Talks on with the National Iranian Oil Refining and Distribution Co to build a new refinery.
SINGAPORE/NEW DELHI: National Iranian Oil Refining and Distribution Company (NIORDC), Iran’s state oil refining company, is in talks with the Essar Group to build a new refinery in southern Iran, officials said on Friday, part of Tehran’s $18 billion drive to meet soaring domestic fuel demand.
The estimated $2 billion-plus investment in a new 3,00,000 barrel per day (bpd) plant to process Iran’s heavy crude would give Iran’s stagnant refining sector a boost and give the Essar group a foothold in the country, where it is already in talks over a steel plant.
“We are studying a refinery in Bandar Abbas with Essar of India,” Akhbari Shad, director of international affairs for NIORDC, told Reuters. Bandar Abbas is a port town in the south.
Shad declined to give more details or say when a deal might be struck. Negotiations over Iranian oil investments often take years. Some major deals have also collapsed at the eleventh hour.
An official with Essar Group told Reuters: “We want to strengthen our relations with Iran. We are talking to Iran for setting up a refinery, based on the crude oil to be given by them.”
“We are (also) in talks to buy a stake in some exploration and production blocks, so that we can get gas for our planned steel plant,” said the official, who declined to be named. He said production would be geared primarily to the local market.
Essar, a diversified, family owned holdings company with interests from telecoms to construction, plans to set up three steel plants in the Middle East, including a joint venture to build a 1.5 million tonnes (mt) a year steel plant in Iran.
Its oil refining subsidiary, Essar Oil Ltd, launched India’s second private-sector refinery late last year and will ramp it up to 2,10,000 bpd by mid-year.
Iran is the world’s fourth-largest crude oil producer, but is also its second-largest importer of gasoline, due to a lack of refining capacity and rapidly growing demand, fuelled by a young population and the world’s second-cheapest pump prices.
The rising cost of importing an estimated 1,70,000 bpd of gasoline has taken a toll on Tehran’s budget, despite petro-dollar revenues, and stoked fears that the country could be vulnerable to import sanctions.
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