Iran's gasoline demand outpaces production
Iran may have to resort to importing gasoline again as consumption has been outpacing domestic refinery production.
Iran is gearing up for a spike in gasoline consumption during the two-week holiday period to celebrate the Iranian new year, or Nowruz, which starts on 20 March. Iranians typically travel across country to celebrate with friends and family, boosting already strong gasoline demand.
State-owned refiner NIORDC said it expects gasoline demand to exceed 120mn litres/d (754,000 b/d) over the Nowruz period.
"In the past few days, due to the beginning of Nowruz trips, the consumption figure of 133mn litres of gasoline was recorded in one day," NIORDC managing director Jalil Salari said, according to state news agency Shana.
This is higher than the previous daily record of 127mn l set during the holiday season in March last year and higher than Iran's total gasoline output, which Salari said last year was 110mn l/d.
"More than a million cars are supplied every year, and no cars are scrapped. If this trend continues, we will reach a shortage of gasoline and become an importer," Salari said last year.
When Iran's flagship 360,000 b/d Persian Gulf Star (PGS) condensate splitter reached full capacity in February 2019, it was meant to help meet Iran's gasoline demand and turn the country into a net gasoline exporter.
Each of the three 120,000 b/d phases of the splitter has a capacity to produce 12mn l/d of Euro IV grade gasoline. Plans to add a fourth and final 120,000 b/d phase had been shelved, with debottlenecking of the existing three trains adding 40,000 b/d of processing capacity. But the surge in demand prompted Tehran to revive the pIan and start construction of the fourth train towards the end of 2022.
The new train's distillation system will be online "by the end of 2025", according to consultacy FGE. "We project the isomerisation and continuous catalytic reformer units will then come online in 2027. We expect that following the commissioning of the fourth train, PGS' intake will likely increase to 500,000 b/d as the utilisation of the existing trains will be reduced toward their original loads," said FGE's managing director for the Middle East Iman Nasseri.
Iran has also partially revived the 480,000 b/d Siraf splitter project in Assaluyeh in the south of the country. "Iran is building a 60,000 b/d condensate splitter there, so-called South Adish refinery, the only part of the shelved Siraf project which was due to have eight 60,000 b/d splitters," Nasseri said.
FGE expects the project to come online by 2025.
Holiday distribution
Iranian officials have to deal with the more pressing task of organising fuel distribution over the holiday period. NIORDC has sent 100 teams around the country to monitor gasoline distribution, which will remain a challenge even after the holiday period.
Plans for optimal management of fuel consumption in Iran "have entered an emergency stage otherwise proper distribution of energy in the country will not be possible", Shana warned previously.
Widespread smuggling of gasoline to neighbouring countries, where prices are higher, has exacerbated the issue. Gasoline is heavily subsidised in Iran, helping to keep consumption at elevated levels for many years and putting pressure on local refineries to raise production.
Given the challenge of importing gasoline while US sanctions are in place, Iran has been looking for alternatives, such as the use of compressed natural gas as a motor fuel. Plans to expand the country's existing 2.29mn b/d of refining capacity are likely to take time because sanctions have hindered Iran's ability to implement refinery upgrades.
Related news posts
Brazil narrows lower biofuel mix mandate in south
Brazil narrows lower biofuel mix mandate in south
Sao Paulo, 10 May (Argus) — Brazil's oil regulator ANP dialed back the reduced biofuels mandatory blend in Rio Grande do Sul state to four cities amid the recent flooding in the region. Low blending areas now apply only to the cities of Canoas, Esteio, Rio Grande and Santa Maria. The measure will still last for 30 days, starting on 4 May. ANP lowered the anhydrous ethanol blend on gasoline to 21pc from the current 27pc in the entire state earlier this week , while pushing the mandatory biodiesel mix for 10ppm (S10) diesel down to 2pc, from the usual 14pc. The agency also temporarily suspended the blending mandate for diesel with 500ppm of sulfur (S500). ANP said it decreased the exemption's coverage as it identified "that the supply situation in the rest of the state had stabilized." Rainfall in Rio Grande do Sul blocked railways and highways where biofuels are transported to retail hubs. Floods in the state have left at least 116 dead and 143 missing, according to the local government. By Laura Guedes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Mexican power outages enter fourth day
Mexican power outages enter fourth day
Mexico City, 10 May (Argus) — Mexican power grid operator Cenace issued its fourth consecutive day of operating alerts amid the heatwave gripping the country. Net electricity demand reached 47,321MW early today, with deployed electricity capacity slightly below at 47,233 MW, according to Cenace. Since 7 May, Cenace has declared emergency operating alerts as demand exceeded generation capacity during peak evening hours, prompting the grid operator to preemptively cut electricity supply across different states to maintain grid integrity. Power outages have lasted up to several hours in Mexico City and in major industrial states as power demand has outstripped supply by up to 1,000MW. Peak demand this week hit 49,000MW, just below last year's historic peak of 53,000MW during atypical temperatures in June. "We are very concerned about the unprecedented outages detected across 21 states, a situation that affects the normal functioning of Mexican companies," national business chamber Coparmex said. Peak electricity demand typically rises in June-July but temperatures this week have risen as high as 48°C (118° F) across some states. Mexico City reported a record high of 34.3°C on 9 May and high temperatures are forecast to continue into next week, Mexico's national weather service said. The inability of Mexico's grid to respond to increased demand is because of insufficient power generation capacity, non-profit think-tank the Mexican institute for competitiveness (Imco) said this week. "Despite the energy ministry's forecast that 22,000MW of new power capacity would enter service by 2026, only 1,483MW had entered service as of 2022" since late 2018, Imco said. President Andres Manuel Lopez Obrador's administration pledged to build new generation capacity, including five gas-fired, combined-cycle plants, but recognized this week that delays had contributed to the power outages. "We have an electricity generation deficit because some of the combined-cycle plants were delayed, but we are working on it and it will soon be resolved," Lopez Obrador said on 9 May. Lopez Obrador's government has also curtailed private sector power development during his administration. Mexico needs to upgrade and expand its transmission network, industry associations say. "In order to resolve this problem, we believe that a reopening of the electricity market to the private sector is imperative," Mexico's wind energy association, Amdee, said. Mexico has 87,130MW of installed capacity, with 39.5pc from combined-cycle gas-fired power plants and 31pc in renewable power, including wind, solar, hydroelectric, geothermal and biomass, according to the latest statistics from the energy ministry. By Rebecca Conan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil reports more off-spec biodiesel March-April
Brazil reports more off-spec biodiesel March-April
Sao Paulo, 10 May (Argus) — The rate of Brazilian biodiesel falling below required blending limits nearly tripled in March and April after the mandate was increased to 14pc, according to a government analysis. Hydrocarbons regulator ANP's Fuel Quality Monitoring Program (PMQC) found 271 instances of biodiesel below the required level between 1 March — when the blending mandate was increased from 12pc to 14pc — and 30 April. In January and February the PMQC found 97 instances of blends that did not meet the 12pc level. An increase in missed blending targets is common during transitions to higher blending levels, according to the agency, mainly due to difficulties in depleting inventories of the lower-level blend. Several plants claim that a slowdown in biodiesel withdrawals in the first four months of the year also contributed to challenges in complying with the new blending level. Some retailers' loss of market share has also been cited as an aggravating factor. In March, 154 recorded instances of non-compliance covered blending levels between 12.3pc and 13.9pc, according to ANP data. In April, there were 101 occurrences within the 12.3pc and 13.9pc range. Another eight instances of non-compliance were also recorded in each of March and April. The PMQC is a monitoring program and does not have the same effect on market behavior as inspections, according to ANP. "It is used as one of the intelligence vectors for the planning of ANP's inspection actions," the agency said. Only irregularities identified in the context of inspectios can result in fines levied against fuel distributors. By Alexandre Melo Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
California fuel retailers fear regulatory scrutiny
California fuel retailers fear regulatory scrutiny
Houston, 10 May (Argus) — US fuel retailers like neither the regulatory precedent being set in California nor how the transition to renewable fuels is being managed, but companies sticking it out in the Golden State may reap rewards. California governor Gavin Newsom (D) in March last year signed SB X1-2 into law, allowing the California Energy Commission (CEC) to gather a broad range of profit data from refiners and set a maximum gross gasoline refining margin in an effort to avoid price spikes at the pump. "Unfortunately in California there is no shortage of bad policies that are being proposed," California Fuels and Convenience Alliance director Alessandra Magnasco said this week in a legislative affairs meeting at fuel retailer trade association SIGMA's conference in Austin, Texas. She worries that if the CEC fails to make progress in capping margins at the refiner level, they will look further downstream and regulate retailers. The alliance is opposed to what it sees as burdensome reporting requirements mandated by SBX 1-2 that were rushed through the legislature. "They are doing it in a way to leave out industry," Magnasco said. The CEC this week approved further reporting requirements for refiners in the state, mandating they file maintenance schedules with the commission at least 120 days in advance of planned work and within two business days after the start of unplanned shutdowns. "Every bad idea we face has generally been socialized in California first," David Fialkov, vice president of government affairs for US fuel retailer trade association NATSO, said during the SIGMA session. The increased adoption of renewable diesel in California is also causing headaches for fuel supply managers. "I can't even tell my customers which specific terminal might have traditional diesel versus renewable or if they're going to have both," said Deborah Neal, director of price risk management for fuel supplier World Kinect during another SIGMA panel discussion. The introduction of renewable diesel to the California market was done without a specific time line or transition plan, Neal said. "It's messy to say the least." The regulatory environment in California has also dampened appetite for mergers and acquisition activity in the eyes of bankers doing the deals. Gas station buyers who are looking to consolidate smaller assets are not looking at California if they are not already invested there, Matrix Capital Markets' co-head of downstream energy investment banking Cedric Fortemps said at SIGMA. "The operating and legal dynamics are completely different than other parts of the country," Fortemps said. But for companies already operating in California, there is limited out-of-state competition and high barriers to entry. Those companies are keen to grow their existing operations, Fortemps said. By Nathan Risser Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more