South Korea to Upgrade Tabriz Oil Refinery
Tabriz oil refinery is one of the oldest nine oil treatment facilities in Iran. It recently signed a €1.6 billion deal with a South Korean firm for enhancing the quality of output.
The agreement was signed between SK Engineering & Construction (SKEC) and Oil Design and Construction Company (ODCC) in Tehran. The signing ceremony was overseen by Abbas Kazemi, CEO of National Iranian Oil Refining and Distribution Company (NIORDC).
Gholam-Reza Baqeri Dizaj, CEO of Tabriz Oil Refining Company, says the refiner attracts foreign investors due to such advantages as ownership of a 50% stake in Tabriz Petrochemical Plant, proximity to five countries and supplying products of its own brand.
In an interview with Iran Petroleum, he said that the signature of deal with the South Korean firm would help the company enter regional and global market.
The following is the full text of the interview he gave to Iran Petroleum:
Q: When was Tabriz oil refining company established?
A: The basic design for the Tabriz oil refinery was done by the American UOP company in 1974 while Italy's Snamprogetti carried out the detailed design. The refinery became operational in February 1978 with a rated refining capacity of 80,000 b/d. In 1992, the oil refining capacity of this company rose to 110,000 b/d. The company was privatized in 2010. It has currently 15 refining units to process crude oil and produce petroleum products, and 8 utility units to support production.
Tabriz oil refining company owns a 7% share in Iran's refining industry. 90% of this company's products are destined for fuel supply and the remaining 10% are sold on stock market to be used as feedstock in downstream industries.
Q: You recently signed a €1.6 billion deal with South Korea's SKEC to upgrade production. In recent years, optimization projects including its new gasoline production section had become operational. What was the reason for the signature of the deal with SKEC?
A: As I mentioned this company was established 40 years ago. Initially, the refinery was designed in a way to provide 30% fuel oil which was transferred directly to a thermal power plant in Tabriz. However, with the turn of time and improvement in conditions and emergence of environmental obligations and also in consideration of decisions of NIORDC, we and other nine crude oil refining companies in Iran were obligated to reduce our fuel oil production level to below 10%, while at the same time improving the quality of other products to the Euro-5 grade, and reducing sulfur content to below 0.5% weight. Therefore, refinery development projects started in 2007 and the first step was to establish a new gasoline production unit. This unit became operational in 2013 with an investment of €265 million. Currently, 35% of the refinery's gasoline production complies with the Euro-4 standards. In order to bring the grade of remaining production to the Euro-4 standard, the isomerization unit will come online and by the end of the current [calendar] year or at the latest in the first half of the next [calendar] year, quality of the gasoline produced in the Tabriz oil refining company will be in full compliance with the Euro-4 and Euro-5 standards. Furthermore, gasoline refining project or gasoil output quality improvement is set to become operational next February with an investment of €100 million (€70 million for the main project and €30 million for utilities). That would raise the standard of this product to Euro-4 grade.
But improving the quality of fuel oil and converting it to lighter products would need significant investment. It was impossible for us to merely invest in this project; therefore, we sought credit line with a lower borrowing rate. After the implementation of the JCPOA (Iran's nuclear deal with six world powers) by the 11th administration, we embarked on negotiations with several companies, including South Korea's SKEC, which has technology to improve fuel oil production and finance the project. One year ago, feasibility studies for the improvement of fuel oil quality started. Over this period of time, 37 models were presented for the refinery and the most attractive one was chosen.
Q: What was the advantage of the SKEC model compared with others?
A: In addition to the model