14 December 2021 - 15:20
  • News Code: 450357
Iran Eyes Mideast Top Petchem Position

TEHRAN (Shana) -- Laying emphasis on development of the downstream sector of the petrochemical industry, paying attention to its high added value and planning for development of the petrochemical industry is currently the most important axis of profitability of the petrochemical industry in Iran. Minister of Petroleum Javad Owji has said Iran’s petrochemical exports will reach $4.8 billion in the current calendar year.

According to official statistics, supply of petrochemical products increased from 3 million tonnes in 1978 to 83.5 million tonnes last March, and currently 50 projects in the second and third jump of the petrochemical industry are in various stages of implementation. With their full operation, Iran’s petrochemical output capacity would reach 130 million tonnes by March 2026. In this production forecast, special attention has been paid to meeting the needs of downstream petrochemical industries as the most important source of employment in the petrochemical industry chain.

With the production of 30 million tonnes of basic products of petrochemical industry, Iran has been able to take the second place in the region in this field and according to projections, implementation of the second and third jump petrochemical projects, by the end of the seventh national development plan, petrochemical production in Iran will increase to 57 million tonnes, which will not only elevate Iran to the top position in the region in this sector, but will also move the growth and development cycles of downstream petrochemical industries more rapidly and will lead to creating more job opportunities and economic prosperity. .

The result of this event is the creation of higher added value for the petrochemical industry and the production of a diverse range of different products in this industry that will meet the different needs of the country. According to Minister Owji, there are more than 65 petrochemical plants in the country with a total production capacity of 40 million tonnes. Iran is forecast to export $4.8 billion worth of petrochemicals in the current calendar year.

8% Output Hike

According to the statistics provided by the National Petrochemical Company (NPC), petrochemical plants produced 32.8 million tonnes of petrochemical products in the first six months of the current calendar year and supplied them onto global markets after meeting domestic demand.

According to Jalal Mirhashemi, NPC production control director, the priority of production is to meet domestic needs, and then exports are handled. For the same period in the last calendar year, an eight-percent increase in production has been recorded.

Iran's petrochemical industry is one of the most important pillars of development and the driving force of various sectors in the country's economy.

Infrastructure has been provided for the materialization of the production leap in the Iranian petrochemical industry, and in addition to launching and operating new projects, the untapped production capacities of some existing plants will be used to maximum capacity in the current calendar year.

According to the petrochemical industry roadmap, a total of 10 projects of the second jump are still to be put into operation, and 40 projects in the third jump are among the projects that will be put into operation in coming years. It turns out that this group of 40 projects will enhance the capacity of this industry from the current 100 million tonnes to 133 million tonnes, which would require $20 billion in investment.

Petchem Diversity

The petrochemical industry supplies a variety of products, including several main groups such as polymers, chemicals, aromatics, fertilizers (in agriculture) and hydrocarbons used as fuel and feedstock. With the current capacity available in the petrochemical industry of 35 million tonnes per year of products enter the market, which in addition to the benefit of downstream industries in the country from these products, whose surplus is exported. At present, according to the officials, what can be sold inside is not more than 30% and more than 70% of Iran's petrochemical products are exported.

Last calendar year, about 40 million tonnes of upstream sources, i.e. hydrocarbons, were absorbed in the petrochemical industry, which is equivalent to 992,000 boe/d; however, the largest volume used in upstream sources is natural gas. The use of natural gas as feedstock to produce petrochemicals would create three times more value-added, while completing the value chain would enhance the output by a factor of 30.

25% Share of Petchems

Petrochemical products have a large share in Iran’s non-oil exports, so with the decline in oil revenues due to unilateral US sanctions against Iran's oil exports, attention was paid to non-oil exports to increase foreign exchange inflow into the country. This issue became so important that the new administration emphasized it in the very first days of its inauguration, and even the issue of trade and foreign exchange policy and ways to increase and develop non-oil exports were discussed.

10% Higher Share for Petchems

Hassan Abbaszadeh, NPC director of planning and development, touching on the petrochemicals’ share of non-oil exports, said: “Non-oil exports cover a variety of products including minerals, agriculture products and petrochemicals among others.”

According to him, last calendar year, due to the fact that the price of petrochemical products in the world markets was reduced due to falling oil prices and the prevalence of the coronavirus, petrochemicals exports accounted for 25.2% of non-oil exports, up from 23.89% the year before. Accordingly, the country's total revenue from non-oil exports is estimated at $35 billion, of which $9 billion was the share of petrochemical products.

He said the $9 billion revenue was realized while Iran had forecasted $12 billion, which did not materialize due to the coronavirus and falling prices.

But at the beginning of the current calendar year, the price of petrochemical products strengthened and it is estimated that petrochemical export revenue will reach $14 billion in the current calendar year. The performance of the last 5 months also shows that it is possible to reach $14 billion in revenue in the current calendar year.

According to officials, it seems that due to the increasing trend of petrochemical production in coming years, the share of petrochemicals in non-oil exports will increase by 10%.

Mideast Share Up 2%

According to available statistics, Iran's share of the Middle East petrochemical trade in the calendar year to March 2020 was 20.2% and in March 2021 it reached 22.1%, which indicates a 2% growth.

According to experts, there are different indicators to measure the state of petrochemical production in the world. In terms of production capacity in 2019, Iran had a 2.5 percent share of the world's petrochemical production, which is due to the second jump of petrochemical industry projects.

Iran's share of global petrochemical production capacity is increasing while most countries are working to improve their capacity. Iran has had a major contribution to the Middle East’s share. Iran accounted for 24.9 percent of the petrochemical capacity of the Middle East region in 2019, which increased to 26.5 percent a year later.

At present, about 70% of Iran's petrochemical products are exported. Iran's share in the world petrochemical products trade in 2019 was about 5.3 percent and by last March, due to increased exports, it reached 5.9 percent.

Basic Products

Iran now has a production capacity of 30 million tonnes of petrochemical core products such as methanol, olefins, ammonia, and aromatics among others. It comes second only behind Saudi Arabia in the Middle East, but with the implementation of ongoing petrochemical projects, by March 2027 this capacity would increase to 57 million tonnes a year, making Iran the first in the Middle East, well ahead of Saudi Arabia with 48 million tonnes of capacity.

The importance of producing core petrochemical products is that these products are the main products in the value chain of this industry.

At present, Iran's share of petrochemical revenues stands at $17 billion. The value of petrochemical and chemical products in the world is estimated at $3.7 trillion annually, which of course includes all petrochemical and chemical products, including even pharmaceutical chemical products that have a high value per gram and are not included in the petrochemical mix. Therefore, a comparison is out of context.

At present, according to planning, the production capacity of petrochemical products will reach 95 million tonnes by next March, while it is predicted that the production capacity of petrochemical products in Iran would reach 100 million tonnes next calendar year as new projects come online.

By March 2026, the production capacity of petrochemical products will increase to 136 million tonnes with the total revenue estimated at $37 billion.

Focus on Value Chain

The fourth jump in Iran’s petrochemical sector has been decided. The focus would be on the projects to complete the value chain. These projects are classified under three categories.

The first group would add 20 new products to the petrochemical mix and would put an end the need to importing $103 billion of petrochemicals.

The other group of projects in the fourth jump of petrochemicals includes 3 combined feedstock projects. The implementation of these projects, which require $12 billion in investment, will add 15 million tonnes to the country's petrochemical capacity.

The third group in the fourth jump is to pay attention to the production of propylene. The production of propylene is followed through by converting propane to propylene and converting natural gas to propylene in the country.

Therefore, Iran would be making more than $50 billion in revenue from the petrochemical industry by 2027, up 230% from 2020.

A total of 50 petrochemical products would have come online by March 2026, which would bring the production capacity to 135 million tonnes a year.

Last calendar year, 25 million tonnes was added to the petrochemical production capacity. The same year, 34 million tonnes of final products were sold for $15 billion.

According to plans, 43 million tonnes of products would have been supplied this calendar year, 33 million tonnes of which would have been exported. For the first time, Iran would be gaining $21.5 billion from the petrochemical industry.

The next step in the petrochemical industry would cover 47 projects, which would bring the petrochemical industry revenue to $50 billion by 2027.

With the implementation of these projects, the total investment in this sector would have increased to $125 billion by 2027.

By Mahnaz mohammadgholi

Courtesy of Iran Petroleum

News Code 450357

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