Browse
related articles
Fuel rationing
Iran finally chose to impose full fuel rationing at the end of June. Private motorists are now allowed to purchase just 100 litres a month. The sudden move allowed no time for hoarding and there has been anger on the streets at the rationing decision, with high inflation already affecting the price of basic commodities, even though Iranian petrol is still sold at about one fifth its economic cost at 11 US cents a litre.
The move is scheduled to last up to six months. Iran had faced exhausting its annual budget for gasoline products by the beginning of August. Without the imposition of rationing, Iran's fuel import bill could have nearly doubled to $9.5bn, France's Petroleum Institute estimates.
Skyrocketing local consumption, as well as a huge illicit trade in subsidised fuel particularly across to Afghanistan and Pakistan, have eaten away at fuel stocks. Iranian fuel is also found in Turkey and Iraq where the price per litre is up to 12 times more expensive. Iran is also in regional terms a major car producer with a million units a year produced, though many of the nation's vehicles are older designs and heavy on fuel use.
Long-term strategy
Apart from curbing consumption by rationing, the government's long-term strategy consists of expanding domestic refining capacity, increasing refinery supplies from countries such as Venezuela, at the same time as converting cars to dual gas and petrol systems.
Iran plans to build three oil refineries in its southern Khuzestan province to be located in Abadan, Andimeshk and between Omidiyeh and Mahshahr. Oil Minister Seyed Kazem Vaziri Hamaneh has also said Iran will participate in five new refineries to be sited in China, Singapore, Indonesia, Malaysia and Syria. These refineries would have a production capacity of 1.1 million barrels per day and be supplied with Iranian crude.
US opposition could prove decisive though if Washington invokes its 1995 Iran-Libya Sanctions Act against international companies deemed to be investing more than $20m in Iran's energy sector.
Politics aside, Iran's refinery dilemma reflects a global problem. Total world refined output is some 86 million barrels per day. On present trends output will need to rise to 93 million bpd in the next three years and increase to 113 million bpd by 2030 to meet world demand. According to the International Energy Agency, a third of this investment will be needed in the Middle East and China alone.
See also:
Iran puts its foot down on the gas
