Addressing the second international forum of Iranian oil refining industry in Tehran (Oct. 11-12), Gholamhossein Nozari added that the international gathering focused on major developments in Iranian refining industry. “This will pave the way for more cooperation in process technologies, joint investments, establishment of specialized technical consortiums in cooperation with the Iranian companies, as well as promoting major oil refining projects by providing needed technical know-how and financial support.”

The minister of petroleum stated that upcoming developments have been reviewed in two major parts. “The first part includes development, optimization, technological uplifting, and increasing profitability of existing refineries which will also include qualitative improvement of products through observing international quality standards and establishment of advanced production, safety, occupational, and environmental health systems,” he said.

Nozari also pointed to the Ministry of Petroleum’s policies for refining industry and added that they included development of refining capacity; converting heavy, inexpensive products to light, expensive ones; meeting the country’s need for fuel, especially removing the existing shortages and meeting future needs; fuel consumption management by rationalizing prices and subsidies; as well as interaction with neighboring countries and overseas investments.

“Implementing every one of the above policies requires technical and specialized studies, choosing the best options, necessary investments, procuring needed equipment and spare parts, as well as installation and commissioning. For example, implementing product quality system under the existing refining capacity only for kerosene and diesel fuel will require construction of units to remove hydrogen from these products at a total capacity of 20,000 cu. m. per day for kerosene and 80,000 cu. m. per day for diesel fuel. This clearly proves the immense size of product treatment units and hefty investments that are needed,” he said.

The minister of petroleum added, “Reducing refining residues and production of fuel oil at Iranian refineries will be a difficult and costly phase and requires downstream conversion industries like FCC* and RFCC** with resultant production of oil coke, synthesis gas, as well as removing asphalt by using solvents and other modern technologies. All these steps would be only possible through heavy investments. At present, refineries can produce up to 480,000 barrels per day of fuel oil. If we made plans to convert only 80 percent of that figure, the total capacity of conversion units should exceed 380,000 cu. m. per day which shows immense size of these units. Since usual investment in these units is over 4,000 dollars per barrel, it becomes clear what huge investment is needed in conversion units.”

Nozari pointed to necessity of transferring ownership of refineries to nongovernmental sectors and paving the way for implementation of this policy and said, “In this basic development, refining companies will work on the basis of mean global prices. If subsidized prices continued inside the country, the government would pay subsidies. This will be an exceptional opportunity for active presence of the private escort from Iran and other countries to run Iranian refineries. For the first time, some stocks of Isfahan refinery will be presented on the stock market and the same will happen to stocks of Tabriz and other refineries.”

Referring to the second part of developments in the Iranian oil refining industry, the minister of petroleum noted that those developments included basic plans for treatment of super heavy crude oil coming from Soroush, Norouz, Azadegan, and Yadavaran oil fields as well as oil layer of South Pars gas field and processing gas condensate produced by South Pars gas field. He further stated that the developments also included increasing capacity of existing refineries to 190,000 barrels per day, building two refineries using 480,000 barrels per day of condensate as feedstock, building three heavy crude oil refineries with a total capacity of 400,000 barrels per day, building two super heavy oil refineries with a total capacity of 380,000 barrels per day and building a refinery for light crude oil coming from Caspian Sea countries with a total capacity of 300,000 barrels per day. New refineries will double the existing capacity for treating crude oil in Iran.

Minister of petroleum stated that new investments in infrastructural projects will be made by domestic or foreign private sectors and this will be a good opportunity for cooperation between Iranian and foreign companies in implementing large-scale, long-term plans.

Now, Iran is considering a plan which will avail of the most modern technology, the shortest possible route, and the highest possible capacity to take crude oil from the Caspian Sea to the Persian Gulf and international waterways.

Manouchehr Mottaki, the Iranian minister of foreign affairs, was another speaker at ORF-II who explained about Iran’s special position in production and transfer of energy to other countries. He said, “As you known, recent developments in the Caucasus have cut oil transfer through the strategic Baku – Ceyhan pipeline which takes oil from Central Asia to the Black Sea. Those developments as well as other reasons, especially the need for that pipeline to cross many countries, has increased its risk and lowered its safety. Now, the government of the Islamic Republic of Iran is considering a plan which will avail of the most modern technology, the shortest possible route, and the highest possible capacity to take crude oil from the Caspian Sea to the Persian Gulf and international waterways. Technical specifications of this plan will be given in this meeting. The important issue, however, is security and safety because it starts at Neka Port (in northern Iran) and will end in Jask Port in southern Iran, thus, simply crossing the Iranian soil. Therefore, it will be immune from regional political and social upheavals. Meanwhile, the Persian Gulf is currently the main energy route in the whole region and the Middle East. Therefore, an oil dock at Neka has been made ready for discharging oil from ships and is equipped with marine navigational and offloading facilities while availing of needed means to prevent oil spills and to collect any possible oil slick.”

“Another important point is economic considerations of the plan and costs of oil transfer to international waterways. Our country has been a vanguard in this field and has spent 2-3 dollars per barrel to implement the plan, which is the least costly compared to international markets. The second issue is investment in oil refining industry and in infrastructural plans for improving and uplifting existing refineries and those beyond our borders.

“Our refinery industry and its specialists have upgraded nine domestic refineries and have implemented projects to build seven modern refineries inside the country and three refineries outside. They have gained a lot of valuable experience in such fields as designing, process models, engineering computations as well as installing refineries. Iranian contractor companies have set up installations at Arak and Bandar Abbas refineries in the best possible manner as confirmed by international authorities and those refineries are working at higher capacities than their nominal capacities. In addition to design, engineering and implementation of major oil projects, we must point to investment guarantees for the oil industry. The Islamic Republic of Iran enjoys the world’s second biggest natural gas and third biggest crude oil reserves. As for extraction and production of natural gas, thus far, 25 phases have been defined for production from South Pars gas field of which eight phases have become operational and two more phases will go on-stream next year. Each phase will produce 25 million cu. m. of natural gas and about 40,000 barrels per day of gas condensate. In other words, when the projects are over we would produce about 2 million barrels per day of gas condensate. This figure should be added to daily crude oil exports of over 3 million barrels. These figures are good guarantees for foreign investments in oil industry. Experienced engineers, powerful contractor companies, and adequate investment assurances are major advantages which enable domestic oil refining industry to implement oil projects outside the country in the best possible manner and according to schedule. Here, I announce that our country is ready to take part in the implementation of major oil projects outside its borders and is ready for all kind of cooperation in this regard.”

Our refinery industry and its specialists have upgraded nine domestic refineries and have implemented projects to build seven modern refineries inside the country and three refineries outside.

Mohammad Reza Nematzadeh, deputy oil minister for refining and distribution of oil products, also addressed the audience emphasizing that investment in the Iranian oil refining industry was necessary. He added that there was no reason to be wary of such investment when oil prices are falling.

“We are not concerned about oil prices to improve investment in the Iranian refining industry because such plans are long-term and will not be affected by oil price fluctuations,” he said. Nematzadeh noted that it would be better for an oil-rich country like Iran to not only export its crude oil, but also to refine part of it and sell its products. He said that Iranian refinery plans needed 20 billion dollars in investment, 40 percent of which should be in foreign exchange and the rest in rials.

Deputy oil minister for refining and distribution of oil products stated that Iran was planning to increase its share of fuel supply to ships in the Persian Gulf from the current figure of 10 percent to 20 percent in 2009. “At present, we supply ships with 2-2.5 million tons of fuel which will increase next year…. Although fuel supply to ships by Iran will reduce share of neighboring countries, we are not seeking serious competition, but since this is a profitable activity and is interesting for the private sector, which has invested in it, if we started fuel supply in Qeshm, with the required facilities already established, we would get a share of international market. The next port to be covered by this plan is Chabahar,” he said.

Nematzadeh added that new refinery projects have targeted European and Asian markets where they would export their products and 70 percent of their yield would go to oriental markets.