Iran’s NGV Road-map; Technology, Policy and Marketing

Seyed Mostafa Mirsalim
Mahdi Ahmadi
IPCO (Irankhodro Powertrain Company), Iran

Seyed Ali Ghoreishi Madiseh
Amirkabir University of Technology, Iran

Maryam Habibian
Alzahra University, Iran

Introduction

The first activities to use Natural Gas in transportation in Iran have been started since
30 years ago. At first LNG was chosen as an alternative fuel but because of impact of
LNG providing, the government could not continue this program.
In the recent years, economic and environmental problems, which were caused by
gasoline and diesel vehicles, have made the government to seek for a green and more
economic fuel. Technical researches show that CNG is the best option for Iran. This
paper describes Iran NGV roadmap from economic, environmental and technical
points of view.

NGV reservoirs of Iran

Evaluation of natural gas reservoirs of Iran shows that 16 percent of the total amount
of natural gas reservoirs of the world, exist in Iran [1]. This means that 26.6 trillion
cubic meters (over 900 trillion cubic feet) of natural gas are discovered which makes
Iran the second ranked country in the world, having great natural gas reservoirs. But
the amount of extraction and production of NG is not proportional to reservoirs
content. With extraction of 55.6 million cubic meters of NG at 2000, Iran has the 11th
place in the NG producer ranking [2].
Considering the ratio of extraction rate by the amount of reservoirs, which is 0.02
percent, Iran has a good potential for natural gas development. It has been considered
to increase the amount of NG production in the coming years. So the government has
invested widely in developing natural gas discovering, extraction, production and
distribution.

The reasons of choosing CNG

Economic reasons

Fuel consumption of vehicles in Iran is so much in comparison with other countries.
Figure 1 shows the average fuel consumption per day of the vehicles in some
countries [3]. This is the most important point that makes the government to substitute
an alternative fuel by gasoline and gasoil.
In the year 2004, fuel consumption of transportation equaled to 56 million litters of
gasoline per day. The government has to import 34 percent of this amount of gasoline
from other countries which are competitors of Iran in oil industry. Also the
government paid 3.1 billion USD for fuel subsides in this year. Figure 2 shows
amount of gasoline production and consumption in transportation [4]. Prediction
shows that in the period of 20 years (2001-2021) total shortage of gasoline would be
equal to 521 billion litters. So considering the huge contents of NG reservoirs and also
low price of NG fuel in Iran (3 cents per cubic meter), natural gas is chosen as a
suitable alternative fuel. Although the specific fuel consumption of NG engines is less
than similar gasoline engines, if we consider them to be equal, economic advantages
of using natural gas instead of gasoline would be about 4.5 Billion USD in the year of
2004. Table 1 shows economic evaluation of converting different kinds of vehicles to
NGV [5,6].
In addition, more than 2.5 million gasoline and diesel on-road vehicles in Iran have
been produced based on old technology. So it is necessary to substitute these
inefficient cars with new ones. Government can achieve three goals by using NGV
technology. First it can decrease fuel consumption. Second it can replace the old
vehicles by the new ones. Third it can save a huge amount of economic resources by
decreasing gasoline imports.

Because of geographical dispersion of cities in Iran, construction of natural gas
infrastructures (including extraction, refinement, transfer and distribution) requires
large amount of investment. So the government has not chosen natural gas as a main
fuel, but as an alternative fuel.

Because of environmental considerations NG is known as a green fuel in Iran.
Generally natural gas fuel produces less emission than gasoline and gasoil. Figure 3
shows the amount of emission of different burned fuels. As can be seen most of the
pollutants, especially SOX and CO, decrease by using natural gas.
Most of the big cities in Iran (like Tehran, Isfahan, Mashhad and Shiraz) are suffering
from air pollution and this has caused a lot of economic and human damages. Table 2
shows the human damages cost in Tehran and Figure 4 shows statistics of deaths in
Tehran due to air pollution [9] Using NG could decrease these damages by decreasing
the pollutants, especially PM10, CO and SOX pollutants.
The emission of diesel engines of public transportation fleet is so much due to old
technology. Also produced diesel fuel contains so much sulfur which causes SOX
emission and corrosion problems in engine. So by using NG in public transportation
many advantages are achieved.

Promotion programs

In order to insure the progress of using of natural gas as an alternative fuel, the
government has established an organization named IFCO (Iranian Fuel Conservation
Organization). IFCO is responsible for programming and managing the progress of
using natural gas in transportation. Also the Department of Environment, that plays

Figure 4: Annual deaths because of air pollution in Tehran

Governmental programs

According to the NGV master plan, by the year of 2020, 46 to 70 percent of the total
vehicles in Iran must be NGVs and 2950 to 4500 fuel stations must have been
constructed. Followings are the abstract of the activities which are done in order to
ensure the achievement of these goals.

Substitution of on road vehicles by NGVs

Conversion of gasoline and diesel engines to NGVs is the most important part of
natural gas substitution program. In NGV master plan for Iran, it has been planed to
have 650 thousand NGVs. Half of these NGVs would be converted and other half
would be produced. The conversion is done in conversion workshops. These
workshops are constructed by the cooperation of government and private section.
There are three categories of conversion workshops. The first one is specially for
converting diesel engines. The second one is for mini-buses and in the third one, cars
and vans are converted. Table 3 shows the number of converted different types of
vehicles up to May 2005 [11].

Public transportation

It’s very important to substitute public transportation fleet vehicles by NGVs in a
short time, because of environmental advantages of using CNG in these vehicles. So it
has been planned to construct special conversion workshops for these vehicles. Also
specific fuel stations are being constructed to improve the fueling of public
transportation fleet NGVs. Table 4 shows the number of taxies, buses and mini-buses
which must be converted in Tehran up to year 2006.
66 percent of the total converted cars in public transportation fleet are taxies. These
taxies are converted to bi-fuel. 33 percent are buses and minibuses which are
converted to CNG engines.

Fuel stations

The first phase of NGV master plan is based on constructing 480 CNG fuel stations in
Iran. It means one fuel station for every 1600 NGVs. Figure 7 shows the considered
number of stations needed in CNG program [12].
Construction of fuel stations is also done by the cooperation of government and
private sections. Table 5 shows economic costs evaluation of constructing CNG fuel
stations.

Private section support

The government is supporting the private section in order to improve the capacity of
this section in NGV technology. Followings are some examples of these supports:
   • The conversion workshops, in which vehicles are converted to NGVs, are
   constructed by the cooperation of government and private section.
   • The government supports the private section to construct fuel stations.
   • R&D organizations which work in the field of fuel tanks, stations and NGV
   technology are supported [13].

Subsides

Subsides are the most effective tools of the government. This tool can ensure that the
consumers will choose natural gas instead of gasoline and diesel. The government
pays subsides for converting on-road vehicles to NGVs. So each person by converting
his car to NGV, will pay 15 percent (55 USD) of the total cost of conversion. Also the
government has decreased the gasoline subsides and as a result the consumers would
like to use CNG fuel instead of gasoline. (the cost of CNG is ¼ of the cost of
gasoline)

Public Education

As the changes occurred in the environment are related to human’s behavior, so it
plays an outstanding role in energy consumption and environment saving programs.
That leads the government to pay a great attention to public educations, as well as
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economical and technical aspects and apply the foreseen budget changes in the third
development program.
IFCO, with the help of National Iranian Oil Company (NIOC) has made vast
propagandistic activities in order to conduct public attentions to fuel conservation and
specially replacing natural gas, as a green alternative fuel, with other kinds of fuel.
These activities include all means of mass media; carrying on related gatherings and
seminars especially annually conferences on “Clean Air Day”. There are some
examples of these programs:
   • First Energy Consumption Optimization forum in vehicle industry,
   October 2004
   • First forum of alternative fuel (CNG) and natural gas vehicles (NGV),
   May 2004
   • International Environment exhibition of Tehran, July 2004
   • CNG exhibition, February 2005
   • 8th International exhibition of Oil, Gas & Petrochemical Industries
   (IOGPE), Specified in Gaseous conversions
   • International vehicle exhibition of Tabriz
   • Second International forum of Internal Combustion Engines, January 2002
   IFCO has also made a specified section for children in different ages which make
   them able to play games or puzzles and read subjects which educates them proper
   energy consumption from early ages.

Environmental

There has been a need for supervisory organization, which is independent from other
organization of government, to guarantee the quality and quantity of the performance
of government plans. Department of Environment in Iran is responsible for this
important task. In addition, Department of Environment must specify and declare
necessary pollution limits and standards, in order to control the air pollution. By
means of this power, Department of Environment is the policy maker of air pollution
control in Iran and could enforce the manufacturers to produce NGV and impel the
consumers to use CNG vehicles. This organization is the supervisor of vehicle
converting and substituting programs.

Research and development

Generally research and development activities in Iran are too weak and university
researches could not properly be transferred to the industry. In the recent years,
researches on NGV materials extensively increased both in universities and industries
R&D section. University researches mainly focused on [14]:
   • Dual fuel natural gas engines
   • Bi-fuel NGV
   • Gas injection simulation and analyses
   • CNG tank
   • Technical, Economical and environmental assessment of NGVs production
In the industrial filed, IPCO (Irankhodro Powertrain Co.) is the leadership of research
and development in the filed of internal combustion engines so various projects
related to NGV are run there, like design and manufacturing of dedicated natural gas
engine and design and production of ECU for bi-fuel engines. Some car
manufacturers recently established a center to do research and development on NGV
especially on NG engines.

NGV market in Iran

Comprehensive NGV promotion programs, as mentioned, require huge investments.
The more important fields that investments were focused are:
   • Extraction and distribution facilities
   • Fuel infrastructure and CNG fuel station including NG compressor, piping and
   sealing, fueling facilities and measurement and controlling devices
   • New NGV producing by OEMs
   • Converting equipments like gas kits and CNG tanks'
Figure 8 shows required annual investment for NGVs manufacturing and converting
and CNG filling station in the period of 20 years. Based on presented data, Iran could
be a great market for NGVs related materials. Although the most required equipments
were imported from other countries (especially Italy, Germany, Denmark and
Canada), some of these are planned to be manufactured in Iran under the license of
original manufacturer. For example production line of some fueling facilities would
be utilization by the help of a foreign partner in the near future.
Based on information from IFCO contracts have already been signed for a ramp start
of phase 1 of NGV master plan, indicating a total number of NGVs in the first fiveyear
period of 1 million OEMs and 900,000 conversions. This will imply some 2,000
filling stations in five years [15].
This tremendous build-up cannot be done with Iranian products due to lack of
domestic production of the required equipment. Hence, the rapid increase of the NGV
business in Iran will create a huge demand of equipment in the world market.
Worldwide production capacity should also be considered. Long-term agreements
with major suppliers will be required [16,17].

References
1- World Energy Council, “Survey of Energy Resources 2004”, “Crude oil and natural gas liquids”,
2004
2- See Ref.1
3- IFCO, “NGV Master plan for Iran”, “CNGV Conversion Policy and Statistics”, 2002
4- See Ref.3
5- IFCO, “NGV Master plan for Iran”, “Macro and micro economic evaluation for large conversion
programme“, 2002
6- IFCO, “NGV Master plan for Iran”, “NGV feasibility study”, 2002
7- See Ref.5
8- See Ref.5
9- Department of Environment, “Comprehensive economic evaluate of human damages caused by air
pollution in Tehran”, Dariush Farhoud (Executive manager), Final report, September 2002
10- See Ref.3
11- IFCO, “Weekly Analytical statistics of converted vehicles in workshop conversion section”, May
2005
12- See Ref.3
13- See Ref.3
14- Iranian Information and Documentation Center database (website address:
http://www.Irandoc.ac.ir)
15- See Ref.3 and Ref.5
16- IFCO, “NGV Master plan for Iran”, “Conceptual design of filling station and vehicle system”,
2002
17- IFCO, “NGV Master plan for Iran”, ”Basic and detail design of filling stations”, 2002