June 29, 2007	Friday	Jamadi-us-Sani 13, 1428

LONDON, June 28: Despite being the world’s fourth-biggest producer of crude oil, Iran’s lack of refineries means insufficient petrol is made in the country - a situation that led to unrest this week.

Iran, which is also the second-biggest producer in the Organisation of Petroleum Exporting Countries, is plagued by a global problem of limited refining capacity.

The Islamic republic produces 44.5 million litres of petrol, or gasoline, a day -- which is not enough to meet demand of 79 million litres.

Against this backdrop, this week the Iranian government decided to ration motor fuel, but the move ignited violence and a dozen petrol stations were set on fire.

Angry motorists meanwhile queued for hours to fill their tanks.

On Thursday, state-run television said the streets were calm and no further trouble had been reported despite long lines of cars still waiting at the pumps.

Private cars using petrol in Iran are now limited to 100 litres of petrol a month, while those using petrol and liquefied gas are entitled to 30 litres.

Refining problems are not unique to Iran, however, and forecasts show the world is heading towards a supply crunch unless adequate investment is made in new facilities.

The world’s refineries had a combined capacity of about 85.7 million barrels per day (bpd) in 2005, according to the French Petroleum Institute (FPI).

They will need to reach 93 million bpd by 2010, and 118 million bpd by 2030 to meet demand, the International Energy Agency (IEA) recently forecast.

The IEA has warned that the world is not spending enough on new refineries.

“Uncertainty about future investment returns discourages much-needed investments in refining,” noted the IEA’s chief economist, Fatih Birol, in a report published last year.

Earlier this month, however, Iran said it would help to build five new refineries across Asia with a total capacity of 1.1 million bpd.

No new refineries have been built in the United States for 30 years, while a new refinery has not been constructed in Europe for some two decades.

Birol argued that some $487 billion was needed in refinery investments around the world between 2004 and 2030 to keep pace with global gasoline demand.

“Two-thirds of this sum will need to be invested in developing countries, over one half of this in the Middle East and China,” Birol added.

New refinery investments are mainly centred on expanding existing refinery facilities or increasing their production, the FPI said. A new refinery takes about five years to build.

Iran spent $5 billion importing petrol in the 12 months to March 31, according to recent data.

The Middle Eastern nation estimates that without rationing, fuel imports could reach $9.5 billion in value per year.

Other big oil players are also forced to import petrol.

Nigeria imports almost all of its products that are refined from crude oil -- such as petrol, diesel and kerosene -- because the country’s four refineries are offline.

Nigeria is the biggest oil player on the African continent and is the sixth-largest producer in the world.—AFP