19 August 2023 - 14:36
  • News ID: 477174
Petchem value chain completion easy task

Completing the value chain of the petrochemical industry is crucial for Iran. From the standpoint of value creation, it would be possible to enhance national revenue by supplying petrochemical products of high value-added. On the other hand, it would be possible to develop the petrochemical industry to end dependence on imports for supplying domestic needs, which would in turn reduce dependence on crude oil and natural gas sales. The petrochemical projects operated under the 13th administration are all aimed at value chain completion. Implementation of these projects would result in the supply of 21 products in line with the value chain completion. National Petrochemical Company (NPC) expects to accelerate implementation of these projects by engaging holdings and investors.

Value chain completion in the petrochemical industry may also create job opportunities at various levels, while enabling Iran to become more influential in world markets and getting closer to economic independence. Additionally, selling raw substances is associated with high risks. For instance, oil prices are tied to political and economic factors, which may drive down Iran’s revenue. Also, if we can import the entire petrochemical equipment needed in the country, we would be able to reduce hard currency costs and minimize the negative impact of international sanctions.

According to the draft of the 7th National Economic Development Plan, Iran’s petrochemical production capacity would reach 131.5 million tonnes, up 43% compared with the current level. Furthermore, the planned implementation of propylene production projects and its chain would bring propylene and its chain production capacity to 11.6 million tonnes by the end of the 7th plan. The current propylene production capacity stands at 1 million tonnes a year and the entire propylene produced by the petrochemical industry is consumed by downstream units. The demand for propylene exceeds 1 million tonnes.

Methanol is also a petrochemical product for which major capacity building has been made in the past years. Iran is currently selling the bulk of methanol it produces. But value chain completion would lead to higher value creation as the methanol production capacity would reach 700,000 tonnes a year. Meantime, the ethylene production capacity would reach 11.9 million tonnes and the aromatic chain production would hit 3 million tonnes by the end of the 7th plan.

Iran privileges

Thanks to abundant oil and gas reserves, Iran’s petrochemical industry has long been involved in petrochemical production; however, it is yet to form a complete value chain. For instance, if finished petrochemicals like polymers, disinfectants, and textile products among others are produced in the country they can be instrumental in increasing national revenue and creating jobs.

By completing the value chain of the petrochemical industry, it would be possible to look for technological growth and development. Widely-used petrochemicals are used in car manufacturing, pipe manufacturing, construction, electronics, and food industry.  Therefore, by completing the petrochemical value chain, it would be possible to look for development of technology and upgrading the quality of final products to rival regional nations’ products.


Iran’s petrochemical industry can rival some European nations in terms of value chain and diversity of products although it is by far distant from them in some sectors. Iran’s petrochemical industry is internationally recognized for producing light hydrocarbons (like ethylene), polymers (like polystyrene and polyolefin) and chemical fertilizers (like ammonium nitrate).

But the distance is too much between Iran’s petrochemical industry and European rivals in the supply of such sophisticated products as highly-recyclable plastics or green plastic. That is why many developed nations in Europe are looking to develop sophisticated products pertaining to highly recyclable products. 

World markets 

Iran’s petrochemical industry is looking for balanced development and value chain completion despite all existing challenges particularly under conditions of sanctions. It is now on the path towards growth and development, for which it needs to complete its value chain. In coincidence with developing the upstream sector of the petrochemical industry, its downstream sector has been taken into consideration as a national strategy. NPC managers have said any project to come online would be based on value chain completion.

Today, under conditions of sanctions, there is a chance to develop the downstream sector and upstream sector alike. It would be possible to use domestically-developed technologies and investment by holdings and banks to help accelerate completion of the value chain. Energy experts believe that investment in the downstream sector would be reliable and profitable.

Construction and expansion of petrochemical parks, which has been pursued by NPC and Iran Small Industries and Industrial Parks Organization (ISIPO), can pave the way for the growth and development of the downstream sector of the petrochemical industry. It has been recently decided that downstream facilities be located in industrial parks. Industrial parks have all necessary advantages to house downstream petrochemical facilities. By expanding these parks, particularly in border provinces, it would be possible to accelerate development of the petrochemical industry.

Owing to its regional position, Iran can export commodities supplied by the downstream petrochemical sector to neighboring nations with an estimated population of 600 million. Access to new markets and diverse mix are achievements of development of the downstream petrochemical sector, which would significantly boost the production capacity of this industry in coming years.

Over the past years, conversion of ethane produced in southern Iran has picked up speed. However, given the fact that 60-70% of world’s ethylene is polyethylene and glycol and the rest to non-PE polymers, there is abundant polyethylene in Iran. That is why PE-dependent industries have been developed in the country, while propylene-dependent chemical industries have not been developed and the latter provides raw materials for the big chain of downstream industries. The downstream products of propylene and polypropylene go beyond polyethylene and ethylene. Therefore, many Iranian and foreign experts believe that propylene shortages are to blame for the non-development of propylene-related downstream industries.

Propylene, petchem feedstock

Propylene is the second widely consumed petrochemical substance used as feedstock for polymer production. The main derivatives of propylene are polypropylene, acrylonitrile, propylene oxide, phenol, acrylic acid, isopropyl alcohol, and oligomers. They are finally used in electronics, car manufacturing, construction, and packaging among other sectors.

Olefins are highly-valued petrochemicals. Ethylene and propylene are among most-valued petrochemicals due to their extended value chain and various applications. In Iran, significant measures have been undertaken for supplying these two products. However, for a variety of reasons, ethylene has outstripped propylene in production with demand for propylene growing on a daily basis. That is while under the present circumstances, downstream facilities powered by polypropylene have experienced periodic shortages.

The Middle East, with 8 million tonnes of propylene production per annum, comes fourth, behind Southeast Asia (Chia, South Korea, Japan and Taiwan), the European Union and North America. Iran’s current rated propylene production capacity exceeds 1.2 million tonnes a year. Surveys by the “Value Chain Studies Center” show that 95% of propylene in the country is converted to polypropylene with the remaining 5% converted to 2-ethylhexanol at the Shazand petrochemical plant. That is while other highly-valued products of this value chain are not manufactured due to insufficient propylene in the country.

Iran is expected to see its methanol production grow by 25 million tonnes over five years. Among existing projects, the three main projects of Kaveh methanol, Marjan methanol and Bushehr methanol are near finalization. With only these units, 5.61 million tonnes would be added to national methanol production capacity.


Iran’s petrochemical industry is expected to become propylene-based and that is why it no longer issues any permit for the construction of methanol units. It has also to be taken into consideration that by converting gas to methanol, methanol to propylene and then propylene to polypropylene, it would be possible to generate higher value.

It is currently possible to convert natural gas to methanol in the country. At Petrochemical Research and Technology Company (PRTC), a pilot project for converting methanol to propylene in Mahshahr with capacity of 120,000 tonnes a year has been implemented successfully.  

At the Arak branch of PRTC, there is a project under way to convert propylene to polypropylene with capacity of 130,000 tonnes, which would complete its value chain. The pilot polyethylene-via-methanol (PVM) resulted in the successful production of propylene with purity of over 99.6% at the Mahshahr research center. It is the most valued and mostly applied polymer grade in the petrochemical chain.

The Ministry of Petroleum of the 13th administration is largely supporting the value chain completion of the petrochemical industry. Under NPC stewardship, petrochemical companies may go ahead on the path towards value chain completion. If any company is not able to finance such projects on its own, it may team up with other companies to invest.

Iran Petroleum

News ID 477174


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