PremiumIran’s refinery sector review in 2011

Head of the Trend Persian service Dalga Khatinoglu

National Iranian Oil Refining and Distribution Company (NIORDC), a National Iranian Oil Company subsidiary, is responsible for refinery sector with operating nine refineries with about 1.7 mbpd of crude refining capacity. NIORDC was established in 1991, as one of the four main subsidiaries of the ministry of petroleum. It has 19 subsidiaries and affiliated companies, including nine oil existing refineries.

Iran planned to boost its oil refining capacity to 3.5 mbpd by the end of the next Iranian calendar year (March 2013), and also planned to construct six more refineries with further 1.2 mbd of refining capacity and put building small-scale refineries on agenda, as well.

Iran's refining capacity was increased in 2010 by 18 percent compared to 2009, however there was no significant process in the sector in 2011.

For instance, the construction of Iran's largest gas condensate refinery has only progressed by 40 percent, the managing director of Persian Gulf Star Refinery Tofiq Azamgin stated on Nov.25.

This project has been designed in three phases and the first phase will come on stream by March 2013.

Expansion & upgrading of existing refineries, based on official stats

Refinery	Current capacity, barrel
Abadan	430,000
Bandar Abbas	300,000
Esfahan	284,000
Tehran	250,000
Arak	169,100
Tabriz	110,000
Shiraz	40,000
Lavan Island	30,000
Kermanshah	25,000
Total	1,638,100

Abadan Refinery

Iranian President Mahmoud Ahmadinejad inaugurated the first phase of the gasoline production project at Abadan refinery with production capacity of 4.2 million liters per day in May 2011.

During inauguration ceremony, an explosion hit the cracker unit of Refinery and it took NIORDC four months to rebuild the unit and bring it back on track.

The project in Abadan Refinery will be installed in 2 phases, building a vacuum distillation unit, the atmospheric distillation unit and establishment of gas production complex which includes catalytic cracking unit, election unit with reconstruction capacities and increasing gas production and reducing fuel oil.

Iran invested more than $820 million on operation of the project. Iranian officials say the second phase of gasoline production project at Abadan refinery will be operational in March 2012.

By completion of gasoline project at Abadan oil refinery, the refinery's gasoline production capacity will rise by six million liters per day. Iran aims to develop Abadan Oil refinery to produce super gasoline with 93 octants, 250 tons of propylene, 330 tons of gas fuel for petrochemical industry and 100 tons sulfur.

The launch of gasoline project in one of Middle East oldest refineries will increase oil products by 45,000 barrels. Abadan refinery currently produces 430,000 barrels of oil products.

Arak Refinery (Shazand)

Sinopec Engineering Inc. (SEI), an arm of Sinopec Group, started up a feedstock hydrotreating facility, part of a reforming unit at Arak Refinery, on Aug. 15. Iran and Sinopec signed $2.7 billion deal to develop this refinery in 2006.

President Mahmoud Ahmadinejad participated in inauguration of Imam Khomeini unit in Shazand refinery on Nov.16. Iran planned production of 98-octane to 100-octane gasoline in Imam Khomeini unit.

Development plan of Imam Khomeini unit in Shazand is conducted to increase the refinery capacity from 170,000 barrels a day to 250,000 barrels a day and an increase in gasoline daily production by 2 million liters a day and quality improvement of the products to reach the 2005 European Union standard. The progress of this project is 94 percent, Mehr reported in November.

Once the project comes operational, the refinery's gasoline production capacity will also rise up to 16 million liters per day from the current figure of 4.7 million liters. The second phase of the refinery is projected to produce 1.1 million liters of propylene. The produced propylene will be fed to petrochemical complexes.

According to the project manager Rashid Seyyedian, the National Iranian Oil Engineering and Construction Company is the proprietor and a consortium comprised of some Iranian firms and a Chinese company is the major contractor of the project.

Domestic contractors hold 70 percent which the Chinese share is 30 percent of the $2.5 billion project.

The Arak Refinery has gone through a major development plan to increase its share of national gasoline production to 44 percent. The refinery came on stream in 1993 with the nominal capacity of 150,000 barrels per day. Currently, the refinery produces some 170,000 barrels of light crude oil, liquefied gas, propylene, gasoline, high-octane gasoline, diesel oil, kerosene, furnace oil, and sulfur.

No.	New Units	Cap. BPSD	Licensor
1	ATM. Crude Distillation Unit (CDU)	80000
2	No.2 Naphta Hydrotreater Unit (NHT2)	33,000	Axens
3	Octanizer Unit (OCT)	20,000	Axens
4	Gas Oil Hydrotreate Unit (GHT)	53,000	Axens
5	Kerosene Hydrotreater Unit (KHT)	31,500	Axens
6	Isomerization Unit (ISOM)	8,500	RIPI
7	Reduced Crude Desulfurization Unit (RCD)	69,180	UOP
8	Residue Fluid Catalyst Cracking Unit (RFCC)	94,387	UOP
9	Cracked Gasoline Hydrotreating Unit (CGH)	50,500	Axens
10	RFCC LPG Merox Unit (LMRX)	28,105	UOP
11	Propylene Recovery Unit (PRU)	28,105	UOP
12	Hydrogen Production Unit (HPU2)	67.5 *2 (135) MMSCFD
13	No.2 SRU (SRU2 / TGT / Solidification)	320 *2 (640) TPSD
14	Amine Treating Unit (AMN)	560 TPSD H2S
15	Sour Water Stripping (SWS)	5000 TPSD SW

No. PRODUCT Existing Cap. BPSD New Cap BSPD 1 Gasoline REG 23,512 77,439 2 Gasoline PREM 5,875 22,339 3 LPG 6,090 22,434 4 Kerosene 26,300 37,400 5 Gas Oil 47,010 56,123 6 Asphalt 6,000 6,000 7 Propylene 0 7,734 8 Fuel Oil 37,720 15,153 9 Sulfur 60 TPD 650 TPD

Esfahan Refinery

Iran is refining around 248,000 barrels of crude in Esfahan. The gasoline production capacity of this refinery is about 9 million liters per day, but Iran is improving its capacity and quality. With the launch of the gasoline production line at the Isfahan Refinery in 2012, 3 million liters of gasoline will be produced instead of furnace oil, deputy oil minister Alireza Zeighami said in November.

It is expected to increase gasoline production of this refinery to 12 million liters per day by commencing new units. The plan has progressed to 77 percent.

No.	New Units	Cap. BPSD
1	CDU	120000
2	Naphta HDT	60060
3	Gas Oil HDT	48000*2
4	LPG Recovery Unit	9808
5	RHU	81000
6	RFCC	91290
7	Hydrogen Plant	101000*2
8	Sulfur Recovery Unit	325 TPD
9	CCR	30038
10	LN Isommerization	26685
11	LPG Merox	24074
12	Sour Gas Treater	-
13	Sour Water Stripper	-

NO	PRODUCT	Existing Cap. BPSD	New Cap BSPD
1	Gasoline REG	41000	98000
2	Gasoline PREM	0	28000
3	Kerosene	61000	44600
4	Gas Oil	109000	115000
5	LPG	17000	30000
6	Propylene	0	7400
7	Fuel Oil	89000	19000
8	Sulfur	80 TPD	600 TPD
9	Asphalt	17000	17000

Lavan refinery

The total capacity of oil refining in Lavan refinery is 30,000 barrels per day. The Lavan refinery has averagely produced 1.036 million liters of gasoline per day in 2010. In may 2011, marking the anniversary of National Day of the Persian Gulf, the first phase of Lavan's upgrading and increasing production capacity plan was inaugurated in the presence of the former minister of petroleum, Dr.Seyed Masoud Mirkazemi.

The comprehensive plan of upgrading and increasing production capacity of Lavan oil refinery aims to increase light distillates production under the global standards. The plan had progressed to 74 percent and is scheduled to come on stream up to the end of the current Iranian calendar year on 20 March 2012.

With launching the first phase, intake capacity of the Lavan oil refinery will increase from 30 thousand barrels per day to 50 thousand barrels per day by taking additional volume of 20 thousand barrels of gas condensate from the South Pars gas field.

Boosting liquefied gas production from 30 thousand tons to 110 thousand tons per day, increasing gasoil production from 1.756 million liters to 2.751 million liters and daily production of 1.913 million liters of naphtha for the first time are among the other targets of inauguration of the first phase of development plan of Lavan oil refinery.

On the other hand, Lavan refinery in Iran will start producing jet fuel next Iranian calendar year (to start on March 21, 2012), the refinery's managing director announced on November 8.

The plan aims to export jet fuel, as a strategic oil product, from the Persian Gulf to the international markets, Mohammad-Ali Dadvar told Mehr news agency.

He also said that the refinery will boost gasoline production capacity by three times to 3.8 million liters per day in spring 2012. Some $500 million will be invested in Lavan refinery's development plan, which is now complete by 80 percent, he noted.

Tehran Refinery (Tondgouyan refinery)

Tehran Oil Refinery, also known as Tondgouyan Refinery, produces an average of 400,000 liters of liquid gas, 6.2 million liters of gasoline, 3 million liters of kerosene, 13 million liters of gas oil and 10 million liters of fuel oil each day.

Iran will upgrade the quality of its oil products to European standards by the end of the year. Meanwhile, gasoline production at the Tehran refinery will reach 8 million liters. The gasoline production plan will launch by the end of current solar year which increase country's gasoline production by 1.8 million liters.

The refinery will upgrade quality of diesel and white oil and will produce 13 million liters diesel according euro 5 standard and 2 million liters white oil base on euro 4 standard. The licensors are Axens, Technip KTI.

No.	PRODUCT	Existing Cap.
1	Gasoline	45,000 (BPSD)
2	Kerosene	41,500 (BPSD)
3	Gas oil	60,600 (BPSD)
4	Fuel Oil	50,100 (BPSD)
5	Sulfur	35 (T/D)

No.	New Units	Cap.	Licensor
1	Gas oil hydrotreater unit (GHT)	53,000 (BPSD)	َAxens
2	Kerosene hydrotreater unit (KHT)	31,500 (BPSD)	Axens
3	Sulfur Recovery Plant (SRP)	110 (T/D)	TPKIT
4	Hydrogen production unit (HPU)	42 (MMSCFD)	Technip
5	Gas turbine Generator (GTG)	3*25 MW

Crude Oil	Cap.BPSD	Percentage
Maroon	80300	33.46
Abtimoor	7000	2.92
Bangestan-Ahvaz	4500	1.87
Asmari-Ahvaz	38500	16.04
North- Dezful	79300	33.04
Middle East	30400	12.67
Total	240000	100.00

Bandar Abbas refinery (Refinery #8)

Bandar Abbas refinery (also known as refinery #8), with refining capacity of 300,000 bpd, was constructed in a 7 square kilometer area near the city of Bandar Abbas in southern Iran. The feed of this refinery is heavy oil plus some condensate extracted from Sarkhoon gas treating plant.

Its daily products were planned to comprise 46000 barrels of gasoline, 37000 barrels of Kerosene and jet fuel, about 67000 barrels of furnace fuel, about 70000 barrels of gas oil, 5000 barrels of tar, together with more than 7000 barrels of LPG.

The products of this unit were expected to be partially exported as well as to meet the demands of the southern parts of Iran, and moreover, to be partially transported to the central regions through the 450 km long 26" Bandar Abbas - Rafsanjan pipeline.

Joint venture of Snamprogetti and Chiyoda, the Italian Company undertook the EP and supervision of this project. This project should be active next year, as it will increase gasoline production capacity at Bandar Abbas oil refinery, south of Iran with 62 percent physical progress, Shana reported in November.

Ahmad Farzaneh, the manager of the development plan of the refinery said that executive work of the plan started early last year predicting procurement work to be completed in August 2012 and its executive operations in December of the same year. Farzaneh continued that the plan aims to promote the quality of gasoline and gasoil produced by the refinery based on euo-5 standards.

'Following completion of the gasoline making project at Bandar Abbas oil refinery, the refinery's production capacity will rise by 2.5 million liters of regular gasoline, 3.473 million liters of super gasoline, 7.905 million liters of high quality gasoil, 250 tons of granular sulfur and 33.6 thousand liters of liquefied petroleum gas', the official said.

According to Farzaneh, by implementation of the plan, the refinery would be able to produce high quality kerosene and jet fuel for potential export.

Development plan of the Bandar Abbas oil refinery includes implementation of four projects in the field of increasing gasoline production, eliminating the bottlenecks in the way of increasing refining capacity, development of an oil products' import-export system and building new docks in the port.

No.	New Units	Cap.	Licensor
1	Heavy Naphta Hydrotreater	25,000 (BPSD)	Axens
2	Continuous Catalyst Regeneration & Octanizing	25,000 (BPSD)	Axens
3	Light Naphta Hydrotreater	16,000 (BPSD)	Axens
4	Light Naphta Isomerization	16,000 (BPSD)	Axens
5	Gas Oil (Diesel) Hydrodesulphurization	50,000 (ton/days)	Axens
6	Sulfure Recovery	120 (ton/days)	Prosernat
7	Amine Gas Treating	200 (ton/days)	Non-Licensed
8	Sour Water Stripping	1.817 (ton/days)	Non-Licensed

No.	PRODUCT	Existing Cap. BPSD	New Cap BSPD
1	LPG	7,034	7,040
2	Gasoline	65,415	95,000
3	Kerosene	35,860	15,575
4	Gas Oil	68,848	90,335
5	Fuel Oil	66,231	113,698
6	Sulfur (Ton per day)	130	250

Tabriz refinery

Tabriz refinery's daily gasoline production capacity will surge to 3.6 million liters from 2.6 million liters. Some $250 million has so far been invested in the project and the unit is expected to become operational by March 2012. Gasoline with octane numbers of 90, 92 and 95 will be produced in the refinery, meeting Euro5 standards. This refinery has 10 refining unit with 110,000 bpd refining capacity.

By inaugurating a gasoline production unit at the Tabriz Refinery, northeast of Iran, the country's gasoline output will be boosted by one million liters per day, the Tabriz Oil Refining Company's managing director Esmaeil Aqapour Qadiminejad in October.

Tabriz Petrochemical Campany, close to Tabriz refinery, also produces several type of petrochemical productions.

Product Name	Type Formula	Production Capacity (Ton/Year)	Consumer Capacity (Tons/Year)
Propylene	Liquid	56000	56000
Butene 1	Liquid	7000	-
butadiene	Liquid	16500	11000
Toluene	Liquid	2000	200
Pentane	Liquid	2400	1200
Nitrogen	Liquid	4000	3500
C4 cuts	Liquid	34000	-
C7-C9 cuts	Liquid	14000	15000
Rafinet C4	Liquid	15000	15000
Light fuel oil	Liquid	3000	3000
Heavy fuel oil	Liquid	11000	11000
C-6 Non-aromatics	Liquid	6500	-
Polyethylene	Polymer	100000	-
General Purpose Polystyrene	Polymer	25000	-
High Impact Polystyrene	Polymer	94000	-
Expandable Polystyrene	Polymer	15000	-
Acrylonitrile butadiene styrene	Polymer	35000	-
Ethylene	Base Products	136000	-
Ethyl benzene	Base Products	106000	-
Styrene	Base Products	100000	-

Shiraz Refinery

Shiraz refinery has 40,000 barrels refining capacity.

Production Units: CDU, VISB, NHT, KHT, LPG, CRU, ISOMAX, SRP, Amine Treater, Kero Merox, Naphtha Merox

Main Products:

Products	Capacity (1000 lit/day)
LPG	293
Gasoline	1,905
Light Jet Fuel	22
Jet Fuel	171
Kerosene	238
Gas Oil	3,286
Asphalt	871
Fuel Oil	2,015

Contractors (Licensor- Engineering):

UOP- Snamprogetti

Kermanshah Refinery

Kermanshah refinery with 25,000 bpd refining capacity is Iran's smallest refinery.

Production Units: Atmospheric Distillation ,Catalytic Hydrotreater and Platformerrmer, LSRG Merox, Kerosene Hydrotreater, LPG Recovery

Main Products:

Products	Capacity (1000 lit\day)
LPG	128
Gasoline	1,137
Kerosene	751
Gas Oil	826
Fuel Oil	1,443

Contractors: UOP, Continental

Resume:

By completion of upgrading plans at Bandar Abbas, Esfehan, Shazand, Abadan and Shahriar oil refineries, gasoline production capacity of the refineries will increase respectively from 10.4 to 15.2 million liters per day, from 6.5 to 19 million liters per day, from 7.4 to 16 million liters per day, from 8.6 to 20 million liters per day and from 3 to 13 million liters per day.

Foreign licenses

Based on a report by Iran's ministry of industries and mines, domestic refineries produce 42,952 tons of petrochemicals, of which 15,033 tons are produced under the license of German companies. In fact, Germany holds a 35 percent share in Iran's petrochemical production. UK, France and the Netherlands rank the next with 18 percent share, 12 percent share and 11 percent share, respectively.

Percentage of Iranian petrochemicals' dependence on foreign licenses

Licensers	Current projects	Future projects
Italy	4%	unknown
China	1%	unknown
Saudi Arabia	2%	unknown
Swiss	2%	9%
Netherlands	11%	9%
Denmark	2%	4%
France	12%	7%
Japan	5%	4%
Great Britain	18%	4%
Germany	35%	15%
Others / unknown	8%	44%

With an eye to these statistics, Iran is highly dependent on foreign expertise in the petrochemical sector. Over half of the country's petrochemical output will be dependent on the above four mentioned countries by 2015, the report says. Of course, the statistics do not include those plans for which licensors have not yet been introduced.

Considering the advancement of such foreign countries in the technological fields, the remaining 22 per cent of Iran's petrochemical output should be seemingly secured under the license of such countries in the future.

Sanctions and insufficiency of Iran's petrochemical industries

In the December report of the U.S. Energy Information Administration, Iran's petrochemical sector was referred to as one of the major challenges of the Iranian government in implementing projects.

In its report, the U.S. Energy Information Administration has highlighted the reduced progression of Iranian refinery construction projects due to financial problems.

Currently 38 petrochemical units are in operation across the country. Based on a report by the Ministry of Industries and Mines, Iran exported some $11.5 billion worth of petrochemical products last year (total sales amounted to $18 billion). However, the petrochemical sector holds only a 1.5 percent share in the gross domestic production of Iran, which is the second and third largest holder of the world's gas and oil reserves.

Nine gasoline refineries are currently operational in Iran as well. The country is planning to boost its refinery capacity to 3.2 million barrels per day from 1.5 million barrels per day through launching six new refineries.

Iran has announced that the daily gasoline production capacity will increase to 70 million litres per day by the end of the current calendar year (March 20, 2012).

According to the ISNA report, 'some quarter of the 21 companies, which have been introduced as the most indebted Iranian ones, are active in the petrochemical sector'.

According to the latest statistics related to the fiscal year 2009-2010 which grades top 300 companies by the Industrial Management Organisation, five petrochemical companies are on the list of the most indebted Iranian firms.

Iranian news agencies have recently reported that the construction of the country's largest gas condensates refinery, named the Persian Gulf Star, is now 40 percent complete, but construction has stopped since the beginning of the current solar year. The refinery, which is projected to produce 55 million litres of oil products, is planned to be built in three phases. The first phase is scheduled to come on stream with the daily production capacity of 12 million litres of gasoline and six million litres of gas oil, by March 2013.

According to Tofiq Azarmgin, the refinery's managing director, some one billion dollars has so far been invested in the project and around another $1.7 billion is needed to complete the project.

Small-scale refineries

Iranian oil ministry has put the construction of small-scale refineries with 2,000-10,000 barrels per day capacity on its agenda, Pana news agency reported.

The decision is aimed to speed up production and supply of oil products all over the country, especially in hard-to-pass and remote areas. A comprehensive plan is expected to be prepared in this regard within the next month.

Iran plans to boost its oil refining capacity to 3.5 million barrels per day (mbpd) by the end of the next Iranian calendar year (March 2013) from the current volume of 1.7 mbpd, deputy oil minister Alireza Zeighami said.

Development plans are underway in seven refineries nationwide, he added, the Shana news agency reported.

Construction Of New Refineries

Persian Gulf Star Oil Company

Capacity : 360 KBPD of Condensate

Production (BPD) :

Gasoline	223800
Gas Oil	89800
LPG	27200
Jet / Kerosene	17500

Expected Start up Date: 2013

NIORDC share: 40%

Physical Progress: 40%

RGC's Khatam al-Anbya Construction Headquarters joined the Persian Gulf Star Refinery project in August 2011.

The construction of Iran's largest gas condensate refinery has progressed by 40 percent, the managing director of Persian Gulf Star Refinery Tofiq Azamgin stated in November.

Tofiq Azamgin told ISNA that the project has been designed in three phases and the first phase will come on stream by March 2013.

Deputy Oil minister Alireza Zeighami also said in November that $600 million will be earmarked for completing the Persian Gulf Star Refinery in Assalouyeh.

Highlighting that about $200 million was allocated to the project last year, Zeighami said that about $1.4 billion has been spent in this mega oil project so far.

Zeighami said that the construction operation of this project has had a physical progress of 40 percent so far.

After the refinery is commissioned, it will have the capacity to refine 360,000 barrels of oil per day.

Hormuz Refinery

Capacity : 300 KBPD

Production (BPD) :

Gasoline	93300
Gas Oil	168000
LPG	28700

NIORDC share: 20 %

Khozestan Refinery

Capacity : 180 KBPD

Production (BPD) :

Gasoline	59200
Gas Oil	75000
LPG	12000
Jet / Kerosene	49000

NIORDC share: 20 %

Pars Refinery

Capacity : 120 KBPD of Condensate

Production (BPD) :

Gasoline	75500
Gas Oil	30000
LPG	8300
Jet / Kerosene	16800

NIORDC share: 40 %

Shahriyar Refinery

Capacity : 150 KBPD

Production (BPD) :

Gasoline	71300
Gas Oil	75700
LPG	9000
Jet / Kerosene	2400

NIORDC share: 40 %

Anahita Refinery

Capacity : 150 KBPD

Production (BPD) :

Gasoline	51800
Gas Oil	34800
LPG	12400
Jet / Kerosene	27100

NIORDC share: 20 %

Caspian Refinery

Capacity : 300 KBPD

Production (BPD) :

Gasoline	129600
Gas Oil	70500
LPG	28300
Jet / Kerosene	29600

NIORDC share: 40%

There is not any exact information about progresses in new refineries, excepting Persian Gulf Star Oil Company.

Consumption

Iran's President Mahmoud Ahmadinejad said on Dec. 21 that Iran would become a major gasoline exporter by 2013, despite the West's latest sanctions. Iran 's average gasoline consumption is 60 million liters per day while 48 million liters of consumption provided by 9 refineries in the country.

Gasoline consumption during the first six months of the current solar year, which began March 20, 2011, averaged 60 million liters per day.

Some 19 LNG station, 249 Diesel station, and 1,557 gasoline stations are active in the country.

Iran 's diesel export reached $450 million, while its gasoline and naphtha export hit $500 million and $700 million respectively during the first six months of the current solar year (started on March 20,2011), Fars News Agency quotes Deputy Oil Minister Alireza Zeyghami as saying in December.

"Iran transferred furnace oil worth $790 million and diesel worth $20 million," he said.

In 2010, Iran consumed around 67 million leters of gasoline per day, about 4 percent less than consumed in 2009.

Iran does not currently have sufficient refining capacity to meet its domestic gasoline and other light fuel needs, according to the U.S. Energy Information Administration's report.

Petrochemicals export

Iran exported over $10.8 billion worth of petrochemical products in the first nine months of the current calendar year which started on March 21, 2011, the IRNA news agency reported on Jan.1, 2012.

The exports amounted to $6.2 billion in the same period last year.

The managing director of the National Petrochemical Company (NPC) of Iran Abdolhossein Bayat stated the value of Iran's petrochemical exports is expected to reach $14 billion by the end of the current Iranian year (March 21, 2012), according to Press TV.

Bayat noted that Iran produced more than 40 million tons of petrochemical goods in the last Iranian calendar year.

The country also exported 18 million tons of petrochemical products worth $11.6 billion last year, showing a 26 percent increase compared to two years ago, he added.

Iran has signed up to $18 billion worth of petrochemical deals since the beginning of the current Iranian calendar year (March 21, 2011), Bayat said on December 12.

"By the end of the fifth development plan (2015), the country's oil production must increase to 5.2 million barrels per day (bpd) and this should happen from the country's joint fields," the ISNA news agency quoted Iran's Oil Minister Rostam Qasemi as saying in August.

The petrochemical industry accounts for 2 percent of the gross domestic production, 44 percent of the non-oil exports and 55 percent of the industrial exports, he said, adding that the country earned 12 billion dollars from exporting petrochemical products last year.