Positive Projections for Iran's Petrochem Sector

EghtesadOnline: Annual petrochemical output in Iran will reach 100 million tons by 2022, managing director of the National Petrochemical Company said.

News ID: ۷۴۸۳۹۸

11 September 2019

“There are 56 petrochemical companies producing 66 million tons of a variety of products a year,” the NPC news portal Nipna quoted Behzad Mohammadi as saying.

About 35 million tons including ethylene and propylene is used as feedstock in the domestic petrochemical complexes to produce derivatives such as plastics, detergents, solvents, paints, fertilizer, pesticides, synthetic fibers and rubbers. The rest of petrochemical output is sold in national and international markets.

Of the 31 million tons sold, 22.5 million tons are exported and 8.5 million tons is used in the downstream sector by local companies, Financial Tribune quoted Mohammadi as saying.

“Sale of petrochemicals, both in the domestic and foreign markets, generates $17 billion a year,” he was quoted as saying.

With $12 billion earned by exporting various products, the pretrochem sector is placed at the top of the list of non-oil exports. Domestic sales annually generate $5 billion. Petrochemical is Iran's most important industry after oil and gas.

“Iran is producing 350 different types of petrochemicals. We have a comprehensive plan for the quantitative and qualitative development of the petrochemical sector, which will increase product diversity and complete the production chain in the downstream sector to produce value-added products,” the NPC boss said.

With 50% increase in production, from 66 million tons now to 100 million tons in the next three years, revenues will rise to $25 billion – an increase of $8 billion compared to current earnings.

Fighting Sanctions

Iran’s petrochemical export is rising as the country seeks to offset the impact of hostile US economic sanctions, mainly against the oil, banking and shipping industries.

President Donald Trump last year pulled the United States out of the 2015 nuclear deal, which was signed between Iran and six world powers and re-imposed sweeping sanctions.

Petrochemicals constitute more than one-fourth of Iran’s non-oil exports with products destined to 30 countries, namely neighboring states, China, India, Southeast Asia and Europe.

Officials including the NPC chief have said that the US sanctions have “had no influence” on the petrochemical export and it functions as in the past.

The petrochemical industry has played a key role in domestic economic growth as it creates value-added and reduces the sale of oil and gas on which the economy has been dependent for decades.

With abundant hydrocarbon reserves and increase in private sector investments, Iran is struggling to protect its global status in the key sector and broaden its scope.

27 Plants Under Construction

Completion of 27 petrochemical projects in three years will help reach that declared expansion goal.

By the end of the current fiscal (March 2020), four projects will be inaugurated, the most important of which is Kaveh Methanol Complex in southern Bushehr Province, NPC’s Mohammadi said.

Located near the port city of Bandar Dayyer in the Persian Gulf, 120 kilometers west of Assalouyeh, the plant is the largest of its kind in Iran and one of the biggest in the world with daily methanol output of 7,000 tons, or 3.2 million tons per annum.

The private Kaveh Glass Industry Group, which accounts for 60% of domestic glass production, is the main shareholder of the methanol company, which will produce methanol, ammonia, urea and polymers. It is expected to start production before the year is out.

In the next year (March 2020-2021), 16 petrochemical plants will start production and seven more will be operational in the following year.