Iran plans to build 7 refineries

Teheran to counter sanctions by reducing dependence on foreign capabilities.

oil iraq refinery 248 88 (photo credit: AP [file])
oil iraq refinery 248 88
(photo credit: AP [file])

Iran plans to build seven new oil and gas refineries in a bid todiminish its vulnerability to sanctions from foreign refineries. 

According to the official Iranian news agency IRNA, the new oiland gas refineries will allow Iran both to meet domestic demand andbecome a gas exporter, although the agency failed to state whenconstruction was due to start.

Though Iran has one of the largest known oil reserves in theworld, it lacks the necessary refineries to turn the crude oil intohigh value consumer products such as gas. If completed, the new plantwill significantly boost Iran’s oil industry.

Iran relies on exporting its oil to southern Gulf countries forrefinement, which necessitates re-importing its own oil at a muchhigher price.

New sanctions being considered against Iran by the United Statesplan to target this dependence.

“From an economic point of view, it’s very difficult, simplybecause it’s going to be a very costly enterprise,” MohammedShakeel, editor and economist with the Economist Intelligence Unit,told The Media Line.

“But also for Iran, it’s a very immediate concern as well,because the threat of sanctions is targeting that particular sector.So the government wants to show that it’s on top of developing itsrefineries, and therefore is able to handle any pressure fromsanctions,” he said.

“Whether it has the resources to carry this out is a completelydifferent story,” Shakeel added, referring to the huge costs ofconstructing refineries.

Regional analysts suspect Washington might find it tricky to getsome Gulf countries to follow its directives as Oman recently signeda gas cooperation deal with Iran.

“Oman has always maintained an open channel of communicationswith Iran,” Dr. Christian Koch, Director of International Studiesat the Gulf Research Center in Dubai, told The Media Line. “Theirrelationship can be described as good.”

“There is also pressure on Dubai to curb its tradingrelationship with Iran, a policy more in line with the United ArabEmirates policy, and to anticipate any further sanctions that mightbe imposed,” he said, noting that Dubai has strong business tieswith Iran despite a conflict over the sovereignty of three islands inthe Gulf.

The root of the conflict between Iran and the US revolves aroundIran’s nuclear program, which Washington suspects is a cover fornuclear weapons development, but which Teheran claims is for energyproduction.

US sanctions against Iran have been in place since 1987 but haveso far had little impact on Iran’s capabilities and determinationregarding its nuclear program. Iran continues to affirm thatdeveloping nuclear power is within the country’s legitimate rights.

The US government is in the process of appealing to the UnitedNations Security Council to approve the planned sanctions, a movewhich would grant the sanctions better legal backing.

Russia and China who both have business ties with Iran, and arepermanent members of the council and thus hold veto power, have sofar failed to support the US in its calls for tougher sanctions.