Iran: Oil pipelines to go operational this year

Iranian Oil Minister Javad Oji said 1,000 kilometers of oil pipeline will come online this Iranian calendar year, ending March20, 2025, to facilitate the transfer of oil products.

Speaking on the sidelines of a cabinet meeting, Oji said that three projects are ready to go operational in Eastern Azerbaijan Province including a 222-kilometer pipeline for conveying oil products from Tabriz to Oromyyeh, improving the quality of gasoil produced at Tabriz oil refinery and its sulfur recycling unit project. 

“Tabriz refinery’s improving gasoil quality project will increase the country’s euro-5 gasoil production capacity by five million liters per day”, the oil minister said, adding the project will be a considerable contribution to the improvement of the environmental situation and deterring air pollution. 

Tabriz-Oromyyeh and Bandar Abbas- Rafsanjan- Sirjan oil products transfer pipelines, as part of a general plan for the construction of a 1000 km pipeline this year, will facilitate oil product conveying from oil refineries to consumption destinations like power plants, industries, oil products storage facilities and so on, he said.

currently about 16,000 to 17,000 tanker trucks are involved in carrying oil products on roads across the country, the petroleum minister said, adding carrying oil products through pipelines will decrease tanker trucks movements and their related accidents while at the same time will improve the quality of air, will lessen the cost of transportation as well as preventing road quality deterioration.  

He said that under the related laws, 90 to 95 percent of fueling at gas stations should be done by using personal fuel cards which stands at around 70 percent currently. 

The official pointed to the creation of a system in the country to reduce fuel smuggling and said, “At first, this system will be used on a trial basis, and based on it, the allocation of oil and gas for trucks and inter-city buses will be done online.”

According to Oji, gasoil burning vehicles will receive their fuel rations depending on the distance they travel (allocating gasoil based on online documents) which will play an important role in gasoil smuggling prevention. 

 

Shrinking number of OPEC members

Lately, Angola has relinquished its OPEC membership. Earlier Qatar, Indonesia had left the organization. These departures are not likely to have any considerable impact on total world market supply.

Generally, it seems OPEC is facing three challenges these days. The first one is the withdrawal of members. Over the past years, OPEC’s efforts to persuade other oil-producing countries to join it have been unsuccessful.

During the current year, OPEC repeatedly invited Guyana to become a member but the South American country rejected the invitation, apparently based on the assumption that it wants to maximize oil production and profits during an era in which oil demand could be in decline over the coming years.

Not only OPEC has not been able to attract new members it also faces new potential quits. After Qatar decided to exit the organization, at least for the past couple of years, UAE has been the largest threat to the unity of the organization.

The disarray between UAE and OPEC led by Saudi Arabia reached its climax two years ago when the country insisted on a higher baseline to its quota to allow for more domestic production.

If the UAE decides to exit the organization it could weaken the influence of the organization as far as it concerns setting oil prices because the Emirates is OPEC’s third-largest oil producer.

The second challenge of OPEC is that since more than a decade ago, three of its main members have played no role in making decisions in the ministerial meetings of the organization.

These three countries' position in OPEC, as the hawks of the organization, has declined considerably mainly due to the US sanctions.

Two of these countries are non-Arab founding members of the organization: Iran and Venezuela. And the third one is Libya as the most serious advocate of higher prices strategy among the African members of OPEC.

Libya's policies at OPEC were close to Iran and Venezuela which more and less were close to each other at OPEC against Saudi Arabia which mainly defended its market share.

When the three countries' influence eroded at OPEC either through the US sanctions or via the toppling of Qadhafi during the Arab Spring unrest, Riyadh probably felt that these developments have paved the way for its unchallenged dominance in OPEC’s decision-making meetings.

Their absence as members who are being excluded from the quota and limiting oil production mechanism may have weakened Saudi Arabia's stance in setting desired oil prices which has to cut oil production voluntarily in the hope of boosting oil prices.    

The read challenge OPEC faces is not from within but from outside. This challenge culminated at the COP28 in UAE when a great number of participating countries asked for fossil fuel phase-out.

Oil once lubricated the wheels of industrialized countries' economies and was the world's economic growth engine. Now it is considered, mostly by industrialized countries, as something redundant that humans should get rid of as soon as possible to save the planet against global warming, and OPEC’s reasoning that humans should get rid of emissions, not fossil fuels, apparently remains unheard.

 Even though the term phase out was eliminated from the final COP28 communiqué, 198 countries reached an agreement that emphasizes transitioning away from fossil fuels, and United Nations (UN) Secretary-General Antonio Guterres said, “To those who opposed a clear reference to phase out of fossil fuels during the COP28: Whether you like it or not, fossil fuel phase-out is inevitable.”

Now OPEC through cooperation with ten non-OPEC oil producers called OPEC Plus tries to maintain its influence in the oil market but without that, it faces internal and external challenges that threaten the power once it enjoyed in the world oil market.