TEHRAN (Shana) -- Falling demand for crude oil and petroleum products across the world due to the Covid-19 outbreak and uncertainty over the development of an effective vaccine have increased gasoline storage in various countries. Iran has been one of them. The country has in recent years built capacity for gasoline production to end its gasoline import needs and even become an exporter. The Iranian Oil Pipelines and Telecommunication Company (IOPTC) has contributed to infrastructure provided for boosting gasoline storage, thereby reducing gasoline consumption and exports following the coronavirus pandemic.

Storage Infrastructure

In parallel with increasing gasoline and petroleum products production capacity, IOPTC has expanded its infrastructure for gasoline storage.

Ali Ahmadipour, deputy CEO of IOPTC for operations, recently said the company’s spare capacity had been used to help store surplus gasoline production.

“Ever since the gasoline consumption has been on the downward trend, given gasoline storage restrictions across the country and with a view to making maximum use of unused spaces and capacities for storage, we decided to empty and clean crude oil storage to be used for gasoline storage,” he added.

Ahmadipour said: “Iran is faced with crude oil and petroleum products export restrictions due to sanctions. Therefore, petroleum products’ storage at big volumes in oil transfer centers has prevented accumulation of gasoline at the Persian Gulf Star refinery.”

He said that storage at existing capacity would compensate for crude oil exports in case sanctions strike.

He added that the crude oil storage site in the Moghanak area near Tehran was partly emptied to allow for gasoline storage. He said another storage tank would be used for storing gasoline in the Sari area in Mazandaran province.

“Furthermore, by accelerating operation of repair and construction projects related to balanced tanks, a number of oil storage tanks at the Naein oil transmission center would be used for storing gasoline produced at the Persian Gulf Star refinery,” he said.

The key point here is that these storage tanks have not been built basically for storage, but as National Iranian Oil Products Distribution Company (NIOPDC) sites hold a specific amount of petroleum products and they had restrictions, these storage tanks were prepared so as to store surplus gasoline.

Gasoline Storage in North

In the middle of spring, significant measures were undertaken in other parts of the country for storage. In northern Iran, which is a strategic district run by IOPTC, necessary infrastructure was prepared for surplus gasoline storage.

Arsalan Rahimi, director of IOPTC for northern Iran, has highlighted the technical preparedness, equipment sufficiency and manpower in the area for carrying fuel to consumers.

“Under such circumstances, a tangible reduction in gasoline consumption was seen in northern Iran. Therefore, the company made necessary arrangements for gasoline storage at the Sari and Neka transmission centers based on its policies,” he said.

Rahimi touched on other plans for this area for increased gasoline storage, saying the Sari oil transmission center was being prepared for storage.

“This storage facility will soon join the storage network,” he said.

Northern Iran has also taken steps in other fields related to hydrocarbon storage.

Rahimi said huge volumes of crude oil were carried from Neka oil terminal to the Tehran refinery through the Neka-Rey pipeline. He added it was aimed at enhancing capacity for storing petroleum products.

He said that new capacity would be built for gasoline storage after emptying the aforesaid tanks.

Once the Iranian Oil Terminals Company (IOTC) has cleaned the tanks, gasoline transmission and storage via Rey-Sari-Neka pipeline would start.

Ali Akbar Fazlikhani, an IOPTC official, said that it was possible to store surplus gasoline in Malayer and Hamedan areas, which could be increased by up to 50%.

He said that safe and favorable conditions were prepared for the transmission and storage of various petroleum products.

The central district of IOPTC covers 1,600 kilometers in Lorestan, Markazi, Qom, Hamedan and Isfahan provinces.

Mostafa Soltani, director of northwest, said: “Following the coronavirus outbreak and subsequent fuel consumption cut, the CEO of IOPTC ordered fuel storage in the storage facilities of that area. The Urmia oil storage facility is planned to be used.”

He said that some other areas in the country were also making necessary arrangements to facilitate petroleum products storage as easy as possible.

Persian Gulf Regional Markets

The increased storage capacity for crude oil and petroleum products in the Persian Gulf littoral states has been a major approach pursued by Iran’s petroleum industry.

Taking into account regional markets would be profitable for the country both when exports are possible, and when like now sanctions are causing problems. With US sanctions in effect, gasoline storage could be a winning alternative in the refined products market.

Currently, design, manufacturing, installation and operation of storage facilities for a variety of products near Persian Gulf waters are in the final steps in line with the aforesaid objective.

Even under sanctions conditions, Iran would maintain its long-term view of presence in the energy market among regional rivals.

As the number of storage tanks increases in different refineries including the Bandar Abbas Gas Condensate Refinery and the Bandar Abbas Oil Refinery, the sanctions become less effective for Iran’s petroleum industry. That means regional energy players could still count on Iran’s commercial potential.

The volume of Iran’s strategic gasoline reserves have increased compared with previous years. Preparing prefabricated gasoline storage tanks, which used to hold crude oil and other hydrocarbon products, marks a new chapter in Iran’s petroleum industry.

Against the backdrop of the Covid-19 outbreak with negative impacts on global markets, Iran’s petroleum industry has realized that tight competition is under way in the world for storing strategic fuels.

Iran is also ready to export a variety of petroleum products to other areas. Launching projects for enhancing gasoline production capacity at big refineries in Iran has paved the ground for storage at big tanks and facilitated conditions for domestic use. That would help Iran consider exports for future, while reduced gasoline consumption in the country would boost storage to boost fuel potential in the country.

A sharp decline in the price of crude oil, as well as petroleum products due to falling demand has brought Iran’s crude oil and oil products storage to levels unseen in the history.

Iran’s refining industry is taking maximum benefits from the current opportunity while the storage of gasoline and similar products would continue.

by 

Farzin Savadkoohi

Courtesy of Iran Petroelum