Page 9 - DMEA Week 10 2022

DMEA REFINING DMEA

Iran to expand refining capabilities

MIDDLE EAST IRAN’S Ministry of Petroleum (MoP) “We have signed contracts for an additional
announced this week that it has received budget- 1.46mn bpd to be implemented in a period of
ary approval to add 300,000 barrels per day (bpd) four to six years for refineries that produce
of refining capacity, with private sector and for- feedstock for petrochemical plants,” he added,
eign investment likely to be sought. noting that each 100,000 bpd increment would
The announcement was made during a par- cost around $2.5-3bn, inferring a total outlay of
liamentary (Majlis) session on March 6 among $36.5-43.8bn. However, the figure associated
other issues considered for inclusion in the gov- with the Soleimani refinery clearly does not
ernment’s spending plans for the upcoming Ira- match Owji’s estimate.
nian calendar year. In any case, when considered alongside the
A few days later, the head of the National $175-200bn required for the build-out of oil
Iranian Oil Engineering and Construction Co. and gas production, is likely to be a significant
(NIOEC) Farhad Ahmadi told official energy stumbling block to the fulfilment of the refining
sector media agency Shana that almost $18bn expansion.
would be allocated for the development of the Given the strains on the country’s economy
refining sector, inferring that the MoP’s previ- and competition for funding, the MoP noted
ous announcement refers to a facility named in that it would consider bartering crude oil for the
honour of Islamic Revolutionary Guard Corps development of the refining facilities.
(IRGC) general Qasem Soleimani who was Also last month, Owji said that a consortium
assassinated in early 2020. would be formed of local banks to invest $4bn
Ahmadi highlighted the $11.5bn Shahid in building out the country’s refining sector. He
Ghasem Soleimani refinery which will have a noted that modern, so-called “petro-refineries”
capacity of 300,000 bpd, another $4.5bn facil- have an internal rate of return (IRR) of 16-20%,
ity of unspecified capacity in Khuzestan and depending on their configuration, which is three
the second development phase of the 360,000 or four times better than the country’s older
bpd Abadan refinery, which will cost $1.85bn. refining and petrochemical facilities.
He added that the total investment would also Data from IGM Energy suggests that while
include new product pipelines. Iran has a current installed capacity of 2.235mn
Referring to the Ghasem Soleimani refinery, bpd across refineries geared to handle oil and
Ahmadi said: “We will use the maximum capac- condensates, at least 130,000 bpd is not currently
ity of domestic contractors and manufacturers, active.
and also this project is going to play an important This usable capacity of 2.1mn bpd represents
role in the development of domestic industries a rise of around 550,000 bpd since 2017, an
and job creation in the country’s refining and oil increase that is seen by the authorities as a major
industry.” success given the challenges conducting interna-
He added that “nine refining projects are tional trade amid US sanctions and Iran’s own
underway in the company, which will be com- domestic economic woes.
pleted within the next six months”. However, the target set by the National
The news comes just weeks after Oil Minis- Iranian Oil Refining and Distribution Co.
ter Javad Owji told Shana that refining capacity (NIORDC) in 2019 of achieving a refining
would rise by around 200,000 bpd in the next capacity of 2.4mn bpd by March 2020 has not
two or three years. been fulfilled.™

Week 10 10•March•2022 www. NEWSBASE .com P9