Foreign Firms Scramble to Fix Iran's Refineries Once Sanctions End
"Wrong Capacity"
Years of restricted access to technology have left Iran's refineries limping into the 21st century, forcing them to produce low quality and polluting fuels and creating safety hazards.
For a country with big aims, huge oil reserves and nearly 80 million fuel-hungry consumers, addressing the refining problem is a priority for Iran's leadership, according to analysts.
"The whole industry is in a mess," said Mehdi Varzi, president of Varzi Energy consultancy. "Iran has 1.5 million barrels per day (bpd) of refining capacity, but it is the wrong capacity. Iran wants western technology and American technology specially."
Iranians consume close to 70 million litres per day of gasoline, but the country's refineries were designed to produce only around 40 million litres. As a result, in 2010, when then-president Mahmoud Ahmadinejad declared the country self-sufficient in gasoline in response to ramped up sanctions, Iran's refineries were forced run above full capacity, and without regular maintenance.
The nation's petrochemical plants, which usually produce plastics, were also drafted into service to produce gasoline. But it came at a cost. Drivers have been using gasoline that contains additives that are hazardous to health and banned in most Western countries.
"They are currently spewing out pollution," Varzi said.
Shazand refinery, one of the nation's more advanced units, suffered an explosion in 2011, a fire in 2014 and various other problems. The massive Abadan refinery has faced similar difficulties. Bandar Abbas, another 335,000 barrels per day refinery, needs repairs and quick upgrades, sources said.
In fact, virtually all of the country's refineries need major works of some sort - and quickly.
Sara Vakhshouri, president of SVB Energy International, said scores of western oil industry officials are clamouring for this business. There would be huge competition but the right companies should be able to succeed.
"If you can bring the technology needed, it shouldn't be tough," Vakhshouri said.
(Reporting by Libby George and Ron Bousso; Editing by Giles Elgood)
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