13 July 2021 - 14:25
  • News Code: 318541
Petchem Output Set to Grow 10mt 

TEHRAN (Shana) -- Iran’s petrochemical production capacity has been growing over the past eight years. Despite tough sanctions imposed on Iran’s petroleum industry, the petrochemical sector has constantly exported products to become a major source of revenue for Iran.

Born more than 50 years ago, Iran’s petrochemical industry is now endowed with a 90-million-tonne production capacity, which is set to reach a record 100 million tonnes by next March, i.e. at the end of Iran’s current calendar year.

Behzad Mohammadi, CEO of National Petrochemical Company (NPC) told a press conference the petrochemical industry earned Iran $15 billion in revenue from domestic and foreign sales of petrochemicals, last calendar year.

He told "Iran Petroleum" that foreign investors were yet to hint at cooperation with Iran as hopes are growing for the revival of the 2015 Iran nuclear deal and concomitant removal of US sanctions. “However, if investors want to cooperate with the Iranians we need their cooperation in the technical knowhow sector.”

The following are excerpts from Mohammadi’s remarks:

Foreign Savvy Needed

“Many foreign companies left Iran, as sanctions were restored. Now, the return of these companies depends on the political circumstances in the country. As long as necessary conditions are not fulfilled, we have to go ahead as we are doing now. But generally speaking, if we take a look at the petrochemical industry in terms of development, production and exports, we will find out that we have been largely resilient. Therefore, it could be argued that our conditions were not severely affected by sanctions. Of course, we could have fared much better in terms of development; however, the petrochemical industry has an acceptable record now.

As JCPOA talks go ahead, we have not received any serious signal from foreign investors, but there are signs of overture and better atmosphere for external communications. As far as cooperation with foreign investors is concerned, the petrochemical industry needs the partnership of major foreign companies for providing investment and technical knowhow. In some points, we need to use foreign technical knowhow.

Petchem, Key Chapter in Iran-China Pact

“Following the Iran-China 25-year cooperation pact, we have not yet had any talks with the Chinese, but petrochemicals constitute a very significant chapter in the pact. We have listed incomplete projects and those that need finance. Our projects are incorporated in this package, but we have not held talks to discuss details. The petrochemical industry supplies nearly 35% of national hard currency generation. Last [calendar] year we met our commitments for hard currency generation for the Central Bank at 150%. The petrochemical industry has been highly instrumental in stabilizing the economic conditions in the country.

Petchem Exports at 25mt

“Last calendar year, despite restrictions caused by sanctions, as well as decline in demand due to the coronavirus pandemic, we exported 25 million tonnes of products, which yielded $10 billion. We also sold 10 million tonnes on domestic markets for $5 billion. There is no other industry in the country to supply 10 million tonnes of products to its downstream sector. Such amount of products would result in prosperity and unrivalled job creation at 15,000 small and large-sized enterprises in the downstream sector of the petrochemical industry. Last calendar year, 40 varieties of chemicals as well as about 340 grades of polymer products were supplied on the market. By 2025, when new projects become operational, 20 new products would be added to the petrochemical mix and the mix would become more diverse.

Petchem Output Capacity Up

“The annual growth in demand for petroleum products is less than 0.9% at the global level. The rate stands at about 5% when it comes to petrochemical products, an important sign of necessity for the further development of the petrochemical industry. Therefore, we need to use rich oil and gas deposits as feedstock and follow a roadmap towards quick and smart development of the petrochemical industry and generation of wealth. Fifty-eight years have passed since establishment of petrochemical industry in Iran. The petrochemical production capacity was 65 million tonnes in the Iranian calendar year to March 2020. Implementation of 17 new projects has brought the figure to 90 million tonnes, a historic record in this industry. Among the second jump projects, 10 remain to become operational. They have had 84% progress, which would come online by March 2022. Then, the petrochemical production capacity would reach 100 million tonnes, which would mean that the petrochemical development target has been met. In the third jump projects, 40 are now active, whose operation would bring the production capacity up to 135 million tonnes by 2025. Then, Iran’s ranking in the supply of basic products in the Middle East would escalate from the second to the first.

50 Projects Up to 2025

“But regarding selling crude oil, natural gas and derivatives, it is noteworthy that last calendar year 40 million tonnes of feedstock including natural gas, ethane, gas condensate, rich gas, naphtha and kerosene was received from the petroleum industry, which is 1 mboe/d. By 2025, when 50 more petrochemical projects are expected to come online, the figure would reach 2.2 mboe/d which means shifting from crude selling toward creating value added. Currently, 67 petrochemical plants are operating. Once the projects left from the second jump come online by the end of the current calendar year, the number of operating plants would reach 77. Last calendar year, 62 million tonnes of products was produced in the petrochemical industry, 27mt of which was exported and 35mt of which was consumed by the petrochemical industry. Generally speaking, 30% of products is consumed by domestic industries while the remaining 70% would be exported to various nations.

$105bn Investment in 58 Years

“The investment made in the petrochemical industry since the beginning would have reached $105 billion by 2025. So far, the figure stands at $79 billion which would go up to $82 billion as the second jump’s remaining projects come online. In a bid to develop the value chain, supply downstream industry needs, diversify the mix of products and reduce imports of costly products, 33 projects in 6 chains have been introduced to investors as opportunities for investment. So far, permission has been given to 15 projects whose capacity is estimated at 3.3 million tonnes with a total investment of $3.5 billion. Once operational, these projects would add 18 new products to the petrochemical mix, thereby allaying downstream industries’ concerns with regard to raw materials supply. Furthermore, the $1.3 billion spent on imports would be cut by 70%. The most significant chain for these new projects is the propylene chain to help make up for shortages in the country. Therefore, where there is no methanol, propylene would be produced form natural gas and propane. We are determined to enhance propylene production capacity from the current 1 million tonnes to 4 million tonnes by 2025.

Petchem Catalysts Homegrown

Last calendar year, the technical knowhow for the process of propylene production from methanol was unveiled. For the first time in the petrochemical industry we saw the construction of a mega petrochemical project with fully Iranian technical knowhow to supply propylene, a strategic product. That is why NPC has been pursuing this project. The process of domestic development of petrochemical knowhow is being pursued quickly in other products, too. Currently, 85 catalysts are annually used in the petrochemical industry, worth $275 million. Twenty petrochemical catalysts have been domestically manufactured and 16 others would be produced by next March. By the end of the current calendar year, $200 million of the $275 million mix of catalysts would have been domestically manufactured. We are faring better in the petrochemical catalyst production than in other sectors. Although we are under sanctions, many private companies have established direct communications with suppliers of technical savvy and they have managed to acquire their necessary technical knowhow. But I have to recall that the petrochemical industry relies on global technical knowhow, and in case of having more access to it, developing the petrochemical industry would be much easier.

Courtesy of Iran Petroleum

News Code 318541

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