Petrochem Development Will Help Mitigate Sanctions Effect

"The development of petrochemical industry is one of the effective strategies to tackle looming US sanctions," Masoud Pezeshkian was also quoted as saying by NIPNA, the National Petrochemical Company's news agency. 

US President Donald Trump unilaterally withdrew the US from Iran nuclear deal in May.

"Petrochemical initiatives have the potential to help the country circumvent sanctions by generating revenues," Financial Tribune quoted Pezeshkian as saying.

According to the official, now that the US is intent on creating economic problems by impeding oil exports, reducing the bloated bureaucracy in petrochem sector, which slows down its development, should be a top priority.

Pezeshkian noted that the Majlis should speed up the ratification process of laws that can help revive the industry. 

Energy experts believe that amending inefficient laws and passing more effective ones can boost the potentially lucrative business by encouraging the private sector.

"The abundance of natural gas as feedstock for petrochemical projects gives Iran a distinctive advantage," he said, adding that the more the value-added chain is completed, the less crude will be required to be exported.

"Petrochemical commodities account for 35% of the country's non-oil exports," he said, adding that such products can grab a bigger share of the international markets if the role and authority of the state-owned National Petrochemical Company expands. Iran ranks second in the world in terms of natural gas reserves and third in terms of oil reserves, having 18% and 9% of the world's oil and gas reserves respectively.

  Empowering NPC

The official emphasized that by stipulating NPC’s scope of authority, the company will have greater autonomy to pursue its goals.

NPC is the chief regulatory body in the petrochemical sector. The state-owned company used to be a conglomerate of dozens of petrochemical firms that are now privatized as part of the push for downsizing the bloated bureaucracy.

According to Fereydoun Hassanvand, the head of Majlis Energy Commission, empowering the petrochemical industry will create more jobs, help Iran diversify its economy and reduce dependence on oil export revenues.

Underlining the petrochem sector as a driver of economic growth, he said a parliamentary committee, affiliated to Majlis Energy Commission, has been established to help ease regulations and cut red tape to facilitate investment.

The lawmaker said creating new investment opportunities for private companies is a priority of the committee.

Tehran is making efforts to double annual petrochemical production capacity from around 60 million tons by opening up the sector to investors. It has said over $70 billion in investments are needed for 80 major petrochemical projects. The country aims to diversify its economy that is largely dependent on oil revenue and make better use of hydrocarbon reserves by producing petrochemicals with higher value-added.

The petrochemical sector is Iran’s second biggest industry after oil and gas.