26 July 2016 - 12:13
  • News ID: 265756

Huge Investment in Kurdish-Populated Areas

Huge Investment in Kurdish-Populated Areas

TEHRAN, July 26 (Shana) -- Plans envisaged under Iran’s Vision Plan indicate that petrochemical industry has been chosen as an option for the country to reduce crude oil and natural gas sales in the coming decades.

TEHRAN, July 26 (Shana) -- Plans envisaged under Iran’s Vision Plan indicate that petrochemical industry has been chosen as an option for the country to reduce crude oil and natural gas sales in the coming decades. As a value-generating industry, the petrochemical sector has been through a growing trend and today one of the major petrochemical projects heavily banked in on is West Ethylene Pipeline (WEP) as well as petrochemical plants it is supposed to feed.     

Addressing the inauguration of one of these petrochemical plants recently, Iran’s petroleum minister Bijan Zangeneh said Iran’s third petrochemical hub will be established after Assaluyeh and Mahshahr.

Over recent years, petrochemical industry has captivated Iranian officials due to its appropriate productivity and revenue generation. WEP is the most important investment project by Iran’s petroleum ministry for the development of Kurdish-populated areas. In case the downstream sector of these plants is also launched the final products could be exported to Turkey and Iraq because there are no petrochemical facilities in eastern Turkey and northern Iraq.

Due to proper infrastructure, Iran’s petrochemical industry is currently on the path of growth and development, but it needs to complete its value chain. Therefore, as long as the upstream oil sector, particularly South Pars gas field, is being developed, downstream industries must be also taken into consideration as a national strategy.

It must be noted that a balanced development of petrochemical industries requires downstream industries everywhere across the country. Iran is currently building the longest ethylene pipeline in the world in its western provinces with the objective of developing its petrochemical industry and generate more value-added from ethane. According to Iranian petroleum industry officials, the total production from petrochemical projects under way in western Iran, mainly for Kurdish-populated areas, will be worth $8 billion by 2017. Petrochemical plants in western Iran are expected to produce two million tons this year. These plants are the third largest producers in the country.

Marzieh Shahdaei, managing director of National Petrochemical Company (NPC), said this pipeline has a capacity up to 3 million tons. So far five compressor stations have been installed on the way of this pipeline. Apart from compressor’s price, this pipeline has so far cost IRR 12,000 billion.

$4.7bn Investment

Investments made in petrochemical plants located throughout the path of WEP total $3.5 billion. Furthermore, $1.2 billion investment is under way.

The bulk of ethane produced at the refineries of South Pars phases is expected to be delivered to Kavian Petrochemical Plant by next March. Kavian Petrochemical Plant is currently operating at 70% of its rated capacity. After ethane is converted into ethylene to be injected into WEP, a major development will transpire Iran’s petrochemical industry.

WEP is the most important and the largest project remaining from the 4th Economic Development Plan for Iran’s petrochemical industry. This project was adopted in 2002 by the then government in order to help underprivileged western provinces make up for backwardness, create jobs, engage the private sector, stimulate production and upgrade technology in the oil sector. The project was planned to come on-stream by early 2008, but due to many changes, technical problems and increased costs, so far the project has almost progressed 80%. Currently, 5,000 staff are directly employed by petrochemical plants under way in western Iran. Once these plants come online, 3,000 more jobs will be created.

Given the existence of upstream plants along the path of WEP, downstream petrochemical industries are expected to produce a variety of petrochemicals and keep this industry away from selling raw materials. After completion, WEP will have the capacity of transferring 3.5 million tons of ethylene. It will receive 2.5 million tons of ethylene from South pars and one million tons from Gachsaran. WEP will feed 11 petrochemical plants.


11 Petchem Plants

The operations for the construction of Hamedan, Dehdasht, Mamesani, Boroujen and Kazeroun sections of the pipeline have yet to start. Like Ilam Petrochemical Plant, Tabriz Petrochemical Plant has moved to build its own connection to WEP.

This pipeline is 2,700 kilometers long and will feed 11 petrochemical plants in Kermanshah, Andimeshk, Lorestan, Kurdestan, Miandoab and Mahabad. On the way of WEP are located Kavian, Lorestan and Mahabad petrochemical plants and Kermanshah polymer plant. WEP takes products supplied by Kavian Petrochemical plant to western areas in Iran aimed at development of petrochemical industry.

Iran’s petrochemical industry, which has been growing rapidly in recent years, will enter a new phase next year as petrochemical plants in western provinces become operational.

Hamedan Petrochemical Plant is in the final phases of its construction and Kurdestan Petrochemical Plant is to come on-stream by next March. The first phase of Ilam Petrochemical Plant recently started production and next year it will be able to run at full capacity as it receives more feedstock.

Undoubtedly, Iran’s western province could soon become an industrial hub as petrochemical industry is being developed there. Then petrochemical products will at times meet domestic needs and be exported. NPC projects' manager recently said that construction of three more petrochemical plants is under way rapidly in western Iran.

Ilam Petrochemical Plant is close to coming online, and startup of several petrochemical plants in western Iran will remove impoverishment and provide the infrastructure for development in underprivileged areas.

WEP is currently in its final stages and enjoys full backing of NPC. 

Abbas Sha'ri-Moqaddam, former NPC managing director, said one of the major challenges to WEP is local opposition that has so far caused problems for the contractor of the project. Provincial officials do not want to offend local people; therefore, they take no action to resolve this problem.

He said that WEP is fully operational between Assaluyeh and Miandoab, adding: “At present, Morvarid, Ilam, Lorestan, Kurdetan and Kermashah are being fed by this pipeline.”

Sha'ri-Moqaddam said ethylene has not yet been injected to the pipeline between Miandoab and Mahabad due to local opposition.

Shahdaei recently said WEP is 80% completed, adding: “Currently, the second phase of Kavian Petrochemical Plant is ready to come online and is waiting to be fed with ethylene by this pipeline.”

She added that WEP can create new jobs in the area as several petrochemical plants will start operation.

State-run or Private?

The only body competent to decide about WEP to remain in state hands or be privatized is the government because maintenance, control and protection of the pipeline and accountability to consumers of ethylene is a significant and sensitive issue.

The government assigned the construction of WEP to Ministry of Petroleum in 2002. At that time, the project was supposed to cover Kohguiluyeh Boyer Ahmad, Kermanshah, West Azarbaijan and Kurdestan provinces where petrochemical plants were supposed to be built. But after some time more provinces were added to this project.

After Article 44 of the Constitution took effect, petrochemical units lying on the way of WEP were totally privatized. However, no decision was taken about the pipeline itself in the Cabinet. This issue is now a complicated affair for petrochemical industry because maintenance of this pipeline and the ethylene it carries is very sensitive and costly.

This pipeline is unique in the world because of its length. Petrochemical officials recently said a competent and qualified company is expected to be assigned the startup operation of WEP without being put out to tender. But there is still no word on the privatization of the pipeline itself.  A scenario speculated from the past about WEP has been its cession to Kavian Petrochemical Plant as the main producer of ethylene. But conditions have changed and a single company is now both producer and consumer of ethylene.

Byproducts

Production of some alcoholic substances, agricultural consumption, production of chemicals and other special substances are among other advantages of ethylene transfer by this pipeline. These advantages along with other usages of ethylene for various polymer productions have given a boost to ethylene production and transport by capsule in the market, which shows the high value of this product.

A major point in the policies of the Resilient Economy instructed by Supreme Leader Ayatollah Ali Khamenei has been to avoid the sale of crude oil and natural gas.

It is common knowledge that besides crude oil, what keeps Iran safe from fluctuations in the global economy is sustainable development which implies generation of value-added.

WEP can serve the economy of western Iran the most. This pipeline and petrochemical plants on its path have the capacity to play an important role in upgrading Iran’s economic standing, eradicate unemployment, create jobs and generate revenues for western Iran.

Getting more profits through creating a perennial market for petrochemical products, supplying products in consistency with the market’s taste and for getting more profits, helping national macroplans and sustainable job creation in the country, presenting an alternative model for downstream petrochemical development instead of upstream petrochemical development across the country, clearing the way for further contribution of the private sector to the country’s development plans and helping implement Article 44 of the Constitution, the necessity of taking into consideration complementary industries indirectly at the NPC mix and reducing possible risks and shortcomings resulted from international sanctions are among the advantages of development of downstream petrochemical industries alongside important projects like WEP in western Iran.

 

Courtesy of Iran Petroluem

News ID 265756

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