Monday, October 25, 2010

Iraq major importer of Iranian gasoline

Iran began exporting its gasoline in September with Iraq being the first customer. To date Iran has exported 32 million liters of gasoline, reports Mehr News. Iraq, Afghanistan and Armenia were the major buyers of Iranian gasoline, while Iraq’s imports accounted for 47 percent of the total figure. Iraq has been the major importer of Iranian gasoline since the country began to export domestically produced fuel, Iran’s Customs Administration reported. The report shows that 32 million liters of gasoline worth 370 billion rial (some $37 million) have been exported to foreign countries, the Islamic Republic of Iran News Network reported.

This all comes after Iran was importing around 30-40% of its domestic gasoline needs prior to the latest US sanctions that warned any provider that sells gasoline to Iran would lose the large American market. The US strategy was openly discussed and debated for over a year before being passed by the US Congress giving Iran a large heads up and preparation time for the eventuality prior to sanctions taking effect. It can also be argued that the efficiency that that results in the Iranian energy market as the greater population and firms reduce their excess consumption (due to higher prices) can be attributed to the same sanctions. President Obama, you are owed a fruit basket of appreciation!

Source: Mehr News


Nader Uskowi said...

Amir jan,

I believe before offering the president fruit baskets of appreciation, we need to inquire more about the details of this report. Few questions come to mind: If Iran is such a large exporter of gasoline, why does it need to ration the gasoline for its own citizens? If Iran was able to increase its gasoline output, not lower its demand through rationing and price increase, and all that in a space of one or two months, did it have to stop production of other refined petroleum products/petrochemicals in order to increase gasoline consumption? If so, which products, and at what cost? If it could produce so much gasoline, which it has apparently been doing lately, without cutting back on other products, why did it wait for the US sanctions to start this production? There are some disconnects here.

The questions related to gasoline production, consumption, rationing and export fall in the domain of the country's economy, not its politics. Government declarations should be handled with care, because governments have a tendency to politicize these questions, muddying the water, and not helping us understand the real story.

Amir Taheri said...

Nader Jan,

You are absolutely right that usually these topics are very much an economic issue. As you know though, the West has turned these things also into a political issue. So yes, Iran has responded in my opinion with a political economical tit for tat.

Now you have brought some very good questions about how Iran has reached the production level they have and about rationing. Unfortunately, I think we have to wait to find out the real methods Iran has taken to reach this goal. Otherwise everything is an assumption. As I mentioned in my post, this issue of gasoline sanctions was openly discussed for more than a year. You ask why did Iran wait to increase its output after sanctions were implemented. I can make one assumption until proven in the future as otherwise. As you and I agree, this issue has taken a political turn of events. Imagine if Iran new more than a year in advance that these gasoline sanctions were coming. Would it not make the most political points to wait till sanctions are implemented to prove them worthless (as they often claim) and crank up your production. If they were to do this prior to implementation of sanctions, then the efforts of the US Congress for over a year might have been aimed somewhere else where Iran would have a weakness and be harder to act on quickly. Why not let the US Congress focus on something for more than a year and when they finally come to a decision say "oh well that really wont be much of a problem for us". In reality you knowing ahead of time, were able to adjust your refineries to meet demand and possibly continue imports even though you don't need it, wait to stop imports after sanctions are implemented to prove your point.
You also asked about Iran's continued rationing of gasoline when exports have started. The rationing program as you would probably agree was an interim plan to move towards market prices for gasoline. As the aim is not to hurt the consumer with rapid price raises, the rationing program has started with over 120 liters per month and today offers 60 liters. Eventually the rationing program will go away replaced with market prices. The Iranian population needed to understand that gasoline is not something that should be wasted and overly consumed as it has effects on the economy (by reducing exports) and ecological ramifications (polluted cities like Tehran).

Anonymous said...

Iranian domestic refining has indeed increased as new refineries have come online. Another great achievement and a slap in the face of Iran's pathetic enemies.

Nader Uskowi said...

Amir jan,

I agree that we need time to prove/disprove your assumptions; they are very profound assumptions, almost too precise to be practical, especially the part on how patiently they executed a scenario of delaying to increase their capacity to produce gasoline, and paying high economic price for it in the meantime, only to send a strong political message to the US on a later date.

Anon 5:30AM,

The discussion of real issues here must preclude sloganeering. These are too serious of issues to be dealt with alhamdolallahs and inshaallahs.

Nader Uskowi said...

I meant Anon 3:50 PM, sorry.

Weapons of Mass Deception said...

It appears the Iranian government had the clarity of mind a decade or so ago to allocate a substantial part of the country's gas production to domestic consumption (power stations, car CNG) in anticipation of future problems with gas exports by TANKER or PIPELINE: denial of LNG technology by the west (no export by tankers) and deterioration of the security situation in existing and projected pipeline transfer regions (Afghanistan, Baluchistan, Turkish Kurdistan).

The west has also been promoting shale gas production to counter reliance on Russian and ME exports.

By substituting domestic oil consumption with gas Iran could free up more of its dwindling oil production for export. If the rise in refinery output will prove to be true (and not just propaganda) and subsidies and consumption can be reduced as well, even gasoline can be exported instead of oil. This is more profitable, not subjected to OPEC quota and can also be exported by road (to neighboring countries and beyond: smuggling has its benefits too... think sanctions!).

Precondition to this of course is that Iran can somehow manage to sustain or even enhance its oil production levels!

There's only one catch: failure of sanctions will make them more desperate to try the military option!

Amir Taheri said...

Reuters picked up on the story with a different twist :)