Iran eyes to update Tabriz refinery by Chinese, Russian finance

Business Materials 26 August 2018 16:21 (UTC +04:00)

Baku, Azerbaijan, August 26


Iran’s Tabriz Refinery is negotiating with Chinese and Russian companies to attract investment for a project to improve the quality of its products.

Talks are underway with the companies for a project, worth $1.5 billion, to produce products compatible with the Euro-5 emission standard, Gholamreza Bagheri, managing director of the refinery, said.

The investment will also increase the refinery’s output, Bagheri said, IRNA news agency reported.

He further said that the refinery has invested over 500 million euros so far for various eco-friendly plans, including sulfur granulation Project and high-quality gasoline production as well as asphalt production unit.

Some 5 million euros also is invested for a project to curb associated petroleum gas (APG) from flaring, he added.

APG is a form of natural gas found with deposits of petroleum. It is often released as a waste product from the petroleum extraction industry. When it is burnt off as gas flares, it is referred to as flare gas.

Earlier in 2017, Iran’s Oil Design and Construction Company (ODCC) and South Korean SKEC signed a preliminary agreement related to the upgrade of Tabriz refinery, worth 1.6 billion euros.

At that time it was announced that the companies would establish a consortium, with the intention of purchasing new equipment, redesigning and upgrading the refinery, with the goal aimed at the decrease in final production loses from the current 20 to the expected 2 percent as well as improving the quality of other products like gasoline and diesel.

The refinery was also negotiating with Japan’s JX Nippon Oil & Energy Company on reducing the complex's mazut output from the current level of 28 percent to 10 percent.

Capacity of the Tabriz refinery is at 110,000 barrels per day. It produces 4.1 million liters of fuel oil per day (ml/d), 3.5 ml/d of gasoline ((half of that is compatible with Euro-4 standard)), 1 ml/d of kerosene, 6 ml/d of diesel, 0.3 ml/d of LPG and other products.

Analysts believe that due largely to the high production of mazut in refineries, most refiners will go bankrupt unless they receive financial backing from the government.

Moreover, many refineries need huge investments to upgrade their aging infrastructure and employ state-of-the-art technology to convert mazut into byproducts with higher value added.

Reportedly Iran ranks 9th in the world in terms of gasoline production and 13th in gas oil output, meanwhile it is the world's third major mazut producer, which indicates low performance of the country's refineries.