In signal to West, Iran boosts fuel output

Iran said it temporarily boosted gasoline production by about 30% on Tuesday to show the West it can cope with any sanctions targeting its fuel imports.

Oil minister Massoud Mirkazemi said the move to raise output by 14 million litres per day increased total output to 58.5 million litres. Domestic consumption stands at about 66.5 million litres per day.

The higher production level, carried out at three southern plants, would only last for a few days, he said, making clear it was not economical in the long run.

"With this move we would like to show that the West can not use any limitations on selling gasoline to Iran as a tool against the Islamic Republic," Mirkazemi told a news conference.

He also said Iran faced no problems in importing gasoline as it had a "good list" of suppliers. It also had at least 1.5 billion litres in storage at all times.

"Today, no new limitations, either from America or any other country, can be imposed against the Iranian nation," he said.

Iran is the world's fifth-largest oil exporter but lacks sufficient refining capacity to meet domestic gasoline needs, forcing it to import up to 40% of requirements.

This makes Iran vulnerable to any Western decision to target the gasoline trade as a way to put pressure on Tehran over its disputed nuclear programme. Iran says it is aimed at generating electricity but the United States and other Western governments say they believe it is seeking to build an atomic bomb.

Iranian officials have repeatedly shrugged off the impact of sanctions, including three rounds imposed by the UN.

"Despite all restrictions in the past 30 years, Iran has become stronger day by day," Mirkazemi said.

A US Senate panel last month cleared a bill to impose sanctions on companies providing gasoline to Iran and to limit other dealings if talks fail to resolve the standoff.

According to industry sources outside Iran, companies that have supplied fuel in the last few months include Totsa, a unit of Total SA; Vitol, an independent company; Glencore International; Litasco, the trading arm of Russia's LUKOIL; and state-run Chinese company Zhuhai Zhenrong Corp.

French major Total's chief executive Christophe de Margerie said this month an embargo against sales to Iran "wouldn't work" but the company would stop supplies if sanctions were enforced.

British major BP halted gasoline supplies earlier this year, sources said.

In Dubai, trading sources said Royal Dutch Shell has not shipped any gasoline into Iran for more than a month.

Shell was also asking companies buying gasoline from its system to declare the cargo's final destination, they said.

"Shell will not sell if (the buyer) is going to move the cargo to Iran," a trader said. Shell declined to comment.

Iran's production increase took place at plants in Bandar-e Emam, Bander-e Mahshahr and Assalouyeh. As the cost exceeded the international price, the measure would only last for a few days, Mirkazemi said.

"We just want to show that they can not use this tool to pressure Iran," he said.

In the longer term, work was under way to boost capacity at existing refineries by 33.5 million litres per day by 2013, he said. In addition, a new refinery to be completed by 2014 would produce 35 million litres.

Iran has taken steps to reduce consumption of subsidised fuel, including launching a rationing scheme in 2007 and putting forward a government plan to end subsidies over five years.