Iran seen needing $8bn for 2008/9 gasoline imports

Lack of refining capacity continues to plague country with third largest reserves of oil.
Iran seen needing $8bn for 2008/9 gasoline imports
By Hashem Kalantari
Sun 03 Aug 2008 12:09 AM

Iran will need around $8 billion for gasoline imports in the 2008-09 year based on the price in recent months, a senior official was quoted as saying on Saturday, despite fuel rationing launched in 2007.The Islamic Republic is the world's fourth-largest oil exporter but lacks sufficient refining capacity to meet domestic demand and therefore has to buy large amounts of gasoline from abroad.

Reliance on expensive fuel imports is a sensitive issue for Tehran, which is facing the threat of more sanctions from the West over its nuclear programme if it does not halt work that can have both military and civilian uses. Iran says it only seeks to generate electricity.

Traders have said Iran's gasoline imports are set to rise to 170,000 barrels per day (bpd) from a monthly average of 95,000-115,000 bpd as the country is planning maintenance at two large refineries in the fourth quarter.

Deputy oil minister in charge of refining and distribution affairs, Mohammad-Reza Nematzadeh, said the government should decide on funding for needed gasoline imports for the Iranian year that ends in March 2009.

"If we are to calculate the gasoline import rate at the price in the past three months, we will need $8 billion in allocation," he was quoted as saying by the Oil Ministry website Shana.

An Iranian newspaper last month said the government planned to ask parliament for $7 billion to pay for increasingly expensive fuel imports.

Officials had previously said both consumption and imports fell sharply after Iran launched rationing to curb soaring consumption which had risen well beyond its ability to refine crude, forcing the government to rely on expensive imports.

Iran pays international prices for the fuel but subsidies at the pump to ensure its gasoline is among the world's cheapest.

In February, Iran's parliament authorised in February the Oil Ministry to import gasoline and gas oil for the equivalent of $3.2 billion in the fiscal year that started on March 21, but media reports have made clear this would not nearly be enough.

Under the rationing scheme, all fuel had been sold at the heavily subsidised price of 1,000 rials/litre (about 11 US cents). But the government in March revised the system to let drivers buy fuel above their 120 litre a month quota at four times that price. (Reuters)

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