Mazut is one of the many products produced at crude oil refineries, but also, one of the cheapest and most polluting amongst such products. Its use is prohibited under international law in various areas. As Dr. Keyvan Hosseini, a lecturer at the University of Södertörn in Sweden, tells Zamaneh, mazut is considered one of the major products of Iran’s oil refineries as a result of their low efficiency.
In recent years, Iran has been burning massive amounts of mazut to generate electricity, although this should not be the case under Iranian law. Fereydoun Abbasi, a member of the parliament’s energy commission, called on the public to reduce electricity consumption on June 7, stating, “We will definitely have a blackout this summer because with the hot weather, electricity consumption will increase, especially in the south…We need to burn Mazut”. He further added, “It is not wise to buy diesel for 60 cents and burn it in the power plants, because the price of the electricity we want to produce is one cent. That is not acceptable…we have no choice but to burn Mazut”.
However, Mr. Hosseini says Iran should switch to solar power plants as soon as possible and improve the performance and efficiency of oil refineries.
Although the Clean Air Law of Iran was announced for implementation in 2017, it has yet to be properly implemented in Iran. Air pollution levels are increasing in various cities across the country due to the burning of mazut, the use of outdated cars, and particulates resulting in haze. Mazut specifically, leads to an increase in the concentration of sulfates (sulfur oxides) and the release of the active ingredient sulfur dioxide into the air. When sulfur dioxide is inhaled, the nose, throat, and airways become inflamed, resulting in coughing, shortness of breath, or a feeling of pressure in the chest area. These symptoms develop rapidly, taking only 10 to 15 minutes to appear after sulfur inhalation
“Oil and natural gas accounted for more than 98% of Iran’s total primary energy supply. Therefore, aspects like political stability, energy security, power generation, economic growth, and poverty alleviation strongly depend on the oil and natural gas industry in Iran.”
Dr. Keyvan Hosseini points out that Iranian oil refineries spend energy and money and in turn, create environmental injustices by polluting the air, soil, and water resources to produce a non-profitable product, mazut. Read our interview with Dr. Keyvan Hosseini below:
Mr. Hosseini, in your 2019 research published in the Journal of Energy, you demonstrated that the Iranian refineries are not efficient and therefore as a result, 30% of their product is residual fuel oil in the form of mazut. Can you explain more about this inefficiency and its cause? Why has Iran not been able to modernize its refineries and why is there no investment priority for this area? What is your estimate of the return on this investment if made in the short, medium, and long term?
According to U.S. Energy Information Administration (EIA), on average less than 3% of crude oil intake by U.S. petroleum refineries is converted to residual fuel oil. In contrast, on average, almost 30% of crude oil intake by Iranian petroleum refineries is converted to low-quality and heavy residual fuel oil (mazut). Globally, petroleum refineries concentrate mainly on the production of transportation fuels (in particular gasoline) due to their high value and to an increase in demand for transportation fuels and a decrease in the demand for residual fuel oil in recent decades.
Based on the International Energy Agency (IEA) data, Iran cannot satisfy the domestic demand for transportation fuels, forcing the country to import gasoline. Therefore, in our study, we recognized three problems in the current petroleum industry in Iran: the large proportion of crude oil in exports, the imports of gasoline and diesel fuel to Iran, and the high production percentage of an unprofitable product, mazut, in petroleum refineries.
To achieve better performance, Iranian petroleum refineries must improve their production pattern by equipping themselves with new technologies to satisfy the demand for transportation fuels in the domestic market. Therefore, improving all private and state-owned refineries by instalment of residue fluid catalytic cracking (RFCC) unit is an applicable and highly recommended scheme. Currently, the only RFCC unit in Iran is located in the Arak refinery, and this unit decreases the production of mazut and increases the production of gasoline substantially. Thus, based on this improvement, using RFCCs is a promising remedy.
According to the Sixth Five-year Development Plan of Iran (2017-2023), the share of mazut in the oil refineries’ total output should not exceed 10%. Improving the existing refining sector would be a major step to raise the production of transportation fuels to meet the domestic demand and increase the export of transportation fuels. These plans can boost the income from Iran’s oil sector and, as a result, may lead to a higher economic growth rate and poverty alleviation, which are the main goals of Iran’s Sixth Five-year Development Plan.
“Energy justice defines as ensuring that people have access to energy to maintain a decent quality of life and that the production and distribution of energy is conducted in a manner that causes no harm, environmentally or socially.”
A consequence of the need to implement the above-mentioned plans is that the country needs to attract foreign investment. To achieve its Sixth Five-year Development Plan, Iran requires $200 billion of investment in the oil industry, which local resources cannot afford. Therefore, it should be derived from foreign investment, which is a problem since the disorganized Iranian financial system is not attractive to overseas petroleum investors. Besides, the ambiguous future of the Iran nuclear deal and the imposition of more sanctions provide uncertainty in the future of foreign investment. To achieve the required investment in the oil sector, which can lead to economic growth and energy sustainability in the long run, Iran needs to maintain a friendly relationship with the Organization of the Petroleum Exporting Countries (OPEC) in order to control the oil price and exports, and also adopt a tactful and moderate foreign policy to eliminate both financial and technological sanctions against the Iranian economy.
I believe that it is unlikely to attract foreign investment in the current situation as it would require a reform in the structure of Iran’s entire economy and political power. Moreover, continuous international political conflicts and regressive theocratic totalitarian policies for more than 40 years have given Iran a negative perception among investors.
You also referred to mazut as an unprofitable product in this study and wrote: “Iranian petroleum refineries spend energy and money and create environmental injustice by contaminating air, soil, and water resources to produce non-profitable products.” Two questions regarding this statement are: why should mazut be considered an unprofitable product?, and can oil refineries be operated in a way that minimises the environmental injustice caused by their operations?, and if so how?
The price of mazut is often lower than the price of crude oil in the international market. It can be concluded, as you quoted from our article, that Iranian petroleum refineries spend energy and money and create environmental injustice by contaminating air, soil, and water resources to produce nonprofitable products. Moreover, officials who were (and are) in charge of the oil industry in Iran several times confessed that they are selling mazut at a lower price than the crude oil, and they stated that the production of mazut is not economical for Iran.
To answer the second question, I should mention that oil refineries are notorious for their environmental degradation. Generally, low operational performance in industries exacerbates environmental devastation, which leads to the conclusion that low performance refineries damage the environment even more. Therefore, through the improvement of their efficiency, Iranian refineries can reduce negative environmental impacts and raise energy and environmental justice to some extent. Energy justice defines as ensuring that people have access to energy to maintain a decent quality of life and that the production and distribution of energy is conducted in a manner that causes no harm, environmentally or socially. Environmental justice defines as the inclusion of citizens in the development, implementation and enforcement of environmental legislation and policy. Eventually, the transition to available renewable energy carriers, solar energy, in particular, can be seen as a long-term target of the Iranian energy sector to reduce reliance on the polluting oil and natural gas industry and ensure environmental and energy justice.
Recently, Fereydoun Abbasi, a member of the parliament’s energy commission, said that power outages were looming in the summer and Iran had no choice but to burn mazut to supply energy. Is there another solution?
Oil and natural gas accounted for more than 98% of Iran’s total primary energy supply. Therefore, aspects like political stability, energy security, power generation, economic growth, and poverty alleviation strongly depend on the oil and natural gas industry in Iran. To cope with this dependency, the Iranian government should consider using reliable and sustainable renewable energy carriers. For instance, Iran, located on the earth’s solar belt, gets an enormous amount of solar radiation, which is an excellent reason for the country to build solar power plants. Currently, however, less than 0.01% of Iran’s total primary energy supply is derived from solar power, a figure which shows the neglect of this renewable energy option.
Conservatives critical of Hassan Rouhani’s government during his tenure called the Paris agreement a “colonial hoax.” Parliament has prosecuted a number of former members of the Environmental Protection Agency for implementing Iran’s meagre commitments in the Paris climate agreement. Critics of the Paris Agreement argue that meeting climate commitments will slow the country’s progress and lead to deficits, particularly in the energy sector. What is your opinion on this argument?
Large-scale transformations in the human economy and society are required worldwide to reduce GHG emissions and limit temperature increases to 1.5 °C above pre-industrial levels (Paris Agreement). Climate change is a global issue with global consequences. The prospects of Iran and other oil-dependent economies are linked with other developing and advanced states. Therefore, sustainable development goals (SDGs 2030) cannot be met if oil-dependent countries like Iran and Saudi Arabia do not tackle their dependency on fossil fuels. Also, the role of advanced economies is crucial, and they should not concentrate only on regional development while ignoring the struggles in poorer nations. Therefore, the 17th SDG emphasizes partnership to make sustainable development achievable not only for advanced economies but also for developing countries. In my research, I asserted that developing countries do not have sufficient resources to move toward sustainable development without the stimulation of their economy. Part of this stimulation should be received through financial and technological assistance through a non-hegemonic and fair North-South or China-South partnership.
To curb unbridled climate change, global efforts to stop extracting and burning oil and accelerate the energy green transition have recently intensified. In compliance with the goals of the Paris Agreement, several countries and international organizations announced their commitment to eliminate the usage of fossil fuels before 2050. For instance, since the end of 2019, the World Bank no longer finances upstream related oil projects, and similarly, European Investment Bank stopped investing in fossil fuel energy projects by the end of 2021. Also, the concerns about the shortage of oil in the future are no longer taken into account, and the new target is to stop extracting crude oil and keep it under the ground. Therefore, a shift from fossil fuels to renewable energy carriers is the only long term option for Iran and other oil-dependent countries because, in 20-30 years, they will not have customers for their crude oil. However, as I mentioned above, Iran’s progress is slow due to the sanctions resulting from continuous international political conflicts led by the Iranian government and regressive theocratic totalitarian policies for more than 40 years.
Dr. Keyvan Hosseini is a Senior Lecturer in business studies in the School of Social Sciences at the Södertörn University in Stockholm, Sweden. His research interests include energy policy, just transition, and sustainable development. Currently, he is developing sustainability assessment frameworks to handle complex challenges in developing countries. For further information and interviews, Dr. Keyvan Hosseini can be contacted via Keyvan.hosseini@sh.se. A copy of the paper ‘Efficiency assessment of Iran’s petroleum refining industry in the presence of unprofitable output: A dynamic two-stage slacks-based measure’ can be emailed on request, contact Keyvan.hosseini@sh.se or is available to view at here.
