A Look at Iran’s Unaccounted-For LPG Revenues

In a recent speech at the Iranian Association of Chemical Engineering, Malek Shariati Niasar, an MP and a member of the Iranian Parliament’s Energy Commission, criticised the lack of accountability for the sale of LPG (Liquified Petroleum Gas) in Iran. He complained that the National Iranian Oil Refining and Distribution Company (NIORDC) could not account for the 4,000 Tons of LPG being sold daily. Niasar was equally critical of the NIGC (National Iranian Gas Company), which is also failing to clearly report its revenues from LPG sales. In reaction to Shariati Niasar’s statement, Iran Open Data has prepared the following account of Iran’s current LPG revenues, as well as the main state-owned organisations involved in its sales.

LPG is a fuel gas that generally comprises a mixture of propane and butane gases. Most of the LPG in Iran is produced by refining & processing natural gas which is then transferred into NIGC-controlled gas pipelines. Another source of LPG is refined crude oil. In this process, the lighter remnants of the oil are collected as LPG under NIORDC control. LPG is a globally traded commodity that has multiple uses. It can be used in kitchen stoves, automobiles or as feedstock for petrochemical plants. According to Niasar, Iran produces around 12 Million tons of LPG annually, 55% of which is consumed within Iran and 45% exported. These figures correspond to S&P Global’s estimates that Iran exports around 6 million Tons/Year of LPG, most of which is sold to China. 

Data from Argus Media (Argus LPG World) indicates that LPG prices have been rising steadily in the past year. Figure 1 shows the dramatic increase in LPG prices in the Middle East region, where April 2022 prices were almost twice those in May 2021. The average LPG prices in the Middle East region for the months of February-April 2022, at $877/Ton, suggests that 6 million Tons should generate around $5.3 Billion in one year. However, Iran offers discounts to incentivise sales despite US sanctions. Assuming that $50/Ton is offered as discounts, Iran should still get around $4.9 Billion per year. It is unclear if the additional revenues from the recent increase in global gas prices is being passed on to the Iranian public, as even the Member of the Parliament says he is unsure about what happens to the revenue from LPG sales.

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Note: In the global LPG trade, Saudi Aramco’s contract prices are standardly used as a baseline for sales from the Middle East region.