6% Growth in Petrochem Output

“Petrochemical and polymer output exceeded 25 million tons in the first five months of the current fiscal (March 21-August 22),” Jalal Mirhashemi was quoted as saying by ILNA.

This indicates a growth of 6% (or 1.5 million tons) compared to the same period a year ago, he said

An estimated 40% of the products were sold domestically and the rest went to Asia. He did not provide details on NPC earnings in the five months.

“NPC exported 23 million tons of petrochemicals in the last fiscal (ended in March) worth $9 billion, (almost 20% of Iran’s oil revenue in fiscal 2018).”

Close to 34 million tons of hydrocarbons was sold as feedstock to 55 petrochemical plants that produced 31 million tons in 2019, of which 9 million tons were sold to local companies.

Mirhashemi noted that a wide range of feedstock namely propane, ethane and naphtha is converted into value added goods like ethylene, propylene and methanol which are used to produce plastics, adhesives, resins and synthetic rubbers.

Referring to the international petrochemical market, he said prices have fallen by a massive 30% on average in the last eight months due to historic low crude prices and the massive economic devastation caused by the Covid-19 pandemic.

Comparative Advantage

Regarding Iran’s comparative advantage in the huge petrochemical sector, such as abundant natural gas for feedstock and domestic production that has been rising, the industry has resolved most of its problems in the last two years, he said. He did not elaborate.

Petrochemicals account for 35% of Iran’s non-oil exports.

NPC is the regulator of the petrochemical industry. The state-owned company used to be a conglomerate of dozens of petrochemical firms that are now privatized as part of the government policy to downsize curb the bloated bureaucracy.

Calling the petrochemical sector as a driver of economic growth, he said it uses $400 million worth of catalysts a year most of which is produced locally.

Iranian companies annually use at least 23,000 tons of catalysts. Private companies produce 20,000 tons covering most of the demand.

Development Projects

In related news, the news agency quoted Behzad Mohammadi, managing director of the NPC as saying that with the launch of 13 development projects (mostly in Asalouyeh and Mahshahr in the south) by next March, petrochemical production capacity will reach 90 million tons a year from the current 60 million tons.

“The petrochemical industry annually generates between $10 and $15 billion in revenue and this should rise to $25 billion in less than two years,” Mohammadi noted.

There are 28 other projects underway in different cities namely in Masjed Soleyman County, north of Khuzestan Province and Eslamabad-e Gharb County in western Kermanshah Province. When these come into operation (in 2025), annual production will reach 135 million tons in five years, worth $37 billion.

Domestic knowledge-based companies are involved in the construction process of new plants that create jobs and help companies move toward self-sufficiency.

One key mission of the petrochemical industry is to reduce the export of raw materials by completing the value chain in the oil and gas industry and supply feedstock for downstream industries.

Referring to the dire shortage of propylene, the NPC boss said, “The current 200,000 deficit will swell to 700,000 tons in five years” if timely and effective measures are not taken. 

Propylene is a colorless fuel gas with a naturally pungent smell. Although similar to propane, it has a double bond which gives it a combustion advantage i.e. it burns hotter. This fuel gas is extremely flammable and non-toxic. Propylene is obtained by refining gasoline.

Propylene is a strategic item in the petrochemical industries. It can be transformed into value added products like polypropylene in the downstream petrochemical sector.