Iran Khodro Company to Start Production of Dual-Fuel Cars in July; National Push for Natural Gas Fuel

2 July 2007

Iran Khodro Company (IKCO) will begin the production of dual-fuel gasoline-compressed natural gas cars in late July. IKCO is the largest vehicle manufacturer in Iran and the Middle East, and builds cars and commercial vehicles for domestic use and for export.

Iran is facing a gasoline shortage. Riots erupted in the country last week as its parliament instituted gasoline rationing. Although Iran is the second-largest OPEC producer of crude oil (behind Saudi Arabia), its refinery infrastructure is inadequate to meet domestic transportation needs. With a combined capacity of 1.6 million barrels per day, the Iranian refineries currently produce just 16% gasoline, according to the Energy Information Administration.

Iran has thus imported refined products since 1982, and these imports have been increasing rapidly. The parliament instituted the fuel rationing in the face of the rising cost of imports and the possibility of sanctions.

In an interview with an Iranian TV channel over the weekend, President Mahmoud Ahmadinejad called for a nationwide focus on reducing fuel consumption, and also described an increasing focus on switching transportation to natural gas fuel.

“National income from sales of oil, gas and other oil products is about 50 billion dollars annually while country’s total energy consumption is about 55 billion dollars.”

The president said, "By executing fuel rationing, the daily consumption has decreased from 80 million liters to 70 million liters, and we plan to reduce the figure to less than 60 million liters.

He added, “If we can change our automobiles fuel from gasoline to gas during the next 3-4 years, we won’t need gasoline anymore.”

The president also said, “We will have constructed 550 CNG fuel stations in the country before the end of September and the figure will reach to one thousand before March 20, 2008.”

Iran has an estimated 970 trillion cubic feet (Tcf) in proven natural gas reserves, making it the world’s second largest reserves and surpassed only by Russia, according to the EIA.

IKCO’s compressed natural gas company will start operations next year with an initial capacity of 250,000 CNG tanks per year to meet domestic demand. The carmaker has purchased 70,000 fuel tanks from a domestic company and the agreement for another 300,000 has been inked. An additional agreement for 200,000 tanks is also under negotiation.

(A hat-tip to John!)