Analyst sees end to Iranian gasoline crisis by 2012

By OGJ editors
HOUSTON, July 25 -- Iran's potentially destabilizing shortage of gasoline will ease by 2012, according to a veteran observer of the country's oil industry.

Fereidun Fesharaki, chairman and chief executive officer of FACTS Global Energy, says additions to refining capacity totaling 705,000 b/d during 2008-12 will eliminate Iran's strong reliance on imported gasoline. The capacity additions include three condensate splitters with 55% gasoline yield at Bandar Abbas.

With demand for gasoline, which is heavily subsidized, rising at 10-11%/year recently, the Iranian government in May increased prices of the product by 25% and in late June imposed rationing. The latter move caused riots in major cities (OGJ, July 9, 2007, p. 17).

In a report this month, Fesharaki says the government is under pressure to raise the price of gasoline sold beyond ration limits to international levels, about five times the current price, by September.

Following the government crackdown in May and June, he adds, smuggling of about 40,000 b/d of gasoline out of the country ceased. Iranian gasoline now is being smuggled to Iraq.

Last year, the Islamic republic imported about 192,000 b/d of gasoline. In the first week of May, Iranian gasoline demand averaged 496,000 b/d.

Fesharaki expects Iran eventually to export 100,000-250,000 b/d of gasoline while fuel oil exports drop to 50,000 b/d in 2012 from 250,000 b/d in 2006 once planned refinery projects are complete.

The analyst projects additions to crude distillation capacity by 2012 of 80,000 b/d at Arak, a total of 420,000 b/d at Bandar Abbas, 120,000 b/d at Isfahan, 50,000 b/d at Tabriz, 21,000 b/d at Lavan, and 14,000 at Shiraz. He forecasts additions of processing capacities related to gasoline, such as catalytic cracking, catalytic reforming, and pentane-hexane isomerization, at those and other refineries.

Upstream work
Fesharaki notes a series of delays and cost overruns in major oil field development projects related to the buyback contracts under which foreign partners must work and to inefficiencies in the Iranian regulatory system.

Despite modest changes to the buyback contracts, he says, terms remain unattractive by international standards.

Furthermore, because of US pressure and political instability, international banks won't back Iranian energy projects.

Last year, Iran produced 4.07 million b/d of crude and condensate from capacity estimated at 4.3 million b/d. Recent production gains have mostly been condensate from offshore South Pars field.

Production-decline rates are about 8%/year onshore and as high as 13%/year offshore.

Despite the steep production declines and problems with oil field development, Fesharaki expects crude and condensate production capacity to reach 4.7 million b/d by 2012, almost all from South Pars.

Although Iran's gas reserves estimate of 993 tcf is second only to Russia's, the analyst sees a ceiling of 20-30 million tonnes/year on Iranian gas exports via LNG and pipeline.

He cites domestic demand kept high by subsidy pricing, oil field needs for gas injection of about 10 bcfd, large gas-based petrochemical projects, the use of compressed natural gas to supplement gasoline supplies, and political opposition to gas exports (OGJ, May 9, 2004, p. 34).

Related Articles

US House leaders press BP for answers on Whiting refinery outage

08/18/2015 Leaders in the US House of Representatives are demanding answers from BP PLC regarding the early August unplanned and still ongoing shutdown of a m...

EPA proposes methane emissions requirements for oil, gas industry

08/18/2015 The US Environmental Protection Agency has proposed requirements aimed at reducing emissions of methane and volatile organic compounds (VOC) from a...

Pennsylvania’s governor issues crude-by-rail study he commissioned

08/18/2015 Pennsylvania Gov. Tom Wolf (D) issued a study he commissioned in late April of issues stemming from the growing number of crude oil shipments by ra...

LyondellBasell to shed Argentinian petrochemical assets

08/18/2015 LyondellBasell, Houston, has reached an agreement for the sale of its wholly owned subsidiary Petroken Petroquimica Ensenada SA (Petroken), which o...

Santos updates Gladstone LNG project status

08/18/2015 The Santos Ltd.-led Gladstone coal seam gas-LNG project (GLNG) has introduced first gas to the LNG plant on Curtis Island. The gas will be used to ...

Browse FLNG project awarded Australian government approval

08/18/2015 The Woodside Petroleum Ltd.-led Browse floating LNG (FLNG) project offshore Western Australia has taken another step forward with the Australian go...

MARKET WATCH: NYMEX crude oil prices dip below $42/bbl on oversupply concerns

08/18/2015 The light, sweet crude oil contract for September settled at $41.87/bbl on the New York market Aug. 17, which was the lowest closing since Mar. 3, ...

BSEE approves full drilling of Burger J well in US Arctic

08/17/2015 The US Bureau of Safety and Environmental Enforcement (BSEE) has given approval to Royal Dutch Shell PLC to drill to total depth the Burger J explo...

NEB issues import, export licenses to Pieridae Energy

08/17/2015 Pieridae Energy (Canada) Ltd. reported that it has been issued long-term licenses by Canada’s National Energy Board to import natural gas from the ...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected