To temporarily redress the growing imbalance between gasoline and diesel supply and demand, the government has started to import fuels, spokesman for the Majlis Energy Commission said.
"Although the gap is not considerable yet, the government has predicted the deficit to rise incessantly, for which it has allocated close to $1 billion in the fiscal 2023-24 budget bill to buy diesel and gasoline from international markets,” Mostafa Nakhaei also said in an interview with the Persian newspaper Shargh, Ensafnews.com reported.
The disparity between supply and demand is rising rapidly and despite the National Iranian Oil Company’s reluctance to import fuels, it has to meet the mounting domestic demand, he added.
Iran’s dependence on the costly import of gasoline ended in 2018, but Nakhaei confirmed that imports have resumed and he expects fuel supplies to rise this year.
The average international price of gasoline and diesel is around $1.5 per liter.
“Importing gasoline to plug fuel shortage is a short-term solution and other effective measures like sending dilapidated vehicles to the junkyard must be given an immediate priority,” he said.
According to the lawmaker, rules should be ratified to facilitate the import of hybrid cars whose consumption is less than that of domestically-manufactured gas guzzlers.
The Majlis Research Center had earlier announced that the number of clunkers that have outlived their usefulness has surpassed 10 million.
As vehicles become outdated, their fuel consumption rises and getting rid of each rundown vehicle can reduce fuel consumption by 2,000 liters annually.
Fuel Cards
Referring to NIOC’s decision to collect smart fuel cards from gas pumps and force motorists to use their own cards to fill their tanks, he said such stopgap solutions may reduce fuel smuggling in border areas for a while, but more practical strategies are required in the long run to reduce the demand.
As per the directive issued by NIOC on April 15, all car owners are obliged to use their own fuel cards in the pumps and gas stations are not allowed to give their cards to motorists anymore.
The National Iranian Oil Products Distribution Company (NIOPDC) rationed gasoline on Nov. 15, 2019, and raised prices.
“The NIOC data show daily gasoline consumption has reached 103 million liters per day, while all Iranian refineries are functioning at full capacity to produce 100 million liters/day and output cannot rise any further,” Hashem Oraei, the head of Iran Energy Association, said.
“The current consumption will rise by at least 10% in the following years,” he said, adding that there is no quick fix for the fuel shortage because plans for the construction of new refineries, or manufacture of fuel-efficient cars are either infeasible or time-consuming.
Oraei said pinning hope on automakers to manufacture energy-efficient cars has been an exercise in futility, as they have shown utter indifference when it comes to producing vehicles whose mileage complies with global norms (less than 6 liters/100 km).
Close to 800,000 new low-quality cars are added to Iran’s transport fleet, whereas old gas guzzlers are not sent to the junkyard.
The energy expert said the most viable option to curb consumption is to accelerate the nationwide plan to convert 1.4 million gasoline-powered public transportation and commercial vehicles to compressed natural gas hybrids, which was launched in 2019.
CNG Conversion Venture
Oraei regretted that despite its long-term financial and environmental benefits, the CNG conversion venture is moving at a snail’s pace.
According to Ali Mahmoudian, the head of the Alternative Fuels Union, as per the long-awaited scheme, at least 1 million gas-guzzlers should have been retrofitted by now, but the figure has not exceeded 200,000.
Even at this pace, the scheme has helped cut gasoline use by almost 1.5 million liters per day and if the government wanted to import the same volume, it would have to spend $500 million a day, Mahmoudian revealed.
The official noted that if the project was implemented as scheduled, it could save close to 12 million liters of gasoline per day, which is equal to the daily output of Tehran, Shiraz, Lavan, Tabriz and Kermanshah refineries.
“Importing that amount of fuel [12 million liters] would cost NIOC about $6.5 billion per year,” he added.
According to Reuters, Russia has started fuel exports to Iran by rail for the first time two months ago.
Last autumn, Russia's Deputy Prime Minister Alexander Novak announced the start of swap supplies of oil products with Iran, but actual shipments only started this year.
In February and March, Russia supplied up to 30,000 tons of gasoline and diesel to Iran, two sources familiar with the export data told Reuters.
Iran is an oil producer and has its own refineries, but recently its consumption had exceeded domestic fuel production, especially in its northern provinces, a trader in Central Asian oil products market said.
Russian oil companies are currently interested in exporting diesel and gasoline to Iran by rail, as exports by sea face high freight rates and a price cap imposed by the G7 countries.
