Major Petrochemical Deals Expected in Three Months

EghtesadOnline: Iran's state-owned petrochemical company is planning to finalize preliminary agreements on licensing and construction projects in the next few months in what could see the world's top energy firms return to Iran's petrochemical market after years of absence.

News ID: ۷۴۳۸۵۰

19 September 2017

Marzieh Shahdaei, chief executive officer of the National Petrochemical Company, said her company is in the process of evaluating and finalizing a host of petrochemical memoranda of understanding with foreign companies, ISNA reported.

"We expect some of the preliminary [petrochemical] deals with foreign companies to come to fruition within three months," Shahdaei said.

She added that it could take longer to hammer out the details of bigger petrochemical ventures by western investors, according to Financial Tribune.

"The result of some petrochemical ventures will be announced through the second half of this [fiscal] year" that ends in March 2018, the NPC chief said, underlining the prospective collaboration with France's Total and Royal Dutch Shell among the biggest petrochemical deals after last year's lifting of sanctions.

"There are a handful of other big names in negotiations, but they insist their names not to be publicized," she added.

Total and Iran reached a preliminary agreement this year to build three petrochemical plants, with a total capacity of 2.2 million tons, in a deal that, if finalized, could see the French oil major investing up to $2 billion in Iran.

The agreement entails the development of two plants to produce a special grade of polyethylene, each with an annual output capacity of 500,000 tons, and an ethylene production project via cracking of ethane with 1.2 million tons in annual production capacity.

Shell also signed an agreement with NPC last year on expanding cooperation in the petrochemical industry.

The Anglo-Dutch company has agreed to invest $350 million in a major petrochemical project in Ibn Sina Petrochemical Complex located in Hamedan Province.

According to Trend News Agency, the agreement with Shell could pave the way for the energy giant to invest $6 billion in Iran's energy and petrochemical projects.

Production

According to Shahdaei, Iran's petrochemical production is forecast to reach 60 million tons in the fiscal 2017-18, nearly 20 times more than its production level after the 1979 Islamic Revolution. Nominal production capacity is slated to reach 72 million tons annually upon the launch of new petrochemical ventures over the next six months.

"The lifting of sanctions helped us improve trade ties with foreign petrochemical companies," she said, adding that NPC is in a race with Turkey for emerging petrochemical markets in the region, including Iraq and Pakistan. NPC said last week that 22.6 million tons of petrochemicals worth $4.6 billion were exported in the first five months of the current fiscal year (March 21-Aug. 22).

The government is on a drive to renovate petrochemical facilities and attract know-how in Asalouyeh and Mahshahr, two southern cities along the Persian Gulf coasts housing Iran's largest petrochemical plants. "The technology for producing polymers in Mahshahr and Asalouyeh belongs to over 10 years ago. We need to upgrade the technology and bring in investment," Shahdaei said.