Iran General NewsIran to shut Bandar Abbas crude units in Jan,...

Iran to shut Bandar Abbas crude units in Jan, May

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Reuters: Iran will shut a crude unit at its Bandar Abbas refinery in January and a second in May to boost capacity by 40 percent, part of its multi-billion dollar move to cut dependence on gasoline imports, a National Iranian Oil Co source said on Thursday.
By Luke Pachymuthu

SINGAPORE, Oct 4 (Reuters) – Iran will shut a crude unit at its Bandar Abbas refinery in January and a second in May to boost capacity by 40 percent, part of its multi-billion dollar move to cut dependence on gasoline imports, a National Iranian Oil Co source said on Thursday.

The source said the shutdowns at the 110,000 barrels per day (bpd) units, set to last for about 30 days each, would allow the state-run firm to boost the refinery’s capacity to 320,000 bpd.

“In January we will shut down one CDU to raise the capacity to 160,000 barrels per day, this one will last about a month and the refinery will be in full operation after,” the source said.

A second crude unit, of similar size, will be shut in May for the same operation, the source added.

“Following this… we will be looking to upgrade the refinery,” the source said. He said it will add units including a hydrotreater to improve the quality of the plant’s diesel and gasoline over two years from early 2008.

Iran, the world’s fourth-biggest oil exporter, last year started on a multi-billion dollar, five-year programme to expand and upgrade its domestic refineries to 3 million bpd, from around 1.6 million bpd presently.

The OPEC-member lacks refining capacity and must import huge amounts of costly gasoline to meet its needs, a sensitive issue as the West considers tougher sanctions against Tehran over its nuclear work.

Iran is sharply cutting imports of the auto fuel through rationing and expects to save nearly $3 billion in this Iranian year by reducing purchases to 15 million litres per day (94,000 bpd) over the next six months — almost 60 percent below the rate before rationing began in June, an oil official said last month.

RESTRICTIONS, SUPPORT

But analysts have already dismissed Iran’s plan to bolster its refining capacity, saying that rising costs and lack of state funding for these projects will likely see the target date completion be pushed back.

In June energy consultancy Wood Mackenzie estimated that Iran’s actual refinery capacity additions would more likely come to about 700,000 to 800,000 bpd by 2014 and would likely cost at least $10 billion.

Iran’s access to financing of mega-projects have been hampered by restrictions from European banks and energy firms to do business with the Islamic Republic.

But Iran has found support from companies in energy-starved Asia who are keen to participate in the country’s refinery and energy infrastructure expansion plans.

India’s Essar Oil Ltd is presently in negotiations with Tehran to build a new $2 billion, 300,000-bpd plant. China’s Sinopec Corp last year inked a deal to upgrade Iran’s 170,000-bpd Arak refinery and has also upgraded plants in Tehran and Tabriz.

Iran is also looking at building a 300,000-bpd refinery in the Northern Iran, with a view to process Caspian crude, the source added.

“We completed the feasibility study, and are now having negotiations with Caspian countries to look for interested parties,” the source said.

The refinery is also expected to have two 150,000-bpd trains and Iran will also be looking at securing long-term transportation of these crudes from countries bordering the Caspian Sea.

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