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UPDATE 3-Iran says it has started exporting gasoline

Published 09/28/2010, 12:23 PM

* Iran said this month it was self-sufficient in gasoline

* Iran oil company official says more exports expected soon

* Analysts say Iran is years away from being exporter

(Adds oil minister, analyst quotes)

By Robin Pomeroy

TEHRAN, Sept 28 (Reuters) - Iran, long dependent on imported gasoline, said on Tuesday it had started exporting the fuel, Oil Ministry website SHANA reported -- an announcement met with scepticism by energy analysts.

Iran's latest bullish denial that international sanctions are hurting comes after it said a sudden increase of around 40 percent in domestic gasoline production meant it no longer needed to import the automotive fuel targeted by trade restrictions.

"The first shipment of Iran's gasoline has been exported," SHANA quoted Ali Asghar Arshi, manager of international affairs at the National Iranian Oil Company, as saying. He did not say who had bought the fuel.

"By producing (gasoline) in some petrochemical complexes Iran reached self-sufficiency in gasoline and will soon export more gasoline shipments," he said.

Iran is the world's fifth-largest oil exporter but a shortage of refining capacity -- in part due to a lack of foreign investment -- had forced it to import gasoline.

Oil traders on Tuesday said the country was actually exporting 75 research octane number (RON) gasoline, but the destination and the volume was not clear.

The grade is much lower in octane than 95 RON, which is typically used in many European countries and is typically used in Iraq.

In late July SHANA reported Iran's daily gasoline production was 45 million litres and its consumption 63 million litres, with the rest made up by imports -- an economic weak point deliberately targeted by U.S. and European sanctions.

The sanctions are aimed at pressuring Iran to curb its nuclear programme over fears it might be seeking weapons capability, something Tehran denies.

President Mahmoud Ahmadinejad has assured Iranians the punitive measures will only spur the economy to greater heights as Iran becomes more self-reliant.

Earlier this month, Iran made the surprise announcement that it had become self-sufficient in gasoline by converting some petrochemical plants to produce the fuel.

Sales of gasoline to Iran have plummeted in recent weeks, but analysts say that may be due more to sellers' reluctance to risk breaking sanctions than to Iran's reduced demand.

"They've been making a lot of noise about this recently. We think that it's highly unlikely that they have succeeded in producing enough gasoline to export as they now claim," said Saket Vemprala of research group Business Monitor International.

EMERGENCY SCHEMES

Iran has dismissed reports that sanctions are making it difficult to find gasoline suppliers and Oil Minister Massoud Mirkazemi said on Tuesday Iran's decision to reduce imports had caused a drop in gasoline prices.

"By implementing the emergency schemes that increased Iran's gasoline production capacity, we managed to minimise imports and that led to price drop of gasoline in the regional markets," he said, according to SHANA.

"If now we want to buy gasoline from foreign countries, we would buy it with a cheaper price."

Prior to the emergency plan involving petrochemical plants, Iran had said it could eliminate imports by the end of the next Iranian year, which runs until March 2012, and could become a gasoline exporter within four years.

Analyst Vemprala said that outlook was still more realistic than the notion that Iran had become an exporter overnight.

"We don't forecast an end to Iranian refined products imports prior to 2014, and are sticking to our forecast.

"Iran's budgetary problems mean that investment cash for refineries will be difficult to allocate, and foreign investors will be hesitant to violate U.S. or EU sanctions to provide financial or technological assistance in this arena."

Some analysts have suggested that Iran might be making a concerted effort to increase gasoline production in the short term and will return to the market later when noise about the new sanctions dies down.

David Wech, an oil analyst at JBC Energy, said he doubted Iran could sustain a massive increase in domestic production.

"Iran might become 'self-sufficient' for weeks or even 1-2 months based on stock draws and petrochemical measures, but I doubt they are anywhere close to self-sufficiency over a longer period of time," he said.

As well as increasing domestic gasoline production, Iran aims to suppress demand by cutting subsidies that currently mean Iranians can buy petrol for as little as $0.10 per litre. But that plan -- potentially politically damaging to Ahmadinejad -- has been delayed for at least one month. (Additional reporting by Ramin Mostafavi and by Emma Farge and Ikuko Kurahone in London; Editing by Anthony Barker)

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