One of the most humiliating aspects for Iran of the last sanctions era was that it was dependent on the whim of the U.S. for gasoline just to keep its vehicles moving, Mehrdad Emadi, head of risk analysis and energy derivatives markets consultancy, Betamatrix, in London, told OilPrice.com. “At the time that the new sanctions were introduced last year [by the U.S.], Iran was absolutely determined not to be in the dependent position again, which is why it has pushed ahead so determinedly with the PGSR [Persian Gulf Star Refinery], and why Iran is now not just self-sufficient for gasoline but is actually looking to ramp up its export capacity,” he added.
According to comments last week from the chief executive officer of the PGSR (also more generically called the Bandar Abbas Gas Condensate Refinery), Mohammad Ali Dadvar, the plant earned US$100 million by exporting petroleum products in the just the first seven months of the current Iranian calendar year, which began on 21 March. Plans are afoot, though, to increase both the export volume and revenues within the coming 12 months or so, by initially increasing the PGSR’s output to 540,000 barrels per day (bpd) from the current 360,000 bpd, a figure that appears entirely realistic given the breakneck speed of the PGSR’s development to date.
The original plan involved a three-phase development, each designed to produce 12 million liters per day (ml/d) of Euro 5 gasoline, plus 4.5 ml/d of Euro 4 standard diesel, 1 ml/d of kerosene and 300,000 litres per day of liquefied petroleum gas (LPG). To achieve these targets, the project’s developers were given a €260 million additional loan from the National Development Fund of Iran, as part of the estimated total cost for the three stages of approximately US$3.4 billion. Phase 1 was officially inaugurated only in April 2017, with the first shipment of gasoline delivered for distribution just one month later in June, and Phase 2 began producing Euro 5 standard gasoline shortly after its own official launch in February 2018, running at full capacity by the end of June that year. Phase 3 saw its official inauguration just a few months ago, although it has been basically operational for a few months prior to that.
Vital to its ongoing success is that the PGSR receives its gas feedstock directly from the nearby supergiant South Pars non-associated gas field. Despite various changes in foreign participants of various kinds in this enormous resource, South Pars’ gas production has continued to rise, in line with Iran’s short-term target of producing at least one billion cubic meters per day. This means that the PGSR is now being supplied with around 450,000 bpd of gas condensate feedstock from the South Pars gas field rather than the 360,000 bpd original target for the three official phases. This has allowed Iran to add the new Phase 4 (540,000 bpd target), which will also allow the plant to produce sweet naptha – rather than the previously produced lower value sour naptha – which has commercial applications and can also be utilized in a broader range of petrochemicals products production.