Iran’s gasoline consumption is falling rapidly thanks to higher prices and compressed natural gas (CNG) use, according to the Iranian oil ministry, helping soften the blow of Western sanctions that ban fuel sales to the Islamic Republic.
Western governments have blocked gasoline supplies to Iran over the last few years to pressure Tehran over its disputed nuclear program.
But Iran has succeeded in significantly reducing its reliance on gasoline by tapping the world’s second largest natural gas reserves to make CNG and slashing subsidies to discourage gasoline use.
As a result, Iran’s gasoline consumption fell to 55.8 million liters a day in the period from December 22, 2011 to January 20, 2012, down from 58.3 million liters per day during the same period a year earlier, oil ministry website Shana said, citing National Iranian Oil Products Distribution Company data.
Until 2007, Iran’s inadequate refinery infrastructure and rising demand made it increasingly dependent on imported gasoline - a vulnerability Western powers led by Washington targeted by banning companies from selling it fuel.
Tehran responded by slashing fuel subsidies and rationing gasoline to discourage long trips by car, while fitting vehicles with dual fuel systems and building CNG pump stations to make use of its vast gas reserves.
As a result, the share of imports in Iran’s gasoline supplies has dipped from around 40 percent to less than 5 percent, according to Iranian government data, putting pressure on Western allies to find new ways to squeeze Tehran over what they suspect is a nuclear weapons program but which Iran says is only about energy.
With Iran having largely neutralized fuel sanctions, Washington - which has long since banned all U.S. companies from any Iranian oil deals - has increasingly tried to stem the flow of crude oil sales funds to Tehran.
The European Union agreed last week to ban its companies from buying any Iranian oil from July, but Iranian lawmakers look set to preemptively ban oil exports to Europe immediately in a vote planned for Sunday.
Western powers tightened restrictions on oil and gas trade with Iran in mid-2010 and scared off many of Iran’s gasoline suppliers, but some fuel still slips through from Asia which also still buys large volumes of Iranian crude.
Iran’s own gas consumption has risen more markedly than its production over the last few years driven by heating, power generation and oilfield reinjection needs which have made it a net importer over the last few decades.
Increasing reliance on CNG as a gasoline substitute is likely to further increase Iran’s gas import needs and limit potential exports which are already constrained by sanctions on key gas technology.
Iran’s natural gas consumption was up 14.9 percent year on year from Dec. 22-Jan 20, while gasoil consumption rose by 14.6 million liters to 112.6 million liters per day.