Iran Economy - News & Updates
Iran Economy - News & Updates
Report updates Iran’s refinery project status
Iran has announced many refining and upgrading projects to increase the supply of transportation fuels. Many of these projects, however, will not proceed due to lack of funding.
The report from FACTS Global Energy, Singapore, notes that expansion and upgrading projects currently under way are likely to be completed. New refinery projects, to supply both exports and domestic demand, are having difficulty obtaining funding.
Gasoline demand, politics
According to the report, Iran’s need for gasoline imports is temporary and domestic production will be sufficient to supply Iranian demand beyond 2012-13. US sanctions on gasoline exports to Iran will therefore have no effect on the country.
Sanctions will instead motivate Iran to seriously curtail demand by forcing large volumes of gasoline to nonregulated prices, according to the report. These sanctions can save Iran several billions of dollars immediately, and could be a blessing in disguise for the Ahmadinejad government.
Iran is embarking on a large refining expansion and upgrading program. By 2012-13, Iran will not need any gasoline imports and may be an exporter after that. Iran’s gasoline demand is unlikely to grow much because the government intends to push more gasoline into nonregulated price market to force lower domestic consumption, according to the report.
Iran also plans to build new refineries, which the report says are doubtful. There are current projects that will resolve Iran’s gasoline deficit.
Iran’s gasoline imports
According to the report, Iran’s gasoline imports averaged 180,000 b/d in 2007 with a peak of 233,000 b/d. Although Iran had planned to introduce gasoline rationing through smart cards, it feared political backlash and expected consumer resistance.
The threat of US sanctions gave Iranians the justification they needed to impose rationing with limited public resistance in summer 2007. Imports fell about 50% immediately and saved Iran about $2-3 billion/year.
The report stated that demand is currently rising slowly and imports for 2008 will average 112,000 b/d, a decline of nearly 40% from 2007. The most important effect of all of these changes was the elimination of gasoline smuggling out of Iran and the emergence of a free market price.
Due to an emerging global refining surplus and, particularly, an unprecedented gasoline surplus, product imports make sense for Iran. Domestic criticisms and international concern over imports, however, have compelled Iran to build new refineries including upgrading projects and grassroots refineries. This will significantly increase gasoline supply.
Regarding Iran’s refining projects, many ask whether Iran can find enough capital, whether the projects will actually materialize, and whether they find the contractors to build the refineries, according to the report. These questions translate the global cost escalation and refining delays to the Iranian situation.
Real projects, of which FACTS has first-hand knowledge, are upgraders and expansions. These are all real, ongoing, and despite delays, there is a reasonable completion date, according to the study.
Iran’s refineries have focused on diesel production and neglected gasoline production. As of yearend 2008, Iran only has a small 20,000-b/d FCC unit in Abadan, no coking, and 145,000 b/d of hydrocracking. Iran is moving heavily into FCC and resid catalytic cracking (RCC) to maximize gasoline production, according to the study.
Iran is building three of the largest FCC-RCC units in the world—94,000 b/d in Arak, 91,000 b/d in Isfahan, and 79,000 b/d in Abadan. These three projects alone will produce enough gasoline to eliminate all imports in the short term, the report said.
The Abadan upgrade will be finished in 2010, Arak in 2011-12, and Isfahan in 2012-2013. There will be virtually no additional diesel output from these projects.
There will also be crude distillation expansions in Lavan, Arak, Tabriz, and Isfahan refineries. The report said that there were definite distillation expansions of 300,000 b/d, and catalytic cracking expansions of 279,000 b/d, from a current level of 20,000 b/d, that would maximize gasoline yield.
The report said that distillate treating unit capacity will increase tenfold from 56,000 b/d. This will allow Iran to produce distillate products at Euro Spec 4 and 5 levels, comparable to US and European distillates, by the middle of the next decade.
An almost-real project
Persian Gulf Star Project consists of three 120,000-b/d condensate splitters at the Bandar Abbas refinery. These three units will process 360,000 b/d of South Pars condensate, but will produce no naphtha, the report said. Their role is to maximize gasoline production.
The three units will cost $5-6 billion and will produce 64% gasoline and 36% diesel. The project has been delayed due to financing problems and the departure of contractor Snamprogetti.
The project is currently under way with Sinopec Design Institute and other Chinese affiliates performing the construction; equipment has already been ordered, according to the report. The condensate price is linked to its product yield to ensure the project’s profitability. The project will probably be completed in 2012, and 2013 at the latest.
This project will produce about 230,000 b/d of gasoline and 130,000 b/d of diesel. About 70% of the gasoline will be exported, according to the report. Before Iran’s rationing program, all products were slated for the domestic market; but with lower gasoline demand growth, most will be exported.
The report said that Iran has several new refining projects planned. None have financing and there is uncertainty that any or all will go forward.
These include three export refineries:
* Hormuz refinery in Southern Iran is a 300,000 b/d, heavy crude oil refinery with a delayed coker, hydrocracker, and FCC. Its cost is about $5-7 billion. Its feed will be 100,000 b/d of Iran Heavy, supplemented by other heavy crudes: Soroush, Nowruz, Azadegan, Yadavaran, etc.
Front-end engineering and design has already begun and multiple contracts awarded to domestic contractors, in particular, Sazeh Consultants. Start date is 2012-13.
* Fars refinery is a 120,000-b/d condensate splitter feeding South Pars condensate and adjacent to the Shiraz refinery. Petrofield, representing SKS of Malaysia has a 40% interest, NIORDC owns 40%, and NIOC Pension Fund owns 20%. Start date is 2013.
* Caspian refinery is a 150,000-b/d refinery based on Caspian crudes and will export products to Caspian countries. No further details are available.
Iran is also planning three refineries for domestic production:
* Shahriar refinery will be adjacent to, and integrated with, the Tabriz refinery. It will have a capacity of 150,000 b/d and will be FCC-based.
* Anahita refinery will have a capacity of 150,000 b/d and will replace the Kermanshah refinery.
* Khuzestan refinery will have a capacity of 300,000 b/d and will replace the Abadan refinery.
FACTS feels that all of these refineries are long shots. There is no imperative for the export projects and there is no need for additional domestic products. It makes more sense to upgrade or expand existing refineries when the need arises, the report said.
KBC and its affiliate PEL have completed marketing studies for several of these refineries, giving the green light to NIORDC. Given the emerging refining surplus, FACTS thinks it is surprising that Iran has been told that there is a market for these refined products.
Currently the Hormuz and Fars refineries have some momentum, but all the other projects are “waiting in the wings.” There is no budget, no financing, and no detail plans drawn. The report doubts that any of these will happen by 2015, if at all.
A recent report, “Iran’s Gasoline Imports and US Politics: An Update on Iran’s Refining Buildup,” discusses Iran’s refining projects and evaluates the likelihood of completion for each one.
Oil & Gas Journal January 19, 2009
volume 107, issue 3
Iran, Tajikistan review expansion of economic ties
DUSHANBE, Feb. 4 (MNA) – Iran’s Commerce Minister Masoud Mirkazemi in a meeting with Tajikistan’s Minister of Economic Development and Trade Ghulomjon Bobozoda in Dushanbe on Wednesday explored the avenues for the expansion of bilateral economic relations.
The sides called for the optimum utilization of existing potentials and capacities towards promoting bilateral trade and economic ties, IRNA reported.
Masoud Mirkazemi said in the meeting that “Trade between the two countries has experienced a progressive trend in recent years but there are still unused capacities that the sides can take advantage of to boost relations.”
Exchanging more economic delegations, holding different exhibitions, and putting the signed letters of agreement into effect can encourage investors and trade companies of the two sides for more economic transaction, he noted.
Bobozoda underscored the promotion of bilateral economic and trade ties, saying that there are some problems and limitation on the way of trade with Iran like the membership of Tajikistan in Eurasian Economic Community.
He explained that according to the rules of the community, a decision made by Tajikistan has to be agreed to by all the other member countries which are Belarus, Russia, Kazakhstan, and Kyrgyzstan.
Mirkazemi, heading a delegation, started his two-day official visit to Tajikistan on Wednesday and he is also scheduled to meet with Prime Minister of Tajikistan Okil Okilov and the country’s Minister of Foreign Affairs Hamrokhan Zarifi as well as the speaker of Tajikistan’s National Assembly.
Statistics show that Iran and Tajikistan had $250 million of trade exchange during the last year that shows a 70-percent growth compared to the preceding year.
Iran mostly exports foodstuff, construction material, detergents, and carpets to Tajikistan and imports cotton from that country.
Region’s largest grain dock comes on stream in southern Iran
HVAZ, Feb. 4 (MNA) – The Imam Khomeini 150,000-ton dock for grain shipment has come on stream, said the managing director of the Khuzestan Province Ports and Maritime Organization here on Wednesday.
Ebrahim Idani told the Mehr News Agency that the 150,000-ton dock for grains cost 400 billion rials (about $41.36 million) and is one of the organization’s main projects in the Fourth Five-year Socioeconomic Development Plan.
The facility is the No. 1 dock for grain shipment in the region.
The project is targeted to meet the domestic need for a dock with a huge capacity for loading and unloading grain.
Hofex 2009 kicks off in Tehran
TEHRAN, Feb. 4 (MNA) – The 18th International Exhibition of Home and Office Furniture (Hofex ’09) kicked off on Wednesday and will run to February 8th in Tehran’s Permanent International Fairground, an official reported.
According to IRIB, 571 domestic companies and 195 foreign companies from Spain, Indonesia, Romania, China, Pakistan, Syria, Turkey, India, Switzerland, Germany, Austria, Canada, the United Arab Emirates, England and Italy will take part in the event, said Ramin Samizadeh.
He added that the aim behind the expo is to introduce new markets and increase exports, noting that the world’s annual furniture trade touches $150 billion, 30 percent of which is related to Asia.
By exporting $25 million worth of furniture, Iran accounts for 0.2 percent of the global trade.
Iran to reach self-sufficiency in coal production
TEHRAN, Feb. 4 (MNA) – Iranian Industries and Mines Minister Ali-Akbar Mehrabian is to inaugurate a development project tomorrow at the Hamkar Coal Mine, Kerman Province, which will increase its annual output by 17,000 tons, bringing the country to self-sufficiency in coal production.
IRNA quoted the Iranian Mines and Mining Industries Development and Renovation Organization (IMIDRO) as reporting that the project has cost 250 billion rials (about $25.85 million), generating some 1,000 direct and 2,500 indirect job opportunities.
The report said that 70 percent of the related machinery and equipment are domestically made.
Cathode copper output jumps 58% in 11-months
TEHRAN, Feb. 4 (MNA) – A development project at Sarcheshmeh Copper Complex will be inaugurated next week that will increase the complex’s cathode copper output capacity by 58 percent to 250,000 tons per annum.
The development project cost $21 million, IRIB reported on Wednesday
In the first 10 months of the current Iranian calendar year (started March 20), the National Iranian Copper Industries Company exported $743 million worth of its output.
In 1972, Sarcheshmeh Copper Mines Joint Stock Company of Kerman was established; and later, in 1976, it was renamed as National Iranian Copper Industries Company to involve all copper mines operations throughout the country.
This company has numerous responsibilities including extraction and utilization of copper mines, production of copper concentrates and manufacturing copper products such as cathodes, slabs, billets and 8mm wire rods.
Sarcheshmeh and Miduk mines in Kerman province and Sunegoon mine in eastern Azarbaiejan province are of the most significant copper mines in the country.
Russia ready to cooperate in North-South Railroad project: media
TEHRAN, Feb. 6 (MNA) – The Turkmenistan state TV on Thursday announced that the Russian Railways Company will take part in the construction of the North-South Railroad which will connect Russia to Iran via Turkmenistan.
Russia’s Railway Company Director Vladimir Yakunin and Turkmenistan’s President Gurbanguly Berdimuhamedov have recently held a meeting on the issue in which the Russian official voiced his company’s readiness to take part in the construction of the railway that links Turkmenistan to Iran, IRNA reported.
Turkmenistan formally opened construction on the North-South Railroad from the border with Kazakhstan to Iran, a project seen as an economic boon for the oil- and gas-rich Caspian Sea region.
The 700-kilometer (420-mile) line will improve Turkmenistan’s connections with Russia via Kazakhstan and to the Persian Gulf coast via Iran.
Iran, Turkmenistan, and Kazakhstan signed a trilateral contract on construction of the railroad in 2007.
The railway has the capacity of transporting 15 million tons of goods per annum.
Iran starts bunkering service at Shahid Rajaee Port
BANDAR ABBAS, Feb. 6 (MNA) – Iran inaugurated on Wednesday the first phase of a national project for offering bunkering service at the Shahid Rajaee Port Complex in Hormozgan Province.
According to PIN, the private sector has invested 740 billion rials (about $76.5 million) in the project to build an 84,000 cu. m. tanker, establish 15 kilometers of pipelines, and launch seven bunkering vessels with the total capacity of 70,000 tons.
The project has generated 520 direct job opportunities.
Iran takes part in Turkey WIN 2009 expo
ISTANBUL, Feb. 6 (MNA) – A group of accredited Iranian industrial firms have attended Turkey’s World of Industry international trade fair (WIN 2009) which kicked off at Tüyap Fair, Convention and Congress Center in Istanbul on February 5th.
According to IRNA, 70 countries have participated in the fair that will run to February 8th.
Iran’s Deputy Industries and Mines Minister Ahmad Qalebani is heading the Iranian delegation.
According to the expo’s official website, the fair features a full spectrum of machine components, metal processing machinery, tools, calibration devices and industrial equipment. Conferences, seminars and special programs will be running concurrently with the exhibition.
The fair is scheduled to be held in two phases. The second phase will open on February 26th, running till March 1st and focusing on the energy, electric and electronic technologies.
Iran discovers new oil field in Persian Gulf
TEHRAN, Feb. 6 (MNA) - Managing director of Iranian Offshore Oil Company (IOOC) Mahmoud Zirakchianzadeh stated on Friday that his company has discovered a new oil reserve in Farsi Oil Field in the Persian Gulf.
He said the oil field could yield over one billion barrels in reserves.
Zirakchianzadeh stated that the IOOC has finalized the exploration of the filed and if it proves profitable the company will decide whether to expand the field.
He said that the global economic meltdown may affect the expansion of the field because “Investment needs security and the stability of prices is the best security.”
Iran holds 10 percent of the world’s proven oil reserves and 15 percent of its gas. It is the Organization of Petroleum Exporting Countries’ (OPEC) second largest exporter and the world’s fourth oil producer.
Zirakchianzadeh also said the IOOC is negotiating a deal with the Indian ONGC company on the expansion of Farsi Gas Field.
He expressed hope that the agreement will be signed by the end of the current Iranian calendar year (March 20, 2009).
Iran unveils world’s most powerful natural-gas-based engine
TEHRAN, Feb. 7 (MNA) - The world’s most powerful natural-gas-based car engine was unveiled on Saturday by the Iranian carmaker Iran Khodro under the intellectual property of the Islamic Republic of Iran.
According to IRINN, the engine is to be installed on Iran Khodro’s newest product Samand Soren ELX.
Iran Khodro CEO Manouchehr Manteqi said that all the design and development stages of the engine have been conducted in the company’s research center.
The engine is turbocharge type, with 150hp of power and has passed EuroIV standard requirements, he said.
“Its nominal power will not decline even at the height of 2,000 meters above sea level,” Manteqi noted.
Samand Soren ELX is an elegant and highly safe sedan which is outfitted with air bags for front-seat passengers, security belts, a telescopic steering wheel, and other safety equipment.
Iran to build wind power plant in Pakistan
TEHRAN, Feb. 7 (MNA) – The managing director of SANIR Company, affiliated to Iran’s Energy Ministry, here on Saturday announced that Iran in collaboration with a Pakistani private company will construct a 50 MW wind power plant in the form of build, own, operate (BOO) contract in Pakistan.
According to the Mehr News Agency, Reza Ebadzadeh said that in addition to the project Iran has won the tender of a $50 million 220/132 KV electricity station, and a 120 Km 220 KV power transmission line on which Iran is working.
He added that in accordance with a $65 million deal with the Ministry of Water and Power of Pakistan, Iran has vowed to develop the electricity network in Pakistan’s Gwadar Port by transmitting 100 MW electricity via Chabahar border.
Iran’s power grid to connect to Georgia, Russia
Iran’s Ministry of Energy is to promote multilateral cooperation with Armenia, Georgia, and Russia by joining the electricity transmission network of the countries.
According to IRNA, Ebadzade said that “the power grids of Iran and Armenia are already connected,” adding that “another 400 MW power transmission line will be linked between the two sides.”
Statistics show that Iran’s exchange of electricity with its neighboring countries in the last Iranian calendar year (ended March 19) touched 430 MW.
17,000 units running in Iran’s industrial parks
TEHRAN, Feb. 7 (MNA) – The deputy industries and mines minister announced here on Saturday that more than 17,000 units are active in the country’s industrial parks.
Esfandiar Heidari, who is also the director of the Small Industries and Industrial Parks Organization, told IRNA that there are 788 active industrial parks with 400,000 employees in the country.
The permits for 40 percent of the industrial parks have been issued during the current administration.
He added that the government predicts the number of job opportunities in the industrial parks to reach 500,000 by the end of Fourth Five-Year Socioeconomic Plan.
The official said that $100 billion has been invested in Iran’s industrial parks so far.
Iran wins Indian $210m oil rig renovation tender
TEHRAN, Feb. 7 (MNA) – The Iranian Offshore Engineering and Construction Company (IOECC) deputy director for projects announced here on Saturday that the company has won an Indian oil rig project tender.
Nozar Aryan told IRIB that according to the $210 million contract the Iranian company has undertaken the renovation of six drilling rigs in India.
Aryan added that the project will be launched in October 2009 and is predicted to take the contractors 12 months to complete.
He noted that the IOECC has also taken part in some tenders in Malaysia, Indonesia, Nigeria, Congo, Venezuela, and Guinea, adding that the company has so far exported technical and engineering services like pipe laying and renovating and repairing services to India, Qatar, and Egypt.
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