Source:

August 25, 2010

Iran has taken measures to increase domestic production and will soon stop importing gasoline, the country’s oil minister said Wednesday, in a show of defiance as U.S. sanctions target Iranian fuel supplies.

Four rounds of U.N. sanctions have hit Iran’s economy but have not persuaded the government to halt a controversial nuclear program, which the West fears could be used for making atomic weapons. Tehran denies the charge and says it is enriching uranium solely for peaceful, electricity production.

Separately from the U.N. sanctions, which do not affect the oil sector, the United States and its European allies imposed penalties that target exports of gasoline and other refined petroleum products to Iran.

In remarks carried on the official IRNA news agency, Oil Minister Masoud Mirkazemi dismissed the gasoline-related sanctions as ineffective.

“Soon, domestic gasoline production will increase by 20 million liters (5.3 million gallons)” per day, Mirkazemi said after a Cabinet meeting Wednesday. “Therefore, we won’t need to import gasoline.”

Iran is home to the world’s second largest proven reserves of conventional crude and produces about 4.2 million barrels of oil per day, most of which is used domestically.

But a lack of refining capacity enables it to only produce roughly 44 million liters (11.63 million gallons) of gasoline per day — around two-thirds of its of daily demand, which means Tehran must import around 20 million liters to meet its daily needs.

The imports are a heavy drain on the state budget, which relies on oil sales for around 80 percent of its revenues. Mirkazemi did not elaborate on what the measures to produce the remaining third of needed gasoline entailed.