Iran drives forward with natural gas cars

Iran has dramatically scaled up its use of compressed natural gas to power vehicles, an effort which has helped ease the tightening pressure from international sanctions on petrol imports.

A five-year multibillion-dollar government investment programme has helped bring millions of duel-fuel cars on to the roads, softening the impact of rising gasoline prices and petrol rationing.

The natural gas boom is a microcosm of the struggle of the Tehran regime and Iranian citizens with western banking and oil sanctions that have triggered sharp falls in both exports of crude and the value of the Iranian rial.

Tehran resident Mehdi, who uses his Iranian-made Tiba car as an unofficial taxi, had the vehicle altered to run on natural gas six months ago and believes the costs are worth it.

“My decision to convert my car into dual-fuel was after I noticed I could no longer afford petrol under such tough economic pressure,” he says. “Now, I can save my money. I fill my tank twice per day and pay 80,000 rials ($6.50) instead of 20 litres of petrol for 140,000 rials ($10.80).”

Iran began its dash for compressed natural gas about a decade ago, as it tried to capitalise on its huge gas reserves – the world’s second largest – and an extensive gas distribution network that serves more than 80 per cent of the 75m population.

Five years later, the government of Mahmoud Ahmadi-Nejad decided to inject $3bn to accelerate the plan and help cushion the blow of a decision to scrap about $100bn of energy subsidies for consumers.

The number of dual-fuel cars manufactured in Iran has risen from 1,500 in 2006 to 2.95m this year, while the number of compressed natural gas filling stations in the country has mushroomed from 60 to about 2,000.

The Natural Gas Vehicle Global – an international lobbying association of more than 300 companies and other organisations – says Iran is now the world’s leader in terms of numbers of natural gas vehicles, ahead of Pakistan, Argentina, Brazil and India.

“You cannot find any country in the world that has made such progress in the compressed natural gas industry over the past five years,” says Morteza Ebrahimi Moghaddam, secretary of the Iran CNG Association, a non-governmental group.

The Iranian government says it was keen to promote compressed natural gas because it is less environmentally damaging than petrol. But Jalil Salari, deputy head of the National Iranian Oil Products Distribution Company, says the main reason for the move was to diversify the country’s fuel sources and control climbing petrol consumption, which is now about 61m litres a day.

“If we had not started the scheme, the petrol consumption would have now been 80m to 85m litres per day,” he says.

Mr Salari added that compressed natural gas had helped the government avoid a gasoline crisis since 2010, when tighter international sanctions were placed on petrol imports.

While Iran has stepped up domestic petrol production to help stop international sanctions causing any visible supply shortages, many Iranians complain that the quality of the product has fallen sharply due to the presence of high levels of aromatic – and toxic – chemicals such as benzene.

Analysts believe low petrol quality is one of the main reasons for the alarming levels of pollution seen in Tehran.

The pollution has led to closures of schools and to the deaths of about 4,500 of the capital’s residents over the past year, according to the health ministry.

Now the US and European Union have ratcheted up oil and banking sanctions still further, causing the rial to fall in value by more than half over the past year, compressed natural gas may become a still more important and political part of Iran’s energy mix.

Source: FT