TEHRAN (Reuters) - Iran will gradually decrease its gasoline imports by about 10 million liters (63,000 barrels) per day, or 30 percent, once the country starts rationing fuel in about two weeks, a top Iranian oil official said on Sunday.
Mohammad Reza Nematzadeh, head of the National Iranian Oil Refining and Distribution Company, said a “tremendous rate of increase in consumption” sparked by heavily subsidized petrol and a decade of underinvestment in the refining industry had forced Iran to buy gasoline and gas oil on world markets.
The No. 2 OPEC producer said it would ration gasoline from around June 5, after a two week delay, to reduce dependence on expensive imports at a time when world powers are threatening tougher sanctions over Tehran’s nuclear program.
“We will gradually decrease by about 30 percent, but it will not happen suddenly,” Nematzadeh told Reuters on the sidelines of a conference organized by Iran’s Ravand Institute for Economic and International Studies.
Iran is now importing roughly 34 million liters per day of gasoline, up from 30 million liters per day in the Iranian year to March, Nematzadeh said.
Another Iranian oil official had on Saturday put imports last year at 28 million liters per day and said the country could halve that figure once rationing was implemented.
Iran consumes an estimated 78 million liters of gasoline per day and analysts say consumption has been rising at about 10 percent a year.
Traders have been monitoring the debate on gasoline rationing and potential import cuts because they supply at least two cargoes of fuel a week to Iran.
A lack of refining capacity has forced Iran to import 40 percent of its gasoline needs. But strong crude prices over the past several years and correspondingly big refinery profit margins have convinced policy makers it is time to build.
Iran embarked on a multibillion dollar, five-year program last year to revamp and expand the refining system to 3 million barrels per day (bpd), up from 1.6 million bpd now, Nematzadeh said.
“I’ve always been pro-investment in refining. I wish we could have invested more during the past five years,” he said.
But lower oil prices and poor refining margins postponed the decision-making process, he added.
Nematzadeh, also deputy oil minister, said he hoped to sign $7 billion in new contracts this year after striking $6 billion worth of deals last year.
Three new refineries are planned — at Bandar Abbas a 360,000 bpd plant that runs on condensates and a 300,000 bpd facility that feeds on heavy crude. A 180,000 bpd refinery is planned for Abadan, which will also run on heavy crude.
A new gasoline-making catalytic cracker has been built at the existing Abadan refinery, which has boosted petrol production by 5 million liters per day.
A liter of gasoline is now sold at the pumps in Iran at 1,000 rials (about 11 U.S. cents) a liter, a 25 percent increase on the old price but still some of the world’s cheapest fuel.