IRAN STRUGGLES WITH AUTO FUEL SHORTAGES

Half a century ago, Abadan was the greatest refinery in the world. Now the Iranians can't keep up with their own gasoline demand. But, then, the US has been one big hurricane away from the same state of affairs for the last few years. It almost seems like there is an intuition throughout the oil industry that though the world will very much need it for the next 3-5 decades, its glory days are gone. Boone Pickens, Royal Dutch Shell and coal-giant TXU are all buying wind. (see next post)

Analyst sees end to Iranian gasoline crisis by 2012
July 25, 2007 (Oil and Gas Journal)

WHO
Fereidun Fesharaki, chairman/ceo, FACTS Global Energy

WHAT
A gasoline supply shortage is plaguing Iran, causing popular unrest and forcing the government to import fuel. A US analyst reports the shortage is expected to ease over the next five years.

Iran's oil wealth is running short on capacity. (click to enlarge)

WHEN
- 2006 Iran production: 4.07 million barrels/day of estimated 4.3 million barrels/day capacity. Capacity expected to reach 4.7 million barrels/day by 2012, almost entirely due to growth of South Pars offshore field production.
- 2006: Iran imported 192,000 barels/day of gasoline. May 2006: Iranian gasoline demand -- 496,000 barrels/day. May 2007: Gasoline prices were raised 25%. June 2007: Gasoline rationing was imposed, causing riots in major cities.
- 2012: gasoline supply shortage expected to ease
- 2008-2012: Iran is expected to add 705,000 barrels/day of refining capacity

WHERE
- The shortage is everywhere in Iran.
- Three condensate splitters will be installed at the Bandar Abbas refinery complex.
- By 2012: Arak—increased crude distillation capacity 80,000 barrels/day, 420,000 at Bandar Abbas, 120,000 at Isfahan, 50,000 at Tabriz, 21,000 b/d at Lavan, and 14,000 at Shiraz.

WHY
- Iranian demand for gasoline, which is heavily subsidized by the government, is rising 10-11%/year. Due to the failures of the 25% price hike and rationing, there is a move within the country to raise price five times over current levels by September.
- The spring price hike and rationing temporarily cut off the 40,000 barrels/day smuggling but it is now once again being smuggled to Iraq.
- By 2012, catalytic cracking, catalytic reforming, and pentane-hexane isomerization are expected into improve at all refineries.
- Current failures are due to delays and cost overruns related to the buyback contracts depending on foreign partners and inefficiencies in the Iranian regulatory system. Also, US pressure and political instability keep international banks away.
- Current production-decline rates: 8%/year onshore,13%/year offshore.
- Natural gas production and exports are not expected to rise.

Iranian oil resources. Lisa Margonelli describes her visit to an Iranian offshore oil platform in OIL ON THE BRAIN. See left column. (click to enlarge)

QUOTES
“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.”