Iran's Open Data Database: The Islamic Republic's Use of Heavy Fuel Oil Causes 'Environmental and Commercial Damages'

Iran's Open Data Database has conducted a study on the 'environmental and commercial damages' caused by the use of heavy fuel oil (Mazut) in Iran. According to this website, since December 2020, Iran has faced difficulties in selling heavy fuel oil, leading to its use in power plants, which has resulted in severe air pollution in various cities across the country. The report further states that the Iranian government imports lower-sulfur heavy fuel oil due to commitments to international shipping companies, creating numerous commercial crises. There is a mutual dependency between the refining and shipping industries. The shipping industry relies on heavy fuel oil supply from oil refineries, while refineries depend on the shipping industry to sell petroleum products that are difficult or impossible to sell in other markets. In November 2016, the International Maritime Organization (IMO) approved a reduction of sulfur content for marine fuel from 3.5% to 0.5% by weight to prevent marine pollution, which was implemented in December 2020. This regulation necessitated major changes in refineries worldwide to supply the heavy fuel oil required by the shipping industry with a lower sulfur percentage within a specified timeframe. Consequently, global production of heavy fuel oil, which exceeded 400 million tons in 2018, with nearly 50% used in the shipping industry, gradually decreased, while production of lighter compounds with lower sulfur, such as diesel and jet fuel, increased. However, Iran did not make the necessary investments in this area, resulting in heavy fuel oil that could no longer be sold in global markets due to the same regulation being left unsold, and officials sent this low-quality, high-sulfur heavy fuel oil to thermal power plants. Compared to Brent crude oil, Iranian crude contains high sulfur and is rich in heavy fuel oil (or Mazut), but since December 2020, there has been a limited market for Iranian Mazut, yet Iranian oil refineries continue to produce high-sulfur heavy fuel oil and sell it at a lower price (the price of low-sulfur heavy fuel oil is about 30% higher than that of high-sulfur heavy fuel oil). Experts say that currently, only the Arak oil refinery can produce low-sulfur heavy fuel oil, and only 15,000 tons per month. Meanwhile, the demand for low-sulfur Mazut in Iran is about 1.5 million tons per year (125,000 tons per month). Although the Iranian government does not provide clear statistics in this regard, it is estimated that Iran spends over $70 million monthly (equivalent to $900 million annually) on importing low-sulfur heavy fuel oil while simultaneously causing severe air pollution by burning high-sulfur heavy fuel oil in its power plants. The head of the Environmental Protection Organization admitted that air pollution in Iran kills 26,000 people annually. The ongoing strike of over 2,200 workers in various oil and gas industries in southern Iran continues. The U.S. has warned about the 'environmental dangers' of illegal oil transfers from Iran to Malaysia. Insurance companies opposed paying damages to Chevron due to the seizure of oil cargo by the Iranian government. The production of 'petrochemical gasoline' is on the agenda of President Raisi's government; contaminated fuel with carcinogenic materials is returning to Iran's fuel cycle.