Iranian Petrcohems Increasing Market Share With Three New Projects

EghtesadOnline: To help expand the value-added chain in the petrochemical industry, three projects that cost $1.6 billion will be inaugurated on Thursday, managing director of the state-run National Petrochemical Company said.

News ID: ۷۵۰۶۲۲

05 August 2020

“Kaveh Methanol Complex in the southern port city of Bandar Dayyer, Bushehr Province, Middle East Kimia Pars Petrochemical Company in the 2nd phase of Pars Special Economic Energy Zone in Assaluyeh, Bushehr Province, and Lorestan Petrochemical Complex in western Lorestan Province will add 4,000 tons to NPC’s annual output that currently is 66 million tons,” Behzad Mohammadi was quoted as saying by IRNA.

Referring to the first venture (Kaveh complex), he said it would increase Iran’s annual methanol production (now 8.3 million tons) by 2.3 million tons.

“Costing $950 million, it is the largest of its kind in Iran and the world and receives 6 million cubic meters of natural gas as feedstock per day to produce methanol, ethylene, sulfur, acetic acid, ammonia, urea and polymers among others.”

The private Kaveh Glass Industry Group, which accounts for 60% of domestic glass production, is the main shareholder of the methanol company expected to annually generate $400 million.

Regarding the second project (Middle East Kimia Pars) that was built at a cost of $600 million, he said the plant needs 1.6 billion cubic meters of gas per year to produce 1.6 million tons of methanol per year.

As part of the project, a Danish catalysis company (Holdor Topsoe) provided licensing, catalysts and equipment for the new plant. Petrofarhang (a subsidiary of the Teachers’ Investment Fund) owns 84% of the plant.

The company is projected to annually earn $300 million.

Lorestan Petrochemical Complex, the third and final undertaking cost $20 million and was built with help from Bakhtar Petrochemical Company. It should manufacture 100 tons of catalysts for different types of polyethylene factories.

Catalyst Market

Referring to petrochemical plants need for catalysts, Mohammadi said the global catalyst market is worth $18 billion of which 2.2% belongs to Iran. Iran’s petrochemical sector uses $400 million worth of catalysts a year most of which is produced locally.

Bidboland Persian Gulf Gas Refinery in Behbahan County, Khuzestan Province, Masjed Soleyman Petrochemical Company's ammonium and urea units in Khuzestan Province and Kangan Petro Refining Complex -- a major petrochemical and refinery project in Bushehr Province -- are slated to become operational later this year.

“The 55 petrochemical companies in Iran, mostly in southwestern Khuzestan Province and Assalouyeh in the Persian Gulf, produced 31 million tons in the last fiscal (ended in March) and exports generated $9.5 billion, the official was quoted as saying.

Export of 23 million tons of petrochemicals in the last fiscal helped offset at least 20% of lost oil revenue. Due to the new US sanctions which took effect in September 2018, daily oil exports are said to be less than 250,000 barrels. But no official figures are available.

Referring to the international petrochemical market, he said prices have fallen by 30% on average in the last seven months due to historic low crude prices (used as feedstock in petrochemical plants) and the unprecedented hammering of economies by Covid-19.

“The best way to offset low petrochemical prices is to product diversity and raising output of value-added goods.”

A feedstock like ethane or propane should be converted into more than one commodity by completing the value chain and development of petrochemical downstream sector.

Regarding Iran’s comparative advantage in the highly competitive world petrochemical industry, such as abundant natural gas for feedstock and domestic production that has significantly progressed, the sector has done a good job in the last two years, he said.

Petrochemicals account for 35% of the country's non-oil exports.