Page 5 - DMEA Week 08 2022

DMEA COMMENTARY DMEA

in gasoline production and enabling the export in October 2019, although it had already been
of refined products which are not affected by operational for several months and the PGSR
sanctions. has since been expanded to 400,000 bpd with
another 50,000 bpd still to come.
Refining push A multi-billion-dollar programme was
Oil Minister Javad Owji told official energy sec- launched in 2016 to expand capacity, which
tor media agency Shana earlier this month that included the addition of the Anahita, Pars and
refining capacity would rise by around 200,000 Bahman Ganou refineries, with $3bn to be spent
bpd in the next two or three years. on upgrading the Abadan refinery and $10bn to
“We have signed contracts for an additional be spent improving processing at Tabriz, Tehran,
1.46mn bpd to be implemented in a period of Bandar Abbas and Isfahan.
four to six years for refineries that produce Meanwhile, 480,000 bpd of gas condensate
feedstock for petrochemical plants,” he added, processing capacity was to be added through
noting that each 100,000 bpd increment would the Siraf refining project, which consists of eight
cost around $2.5-3bn, inferring a total outlay modular refining units fed by large volumes of
of $36.5-43.8bn. This figure, when considered condensate from the supergiant offshore South
alongside the $175-200bn required for the build- Pars gas field.
out of oil and gas production, is likely to be a sig- Speaking to NewsBase, IGM Energy’s princi-
nificant stumbling block to the fulfilment of the pal advisor Ian Simm notes that greenfield and
refining expansion. expansion projects are planned that would add
Data from IGM Energy suggests that while more than 1.7mn bpd; however, completion
Iran has a current installed capacity of 2.235mn dates have been repeatedly pushed back as Iran
bpd across refineries geared to handle oil and continues face a significant financial crisis.
condensates, at least 130,000 bpd is not currently The post-expansion figure of 3.9mn bpd
active. would take Iranian refining capacity well beyond
This usable capacity of 2.1mn bpd represents the 3.3mn bpd Saudi Arabia expects to reach
a rise of around 550,000 bpd since 2017, an when Saudi Aramco’s 400,000 bpd Jazan refinery
increase that is seen by the authorities as a major completes commissioning later this year.
success given the challenges conducting interna- “While the expansion of Iran’s downstream
tional trade amid US sanctions and Iran’s own sector has been a major achievement, the cost
domestic economic woes. of expanding to nearly 4mn bpd is prohibitive.
However, the target set by the National The country is already outproducing demand
Iranian Oil Refining and Distribution Co. for gasoline – 800,000 bpd of supply vs 550,000
(NIORDC) in 2019 of achieving a refining bpd of demand – and while improved feed-
capacity of 2.4mn bpd by March 2020 has not stock availability will play an important role in
been fulfilled. ongoing economic diversification, improving
Iran’s downstream sector has experienced upstream oil recovery is likely to present a signif-
significant growth in recent years, though, icantly quicker return on investment and should
with the flagship 360,000 bpd Persian Gulf Star therefore be prioritised.”
Refinery (PGSR) being the most notable addi- With the end of negotiations for the renewal
tion and central to Iran’s achievement of fuel of the JCPOA apparently in sight, Iran’s task
self-sufficiency. Phase 1 was officially inaugu- will be balancing the budget requirements of an
rated in April 2017, with the first shipment of array of projects geared towards modernising
gasoline delivered for distribution two months and expanding its vital energy sector. If it can get
later. Phase 2 began producing Euro-V gaso- guarantees that the counter-signatories to the
line shortly after its own official launch in Feb- deal will not have sanctions ‘snap back’ options,
ruary 2018 and was running at full capacity by the buildout of the downstream may take a back
June that year. The third phase was inaugurated seat to the upstream.™

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