IRAN - The Refineries.

The refining sector was hardest hit by the Iran-Iraq war of 1980-88. In 1980, the refineries had a combined capacity of 1.32m b/d. In less than two years of war from late September 1980, that was halved to 670,000 b/d as a result of the destruction of Abadan refinery and the Kermanshah topping plant. The 70,000 b/d Masjid-i-Sulaiman topping plant, attached to the Abadan refinery, was destroyed in 1983 - cutting Iran's capacity to 600,000 b/d. Reconstruction only began after the war but was hit by funding problems and most of the reconstruction and rehabilitation work was done by local companies.

NIORDC was set up in 1999 by the Petroleum Ministry to operate in parallel with NIOC. Having taken over from NIOC, NIORDC is in charge of the refining sector and its projects. Its engineering unit, NIOEC, has since grown rapidly and now is in charge of NIORDC's projects, in most cases acting as EPC contractor. But all foreign subcontractors have raised their prices in the past two years to the extent that, in some cases, it would have been cheaper and more efficient for NIORDC to have hired them for the EPC job.

Abadan: The largest in the world until it was destroyed by Iraq, the Abadan refinery had a capacity of 635,000 b/d in 1980 and the complex was the site of important petrochemical plants. Reconstruction of the complex has been increased steadily since 1988. Its capacity now is 460,000 b/d but the refinery is grossly inefficient. In mid-1998 NIOC offered four projects for the refinery to be built and funded by foreign companies on buy-back basis, so that the plant's capacity is raised to 600,000 b/d: modernising the central fluid catalytic cracking unit (FCCU) built by Foster Wheeler in 1950 and raising its capacity from 40,000 to 60,000 b/d; building a 70,000 b/d vacuum distillation unit (VDU); building a 25,000 b/d visbreaker; and building four desalting units with a total capacity of 525,000 b/d.

NIORDC modified the upgrading programme after it took over from NIOC. It split the central FCCU tender into phases, one for rehabilitation of the existing unit, to be followed by construction of a grassroots unit which would cost about $250m. The existing FCCU is grossly inefficient; it only operates at 15,000 b/d. Contractors shortlisted for the two phases were more interest in building new units than in rehabilitation work and their terms for financing were not accepted by Tehran.

The Abadan refinery's reconstruction involved thousands of Iranians with no role for foreign firms. The engineers and technicians involved eventually formed the nucleus for NIOEC. One of its distillation units was brought back on stream in April 1989 at the rate of 130,000 b/d to produce 63,000 b/d of fuel oil, 23,000 b/d of gasoil, 22,000 b/d of kerosine, 18,000 b/d of gasoline and 5,000 b/d of LPG. The lubricants unit was restored in Feb. 1990 with a capacity of 517,000yb/y, as against an original design capacity of 550,000yb/y. Another phase of reconstruction completed in April 1991 brought the second distillation unit on stream and raised the refinery's capacity to 260,000 b/d. But most of the new expansion involved topping units producing more heavy fuel oil than the local market required. By late 1993, the refinery could crack about 10% of its fuel oil output into low quality gasoline. Further work raised the capacity to 300,000 b/d in March 1994 and to 330,000 b/d in early March 1995.

The FCCU was installed in June 1994 which increased the refinery's output of high-sulphur distillates and cut its heavy fuel oil yield by 12% to 33% of the throughput. Since mid-1991, the refinery has had new and repaired units in addition to topping facilities, including a visbreaker brought back on stream in September 1994, a vacuum distillation tower which started up in late 1991 and a 200,000 litre/d special solvents plant completed in 1992. In expansion work to March 1998, the refinery got a third distillation unit.

The rebuilding of the Abadan plant by Iranians encouraged the Ministry to use locals in other refineries. They were mobilised to complete work on the Bandar Abbas refinery, where the EPC contractor was Snamprogetti and most of the Iranian engineers eventually joined NIOEC.

Arak: Like Abadan and most other refining centres, Arak has been developed as an industrial zone including a refinery and a petrochemical complex producing ethylene, PVC, HDPE, polypropylenes, etc (see DT of next week). The Arak refinery sometimes operates at more than its 150,000 b/d capacity. NIORDC wants to raise its capacity to 250,000 b/d and change the plant's configuration so that it can turn heavy/sour crudes into light fuels - including a major stream of gasoline, of which Iran is a net importer - in a $1.6 bn project. In late 2004 NIOEC requested companies to express interest in bidding for the main EPC package, with the tender expected in the summer. JGC Corp. of Japan is doing the front-end engineering and designs (FEED).

Arak started up in July 1993, three months behind schedule and its crude distillation system ran at 75,000 b/d. In 1994 the plant ran at 100,000 b/d, with conversion units having come on stream progressively since October 1993. Its 25,000 b/d hydrocracker started up in early 1994. In early 1995 almost all of the plant's units were ready. The refinery has been processing Ahwaz-Asmari crude oil, 32 deg. API. These are its units: crude distillation (150,000 b/d), vacuum distillation (71,000 b/d), visbreaking (27,300 b/d), gasoil hydrocracking (UOP HC Unibon, 24,500 b/d), hydrogen production (50 MCF/day), naphtha hydrotreating (21,600 b/d), CCR reforming (UOP, 21,600 b/d), LPG recovery (1,050 t/d), amine treating (420 t/d), sulphur recovery (60 t/d), sour water stripping (2,500 t/d), and an asphalting unit (5,500 t/d). The output consists primarily of: gasoil (46,500 b/d), fuel oil (37,590 b/d), kerosine (26,910 b/d), gasoline (12,120 b/d), reformate (8,890 b/d), light naphtha (6,670 b/d), asphalt (5,560 b/d), and LPG (5,440 b/d).

The refinery's construction and units cost $1.4 bn and involved an EPC contract given in April 1989 to a consortium of JGC and Tecnologie Progetti E Lavori (TPL - Italian unit of Technip). The group later awarded a $300m subcontract to Belleli for the construction. Saipem won a $144m subcontract for civil and mechanical engineering and installation of a 26-inch pipeline from the Ahwaz-Asmari field. Iranian companies were involved in the project as well, spending 135,000 engineering man-hours for a detailed design of the naphtha hydrotreater and the continuous catalytic reformer. The refinery has 71 storage tanks with a capacity of 7m barrels. The EPC contract provided for infrastructure and designs to allow the plant's capacity to be raised to 300,000 b/d.

Bandar Abbas: This 232,000 b/d plant came partly on stream in late July 1997. It reached full production in late 1998, four years behind schedule. It cost $1.6bn, including $1.3 bn in foreign currency. It was first conceived as an export refinery. But most of its non-fuel oil output is used in Iran. A 24-inch pipeline built to Kerman feeds the products into the domestic market. The plant depends on both crude oil and condensates (12,000 b/d) from the nearby Sarkhun gas field. It processes heavy crude received from the Kharg island export terminal. A jetty at Bandar Abbas, serving the Al-Mahdi aluminium smelter nearby, was extended to take tankers from Kharg. The plant produces 46,100 b/d of gasoline, 67,000 b/d of fuel oil, 36,200 b/d of jet fuel and kerosine, 70,000 b/d of gasoil, 7,100 b/d of LPG and 5,000 b/d of asphalt.

The Bandar Abbas project had been pending since the late 1980s for lack of finance. Work was done by Snamprogetti in partnership with Chiyoda Corp. of Japan, under a $1.24 bn EPC contract awarded in February 1990. The refinery was to come on stream in the second half of 1993. That deadline could not be met because of funding problems. In late 1994, the Petroleum Ministry and NIOC decided to give the work to local firms.

The refinery is to be expanded to 320,000 b/d by raising the capacity of its two 116,000 b/d crude units to 160,000 b/d each. NIOEC is to carry out the EPC work and get Snamprogetti as a subcontractor.

Condensate Plant: Snamprogetti is doing a feasibility study for a long-delayed project at the Bandar Abbas refining complex to turn condensate into light fuels feedstocks. Its capacity is yet to be decided. NIORDC has indicated that the complex could have a capacity of 1m b/d by 2010 (see background in Vol. 60, DT No. 14).

Isfahan: This is another industrial base, including a 4,500 b/d lubricants unit, a 184,000 t/y lube oil blending plant, and a major aromatics plant. The oil refinery was completed in December 1979 with a nominal 100,000 b/d capacity but its first distillation unit came on stream in February 1980. The second 100,000 b/d distillation unit came on stream in September 1980. The plant could operate despite Iraqi raids, and in 1988 its throughput reached 240,000 b/d.

The refinery was debottlenecked in 1990 to a capacity of 265,000 b/d. A further debottlenecking work has raised its capacity to 270,000 b/d. The contractor for the refinery was Fluor, which withdrew from the project in 1979.

The refinery is to be upgraded and expanded to 376,000 b/d in a $1.6 bn project. With Technip doing the FEED, this will have a 70,000 b/d FCC to raise gasoline production from 40,000 b/d to 119,000 b/d. Jet fuel output capacity is to rise from 14,000 b/d to 33,000 b/d. The refinery's gasoil and diesel outputs will increase as well, so that most of the plant's products meet Euro 2005 standards. NIOEC hopes to award the EPC contract later this year.

The aromatics plant at the Isfahan complex, commissioned in 1991, has the capacity to produce 75,000 t/y of benzene, 44,000 t/y of paraxylene, 22,000 t/y of orthoxylene, and 20,000 t/y of toluene.

Shiraz: The 40,000 b/d refinery at Shiraz is to be upgraded to crack more distillates of higher quality. But NIORDC it is yet to find a contractor willing to finance the work under the buyback formula.

The plant, built by Snamprogetti, has been on stream since August 1974. It produces semi-distilled fuels and is supplied with Gachsaran crude oil.

Tabriz came on stream in April 1978 with a capacity of 80,000 b/d. Through debottleneck-ing work, this increased to 90,000 b/d in 1992, to 110,000 b/d in 1995 and 112,000 b/d in 1997.

A lube oil plant at the Tabriz complex with a capacity of 200,000 t/y started up in March 1994. Work on a 200,000 t/y motor oil plant at the refinery has been underway for some years. Tabriz has a petrochemical complex (see DT 15).

NIORDC in January 2001 signed a $150m contract with Sinopec to upgrade the Tabriz and Tehran refineries, so that they can process crude oils from Central Asia, and build a crude oil receiving terminal at Neka, on the Caspian coast. For its part, NIOC signed with Sinopec a contract to explore the 4,000 sq km Kashan block in Central Iran.

Sinopec's deal with NIORDC followed prolonged negotiations and several changes in specifications since the original tender in 1998. Eventually Sinopec Engineering (SEI) provided basic engineering for the downstream modifications at the two refineries, offsites and utilities. Siirtec Nigi of Italy has partly revamped the sulphur recovery units at the two refineries under a subcontract awarded by Sinopec in June 2001. But Sinopec could not execute the main upgrades at the two refineries.

NIORDC subsequently changed the project for the Tabriz and Tehran refineries into a $500m upgrading programme and re-tendered the EPC contract under a new initiative called Caspian Republics Oil Swap (CROS). This called for configuration changes at the two refineries so that they can process crude oils to be imported from the Caspian states through the Neka terminal. The crude oils would be transported to Tehran by rail and by pipeline to Tabriz for processing and then distribution in northern Iran by NIORDC.

The project, however, was too complicated and very difficult for an EPC contractor to handle as the latter had to arrange a whole swap deal. Accordingly, in return for the procurement of such crudes from Caspian states, Iran would sell a commensurate volume of its own crude on behalf of the supplier states through its marine access to the Persian Gulf and the Indian Ocean. The contractor company had to ensure the supply of crude oil and its payment would be linked to global prices. In late 2004 NIORDC cancelled the upgrade project. But NIOC is keeping the CROS initiative in the hope of finding companies able to secure swap deals with Caspian republics.

Tehran: Until the Arak plant came on stream, the Tehran refinery was the only producer of unleaded gasoline in Iran. The refinery has two crude oil distillation units, one which came on stream in 1968 with a capacity of 100,000 b/d and the second with the same capacity started up in 1976, built by Fluor/Thyssen. The plant was debottlenecked in the 1980s to a capacity of 225,000 b/d and in the late 1990s to 230,000 b/d. The Tehran refining system has a 173,000 t/y lube oil plant, a 23,000 t/y greases unit and a 1,000 t/y N-paraffin unit.

Lavan: The 20,000 b/d refinery on the island of Lavan is to be upgraded in a project worth more than $50m to include a new medium-sized LPG recovery unit. EPC bids submitted by local companies and an Italian firm were still under evaluation last month by NIOEC. The EPC contract should also involve installation of an associated harbour. Namvaran Consulting Engineering, one of the local bidders for the project, did the feasibility study.

GTL: There are four competing gas-to-liquids projects being promoted by Shell, Sasol, JNOC of Japan (now called JOGMEC after a merger into it of a state mining company), and a private Iranian company. Shell had done a six-month study into a 70,000 b/d GTL project for NPC to be based on South Pars gas (see Gas Market Trends).

An offshore bunkering service at a floating anchorage 15 km south-west of Qeshm island was launched in June 2000 by Singapore-based Global Energy in partnership with National Iranian Tanker Co. and NIOC.