Iran smart cards seen as step to petrol rationing

TEHRAN, Nov 9 (Reuters) Iran, OPEC's second largest oil producer, is launching a system of ''smart cards'' for purchasing gasoline, a newspaper reported, a move which analysts said paved the way for possible fuel rationing next year.

''The distribution of smart cards has started, in order to check the consumption of motorists,'' Mohammad Reza Nematzadehh, a deputy oil minister, was quoted as saying by state-run newspaper Iran.

He did not explain how the smart card would be used to curb consumption but such a method has been mooted in the past as part of a possible plan to ration fuel. The newspaper said motorists would use the cards from March 2007.

''The government wants to establish the system to use it for rationing gasoline when it needs it,'' said analyst Mojtaba Sematian.

Iran lacks the refinery capacity to be self-sufficient in gasoline, importing about 40 percent of its roughly 75 million litres-per-day domestic consumption.

But it subsidises domestically produced fuel and imports so motorists pay the equivalent of just 9 U.S. cents per litre -- a price economists say wastes government funds, encourages waste and fuels a thriving smuggling business to Iran's neighbours.

Earlier this month, parliament approved an increase in the budget allocation for imports of fuel to prevent the need to start rationing fuel this Iranian year ending in March 2007.

The original budget for imports ran out before the end of the year because of high oil prices but officials backed away from imposing politically sensitive restrictions in a country where cheap, abundant gasoline is seen as a right.

Many Iranian officials say Iran's dependence on imported fuel threatens national security, particularly when the country faces U.N. sanctions over its disputed nuclear programme.

President Mahmoud Ahmadinejad's government, which draws much of its support from the poor, may fear a hike in fuel prices or restrictions could spark protests, analysts say.

Asian and European traders watch Iran closely for any suggestion of fluctuation in demand. International trading house Vitol is a major supplier, according to industry sources.

REUTERS SBA RN2030