Iran sets ultimatum to China financier on Abadan Refinery project

Business Materials 12 January 2016 12:15 (UTC +04:00)

Baku, Azerbaijan, Jan. 12

By Farhad Daneshvar - Trend:

An Iranian oil official has warned against postponing the process of signing a contract to develop Abadan Refinery in the southwestern province of Khuzestan.

Abbas Kazemi, an Iranian deputy oil minister, said that the National Iranian Oil Production and Distribution Company (NIOPDC) has been discussing the issue of financing the project with a Chinese financier for a long time over the past several years, Mehr News Agency reported Jan. 12.

Kazemi added that currently the oil ministry prefers to launch the project in co-op with the Chinese side. He did not mention the name of the Chinese company.

Iran's Oil Ministry issued an ultimatum saying if the Chinese financier continues to postpone the project, the oil ministry will replace the Chinese company with another one, he added.

He speculated that the construction of the development project will be launched by the early new Iranian year starting March. 21.

Earlier in an interview with Mehr, Shahrokh Khosravani, deputy head of the NIOPDC, said that to launch the project they need about $2.6 billion worth of investment.

According to Iranian national Oil Engineering and Construction Company the project is aimed at increasing the capacity of the refinery, applying the Euro-5 standards, reducing environmental contaminants, increasing the production of gasoline and gas oil as well as reducing the production of fuel oil.

The capacity of the aged Abadan Refinery is 400,000 barrels per day (b/d) with three units of crude oil distillation where 250,000 b/d of crude are processed. The distillation units suffer from low productivity due to their time-worn technology and equipment which were installed over 70 years ago.

The development project of Abadan Refinery consists of a distillation unit with 210,000 b/d which is expected to replace the aged units.

Considering a new unit with 150,000 b/d that was launched in 2006-2007, the capacity of the refinery will reach about 360,000 b/d after launching the development project. The products produced in the distillation units will be purified in hydrogen units.

Iran's Oil Ministry seeks to sign an EPC contract and also establishing a credit line to finance the project through a Chinese company.