGSR has exceeded 320 million liters since its official inauguration in April, the official said, adding that the refinery's daily Euro-4 gasoline output stands at 8 million liters per day, which is sold to the government.

There is also a growing demand for its other products like diesel and liquefied petroleum gas in neighboring states.

Emami noted that the complex is provided with 95,000 barrels per day of quality gas condensates as feedstock, yet plans are in place to increase the feedstock to 120,000 bpd, which would lift the PGSR nominal gasoline capacity to 12 ml/d.

Despite the fact that South Pars phases produce close to 900,000 barrels of gas condensates per day, "sometimes PGSR is not provided with as much gas condensates as it requires due to the high volume of condensates' exports", he said.

Referring to the facility's wide-ranging products, namely kerosene, sweet and sour naphtha and liquefied petroleum gas, he noted that as soon as gasoline output reaches 20 million tons per day, production of jet fuel will be high on the agenda.

PGSR is designed to produce 12 million liters per day of Euro-4 gasoline, 4.5 ml/d of Euro-4 diesel, 1 ml/d of kerosene and 300,000 liters per day of liquefied petroleum gas in the first development phase.


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