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UPDATE 2-Iran says it self-sufficient in gasoline-state TV

Published 09/07/2010, 01:12 PM

* Minister reported saying output 66.5 million litres/day

* Says before rise output was 44 mln litres, imports 20 mln

* Mirkazemi says sanctions pushed Iran to expand capacity

(Adds quotes, details, background)

By Hashem Kalantari

TEHRAN, Sept 7 (Reuters) - Iran has raised its gasoline output to attain self-sufficiency in the strategic product and foil sanctions targeting its energy needs, the state television's website reported its oil minister as saying.

Massoud Mirkazemi's comments on Tuesday appeared to contradict previous remarks by other energy officials who had said major refinery capacity increases were required before self-sufficiency could be achieved.

"We attained a production of 66.5 million litres a day in the country's refineries," Mirkazemi said, according to the IRIB website.

He said that prior to the increase Iran had a domestic production of 44 million litres and imported 20 million litres more to meet its market needs.

Refinery officials and analysts doubted whether the country could have already achieved self-sufficiency in gasoline.

Iran is the world's fourth-largest oil exporter and sits on the second-largest gas reserves after Russia, but a lack of refining capacity and sanctions hindering access to foreign capital and know-how have forced the country to import up to 40 percent of its gasoline needs.

That vulnerability was targeted by new sanctions from the European Union and the United States imposed to pressure Iran to curb its nuclear programme.

The West suspects Iran's atomic activities are aimed at making nuclear weapons. Tehran denies the charge, saying its nuclear work is aimed at generating electricity.

The threat of U.S. sanctions against suppliers to Iran has reduced the pool of companies prepared to sell gasoline to the OPEC member although Iranian officials have repeatedly said the country faces no problems in buying what it needs.

HIGH STOCKS

Volumes of gasoline being shipped to Iran in July fell far below the seasonal norm after U.S.-led sanctions against the Islamic Republic came into force, trade sources said.

Neighboring Turkey's gasoline exports to Iran dropped by 74 percent in July from 138,673 tonnes in June, statistics showed.

Deputy Oil Minister Alireza Zeighami had said in August Iran would become self-sufficient by March 2012 after two new fuel production projects were completed.

Samuel Ciszuk, an analyst with IHS Consultancy, said: "Iran's refinery construction drive has suffered large delays and quite a few lengthy standstills over the past five years, so I am quite downbeat on them actually achieving self-sufficiency in gasoline before 2013-14."

"For now they have quite high stocks, so it will hard to know the veracity of Mirkazemi's statement anyway for some time," Ciszuk said.

Mirkazemi said it was the impact of sanctions that had pushed Iran to rapidly expand its refining capacity.

"In view of the recent conditions in the wake of the sanctions and the mischievousness of some sellers in increasing gasoline price, the increased production of this product began at the (refining) units 20 days ago," he said.

"The sanctions will make us stronger," he added.

An official from a Japanese refiner, who did not want to be named, said it was not technically possible to raise output of one petroleum product so sharply, merely by tweaking existing units at refineries. (Writing by Robin Pomeroy, editing by Anthony Barker)

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