Iranian refining and downstream industries flourishing despite sanctions

Persian Gulf Star Refinery (PGSR) located in Iran’s southern province of Hormozgan is the first of its kind. It is based on gas condensate feedstock received from the South Pars gas field which Iran shares with Qatar in the Persian Gulf. As the largest processing facility for gas condensate in West Asia, PGSR has made Iran an exporter of gasoline.

This refinery has increased Iran’s gasoline production to 110 million liters per day, while the country’s consumption is 74 million liters. PGSR has not only made Iran self sufficient in gasoline production, but enabled it to export surplus output. The products exported by the refinery during the first half of the current Iranian calendar year were 120 percent higher than the products exported during the same period last year.

Pars Oil and Gas Company (POGC), responsible for developing South Pars gas field, delivered about 60 million barrels of gas condensate to PGSR during the first half of the current year. PGSR receives 375,000 barrels of condensate daily from South Pars gas field as the feedstock.

Historically, Iran has remained a net importer of gasoline in recent decades and restriction on sale of gasoline was used as one of the tools to pressurize the country. Those sanctions were lifted with the implementation of JCPOA (Iran’s nuclear deal with the world powers, known as Joint Comprehensive Plan of Action), concerns about their return led to construction of PGSR to be pursued more rapidly and in different phases. In January 2019, when the third phase of the refinery was inaugurated, Iran was able not only to eliminate the need to import gasoline but also to export surplus gasoline and bring more income to the country.

 According to Secretary General of Iran’s Oil Refining Industry Companies Association (ORICA) the country’s oil refining capacity has increased to two million barrels per day. The activities of the refineries, in addition to meeting the domestic need, have led to the export of surplus products, which plays a significant role in combating the sanctions.

The Secretary General of ORICA went on to say that in addition to the main products, 32 other special products are produced in the refineries, which are allocated on priority to domestic petrochemical industries.

He highlighted the role of refineries as 32,000 people are directly employed in this sector and now all refineries are run by domestic experts and not a single foreign engineer is employed in this industry.

In the recent past, the quality of domestically produced fuel was not comparable to international standards, but over the last four years the quality of local gasoline has improved so much that ordinary gasoline has replaced super gasoline. It is also worth noting that the country's refineries are operating at optimum capacity utilization.

Lately, Iran’s Karoon Petrochemical Company (KPC) has unveiled two new products that are going to save the country US$27 million. The production lines of two new grades of MTDI and KMT-10 were officially launched with the aim of meeting the needs of downstream sectors and completing the value chain of the country’s petrochemical sector.

KMT-10 is produced by pre-polymerization of methyl phenyl isocyanate and by the formation of urethane groups. With the production of this new product, the petrochemical industry will practically eliminate the need to import similar grades which have been previously imported from China, Japan, South Korea, and Germany. This strategic product has wide applications in the automotive, office, and home appliances industries.

MTDI products include Aradur 830 CH, Aradur 850 CH, and Aradur 2963 CH. Karoon Petrochemical Company has introduced this product in order to meet the needs of downstream producers of paint, resin, and polyurethane and in order to complete the value chain of petrochemical products.

The petrochemical industry is playing a crucial role in Iran's non-oil economy, the second-largest foreign exchange earner after crude oil. Petrochemical exports already make up nearly 33 percent of the country’s non-oil exports.

Head of Iran’s National Petrochemical Company (NPC) Behzad Mohammadi said the country’s petrochemical products basket would be further diversified. The official noted that major development plans were underway for diversifying the country’s petrochemical output considering the wide range of feedstock available.