Reuters: Iran will shut a 180,000 barrels per day (bpd) crude unit at its largest refinery in Abadan sometime in end-October for routine maintenance, a source from National Iranian Oil Company (NIOC) said on Wednesday.
By Luke Pachymuthu
SINGAPORE, July 23 (Reuters) – Iran will shut a 180,000 barrels per day (bpd) crude unit at its largest refinery in Abadan sometime in end-October for routine maintenance, a source from National Iranian Oil Company (NIOC) said on Wednesday.
The maintenance at the 450,000-bpd Abadan refinery could last between 30 and 40 days, and is part of the OPEC member's multi-billion dollar effort to expand and upgrade its domestic refineries to 3.0 million bpd by around 2012, from about 1.6 million bpd, the source said.
"Yes, they will start this maintenance in October sometime, when the weather is cooler," the source said.
Iran, the world's fourth-largest oil exporter, lacks refining capacity and must import huge amounts of costly gasoline to meet its needs, a sensitive issue as the West continues to seek ways to penalise Tehran for its persistent nuclear work.
Traders said the shutdown of the plant, located at the delta of the Shatt al Arab waterway, could prompt Iran to cover some of its distillate demand via spot imports and could offer some solace to the weakening gasoline market which is inundated by supplies.
The price difference between gasoline and crude oil sank into discount levels these past two weeks for the first time in recent years, pressured by excess supply and softening global demand, traders said on Wednesday.
"Because they have planned this shutdown in advance, they will likely be buying more products before the shutdown in October," a Middle East based trader said.
Iran launched gasoline rationing last June to curb consumption, which had risen well beyond the country's ability to refine crude, forcing the government to rely on expensive imports.
Analysts have dismissed Iran's plan to bolster its refining capacity, saying that surging costs and poor state funding for these projects will likely see the target date of completion pushed back.
Iran's access to financing mega-projects have also been hampered by curbs from European banks and energy firms to do business with the Islamic Republic.
Most recently Royal Dutch Shell scrapped investments in Iran because of pressure from Western governments, while France's Total put its plans on hold due to political tensions. But Russian and Asian firms have stepped in to fill the gap.
In May, Iran officials had said via local media reports that it had started with the construction of seven refineries at the cost of $23.22 billion. (Additional reporting by Simon Webb in Dubai; Editing by Ramthan Hussain)