Regional demand can support the feasibility of a new plant, and technical know-how can be attained through international interested parties, he said.

Irans base oil capacity, all Group I, is about 1 million tons per year, said Safdari. He summarized the nameplate and operating capacities of the nations four base oil refiners:

*combined total for 2 refineries

In addition to its base oil refiners, said Safdari, Iran is home to 51 active lubricant recycling plants. Together they supply about 10 percent of the domestic base oil market. While their nameplate capacity is about 325,000 t/y, their operating capacity is closer to 150,000 t/y, and about 100,000 t/y of that amount is exported. The main recycling technologies in Iran are clay bleaching, acid wash and batch distillation.

Iran exports significant volumes of base oils, Safdari continued. Domestic consumption in 2008 was about 495,000 t/y, and excess capacity is exported. His own company, Behran, does not export, but Sepahan Oil exported about 230,000 tons in 2009; Pars Oil exported about 10,000 tons; and Iranol Oil exported nearly 90,000 tons – for a total of 330,000 tons.

Behran is a major base oil importer of Groups II and III and synthetics, said Safdari. Behran uses over 200,000 metric tons [of base oils] for finished lubricants. In 2009, Safdari estimated, Iran imported about 54,000 tons of Group II, III and synthetics, and 15,000 tons of industrial oils. Almost all the Group II and Group III goes to top-tier engine oils and high performance industrial oils.

Looking ahead, Safdari predicted that Irans consumption of Group I base oil will decine from todays 450,000 t/y to around 410,000 t/y by 2019. At the same time, Group II and III consumption will rise from about 50,000 tons today to more than 160,000 t/y by 2019.

Development should take place in both the quantity and quality of base oil, Safdari said. For a variety of reasons, expansion of existing Group I plants is not a good option. Conversion of some or all of the capacity of existing plants may be feasible, but conversion projects, too, face obstacles.

Establishing new plants, Safdari concluded, is more attractive to interested parties. He cited two examples. First, he said, is the Azarsan Shetab Group II and III refinery planned by Behran Oil. Located in Tabriz City adjacent to the Tabriz Oil Refinery, this plant has a nominal capacity of 220,000 t/y of Group II and III base oils. But technical license agreement negotiations are still in progress with international interested parties.

A second example is the Sepahan Group II and III refinery, whose shareholders are Sepahan and Fouman. Located in Bandar Abbas City adjacent to the Bandar Abbas Oil Refiniery, the plant has nominal capacity of 300,000 t/y of Group II and III base oils. But again, said Safdari, progress is in a preliminary phase, with technical licensing agreements with international interested parties under negotiation.

Asked how international sanctions have affected Irans base oil business, Safdari asserted, We have felt nothing so far. They have had no effect.