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Iran Touts Gasoline Exports

Posted by Zand-Bon on Sep 29th, 2010 and filed under INTERNATIONAL NEWS FOCUS, News, Oil & Gas, Sections. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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September 28, 2010

LONDON—Iran said Tuesday it has started exporting domestically produced gasoline, drawing skepticism from oil-industry experts but representing Tehran’s latest show of defiance amid international sanctions aimed at curbing its nuclear ambitions.

Iran, one of the world’s largest oil producers, has in the past year relied on imported gasoline to meet 40% of its domestic consumption, because of a lack of refining capacity. Amid Iran’s standoff with the West over its nuclear program, Washington and allied governments have considered those gasoline imports a vulnerability. Earlier this year, the U.S. enacted sanctions aimed at punishing international firms involved in the trade.

Iranian imports have plummeted recently, but Iranian officials have put on a brave face. Tehran has been rationing gasoline use. This year, officials inaugurated the conversion of at least two petrochemical plants into gasoline-producing facilities.

Ali Ashgar Arshi, the international affairs director at the National Iranian Oil Co., said Tuesday that the shipment was the first of several Iran expects to sell to global markets. He said the exports reflect Iran’s success in coping with sanctions, especially the U.S. measures.

“Iran has achieved self-sufficiency in production of gasoline,” he said, according to the Iranian oil ministry’s official web site, Shana. Mr. Arshi also said countries have emerged that are willing to ship Iran gasoline despite the new U.S. measures.

The statements echo a defiant tone set by Iranian President Mahmoud Ahmadinejad and other top officials, who have said a fresh wave of international sanctions have only made Iran stronger, by making it more self-sufficient. Some Western officials, however, have said the sanctions are starting to bite.

Iran this summer said it is scrapping for now some of its liquefied-natural-gas export plans. That ended years of Iran touting the sector as a national priority. Iranian officials publicly didn’t say sanctions played a role, but Western energy firms have a stranglehold on key LNG technology, making it difficult to bring into the country amid tighter sanctions.

Meanwhile, gasoline imports dropped 75% between March and August, according to one oil-shipping expert.

Iranian officials privately acknowledge the sanctions are hurting the country’s energy sector. Using petrochemical plants to churn out gasoline for domestic use is more expensive than producing other products that could be more profitably exported. And the petrochemical plants need maintenance and parts, which are harder to come by amid the fresh sanctions.

“It’s a survival economy,” said one Iranian oil-industry official.

Outside experts questioned whether the exports announced Tuesday were really domestically produced. Petrochemical plants can be reconfigured to make a low-grade gasoline, but the quality isn’t likely high enough to fetch decent prices overseas.

The exports announced Tuesday could be foreign-produced products that have been kept in stock, said Fereidun Fesharaki, an Iranian oil specialist at Singapore-based FACTS Global Energy.

Whether the gasoline is domestically produced or not, exports are “not sustainable,” Mr. Fesharaki said.

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