Currently, Iran holds 25 percent of the Middle East and 2.5 percent of the world petrochemical production capacity, making it the second largest producer of petrochemicals in the Middle East after Saudi Arabia. This is while big profits lie in the downstream petrochemical industry.

The pattern of development of the petrochemical industry is totally different from the past, the development of this industry in a period of high tonnage was the focus of feedstock and capacity building, but now in addition to maintaining these conditions, we must move towards chain development by looking at the world and paying attention to more details.

Therefore, petroleum industry managers are required to switch their focus from project implementation to project analysis based on market conditions and other factors. Development of this industry should be based on global development, supply and demand. For instance, last calendar year, $1.3 billion of petrochemical products were imported and therefore necessary feedstock should be provided for petrochemical plants.

Recently, a movement towards development of the petrochemical industry has begun with the aim of completing the value chain in Iran, and based on this, implementation of 33 projects has been defined as “driver projects” for the purpose of using diverse petrochemical feedstock throughout the value chain in order to activate small-sized industries, as well as industrial and chemical parks. According to the plan, with the implementation of driver projects in 6 different chains, about 3.5 million tonnes of feedstock will be allocated to downstream industries. Three groups of combined feedstock projects, propylene production and drivers are considered as strategic projects of this industry. Three combined feedstock projects, 11 propylene production projects and 33 driver projects are defined in 6 chains based on the market needs, whose investment is low.

Value-Added Creation                                                                                                                                                                

Minister of Petroleum Javad Owji has concentrated his plans on lowering raw material sales and creating value-added, particularly in the petrochemical industry. He has said that one way of overcoming sanctions would be to convert crude oil to products because during the past years of sanctions, supply of petroleum products has not been problematic. Meantime, the Iranian parliament has adopted a law on supporting development of downstream industries. Therefore, Minister Owji may benefit from this law and outline plans in support of development of the value chain with the help of the private sector and investors, which would also supply feedstock to downstream industries and support establishment of petrochemical parks. Planning for the value chain completion alongside petrochemical projects are among Iranian policies based on resilient economy.

Petrochemical exports have earned the country $9 billion in revenue since the beginning of the current calendar year. However, the reality is that Iran’s share of the global petrochemical trading is not as much as it deserves.

A key and unrivalled attractive point regarding investment in the petrochemical industry is long-term feedstock supply with high diversity. One interesting point is that there are eight feedstock categories in Iran’s petrochemical industry: natural gas (27%), ethane (14%), rich gas (17%), gas condensate (23%), kerosene (1%), NGL (10%), naphtha (7%) and platformate (1%). Iran cannot increase its natural gas exports now, but it may develop its petrochemical industry to convert natural gas to products and create value-added.  

Petchem Jump

The total investment in 56 petrochemical plants in Iran totaled $53 billion in 2019, but the figure has now jumped to $70 billion in 83 plants, which would reach $93 billion by 2025. During last calendar year, 17 petrochemical plants came online to add 25 million tonnes to the petrochemical production capacity. Currently, the petrochemical production capacity has reached 90 million tonnes, supplied by 64 plants. With the completion of 65 new projects up to 2027, the figure would increase to 135 million tonnes.

According to plans, 43 million tonnes of petrochemical finished products would be manufactured in the current calendar year, 33 million tonnes of which would be exported, and the remaining 10 million tonnes would be distributed in local markets. In the current calendar year, more than $21.5 billion in revenue would be produced by the petrochemical industry, which would be a new record in this sector.

In terms of revenue, the petrochemical industry would see its income reach $37 billion by 2025, which would rise to $53 billion by 2027. That indicates the key role of the petrochemical industry in Iran’s macro-economy. The petrochemical industry would be receiving 2 million barrels of oil equivalent per day (mboe/d) as feedstock in 2025, which would increase to 2.3 mboe/d by 2027. 

PP and Value Chain

In recent decades, the petrochemical industry in Iran has witnessed significant production jumps in its upstream sector, so that today a significant part of Iran’s non-oil exports to world markets are products that originate from petrochemical products. Meanwhile, the lack of propylene and polypropylene as the main material for the development of the petrochemical value chain has always been one of the major causes of concern for the market.

Iran has long been grappling with the shortage of PP. Iran’s PP production by 2025 would be only 4% of total petrochemical output. This share stands at 18% for the world, 21% in China, 17% in the US and 16% in Saudi Arabia.

The value chain development for petrochemical products in Iran relies on quality upgrade and smart development. The ground has been prepared for PP chain projects following adoption of bylaw for building midstream and downstream petrochemical plants.

The current administration has also adopted a decision which comprises two sections. The first section is about construction of midstream and downstream petrochemical units with private and cooperative investment for transferring propylene into the country with a view to spatial planning and sustainable job creation, which would facilitate development to the valuable propylene chain in the country. The second section considers discount in feedstock supply.

Iran’s petrochemical imports mainly concern the propylene chain. Iran spends about $600 million on propylene imports, or 40% of the total sum allocated for petrochemical imports. Currently, Iran is producing 1 million tonnes of propylene, which is planned to reach 4 million tonnes by 2026.

A major element in developing propylene production projects in Iran is to provide its technical knowhow. PDH, GTP and MTP projects would bring the propylene production capacity to 4.5 million tonnes by 2025.

National Petrochemical Company (NPC) started building and developing petrochemical parks years ago, which would spur growth in the downstream petrochemical industry. It has been recently decided that downstream industries be established in industrial parks.

Catalyst Self-Sufficiency

As far as technology is concerned, the main sections are as follows: process, catalyst, technology and market. In this industry, the country's annual need for catalysts is $450 million while 40% of the country's catalysts are used in the petrochemical industry.

There are 40 groups of catalysts in the country, of which 16 groups have been localized and industrialized, and 9 groups will be produced soon, and 15 groups are in the research and development stage.

A total of 85 types of catalysts worth $270 million are consumed annually in the Iranian petrochemical industry. The share of polymers in this mix is $50 million. To date, we have manufactured 20 types, which is equivalent to $125 million per year, which would reach 36 types worth $195 million next calendar year.

Currently, 90 categories of products are being produced in 300 polymer grades in Iran, which would reach 105 by 2025.

Courtesy of Iran Petroleum