Iran's fuel oil: production, exports fall significantly

Iran Materials 27 December 2013 18:02 (UTC +04:00)

By Dalga Khatinoglu

The latest reports suggest that Iran's total fuel oil output and exports have fallen significantly.

Iran's severe gas shortage forced the country to use more fuel oil in its power plants and production has declined. The decision resulted in sharp fall in the country's fuel oil exports.

Tehran increased fuel oil exports in the previous year to compensate its cuts in crude oil exports.

Fuel oil is a cheap refining product which is about $10 cheaper than crude oil. It is usually used as fuel in power plants, ships, and for heavy engines.

On the other hand, due to the sanctions imposed on Iran and foreign companies' reluctance to take part in Iranian refineries' development and optimization projects for producing more valuable products such as gasoline and gas oil, the country was forced to continue keeping and even increasing fuel oil output level.

Bloomberg reported on December 27 that Iran's fuel oil exports have droped to one third to 200,000 tons per month due to the increasingly use of the product in power plants.

The International Energy Agency's latest report on Iran's fuel oil exports dates back to 2011. The report said that the country produced 26.332 million tones (72 million liters per day) of fuel oil per day in 2011. Some 10.1 million tons of this amount was exported during the mentioned period.

However, Deputy Managing Director of Procurement and Distribution Department of the National Iranian Oil Refining and Distribution Company (NIORDC), Hossein Aghayan told Mehr News Agency that some 22 billion liters (above 20 million tons) of fuel oil has been exported during last Iranian calendar year, which ended on March 19,2013.

Iran's oil ministry statistics show that the country produced 86 million liters of fuel oil per day (which equals to about 30 million tons a year) in the past Iranian calendar year.

Mehr News Agency on December 20 quoted the National Iranian Oil Refining & Distribution Company's report that the country's domestic fuel oil consumption stood at 51 million liters per day in the current year, indicates about 6 million liter increase compared to 2011's figures.

According to Bloomberg Iran has been exporting about 600,000 tons of fuel oil monthly until October 2013.

In case if Aghayan's statement is quoted correctly, then Iran's montly fuel oil export decreased from 1.6 million tons per month (about 300,000 barrels per day) in last Iranian year to 600,000 tons (about 130,000 barrels per day) during first 9 months of 2013 and continued to decrease to 200,000 tons in October.

The huge drop likely has another reason, which is the decrease in production level.

Former managing director of NIORDC, Alireza Zeyqami, had told Mehr News Agency in April that the country plans to decrease fuel oil output by 20-27 percent in the current Iranian calendar year (started onMarch 21) in order to produce more valuable products, such as gasoline.

Iran's oil-gas production inreased from 92 million liters to 100-105 million liters during last nine months, while gasoline output increased at least 4 million liters per day.

The managing director of National Iranian Oil Products Distribution Company (NIOPDC), Mostafa Kashkouli, told SHANA News Agency on December 24 that the fuel consumption of Iran's power plants has increased by 9 percent compared to previous year.

According to him, Iran consumed 43.3 million liters of fuel oil only in the Iranian month of Azar (November 23 - December 22).

The oil ministry has not yet released any official statistics on the country's fuel oil producion.

Given the low temperatures and the increasing trend of household's gas consumption in Iran, the power plants' fuel oil consumption is expected to rise in the coming months.