TEHRAN (NIORDC) __ The National Iranian Oil Products Refining and Distribution Company (NIORDC), as the main custodian of the supply and distribution of fuel and petroleum products in the country, while fulfilling its obligations within the missions assigned to the refining and distribution industry, is planning to change course in line with global market developments.

With the start of the 13th administration and analysis of the challenges and shortcomings in the oil industry, especially in the refining sector, the main helmsman in the production, transmission and distribution of petroleum products and distribution, i.e. NIORDC, has decided to move from being merely fuel-oriented to a profit-oriented one.

But in addition to this approach and apart from realizing the ongoing plans, two serious missions have been instituted by the company to adopt a suitable strategic method at the very beginning by examining the economic status of the country according to the existing conditions in meeting the fuel market needs. NIORDC is being run under the 13th administration while on the one hand it has to address the remaining challenges from the past, and move on to define new projects to balance the growing demand for petroleum products.

First mission;

Preventing refining industry from being struck by challenges

After reviewing the records of actions and activities in the refining and distribution industry, the export liabilities created to the buyers were among the painstaking challenges and in the first place, the evaluation of the challenges took place. According to the available figures, the remaining liabilities of the company in the calendar year of 1399 which ended on March 20, 2021 and the following calendar year, included 694,000 tons of products, of which 185,000 tons were sold by land (settled) and 509,000 tons by sea. In this regard, during negotiations with buyers and using the capacity of the contract to postpone the obligations and to modify the contract prices and delivery time, it was agreed that by buying the opportunity, while fulfilling the imposed obligations, the domestic market would be satisfied.

Lack of coordination of export policies and domestic distribution and lack of use of trade capacity in the field of energy from countries in the region were other leading problems. In this regard, by strengthening and regulating relations with neighboring and regional countries, with the cooperation of international authorities, decisions were made in the field of energy diplomacy and in the next step to use the capacity of transmission and distribution facilities to establish swap interactions.

Enhancing Strategic Fuel Reserves

The COVID-19 pandemic that has plagued the world for the past two years, has led to a change in behavior in the consumer market and with the fluctuations created, it has also transformed the fuel market. Accordingly, in Iran, the opportunity to export products such as gasoline due to the overflow of tanks and stocks of various products as well as crude oil, NIORDC, instead of putting emphasis on storage of the items, moved on towards export markets and generating hard currency for the country.

But gradually, with the normalcy being restored in the country, consumption patent not only returned to the levels prior to the pandemic, but with the realization of an imminent forecast, the amount of gasoline burned in the car tanks will exceed 120 million liters per day within a month; a fact that could aggravate speculations about gasoline imports.

With this in mind, the first step of the executives and stakeholders of the company under the 13th administration was focused on devising plans to enhance strategic reserves of products within the country.

Prevent widespread blackouts with constant fuel supply

The huge winter fuel supply caused a shortage in fuel supply to power plants which was offset by 37 million liters of liquid fuel supply to power plants preventing major blackouts in the first half of the current Iranian calendar year which began on March 21. Caused. Due to the sharp decrease in temperature and rising gas consumption and gas delivery shortages to power plants, which could have led to a blackout crisis, the uninterrupted supply and distribution of liquid fuel prevented the cessation of electricity generation in the country.

CNG Promotion in fuel mix of cars

Subsequently, with the change in consumer market action and also the lack of modernization and reconstruction of refinery facilities in previous years, it was ascertained that the current refining capacity of crude oil and gas condensate equivalent to 2.2 million barrels would fail to address the steep consumption slope. An estimation of the country"s demand for gasoline indicated that the figures will hit 117 million liters per day by 2026, 134 ml/d by 2031 and 153 mt/d by 2041.

Therefore, optimal fuel consumption management was put at the forefront of executive plans to prevent a possible crisis; exploiting the missed opportunity in the car fuel mix through CNG is one of the strategies that has been highly focused upon, on the one hand, by providing clean and cheap fuel, to consider the economic potential of households, and on the other hand, by reducing gasoline consumption can also maintain stabilized export conditions.

Likewise, since the beginning of the current calendar year, 84,000 gas-run vehicles have been converted to dual-fuel ones. Also, apart from the activities carried out in the workshop conversion sector, a contract was signed with Iran Khodro Industrial Group to produce 45,000 dual-fuel vehicles, including taxis and vans, in December 2022, to manage gasoline consumption while generating significant hard currency savings.

Mission 2
Create more value added by moving towards profitability

In the 8 months since the administration took office, the main approach of the office regarding refining petroleum products has been focused on multiplication of refinery and petro-refinery units due to challenges such as not increasing the refining and petro-refining capacity in accordance with legal obligations and not improving refining patterns during the past years.

The policy of the country"s refining industry is shifting from fuel-oriented to profit-oriented. This indicates the need to create a change in the structure of the country"s refineries in order to change the direction in line with the changing global energy market and move towards greater diversity in the products" mix.

This requires coordination and unity between the two industrial hubs of the country, namely refining units and petrochemical complexes.
The inclusion of a new generation of products in the refinery mix, which so far has been focused only on production of various fuels, is a measure that can further facilitate the country"s revenue stream.

It should be acknowledged that the process of construction and development of oil refineries in the country, which are now nine industrial units, has been based on fuel production and increasing the share of products in the fuel mix of the transport fleet, power plants and the other related industries.

Maximum fuel production, especially of two key commodities such as gasoline and diesel, which are considered to be leaders in the petroleum products market, has long been a priority for refinery plans; a process that has continued to produce and supply the fuel needed by the consumer market and has tasked the country"s refineries to refine the current 2.2 million barrels per day of crude oil.

300,000-barrel petro-refinery project under construction

Among the 42 remaining half-finished refining projects in the industry, 25 are petro-refinery projects, five gas condensate projects and 12 refinery renovation projects. Besides these, there was felt a need for construction of another petro-refinery project in the country for which studies were held.

Martyr Soleimani petro-refinery is one of the plans that has been prioritized for construction and will soon come on stream. This 300,000-barrel project will be constructed with the aim of increasing the refining capacity and supplying the required products with emphasis on the value chain in Hormozgan Province and in the vicinity of Bandar Abbas and Persian Gulf Star refineries. The project requires about $10 billion of investment which will be supplied by tapping domestic non-government resources, foreign financing or delivery of crude oil to developers.

This is while the policy of the refining and distribution establishment is to support the private sector and facilitate the conditions for the entry of this sector into the industry. Construction of Lavan Petro-Refinery with a capacity of 150,000 barrels and a 300,000-barrel refinery in Khuzestan are also among the projects envisaged with crude oil feedstock.

Signing a strategic memorandum

Considering that 8.8 million liters of fuel and products are smuggled daily, there is a dire need for continuous monitoring of the relevant organs of this flow. Besides, considering that one of the ways of safe transfer of products is through pipelines, expansion of rail network and pipelines is another plan that can be implemented in this regard.

Likewise, in early January, a €372-million memorandum of understanding was signed between the National Iranian Oil Products Refining and Distribution Company (NIORDC) and Bank Mellat for construction of Tabesh Pipeline (supplying the eastern energy market) to reduce fuel smuggling by saving Rls. 110 billion per day, and creating a safe and sustainable fuel transfer to people and industries as well as an attractive market for exports to Afghanistan. The project is awaiting approval from the Economic Council to be put into operation within the next four years

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Singing A €100 million MOU; soon

Signing of another memorandum of understanding is at the forefront of NIORDC plans to facilitate the conditions of distribution and transfer of products. The Pars pipeline project worth 100 million Euros will provide a daily capacity of 72,000 barrels of products from Hormozgan to Fars province. A memorandum of understanding will be signed by the end of the current Iranian calendar year to March 20 with the aim of providing the fuel deficit and optimal distribution of fuel needed in Fars province, reducing the traffic of road tankers, increasing the storage volume of petroleum products in the province, and so on.

Other ongoing plans

Other NIORDC programs include improving the quality of gasoline and improving the quality of fuel oil, and improving the quality of gas oil in the Shiraz refinery. Also, projects for refining diesel, improving the quality of gas oil and desulfurizing fuel oil from the remnants of distillation towers in Isfahan refinery are underway.

Production of needle coke in Imam Khomeini Shazand refinery, quality improvement of heavy products of coking plant in Bandar Abbas, quantitative and qualitative improvement of products in Tabriz oil refinery, construction of quality and quantity improvement unit of gasoline in Tehran, a plan to build a fuel oil desulfurization unit in Kermanshah, a new vacuum distillation unit in Lavan, are others project underway.