How much capital has been invested in PSEEZ since the 13th administration took office, and how much has the total investment in the region been since its establishment back in 2008?

In general, in 2020, five in-principle approvals were issued for an investment of Rls. 44,000 billion and $900 million; most of these agreements in principle have been issued in the field of petrochemical and chemical industries. In the calendar year 1400 (March 21, 2021-March 20, 2022), a total of 14 approvals in principle with an investment volume of Rls. 17,000 billion and $4.5 billion have been issued by the organization. As expected, most of the projects in question are in the petrochemical, downstream petrochemical, chemical and small refinery projects, and the rest were in the field of supporting upstream industries.

In response to the second part of your question, I must say that the total investment of the National Iranian Oil Company (NIOC) in the region since the establishment of this organization has been $81 billion in the upstream sector and $30 billion in the downstream sector.

Bearing in mind the policies of president Raisi’s administration on expanding relations with countries and attracting foreign investment and the visits that the minister of petroleum has had to different countries, have any foreign delegations paid a visit to the region so far?

Yes, since the beginning of the 13th administration, several delegations from different countries have visited PSEEZ to hunt out investment opportunities; for example, the Russian and Chinese delegations as well as the Cuban ambassadors have visited the zone being accompanied by economic delegations, and their desire was to invest in production, development of fields and downstream industries. In the downstream chain due to its high value-added, billions of dollars could be invested. Major holdings are also very interested in financing in these sectors.

How much capital is estimated to be provided by the holdings in the downstream chain and is it possible to develop this sector in PSEEZ?

South Pars region or, in other words, the country's energy hub, with huge gas refineries and petrochemical plants and projects, has been widely considered by domestic and foreign investors, which is the result of large investments of state and private sector in the region. $81 billion of investment by various administrations has resulted in the construction of 23 gas refineries for South Pars phases in the onshore and offshore sectors, which feed more than 40 petrochemical projects and production complexes with an investment of roughly $30 billion dollars. This volume of investment, especially in the petrochemical sector, as the most profitable industry in the country by the private sector, draws a clear outlook for the development and growth of the region, and the private sector is expected to provide the largest volume of investment in downstream industries in PSEEZ, because in addition to creating more value-added, it has one of the most important advantages of investment, i.e. proximity to feedstock and the high seas through the Persian Gulf.

What kind of financial instruments are you going to provide for the potential investors?

The investment capacity in the upstream sector and the mid- and downstream chains of the petrochemical industry is very high. To facilitate investment, we have cut the red tape for obtaining permits and have tried to carry out inspections and approvals in the shortest possible time. Currently, almost all major companies and even the petrochemical plants operating in the region have development plans. Pars Petrochemical Plant, for instance, broke grounds for a nearly $1 billion PDH project last year. It has also applied for acquisition of land and granting permits for operation of the unit and has also received a feedstock permit from the Petroleum Ministry. This is besides the fact that the company does supply part of the plant’s feedstock on its own; or consider Parsian Sepehr Holding, which is currently running several projects. The Persian Gulf Petrochemical Industries Company (PGPIC) is also pursuing extensive investment in the methanol and sulfur chain.

What is the current production capacity of petrochemicals in PSEEZ?

Thirty million tons per year, which will increase to 60 million tons per year with the implementation of projects that are being implemented.

Are there any land restrictions for implementation of these projects?

We have restrictions in some areas such as Kangan, but we do not have any problems in Pars I (Assaluyeh) and Pars III (Dayer) regions.

What incentives have you considered to attract foreign investment in the region?

Before answering your question, I would like to say that the parties to the contract for domestic and foreign investments in the upstream sector are the private and state-owned companies, which are concluded based on the model of current development contracts with NIOC or other companies, and their development model is also clear in the contracts. Of course, at times the impact of sanctions was great, but now its impact has diminished and the conditions for investment have been prepared. But for investing in the downstream sector, foreign companies have no investment restrictions and could be partners or owners according to the laws of the Islamic Republic. The most important incentive that we have considered for investors is the bylaw that was recently signed off on by the Minister of Petroleum based on which the conditions for the presence of foreign companies have been facilitated by registering their company in the Islamic Republic of Iran.

What is stipulated in the document?

One of the important points of this bylaw is that in the past we used to rent out land to investors and this was not attractive to them, but now, if the investor implements his plan and it comes on stream or the progress of the project reaches the point where it is confirmed that the project will be implemented or it cannot be reversed, we are authorized to grant the ownership of the land to the investor. The bylaw of investment in PSEEZ had created restrictions for investors in the past years, in such a manner that many investors were not interested in continuing to work or invest in the zone.

Is the bylaw enforced with retrospective effect for the companies that have already implemented projects in the area?

Yes, if these companies have fully implemented their plans, then everything is OK, but if they fail to complete them, they will be vetted by a committee.

Given the sanctions, how do you think foreign investors will welcome implementation of downstream projects considering the incentives provided by the Petroleum Ministry?

According to the laws of the Islamic Republic of Iran, foreign companies have no restrictions to invest in Iran; Iran’s Petroleum Ministry is no exception to this law; the model of contracts that foreign or even domestic companies operate in the region is in the form of lease: we lease the land to them. I think this will be a great incentive to attract investment in PSEEZ.

Certainly, considering the conditions of PSEEZ, the policy of the Petroleum Ministry is to support domestic and foreign investors, and with the incentives that we have considered and speeding up obtaining the permits, the companies that enter Iran will reap beautiful profits. Due to the measures taken by the 13th administration to attract foreign capital and expand relations with neighboring countries as well as others, very good conditions have been provided for foreign investors in the region over the last few months.

Considering the emphasis of the 13th administration on the development of petro-refineries, how many petro-refinery projects are currently being set up in PSEEZ?

Four gas condensate petro-refineries with a capacity of 280,000 barrels are currently being built in PSEEZ; the 60,000-barrel South Adish Refinery, which has had 75% physical progress and that we hope to reach early commissioning by the end of the current calendar year, which began on March 21, the 120,000-barrel Setareh Sabz Siraf Refinery which belongs to the pension fund of the armed forces, the 60,000-barrel Pishgaman Siraf Refinery, which recently started its activities in the region and we expect it to come on stream by the end of president Raisi’s administration, and the 40,000-barrel Farzanegan Refinery which have recently received the approval for financing instruments from the National Development Fund of Iran and its construction has started. There were some ahead of implementing the projects, which we have sorted out, such as the fact that we provide part of the infrastructure, including the port or water and electricity.

What measures has president Raisi’s administration taken to curb gas flaring?

According to the government’s approval, the minister of petroleum recently handed over management of the collection of associated gases and in other words reduction of flaring to the National Iranian Gas Company (NIGC), which in my opinion was a very good decision and will speed up the work in this field. The Regional Environmental Strategic Council holds regular meetings. Moreover, online monitoring of air, land and sea is also done on a daily basis, and based on the plan and according to the schedule, flaring will be reduced.

What are you going to do to reduce flaring and which parts of PSEEZ are prioritized for flaring reduction?

Reduction and recovery of flared gases is one of the priorities of the Petroleum Ministry. In this regard, programs are being implemented at the level of PSEEZ to reduce and recover flare gases. According to available figures and data, gas refineries account for about 83 percent of the total flaring in the zone and petrochemical plants operating in the zone account for the remaining 17 percent; therefore, reducing flaring of gas refineries is the first priority. Due to the fact that gas refineries are state-owned, it was necessary to obtain the necessary permits and allocate credit, and with the follow-up of the PSEEZ organization, the projects of recovery and reduction of flaring of gas refineries in the region were approved by the government cabinet, and technical, economic and environmental studies on the recovery of gas refineries' flare gases were carried out and relevant permits have also been obtained.

South Pars Gas Complex Company is also responsible for implementation of the aforementioned projects on behalf of NIGC and the Petroleum Ministry, and its implementation process will begin in the second half of the current calendar year. It will be divided into three categories, including short-term plans (resolving operational problems), three-year mid-term plans (equipment purchase and installation) and the long-term five-year plans (correction of processes). A considerable amount of flaring of gas refineries will be prevented by these projects. At the same time, in NIOC, the flare gas recovery project of the LPG export terminal of Pars Port Complex has been designed and implemented, which is now 90% physically advanced and will be put into operation in the second half of this calendar year.

In the petrochemical companies of the region, the flare gas recovery project has been designed and implemented in Nouri, Aria Sasol and Morvarid petrochemical companies, and we hope that all three projects will come online in the second half of the current calendar year (started on 21 March 2022).

Courtesy of Iran Petroleum 

Negar Sadeghi