How can it be that an oil-producing country must ration petrol?

Petrol rationing has sparked the largest domestic protests in Iran against President Ahmadinejad since 2005, when he took power. Having only three litres of petrol available per day in a country which is the world’s fourth exporter of petrol, not only makes life difficult for individuals, it also prevents many from earning an income. Just consider, for example, that half of the 11 million residents of Teheran get around in collective taxis, the unofficial works of tens of thousands of people. And the owners and managers of pick-ups serving as bars and of mobile workshops cannot get along now.

It is several years since the Iranian government earmarked as a priority the upgrading of its refining capabilities to satisfy domestic demand, and it asked several international suppliers of plants to put forward their proposals. With the relatively few opportunities for contracts for new refineries, one would have expected a battle to win the tender for works. And yet this did not materialize, essentially because of two ranges of factors.

In the first place, Iranians think they know the entire oil and refining world. On the other hand, it was in Iran, in Abadan, that the Anglo Persian Oil Company (which later became the BP) built the world’s first big refinery, intended mostly for exportation purposes. In May 1914, the availability of this refinery prompted – just before the fatal attack in Sarajevo which killed the Archduke Franz Ferdinand – the then First Lord of the Admiralty of Britain, Winston Churchill, to win British parliamentary approval, with somewhat suspicious foresight, for the acquisition of 54% of the above-mentioned Anglo Persian. At stake was a conspicuous contract for the supply of fuel to the British Navy, which moreover was signed on the same date.

Iranian engineers have maintained sound technical knowledge and they know perfectly well the detailed costs of the components of a refinery. So, adding up the costs of individual components, they proposed conditions to potential international counterparts, which none however even dreamed of accepting. The point is that building a modern refinery, in a certain sense, can be technologically more complex than building an atomic bomb. It is not enough, in fact, to put the single components together; complex and hence costly coordination is needed. To use a somewhat strong comparison, a person is not the sum of arms, legs, head and other organs, but much, much more than that. The difference between how much was calculated as costs and how much was requested from western companies, which can boast of adequate experience, induced some in Iran to suspect either western capitalists of avidity or else that some high-ranking personality in the country, in cahoots with foreign companies, was working for his own personal interests, with the excuse of building a refinery. Corruption exists in the world of big international contracts, even if it differs from country and country, and is without doubt an evil. Thus it is right to seek at least to contain it within minimal and tolerable limits, seeing that it is unrealistic to aspire to eradicate it completely.

Asia News