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Reduction in gasoline imports to Iran to deal strong blow to country's economy: experts

Oil&Gas Materials 21 May 2009 16:27 (UTC +04:00)

Azerbaijan, Baku, May 21 / Trend , A. Badalova, T. Jafarov/

Iranian economy will suffer to great extent in case sanctions imposed on gasoline imports to the country.

"Sanctions would let the supply to collapse, with a conceivable big hurt on the economy and life style," Carlo Stagnaro, Italy's Bruno Leoni University Energy Department Director, wrote to Trend in an email.

Discussions on sanctions against companies that sell gasoline to Iran begun in the U.S. Congress two months ago, which is another measure to halt Tehran's nuclear program. In response to this, Minister of Petroleum of Iran Golam Hossein Nozari said earlier this week that "the country welcomes such sanctions." He said building a refinery Setar in the Persian Gulf, Iran will produce 35 million liters of gasoline per day and will no longer import it.

Stagnaro said it is not in Iran's interest to prevent gasoline imports. That may be very inefficient way to achieve a more balanced consumption, as the country over-consume gasoline because of the existing price controls.

Obviously Iran is playing a dangerous game, in my opinion. Both Teheran and the rest of the world have an interest in reaching a peaceful setting of their mutual relations. Western countries may some time ask too much, but also Iran should show some sign of good will, Stagnaro said.

"As soon as the sanctions are officially imposed, Iran will start to severely ration the gasoline that it produces domestically," American professor on oil and petrochemistry at U.S. University Muhammad Sahimi wrote Trend in an email. 

He said while this can be a short-term solution, it cannot be the proper answer to a difficult problem, particularly for a large and populous nation. "First, if the sanctions drag on, they will hurt Iran's economy significantly. Second, the rationing may increase significantly the discontent among the population," Sahimi said.

The only viable long-term solution to Iran's gasoline problem must involve much more efficient use of gasoline, Sahimi said.

He said domestically produced and subsidized gasoline must be prevented from being smuggled into
the neighboring countries to be sold at a much higher price and increasing greatly the domestic refining capacity, which however requires very large investment.

Expert at Energy Security Analysis (ESAI) Andrew Reed said Iran will remain an importer of gasoline for a long time. "Iran must import gasoline, Reed said."Lack of fuel will cause social unrest in the country," Reed said to Trend via email.

Moreover, Iran's refining power is insufficient to meet domestic needs for gasoline.

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