Iran's gasoline demand outpaces production

Iran may have to resort to importing gasoline again as consumption has been outpacing domestic refinery production.

Iran is gearing up for a spike in gasoline consumption during the two-week holiday period to celebrate the Iranian new year, or Nowruz, which starts on 20 March. Iranians typically travel across country to celebrate with friends and family, boosting already strong gasoline demand.

State-owned refiner NIORDC said it expects gasoline demand to exceed 120mn litres/d (754,000 b/d) over the Nowruz period.

"In the past few days, due to the beginning of Nowruz trips, the consumption figure of 133mn litres of gasoline was recorded in one day," NIORDC managing director Jalil Salari said, according to state news agency Shana.

This is higher than the previous daily record of 127mn l set during the holiday season in March last year and higher than Iran's total gasoline output, which Salari said last year was 110mn l/d.

"More than a million cars are supplied every year, and no cars are scrapped. If this trend continues, we will reach a shortage of gasoline and become an importer," Salari said last year.

When Iran's flagship 360,000 b/d Persian Gulf Star (PGS) condensate splitter reached full capacity in February 2019, it was meant to help meet Iran's gasoline demand and turn the country into a net gasoline exporter.

Each of the three 120,000 b/d phases of the splitter has a capacity to produce 12mn l/d of Euro IV grade gasoline. Plans to add a fourth and final 120,000 b/d phase had been shelved, with debottlenecking of the existing three trains adding 40,000 b/d of processing capacity. But the surge in demand prompted Tehran to revive the pIan and start construction of the fourth train towards the end of 2022.

The new train's distillation system will be online "by the end of 2025", according to consultacy FGE. "We project the isomerisation and continuous catalytic reformer units will then come online in 2027. We expect that following the commissioning of the fourth train, PGS' intake will likely increase to 500,000 b/d as the utilisation of the existing trains will be reduced toward their original loads," said FGE's managing director for the Middle East Iman Nasseri.

Iran has also partially revived the 480,000 b/d Siraf splitter project in Assaluyeh in the south of the country. "Iran is building a 60,000 b/d condensate splitter there, so-called South Adish refinery, the only part of the shelved Siraf project which was due to have eight 60,000 b/d splitters," Nasseri said.

FGE expects the project to come online by 2025.

Holiday distribution

Iranian officials have to deal with the more pressing task of organising fuel distribution over the holiday period. NIORDC has sent 100 teams around the country to monitor gasoline distribution, which will remain a challenge even after the holiday period.

Plans for optimal management of fuel consumption in Iran "have entered an emergency stage otherwise proper distribution of energy in the country will not be possible", Shana warned previously.

Widespread smuggling of gasoline to neighbouring countries, where prices are higher, has exacerbated the issue. Gasoline is heavily subsidised in Iran, helping to keep consumption at elevated levels for many years and putting pressure on local refineries to raise production.

Given the challenge of importing gasoline while US sanctions are in place, Iran has been looking for alternatives, such as the use of compressed natural gas as a motor fuel. Plans to expand the country's existing 2.29mn b/d of refining capacity are likely to take time because sanctions have hindered Iran's ability to implement refinery upgrades.

By Elshan Aliyev