Behzad Mohammadi, CEO of National Petrochemical Company (NPC), sees the current calendar year as the golden year of the petroleum industry as “17 projects would have come online” by the end of the current calendar (20 March 2020). That along with five other projects which have recently come on-stream, would rise Iran’s petrochemical production capacity to 91 million tonnes. Last year, Iran’s petrochemical production capacity stood at 66 million tonnes. The figure is set to reach 100 million tonnes by 2021, when the second administration of President Hassan Rouhani would bow out.

In the wake of the 1979 Islamic Revolution, the petrochemical industry has been through a difficult path. In 1997, Iran’s petrochemical products were valued at $1 billion. By bringing development projects into operation in the Bandar Imam Special Petrochemical Zone and Phase 1 of Assaluyeh, Iran brought its petrochemical production capacity to 56 million tonnes by 2013, valued at $15 billion.

The first jump in Iran’s petrochemical industry occurred during the 2013-2017 period. The second jump covers the 2017-2021 period, while a third jump is envisaged for the 2021-2025 period.

After the end of the second jump, Iran would see its petrochemical production capacity reach 100 million tonnes a year, worth more than $25 billion. In the third jump, the petrochemical production capacity will exceed 130 million tonnes annually, valued at $37 billion.

Solid Preparations

Iran’s Minister of Petroleum Bijan Zangeneh believes that solid preparations have been made for the future of the petrochemical industry, noting that these projects were not bound to just making planning, as some of them have made good physical progress. These projects would increase the value of petrochemical industry production from $12 billion registered in 2013 to $37 billion in 2025.

Mohammadi has taken a step further, sating Iran would dominate the region’s petrochemical industry after the third jump has materialized.

The Rouhani administration bows out in 2021. Some critics have said no new project had been started and no capacity building had been done under his double administrations. But statistics confirm exactly the contrary. In 2013, 46 petrochemical plants were operating with an annual production capacity of 56 million tonnes while 67 incomplete projects with an annual capacity of 59.4 million tonnes were transferred from the 10th to the 11th administration. Only 12 of them had physical progress of over 60%.

Mohammadi said the projects that had started under the 11th administration had a progress rate of 40-50%.

He added that each petrochemical project required four to five years to come online. “We are now in the 7th year of the [Rouhani] administration and some projects were legacy of the previous administrations that had to be completed.”

Legacy for Future Administrations

Mohammadi said it was natural to hand over some projects to future administrations for completion.

Citing an example, he said: “The Hegmataneh petrochemical project in Hamedan had started in 2017, but it was inactive until last year with 90% progress. But owing to negotiations with [Minster of Petroleum Bijan] Zangeneh for financing, this project is set to come online this year with an output of 40,000 tonnes of medical-grade PVC, which is being produced in Iran for the first time.  

He said that the legacy of the Rouhani administration for future administrations would be the methanol, propylene, ethylene and benzene projects.

The ground would be broken for these projects, but their completion would fall upon future administrations.

It has also to be noted that for the completion of the propylene chain, an initiative is being designed for the production of about 1.5 million tonnes of propylene.

Mohammadi said: “Four giant mixed feedstock projects worth about $11 billion are envisaged, which would enhance the petrochemical industry capacity by 11 million tonnes.”

He added that the ground was broken for the Arghavan petrochemical plant, financed by the Pension Fund of the Islamic Republic of Iran Broadcasting. Two other projects are being financed by the Persian Gulf Petrochemical Industries Company in Assaluyeh and one by the Parsian Oil and Gas Company in Siraf.   

He said the newly envisaged projects would be instrumental in supplying feedstock to petrochemical plants. He added that half of the petrochemical feedstock needed in the country would be supplied by these new projects.

Mohammadi said propylene was a valuable petrochemical product, adding that a propylene park in Assaluyeh, three projects in northern Iran, one project in the Anzali free zone and one in Eslamabad Gharb had been defined to produce propylene from methanol. They would bring the propylene production capacity to 4 million tonnes a year from the current 1 million tonnes. The volume of investment and production is low in the downstream projects of the propylene chain, but the output is of higher quality. Increased propylene production would significantly enhance the downstream sector development of this chain. That may explain why Mohammadi is assured that all projects set for 2025 would come online on schedule.

Highlighting the growing number of Iran’s rivals in the petrochemical trading, he said: “That is why we would be reaching 100 million-tonne production capacity by 2021 in a bid to have a sustainable industry that would be resilient to harmful developments.”

Iran’s Position After 3rd Jump

In addition to the 2nd and 3rd jump projects, NPC eyes 34 new projects with a total investment of $17 billion for a production capacity of 19 million tonnes.

Mohammadi said that realization of the 3rd jump objectives in 2025 would give the top ranking in the petrochemical industry to Iran in the region.

“Given Iran’s top global position in terms of oil and gas reserves combined, developing the petrochemical industry with this amount of feedstock would be a must,” he said, adding that the new petrochemical projects would offer combined feedstock to plants.

He enumerated feedstock, technical knowhow, capital and market as the four pillars of development, saying: “Under the conditions of sanctions where eyes are moving from oil sales away to the petrochemical industry, we need to direct the market so as to bring about diversity to attract customers.”

Courtesy of Iran Petroleum