October 14, 2012 / 3:26 PM / 7 years ago

Iran refinery work may force it to buy more gasoline

DUBAI (Reuters) - Iran may attempt to buy more costly foreign gasoline while maintenance work is carried out on a big oil refinery, at a time when the government is trying to slash imports to shore up its sanctions-hit economy.

Alternatively the country will have to rely more heavily on the poor-quality gasoline it produces from converted petrochemical plants.

Iran can produce about 60 million liters a day of gasoline when all its refineries are fully operational, compared with daily consumption of around 65 million liters, the semi-official Mehr news agency reported over the weekend.

But work that began last week at the country’s second-largest refinery has reduced capacity by 7 million liters a day.

Mehr quoted the leader of the maintenance team at the 284,000-barrel-per-day Isfahan refinery, as saying work would last for three weeks.

Because of inadequate refinery capacity and Western efforts to prevent it from buying gasoline, Iran has converted some petrochemical plants to produce gasoline, which is highly polluting.

According to Mehr, the country’s petrochemical plants have been producing 8-10 million liters a day over the last seven months.

Their production will increase to make up for lower supply from refineries, Mehr said without saying where it got the information or what the maximum capacity is.

If there is not enough spare petrochemical capacity or fuel in storage to make up for the loss of capacity at Isfahan, Iran may have to try to buy more on international markets.

But the gasoline shortage could be short-lived, as another 8 million liters a day of new refinery capacity is due on line in about five weeks at the Shazand oil refinery, according to Iran’s oil ministry news website.

The Iranian government said over the weekend it wanted to reduce the import of non-essential goods as Western sanctions on oil sales starve the country of foreign currency reserves.

The value of the Iranian rial has slid against the U.S. dollar over the last year as sanctions on Iran’s oil exports, imposed by the United States and European Union over Tehran’s disputed nuclear program, bite.

Reporting by Yeganeh Torbati and Daniel Fineren; Editing by Erica Billingham

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