“Some 600,000 hybrid cars are to be manufactured by the end of the (Iranian calendar) year ending March 20, 2009,” said senior Industry Ministry official Mohsen Salehinia. Iranian companies produced over 314,000 hybrids that utilize both gasoline and compressed natural gas (CNG) during the previous Iranian year which ended March 20, 2008.

“These (600,000 hybrid) vehicles will make up 33 percent of the country's total auto production,” Salehinia added.

The Iranian cabinet issued a statement in June saying that 60% of vehicle produced this year (Iranian calendar year 1387, which ends 20 March 2009) are to be either dual-fuel or full CNG vehicles. (Earlier post.)

Despite having about 10% of the world’s proven oil reserves and being the fourth-largest crude-oil exporter, Iran is the second biggest gasoline importer in the world after the United States, according to the US Energy Information Administration (EIA).

Iran has a total refinery capacity of 1.5 million bbl/d (all products) from nine refineries operated by the National Iranian Oil Refining and Distribution Company (NIORDC), a NIOC subsidiary. According to FACTS Global Energy, Iran imported more than 192,000 bbl/d of gasoline in 2006 costing $5 billion to support consumption of more than 400,000 bbl/day. The gasoline consumption growth rate has averaged 10% annually over the past six years, and the cost of imports was expected to reach $6 billion in 2007, up from $2.8 billion in 2005, according to the EIA.

Gasoline prices are heavily subsidized, and sold below the market price at around 42 cents per gallon, which has encouraged increased consumption. An increase in vehicle sales in recent years has also contributed to the problem. Iranian refineries are unable to keep pace with domestic demand, and face major infrastructure problems.

In June 2007, the Iranian government instituted a gasoline rationing system. The combination of rationing, price hikes, increased refining capacity, as well as compressed natural gas (CNG) production, will reduce Iranian gasoline import demand by an estimated 30,000 bbl/d in the next three years according to FACTS Global Energy.

Iran holds the world’s second largest natural gas reserves—974 trillion cubic feet (Tcf)—after Russia, according to the EIA. Around 62% of Iranian natural gas reserves are located in non-associated fields, and have not been developed. In 2005, Iran produced and consumed 3.6 Tcf of natural gas. Natural gas consumption is expected to grow around 7% annually for the next decade.