Iran is currently producing over 550,000 barrels of gas condensate on a daily basis, part of which is directly exported to foreign destinations, and a part is used as the feedstock for domestic refineries.

Gas condensate, also called condensate, is a low-density mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas produced from many natural gas fields. Some gas species within the raw natural gas will condense to a liquid state if the temperature is reduced to below the hydrocarbon dew point temperature at a set pressure.

Most of Iran’s gas condensate is produced from the country’s giant South Pars gas field which Iran shares with Qatar in the Persian Gulf waters.

Iran used to export much of its condensate to Asia, with South Korea and Japan being major customers, but U.S. sanctions in 2018 led to a sharp decline in the exports.

Therefore, back in May 2020, Iranian Oil Minister Bijan Namdar Zanganeh said that his ministry planned to halt direct gas condensate exports to create products with more added value.

Zanganeh said the plan is to process the condensate in the country’s refineries in order to produce products like naphtha and gasoline and to supply feedstock to local refineries.

“All the gas condensate will be refined in the Persian Gulf Star and Siraf refineries … to gasoline and feedstock for petrochemical units,” Zanganeh said.

Persian Gulf Star Refinery currently receives 420,000 barrels per day (bpd) of gas condensate.

Zanganeh said South Pars and other nearby fields can produce up to one million bpd of gas condensate.

In early February 2020, the minister had said that about 130,000 bpd of the country’s gas condensate were used as feedstock for the country’s petrochemical plants and 80,000 bpd go to domestic refineries, apart from Persian Gulf Star.

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According to the spokesperson for the Parliament’s Energy Committee, Sakineh Almasi, the bill would increase the capacities of gas condensate and crude oil refineries using public investment.

“Construction of refineries is a clever response by Iran to oil sanctions, and helps boosting production and creates new job opportunities,” she said.
The approval of the bill comes after the Research Center of Iran’s parliament announced last week that petro-refineries are two times more profitable than refineries and suggested that National Iranian Oil Company (NIOC)’s new refinery projects be defined as petro-refineries.

In a report dubbed “Petro-refineries, their role in competing the oil value chain and the status in Iran’s oil industry” stated that constructing petro-refineries is one of the most important ways to alleviate severe economic impacts of price fluctuations and achieve a much higher margin of profit.

The parliament’s research center emphasized the importance of completing the value chain of the oil and gas industry to increase value added and prevent crude oil sales as one of the principles that has been underlined in the country’s Sixth National Five-Year Development Plan (2016-2021).

“According to French energy giant Total, by 2020 global demand for oil products will increase by 1.1 percent while the demand for polymers increases by 3.3 percent, so with this in mind, the creation of a hybrid system of refining and petrochemicals (petro-refinery) seems a necessity,” the report read.

Most of Iran’s refining activities take place in Southern regions of the country were South Pars gas field’s refineries account for refining 74 percent of the gas produced in Iran, according to the managing director of South Pars Gas Company (SPGC).

Currently South Pars refineries refining capacity exceeds 2 billion cubic feet per day.

Since the U.S.’s withdrew from Iran’s nuclear pact in May 2018, vowing to drive Iran’s oil exports down to zero, the Islamic Republic has been taking various measures to counter the U.S. actions and alleviate the impacts of the unjust sanctions on its economy.

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