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

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

02 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!)

Posted on 02 July 2007 in Middle East, Natural Gas | Permalink | Comments (27)

Comments

The only real question is: what took them so long?

Posted by: Rafael Seidl | 03 July 2007 at 02:08 AM

This country is pursuing nuclear weapons and energy but they are struggling to refine crude oil. Could someone explain what is really going on? Why can’t they refine more oil? They do 50% of their gasoline so they should master the technology to refine crude oil. Why don’t they just double the capacity?

Posted by: Henrik | 03 July 2007 at 06:58 AM

They have been saying for 5 years that they intend to shift transportation to CNG both for air quality and financial reasons. However, it now looks 'real'. With oil staying high, with petrol imports (embargo on importing refinery parts from US), with growing population wanting cars (with cheap fuel), with terrible air quality, with worlds 2nd highest natural gas reserves (as close to infinte as you can get in energy!) its now obvious to switch all transportation to CNG. saves capex of making LNG to export natural gas.

Expect very rapid NGV growth in Iran - in 10 years time, no need to import petrol anymore.

Posted by: John Baldwin | 03 July 2007 at 07:12 AM

Henrik;
Why are you so sure Iran is after nuclear weapons?
They might very well be doing that but right now the whole issue is a 'he said vs he said' game. On the one side you have Bush who has lied about everything for 7 years and on the other you have the Iran Pres who's just as bad.

The Iran Pres has said he want's nuclear power for electricity so what are the facts?
Well... as of 2006 about 75 percent of Iran's electricity came from natural gas, 18 percent from oil, and 7 percent from hydroelectric power. Their one nuclear power plant has yet to come online and their demand for electricity is growing at 8% per year. The use of fossil fuels to generate power cuts into what they can sell, which lowers their profits and they are now importing electricity, which increases their costs. Iran's need for more electrical power is real, so much so they have even built a wind farm and a solar power plant.

Posted by: ai_vin | 03 July 2007 at 09:11 AM

Iran has more than enough natural gas to meet all the energy needs. Clean and ready to use. Needing nuclear energy is farce. Maybe ": ai_vin " attend the 'holocaust never happened' rally in Tehran. They don't even hide the fact they want to wipe an entire nation of the earth just because of their religion. But by all means, stick up for them!

Posted by: Sam Westbork | 03 July 2007 at 10:05 AM

John:

Iran fertility rate is 1.7 per woman, well below 1.21 necessary for population replacement:

http://www.indexmundi.com/Iran/total_fertility_rate.html

so it population soon will begin to decrease.

Ai win:

Do you really want country under this –

http://news.bbc.co.uk/2/hi/middle_east/6557679.stm

government to have nuclear weapon capability?

Posted by: Andrey | 03 July 2007 at 10:25 AM

The problem with growing oil and gas consumption in Iran is that the government has been heavily subsidizing the retail cost of oil and gas. They should have seen this earlier and gradually reversing this trend, gradual enough so that the population has time to adapt to more fuel-efficient vehicles and measures. We should also have done the same thing here in the US..uh like yesterday.

But, their loss is our gain. By stepping up the embargo on oil and gas technology and other important trade of vital strategic materials, hopefully the current regime will fall and perhaps down with it the dangerous nuclear-weapon ambition.

Posted by: Roger Pham | 03 July 2007 at 10:57 AM

To me it is quite evident that Iran is pursuing nuclear weapons. There are tons of good arguments I will just give you two. 1) The international community recently offered Iran the opportunity to acquire a kind of nuclear technology with help from Europe and the US that was unsuited for weapons development but that could make electricity as they say they intended to. They refused because the real goal is to get nuclear weapons not energy which they have plenty of in oil and gas. 2) They have said several times that they soon will be able to wipe out the state of Israel. Only nuclear weapons are able to do that in a few minutes. Do I find it difficult to believe that the Iranian leadership will actually arm some 40 Scott missiles with nukes and fire them simultaneously at Israel at the time when they have made these weapons? No. Their leadership sincerely believes they are acting on behalf of god and god is always right. They will do it when they have the weapons if they get them.

Posted by: Henrik | 03 July 2007 at 11:11 AM

Whatever money they want to invest in nuclear, they can better invest in Nat-gas as they have plenty of them.

The Oil saved can be exported and money made.
They are taking a dangerous course.

They have the Worlds 6th largest CNG vehicle usa

Posted by: Max Reid | 03 July 2007 at 11:25 AM

@ Henrik -

Iran cannot obtain the foreign-made parts and technical expertise it needs to expand refinery capacity. This is because of UN sanctions and US technology export restrictions. Contractors in other countries typically depend on US products - be it hardware or software, directly or indirectly - for certain key deliverables. Losing access to those as a result of punitive reprisals could cripple their ability to compete not just in places like Iran, but globally.

The current US administration is using this leverage to bully any oil & gas company trying to enter into more than small fry contracts with Iran, even if they are clearly not related to that country's nuclear program in any way. Example: a recent long-term LNG export deal with Austria's OMV that the Bushies are trying hard to scupper. Their objective appears to be to destabilize their regime via chronic shortages of essential supplies such as fuel.

Sanctions are now beginning to bite, but as usual it is ordinary people who are suffering the brunt of sanctions while those in power becomes even more repressive. Introducing fuel rationing at two hours' notice did spark riots but you can be sure that Mahmoud & Co. will not tolerate any more dissent.

Posted by: Rafael Seidl | 03 July 2007 at 12:56 PM

Thank you Rafael that makes sense.

Posted by: Henrik | 03 July 2007 at 01:10 PM

Sam, what you said was insulting. I'll have you know one of my aunts (God rest her soul) had numbers tatooed on her arm. Did you not read where I said 'the Iranian Pres was just as bad?' I make no excusses for evil men but I don't give in to Propaganda either. I have simply heard too many lies from the Bush camp to believe anything they say anymore ("Fool me once, shame on you. Fool me twice, shame on me.") so I put forward some facts. And yes Iran has more than enough natural gas for their energy needs but in truth NG is not "clean," it is only cleaner than oil or coal.

Posted by: ai_vin | 04 July 2007 at 09:57 AM

Do -I- believe Iran wants nuclear weapons? Well, doesn't everybody want them? However, as I can no longer believe anything Bush and friends say, I'll need more proof before I'll say "hell Dick, the war in Iraq is going sooooo well maybe we should try our luck in Iran."

Posted by: ai_vin | 04 July 2007 at 09:59 AM

@ Ai Vin -

not every country in the world wants nuclear weapons. There are currently seven declared and one undeclared nuclear powers, plus North Korea.

Iran might well be busy developing a nuclear bomb, to deter a US-led coup attempt. From the Iranian point of view, this is not as fanciful as it might sound: the CIA did orchestrate the overthrow of democratically elected (but left-leaning) Prime Minister Mossadeqh. He was replaced by the tyrant Reza Shah Pahlavi. When Ayatollah Khomeini eventually led a revolution against him, US embassy staff were held hostage to prevent a US counter-coup. Today, there are no US officials that Iran could use as human shields.

The rational strategy would be to let Iran develop an alternate deterrent to invasion in the form of gas pipelines to Europe and India. It would depend on the associated revenue and therefore have an incentive not to go too far in its foreign policy rhetoric. In a way, it could be expected to behave somewhat like Putin's Russia - prickly, but not lethally dangerous.

Unfortunately, neocons are hard-core ideologues. They don't practice realpolitik. Perhaps the next POTUS will.

Posted by: Rafael Seidl | 04 July 2007 at 02:15 PM

Rafael; I know not every country in the world wants nuclear weapons. Heck I'm a Canadian and we're one of those countries that don't. I was being flippant. I believe Iran is a threat but there is wisdom in knowing your enemy so I've studied the geopolitical history of the region well enough that I already knew what you wrote.

And while I've never attended one of those "the 'holocaust never happened' rallies" I have watched the Iranian Pres in interviews and I can say he may be a lot of things (and none of them good) but he is not stupid and not crazy so yes I knew if they do develop a nuke it will be to deter a US-led coup attempt and not to waste in an attack on Israel. Like I said 'I don't give in to propaganda.'

Posted by: ai_vin | 04 July 2007 at 07:18 PM

...the iranians have some of the finest engineers in the world, and they are perfectly able to put a stupid refinery up, if they want to...

Posted by: galileo | 08 July 2007 at 08:12 PM

Rafael:

Stick to science instead of politics. You are a bright scientific mind, but a horrible political analyst. Stick to what you do best.

Posted by: Marcio Santos | 16 July 2007 at 07:22 AM

Here is an offer for Iran Khodro from Muffler Assembly manufacturer in India - a group having 24 engineering set-ups with a turnover of USD 375 Million. Please contact me with your specificaations of Muffler Assembly for your various cars being manufactured by you so as to produce the sample with our cost break-up so as to get started.

Best wishes,

V.K. Sanger

Posted by: V.K. Sanger | 27 July 2007 at 09:25 PM

Mr Ai vin, your manipulations can no longer fly! in fact you should be happy now that the NIE report proved there is no Iranian nuclear threat! but you decide to fight it anyways even if it doesn’t even exist!
You never stop lying will you? How on earth you can accuse Iran to want to wipe an entire nation just because of their religion! Newsflash: Iran has the second population of Jews in the middle east after Israel! They seem to be happy and able to practice their religion and festivals and are proud to be Iranian as much as being Jews! Like the lies to fed people in Iraq case all your accusations are false! You are the ones who should be prosecuted because of wiping Palestinians of their lands and setting an apartheid regime which assume privileges for people JUST BECAUSE THEY ARE JEWS! You are the one who attacked all your neighboring countries. You are the ones who illegally produced NUKES under the table and never signed a non proliferation treaty! And you are the ones who are threatening to NUKE IRAN! Why, because they are against your apartheid regime (not your religion)!
Now who is dangerous? Iran or you?
How many countries you know that Iran invaded say within the last few decades?! In fact Iran have been attached by your ex-buddy Sadam, thanks to you and your big brother US!
You are keep bulling attacking and threatening and Iran is the danger?!
By the way Iran does not seem to deny the Holocaust in theri TV series "Zero Degree Turn":
http://www.youtube.com/watch?v=qQnlAerDSj0
they just want to confirm that Iranian or Palestinians did not commit it and never done anything bad to Jews, European did! Why they should pay instead?!

By the way Jewish sate is as ridiculous and bogus as Islamic government! They are both destined to collapse and replaced with real democracy!

Posted by: TG | 14 December 2007 at 12:26 PM

The US has nuclear weapons as does Israel. Why shouldn't Iran have them too?

Posted by: twister | 01 January 2008 at 11:29 PM

Iran needs to divert its oil to other products. Exporting petro-by-product is more profitable for Iran than just exporting oil. Iran's petrochemical industry will be the biggest in Middle East in few years. Iran's GDP and most other ME countries is growing so there is a need for power to run the factories and other industries in addition to the metro systems in large cities. Why should Iran purchase the fuel for her Nuclear power plants if she can produce it? By giving in to this idea of purchasing then Iran, like other purchasing countries, will place herself in a position that price and politics can prevent her from getting the fuel.
It is interesting to read that some people think Iran is a danger but reality is that Iran has not attacked any country for over 200 years. It is Israel that has killed and is killing innocent people to expand this so called promise land. Only their ability to kill more and more will determine the size of this promise land.
As an Iranian Moslem who is married to a Jewish person I have seen nothing but love from my Jewish side of the family. However, all I see from the Israelis is hate and death. One can be against Israeli's policy without being anti Jewish. And if anyone listens to Iran's president speech in Farsi she/he would understand that he never mentioned the destruction of Israel. He never used the words "map", "wiped". Iranian Jews don't seem to be scared of Iran. In fact I have met some that have come back from Israel. But, you would not see that in the US news media. Jews in Iran have seats in the parliament and are very educated or own successful businesses.
Getting to the article; Iran Khodro has started the production of such cars. In reality Iran has been using NG buses for the past 14 years, but not enough of them. I see taxis that use NG. Some are Hyndai and some Samand. IKCO is also studying electric hybrid cars. Samand and Sorren are being exported to 14 countries.

Posted by: JF | 05 January 2008 at 03:26 AM