According to the NPC, Hassan Abbaszadeh said Tuesday during a TV program that two petrochemical projects in the Assaluyeh region were inaugurated last week by presidential order, pushing the country’s installed petrochemical capacity past 100 million metric tons.

Abbaszadeh said the petrochemical sector is a process-based, integrated value chain that begins with upstream feedstock production and moves through intermediate products to final goods supplied to consumers and downstream industries. The 100 million tons of installed capacity is distributed across this chain, he added.

Upstream Investment by Petrochemical Companies

Abbaszadeh said one of the industry’s main challenges in recent years has been feedstock shortages, noting that investors, in addition to expanding petrochemical plants, have invested in upstream projects such as field development and the recovery of associated and flare gases.

He said about 30% of capacity dedicated to feedstock supply has been created by petrochemical industry players themselves. Other capacity includes basic and semi-finished products such as methanol; chemical products including ammonia and urea; polymer and aromatic products; and various fertilizers, with fertilizer production capacity reaching about 7 million tons.

Abbaszadeh said about 20% to 22% of installed capacity has remained idle in recent years, adding that studies show roughly 70% of the unused capacity is due to feedstock shortages, particularly natural gas.

 Winter Gas Demand Limits Industrial Supply

The deputy oil minister said gas supply to industries, including petrochemical plants, faces constraints during the cold season as household consumption rises, leading to lower output and underutilization of installed capacity.

He said since the start of the 14th administration, serious medium-term programs have been designed and implemented to compensate for idle capacity and secure sustainable feedstock. A key pillar of these efforts is broad investment in recovering associated and flare gases, much of it led by the petrochemical industry.

Abbaszadeh said investments are underway in West and East Karoun, Dehloran and Ilam to recover associated gas from oil production. Since the start of the current year, 14 flares have been shut down and gases that had been burned for years have been returned to the production cycle.

Targeting 57 Flares for Shutdown

He said a significant portion of these projects is being carried out under the Bidboland Persian Gulf flare gas recovery project, which targets the shutdown of 57 flares. Part of that goal has been achieved this year, and full implementation is expected next year.

Abbaszadeh noted that most gas flares fall under the National Iranian Oil Company and the National Iranian Gas Company, while the petrochemical industry has entered flare and associated gas recovery to secure stable feedstock. He said investments have focused mainly on associated gas in Khuzestan province and neighboring regions.

He said the petrochemical industry aims to recover about 26 million cubic meters per day of flare and associated gas by the end of next year. Overall, nearly 50 million cubic meters of gas per day is flared or burned as associated gas nationwide, much of which is planned to be recovered with participation from various industries, including petrochemicals and private investors.

South Pars Flare Gas Recovery

Abbaszadeh said additional flare gas projects are located in the South Pars region and other parts of the country, where private investors are implementing recovery plans. He said flare gas recovery faces technical challenges, including dispersed flare locations, varying outlet pressures and the sour nature of some gases.

Despite past efforts by the Oil Ministry, the National Iranian Oil Company and the NPC, Abbaszadeh said flare and associated gas recovery has become a top priority under the 14th administration, with presidential backing.

Responding to a question on the economic viability of the investments, he said sourcing feedstock from flare gas is fully economical for the petrochemical industry over the long term. He added that the Seventh Development Plan provides new incentives, allowing investors involved in flare gas recovery or upstream field development to retain 100% of the benefits from recovered gas.

Abbaszadeh said the legal incentives have boosted the attractiveness of investment, noting that all flares put out to tender have secured investors. He added that the National Iranian Oil Company has issued new calls for remaining flares without investors, and the projects are expected to be completed soon.