Experts: Iran's statements on increase in petrol production have propagandistic character

Oil&Gas Materials 31 July 2010 15:36 (UTC +04:00)

Azerbaijan, Baku, July 31 / Trend T. Konyayeva /

Tehran's recent statements to increase petrol volumes in the country and the possibility of self-supply of domestic needs for fuel have propagandistic character, experts said.

"Iranian oil minister's last statement and Iranian President's remark on the issue have propagandistic character, British analyst of Iranian origin, professor at the University of Glasgow Reza Taghizadeh said over phone.

Such a decision may be taken to overcome this difficult situation for a short time. But petrol consumers will not be satisfied with the quality of this type of fuel, he said. 

Iran's oil minister Masoud MirKazemi said on Wednesday that Iran will not only refuse from importing petrol, but export it to other countries increasing the amount of petrol production up to 170 million per day in four years.

He added that if necessary, Iranian refineries can produce 15 million liters of petrol a day in case of emergency additionally.

He said that there are financial difficulties in the construction of oil refineries in Iran. There is also a problem in providing spare parts for equipment at existing plants.

"The process of modernization of refineries is slow. In the current circumstances Iran will not be able to produce petrol in the required quantity during four years, he said.

Today, about 44.7 million liters of petrol are produced per day at Iran's refineries. They are: oil refinery in Bandar Abbas (21 percent of all petrol produced in the country), a refinery in Abadan (20.2 percent), Isfahan (18,2 percent), Tehran (15 percent), Arak (10,4 percent), Tabriz (6,2 percent), Shiraz (3,8 percent), Laban (2,4 percent) and Kermanshah (1,7 percent).

At present, Iran uses about 65 million liters of petrol daily. Taking into account that more than 44 million liters of petrol is produced at local enterprises a day, Iran has to import about 21 million liters of fuel daily from abroad (mostly from European countries). Though Iran is the world's fifth largest exporter of crude oil, it still has to import up to 40 percent petrol. This product tops the list of major imported goods into the country.

He said that one can get fuel for automobile engines and household needs by mixing different kinds of oil products and and using petrochemicals.

"But this type of fuel can damage both the environment and cars", he said.

the country should use a mixture of other oil products to produce such a volume of petrol, which Iran imports. It will lead to shortages of diesel fuel and other oil products on the domestic market, Taghizadeh said.

"If this process is implemented and petrol is received, there will be shortage of other oil products, including diesel fuel," he said.

Contrary to Taghizadeh's opinion, London-based energy consultant Mehdi Varzi thinks that Iran can be economically independent [from petrol import] in 3 years, if it could increase production of petrol and raise it prices.

At the moment concern about the situation with supplies of petrol from European countries amid tightening of international economic sanctions against that country is increasing in Iran.

The UN Security Council adopted a resolution proposed by the U.S. to impose new international sanctions against Iran June 9. Then additional unilateral sanctions against Iran were declared by the U.S. administration. Foreign Ministers of the EU countries approved a package of unilateral anti-Iranian measures, including the decision to reduce exports of petrol.

French oil and gas group Total became the last Western company, which halted deliveries of oil products, particularly petrol, to Iran after the United States imposed unilateral sanctions against that country. Earlier deliveries of petrol to Iran were halted by Anglo-Dutch concern Royal Dutch Shell PLC, British Petroleum, Dutch-Swiss traders Vitol Holding BV and Trafigura Beheer BV, Swiss commodities trader Glencore International AG, as well as Russian Lukoil, Malaysian state-owned Petroliam Nasional Bhd ( Petronas) and Indian Reliance Industries.

Regarding possible supply of petrol to Iran by a number of Russian companies, Taghizadeh thinks that export is impossible now.

On Friday, Iranian Fars news agency reported with reference to the Moscow Chamber of Commerce commission on Iran head and the Moscow Center for the Study of Modern Iran head Rajab Safarov that three Russian companies - Gazpromneft, Rosneft and Tatneft will start deliveries of petrol to Iran by late August.

Safarov said that negotiations on this issue have been conducted. Logistics, banking guarantees and prices are under discussion now.

"Contrary to Safarov, I think that Gazpromneft is not interested in selling oil products to Iran, as it has recently signed a contract with the U.S. It testifies its focus on the U.S. market," he said.

Moreover, such goods must be insured. But at the moment, it is the second obstacle while selling oil products to Iran by Russia because of the sanctions regime, Taghizadeh said.

T. Jafarov contributed to the article.