Iran Likely To Obtain Gasoline Self-Sufficiency By 2015 - EMC

By Reza Amanat Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Iran is forecast to become self-sufficient in gasoline production in the next five years, which may frustrate efforts to limit the country's access to gasoline markets, a research note by Energy Market Consultants part of FACTS Global Energy Group shows. Iran produces between 280,000 and 285,000 barrels of gasoline a day and until recently had acquired the remaining 30%, or about 115,000-120,000 barrels a day, through term contracts or spot purchases from big oil companies, including many from Europe. However, recent unilateral moves by the U.S. and some members of the European Union to deter investment in Iran's energy industry, in an effort to put pressure on Iran over its nuclear program, have forced several oil majors and some trading companies to halt their trade with the country. The EMC study assumes a base-case scenario where the Islamic Republic is able to complete its current schedule of upgrades at Arak, Abadan and Isfahan refineries as well as the construction of one of three condensate splitters at the Bandar Abbas refinery by 2015. At completion, the upgrades mean Iran will be able to meet its domestic gasoline need, estimated at about 400,000 barrels a day, but also achieve a small surplus in production of between 60,000 and 70,000 barrels a day, the EMC report said. Additional measures in the U.S. follow new United Nations sanctions last month that banned countries from selling Iran certain military equipment or accepting Iranian investment in their nuclear industries. The EU is also in the process of drafting Iran sanctions that go beyond the U.N. effort. If the base-case scenario is realized, efforts to maintain pressure on Iran in the medium and long term by restricting its access to global gasoline markets could be blunted. The report also assesses a lower and higher-case scenario for Iranian efforts to upgrade their refineries. In the lower-case assessment the report envisages only the completion of upgrades in Arak and Abadan by 2015, resulting in a reduction in Iran's imports of about 30% but leaving a continued gasoline import requirement of about 80,000-90,000 barrels a day. In the higher-case scenario, where the refinery upgrades in Arak, Abadan and Isfahan are completed, and all three condensate splitters in the Bandar Abbas plant are constructed, Iran will achieve a gasoline export capacity of 200,000 barrels a day. "In the longer term, it is possible to project Iran reaching self-sufficiency in its gasoline requirements, perhaps even turning into a net exporter, but much will depend upon the funding for its domestic refinery projects and the speed of completion of these projects," EMC said. However, the group said that in the near term the withdrawal of international trading companies selling to Iran via the United Arab Emirates means it would have to source its gasoline imports from a very limited number of suppliers. Among these are Chinese and Turkish energy firms, and possibly Russian and Venezuelan companies with whom Iran has signed several memorandums of understanding for co-operation in the energy sector. The cost of selling refined products to Iran, in terms of insurance and credit, will also rise significantly, and these would have to be borne by Iran, they added. -By Reza Amanat, Dow Jones Newswires; 4420-7842-9487; reza.amanat@dowjones.com (END) Dow Jones Newswires July 22, 2010 10:15 ET (14:15 GMT)