Recession in Iran's profitable CNG market

Recession in Iran's profitable CNG market

By Dalga Khatinoglu

Compressed Natural Gas sharing 5 percent of the country's gas consumption and 25 percent of the National Iranian Gas Company's revenues has faced a recession during the last few years in Iran.

Amir Vakilzadeh, the National Iranian Oil Refining and Distribution Company's director for CNG plans told the Oil Ministry's information website Shana on December 2 that some 2,249 CNG stations in the country are active and the government has plans to encourage the private sector to get involved in CNG projects.

The number of CNG stations during last two years increased by 50 percent in Iran, while the consumption rate has not changed. Iranian cars consumes about 20 million cubic meters of CNG per day, equals usage of daily 20 million liters of gasoline.

According to NIORDC's annual statistics, Iran's CNG consumption in the fiscal year, corresponding to 2012 was 19 million cubic meters per day (mcm/d), so there hasn't been any significant increase in Iran's CNG consumption during the last two years.

Iranian cars also consume about 70 million liters of gasoline per day, 5 to 7 million liters of that are imported.

The latest statistics released by NIORDC indicates that some 36 bcm of CNG has been produced and consumed in Iran so far.

The country started CNG production a decade ago, supplying 800,000 cm/d of CNG to the domestic market.

Below is the growth of CNG consumption in Iran

Below is the growth of gasoline consumption in Iran

In comparing the two charts, Iran's gasoline consumption decreased from 2006 to 2011, a period that the country's CNG production increased intensively. However, after 2011, the country's gasoline consumption growth rate accelerated, while the CNG production hasn't increased notably.

About 20 percent of Iran's vehicles are bi-fuel, capable of using both CNG and gasoline.

Iran ranks first in terms of the number of natural gas vehicles in the world, according to the Natural Gas Vehicle Knowledge Base. However, lacking high technologies and financing due to the western sanctions on Iran, imposed in mid-2012, led to halting CNG production projects.

Oil Minister Bijan Namdar Zanganeh said in September that the private sector shouldn't wait for the state sector to take a more active role in developing CNG plants.

A cubic meter of CNG is sold at 18 cents in Iran, while a liter of gasoline is 32 cents.

Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service
Follow him on @dalgakhatinoglu

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