Iran could be target for $1 billion in gasoline sales, once sanctions lift

Iran will need to import about 20 percent more gasoline to meet pent-up demand in the first year after economic sanctions are lifted, creating a market for some $1 billion in fuel sales from abroad, according to traders and analysts.

The nation with the world’s fifth-largest crude reserves may need to buy about 50,000 barrels a day of gasoline if sanctions are removed in early 2016 as expected, say analysts at consultants Facts Global Energy, IHS Inc. and Energy Aspects Ltd. With its refineries running at full capacity and unable to raise output for at least another year, Iran now imports 41,000 barrels a day, or about 9 percent of the gasoline it uses.

Iran was the Persian Gulf region’s biggest gasoline buyer before world powers imposed sanctions over its nuclear program, and it may need to import even more — as much as 70,000 barrels a day, according to two traders in the Middle Eastern market who asked not to be identified because they’re not authorized to speak to the media. The traders expressed doubts that Iran would open planned new refineries on schedule and said it will depend on imports for at least two to three more years.

Improving Economy

“Once sanctions are lifted and the domestic economy in Iran improves, demand will likely rise and that’s going to raise imports,” Victor Shum of IHS said by phone on Sept. 30 from Singapore. “It will be good for existing, export-oriented refineries to see the Iranian market opening up.”

Iran will need to import some $1 billion of gasoline next year, a calculation based on potential purchases of 50,000 barrels a day and regional prices compiled by Bloomberg. The U.S. and European Union restricted oil companies and traders from doing business with Iran, which agreed in July to a deal limiting its nuclear program in return for a lifting of sanctions.

Iran’s gasoline imports slumped to almost zero in 2012 from more than 100,000 barrels a day before 2010, figures from the Joint Organisations Data Initiative show. The drop coincided with tighter curbs by the U.S. and EU on trade in refined products with Iran. The Iranian government responded by trimming fuel subsidies to damp demand and ordering petrochemical plants to produce gasoline.

Imports Halved

The country imports less than half the amount of gasoline it bought prior to sanctions, said Shahrokh Khosravani, deputy managing director of National Iranian Oil Refining & Distribution Co., according to an Aug. 31 report by the Oil Ministry’s Shana news service.

Iran may boost gasoline purchases to a range of 50,000 to 75,000 barrels a day after sanctions are removed, Shum said. Richard Mallinson, an analyst at Energy Aspects in London, forecasts imports at between 30,000 and 50,000 barrels daily, while Salar Moradi, a London-based analyst at FGE, sees purchases at about 50,000 a day.

Officials at Tehran-based National Iranian Oil Co., which oversees Iran’s oil-products trade and refining industry, didn’t immediately reply to phone calls and e-mails for comment.

With its refineries planning expansions to make more fuel, Iran will produce a gasoline surplus as early as the end of 2016, FGE Chairman Fereidun Fesharaki said on Oct. 6 at a conference in London.

The country is building a 360,000 barrel-a-day refinery called Persian Gulf Star that state-run National Iranian Oil says will make Iran a net exporter of gasoline. The plant at the port of Bandar Abbas was to start operating this year. The official Islamic Republic News Agency reported on Sept. 7 that the facility is scheduled now to begin in 2016. Moradi of FGE forecasts the refinery’s first phase will start as late as the end of next year, with its remaining two phases pushed off until the end of 2017.

Persian Gulf Star, whenever it becomes operational, “will change the gasoline balance in Iran,’’ Moradi said.