Iran’s Gasoline Rationing Has Had A Major Impact, Says FACTS

Iran’s Gasoline Rationing Has Had A Major Impact, Says FACTS

Gasoline rationing in Iran has had a major impact on consumption and imports, according to FACTS Global Energy. In the report Gasoline Rationing Situation In Iran – Solution Or Complications?, published in late August, FACTS analysts Alexis Aik, Siamak Adibi and Vijay Mukherji say consumption has “dropped from 470,000-500,000 b/d to 345,000-380,000 b/d. However, domestic production is still insufficient to meet demand and thus imports remain necessary and are continuing at 80,000-110,000 b/d.” While the Iranian government plans to eliminate imports and still keep pace with growing consumption, “subsidy payouts on gasoline and gasoline import dependency will continue in the near term.”

The report says the government’s plans to reduce gasoline consumption through a major program to convert cars to running on compressed natural gas (CNG) seems too optimistic due to unrealistic targets. Although there were 227,000 CNG cars in Iran as of January 2007, the government’s aim is to convert 500,000 more and build 500,000 new CNG cars by the end of March 2008. “Overall,” the report says, “Iran’s CNG conversion through March 2008 will require a total budget of around $700-900mn, and this does not even include the cost of gas required. We believe it is highly unlikely that Iran will be able to achieve its CNG conversion plans. This will ultimately affect the gasoline rationing outlook as more than expected gasoline will be required in the country. It is likely that the government will have to revisit the monthly quota on gasoline due to the expected problems encountered on CNG conversions.”

FACTS is more optimistic about the Iranian government’s refinery capacity expansion program (MEES, 26 February). “Significant refinery construction is under way in Iran and the country will add more than 700,000 b/d of refinery capacity by 2012,” says the report. “By 2012, Iran’s gasoline imports will be zero and there will be exports in the range of 100,000-250,000 b/d, depending on the growth in demand. Iran will become self-sufficient in its gasoline needs by 2012, irrespective of whether rationing had taken place or not.” The report says that the following refinery projects are under construction and expected to be completed during 2009-11: 360,000 b/d capacity Persian Gulf Star greenfield condensate refinery; 60,000 b/d Bandar Abbas expansion; 120,000 b/d Isfahan expansion; 80,000 b/d Arak expansion; and Tabriz, Shiraz and Lavan expansions, plus new upgrading units at Abadan.

Nozari Promises To Double Monthly Gasoline Ration

Gholamhossein Nozari, Acting Minister of Petroleum and Managing Director of the National Iranian Oil Company (NIOC), announced on state radio on 1 September that the gasoline ration for private car owners would be doubled in September. He said that 100 liters of gasoline would automatically be added to car owners’ quotas, to enable families to travel within Iran and take children to school in the new academic year. The Iranian government introduced rationing in June, with private car users initially allocated 100 liters/month of fuel at a subsidized rate of IR1,000/liter (12 cents/liter), and sales controlled through the use of smart cards (MEES, 2 July).

Copyright MEES 2007.