TEHRAN - Iran has awarded Bank Mellat a contract for construction of a major fuel pipeline project that is aimed at easing potential shortages in key consumption centers in east of the country.
Bank Mellat won the contract to finance the construction of the 948-kilomter fuel pipeline from Rafsanjan, located in southern Iran, to the second largest city of Mashhad in east, according to reports in the local media.
The pipeline is expected to cost around 372 million euros ($424.6 million) and will carry 24 million liters (150,000 barrels) per day of fuel from two main refineries in southern Iran to energy-thirsty regions in east.
The project, which is expected to finish within four years, is aimed at easing a shortage of natural gas consumed in household sector in the area by supplying fuels to gas-fired electricity generators.
Mashhad, a city of over 3.5 million people, currently receives fuel supplies from a pipeline that starts at Iran’s south and passes through the capital Tehran and cities in northern Iran.
The official IRNA news agency said the Tabesh pipeline project is expected to boost energy security in eastern Iran while cutting down on huge transportation costs in the region.
The report said Iranian Oil Ministry hopes the pipeline could also help increase the exports of fuel from eastern Iran to respond to a growing demand in neighboring Afghanistan and in other landlocked countries in Central Asia.
Iran has increasingly relied on fuel exports in recent years to earn hard currency at a time the country faces direct American sanctions on its crude oil exports.
That comes nearly a decade after Iranian Oil Ministry was forced to reengineer its refineries or set up new facilities to increase fuel output to prevent shortages caused by foreign sanctions on fuel imports.