Experts: Iran still fails to provide itself with petrol

Photo: Experts: Iran still fails to provide itself with petrol / Oil&Gas

Azerbaijan, Baku, September 18 / Trend T. Konyayeva /

Despite numerous assurances of Iranian officials on Iran's ability to provide itself with petrol and not to depend on its import, experts think that these statements are wrong.

"This is [Mir-Kazemi's statement ] not supported by the facts. Iran still imports huge amounts of gasoline," professor at the U.S National Defense University and Georgetown University Paul Sullivan told Trend on his own via e-mail.

Iranian Oil Minister Seyyed Masud Mir-Kazemi said in early September that the production of petrol at Iranian refineries increased by 66.5 million liters per day. It covers the country's needs for this kind of fuel and turns the Islamic Republic independent of its import.

At present, Iran consumes about 63 million liters of petrol daily. Although Iran is the fifth country in the world in the volumes of oil export, it had to import up to 40 percent of petrol until the recent time due to lack of refining capacity (mainly from European countries). It tops the list of major imported goods.

Since the realization of the projects to increase petrol production at Iranian refineries, from 18 to 20 million liters of import of these strategic products were suspended.

Sullivan said that Iran has been putting massive amounts of money into the development of a full nuclear fuel cycle, within a relatively small economy, instead of more fully and rationally developing its oil and natural gas infrastructures and business systems.

"Good leadership requires admission of the problems a country faces first off," he said. "Then, and only then, can a country's leadership help solve or mitigate those problems. Surely Iran is not alone in such cognitive dissonance and smoke and mirrors policy making. But it does seem that the regime is getting less and less in touch with its own people and the realities of its economic, political, diplomatic, and other problems."

The U.S. and the European Union adopted sanctions against the Islamic Republic because of its nuclear program in July 2010. They aimed at preventing the supply of petrol to Iran.

Earlier, Anglo-Dutch concern Royal Dutch Shell ceased petrol supplies to Iran in March. The Dutch-Swiss traders Vitol Holding and Trafigura and Swiss commodity trader Glencore also suspended the supply of petrol to this country. The Russian largest private oil company LUKOIL followed their example in April. It supplied about 250,000-500,000 barrels of petrol to Iran per month.

Professor at Northeastern University, U.S, Kamran Dadkhah thinks that Mir-Kazemi's statement is only half truth .

It refers mainly to gasoline, which production he claims will increase by 17 million liters by the end of the Iranian year (i.e. March 2011),he said.

Dadkhah said that a reduction of import may occur due to declining demand for this product. This is caused by a significant decrease in the volume of quota petrol (sold at preferential tariffs) and, accordingly, increase in the cost of purchased product.

The quota for preferential volume of petrol in Iran is 60 liters per month for private cars, 25 liters - for motorcycles, 500 liters - for taxi with a conventional engine, 200 liters - for taxi with a hybrid engine (petrol and gas), as well as private vehicles engaged in transporting cargo and passengers, in a volume of 200 liters.

Currently, the cost of Regular subsidized petrol is about $0.11 per liter and Super subsidized gasoline - $0.18.

According to the statistics from the Iranian Oil Ministry, more than 27 billion liters of petrol were saved by implementing a plan to regulate grants from July last year to March this year.

Dadkhah believes another reason for this drop was that in the previous year (March 2009-March 2010) Iran had more than doubled its import of gasoline and had imported some 4.5 billion dollars worth of this commodity. "In other words Iran had hoarded considerable amount of gasoline to be prepared for the sanctions," he said.

"Thus, it is true that Iran may need less import in the short term," Dadkhah said. "But that is not because of self sufficiency. Rather it is the result of reduced demand and buildup of inventories through higher import".

He said that given the present state of affairs in Iran, every statement of Iranian officials has to be considered with a high degree of suspicion.

According to the Iranian customs service, import of petrol in the first three months of the current Iranian year (March 20-June 20, 2010) declined by 50 percent (up to 500,000 tons). It amounted to $376 million in monetary equivalent.

Petrol was imported, mostly from the United Arab Emirates (UAE), Turkmenistan, Singapore, Oman and Holland. This figure indicates that imports of petrol reduced by half compared to the same period of last year. Iran imported about 1 million ton of petrol last year during this period. The total cost is $ 911 million.

Iran needs investments worth $ 46.5 billion to build new refineries and increase production of oil products.

So far, Iran has invested $8.2 billion in this sector within the fourth development program. Over $6.3 billion is required to maintain and expand existing production. Over $2.1 billion has been invested.

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