DMEA: Different approaches to refining

This week’s DMEA covers Iranian efforts to increase the country's refining capabilities, while Israel looks to close its Haifa facilities for good. 

Iran’s Ministry of Petroleum (MoP) announced this week that it has received budgetary approval to add 300,000 barrels per day (bpd) of refining capacity, with private sector and foreign investment likely to be sought. 

The announcement was made during a parliamentary (Majlis) session on March 6 among other issues considered for inclusion in the government’s spending plans for the upcoming Iranian calendar year. The news comes just weeks after Oil Minister Javad Owji told official energy sector media agency Shana that refining capacity would rise by around 200,000 bpd in the next two or three years.   

“We have signed contracts for an additional 1.46mn bpd to be implemented in a period of four to six years for refineries that produce feedstock for petrochemical plants,” he added, noting that each 100,000 bpd increment would cost around $2.5-3bn, inferring a total outlay of $36.5-43.8bn. This figure, when considered alongside the $175-200bn required for the build-out of oil and gas production, is likely to be a significant stumbling block to the fulfilment of the refining expansion. 

Meanwhile, Israel’s cabinet this week voted unanimously in favour of closing refining facilities owned by the local Bazan Group as the country pushes to promote clean energies as a major gas field was connected to the grid.  

Ministers voted that downstream activities in Haifa Bay should be halted within a decade, with efforts to be focused on the development of large-scale infrastructure, residential and transportation projects in the area.

The assets of Bazan, formerly Oil Refineries Ltd (ORL), and owned by Idan Ofer’s Israel Corp., comprise 9.8mn tonnes per year (tpy) of downstream facilities in Haifa Bay as well as an oil storage facility at Kiryat Haim.   

The refinery imports crude feedstock, which it processes to create various distillates for heavy industry, transportation and agriculture, while the company’s subsidiaries generate products including lubricants, oils, polymers, waxes and bitumen.