EghtesadOnline: Plans are underway to revamp and expand crude refining infrastructure in Abadan and Isfahan in cooperation with foreign contractors, head of the National Iranian Oil Engineering and Construction Co. said.
"There are plans to maximize efficiency and enhance crude processing in Isfahan refinery and expand the existing Abadan Oil Refinery," Hamid Sharif-Razi told a news conference on Tuesday, ISNA reported.
Daelim Industrial Co., a South Korean conglomerate, has signed a memorandum of understanding to upgrade the Isfahan refinery. As part of the agreement, South Korean banks will finance the project through Daelim.
Financing is expected to take between 9-12 months, "But we are assessing proposals to start part of operations before the financing is approved to speed up the plan," Sharif-Razi said.
The Abadan refinery project includes upgrading the infrastructure of what was once the world's largest refinery, as well as construction of a new unit with a processing capacity of 210,000 barrels per day.
According to Financial Tribune, the new plant will reportedly be built on the site of the main refinery and will include several units for diesel, distillation and gasoline production.
The first development phase of the project is estimated to cost $1.15 billion and the second $1.7 billion. Abadan refinery was largely destroyed in 1980-88 Iraqi-imposed war by the invading Ba'ath army and occupation of Khuzestan Province where the refinery is. It had a processing capacity of 628,000 barrels of oil per day at the time, now pumping around 400,000 barrels of crude.
It reportedly supplies one-fourth of Iran's total gasoline output which stands at around 60 million liters per day, while consumption has exceeded 70 million liters.
"Some parts of the Abadan refinery are dilapidated and must be replaced. We hope the investment will help curb losses made by the refinery," Sharif-Razi noted. Most Iranian refineries are operating with little to no profit due to the low output of higher value added products.
The official said a memorandum of understanding has been signed with a Chinese corporation for the Abadan project. He did not name the company nor the terms of the agreement or when it was signed.
Iran, currently the third-largest producer in the Organization of Petroleum Exporting Countries behind Saudi Arabia and Iraq, needs to invest billions of dollars in its aging refining infrastructure as it aims to play a bigger in the global crude market.
Sharif-Razi said the lifting of international sanctions in January gave fresh impetus to negotiations with oil and gas multinationals.
"Investors were not willing to work in Iran during the sanctions. We hope renovation operations at Abadan refinery will commence in four months," he added.
The two projects would be in the form of joint ventures between the two refineries and foreign companies, the NIOEC chief said, adding that European companies are also in negotiations for refinery overhaul projects.
"Cooperation with Europeans will take more time, as they demand guarantees from the government or the Oil Ministry," he said.
Iran has a daily crude processing capacity of between 1.6 million to 1.8 million bpd, but plans call for raising the volume to 3.2 million barrels by 2021.