The 7th plan envisages the annual petrochemical production capacity to reach 131 mt/y. The development plan is based on reducing sales of raw materials, development of downstream industries, attracting investment and increasing productivity so that the petrochemical industry would experience 8% annual growth. Therefore, the petrochemical industry must attract domestic and foreign investment to realize its development goals. Hamid Reza Ajami, NPC’s director of investment, said $87 billion has been invested in the petrochemical industry, $26.3 billion of which has been sourced from overseas. Thanks to such investment, 75 petrochemical plants have generated 96 mt production capacity.

Foreign Resources

The petrochemical industry is a key industry at the national and global levels. It supplies the needs of a wide spectrum of downstream industries. Development and expansion of petrochemical industry capacity through attracting domestic and foreign investment may play an effective role in the growth and development of national industry and economy, not to mention enhancing such indicators as GDP, trade balance and per capita income.

Although there is a focus upon using domestic financing like the National Development Fund of Iran (NDFI), the Central Bank of Iran (CBI), and financial institutions, Ajami said: “Using these sources would facilitate a limited growth that would in the short term hold the country behind others. Therefore, scientifically speaking, in my view, foreign sources of financing should be used while taking into consideration their risk. This issue is specifically significant in light of international efforts aimed at isolating Iran.”

Ajami said that 142 projects with more than $102 billion in investment are underway with a production capacity of more than 132 mt a year.

Investment Opportunity

Based on estimates of the NPC Directorate of Investment, the petrochemical projects envisioned in the 7th National Development Plan would require $24 billion in investment. So far, $12 billion has been spent on these projects that have had 40% progress. They would need another $12 billion to become fully operational.  

Referring to investment needed for NPC projects for increased production in the current calendar year, Ajami said: “The 8th Plan projects for petrochemical industry development would also need $10 billion in investment. Therefore, petrochemical industry development under the 7th and 8th plans would require $22 billion in domestic and foreign investment.”

Petchem Events

Ajami touched on ways for introducing opportunities to investors in the petrochemical projects, saying: “The idea is to introduce opportunities for investment in the petrochemical industry through organizing specialized events like oil, gas, and petchem exhibition, and Iran Petrochemical Forum (IPF).”

There will be also arrangements for holding the second conference on investment in the petrochemical industry, one section of which would focus on introducing investment opportunities. Some studies have been carried out on the manner of attracting domestic and foreign investment by establishing financial entities within the Directorate of Investment with a view to providing investment. Once ambiguities are removed, they would become feasible,” he said.

Intl. Cooperation

For years, economic and international restrictions emanating from sanctions have cast a shadow over the country, yet these restrictions have not prevented the development of the petroleum industry in Iran. One of the most important obstacles resulting from sanctions restrictions is international communications and presence in global markets, but Iran has not neglected the development of its projects in this industry and, given its significant potential for growth, has still maintained its international links.

To that effect, Ajami said: “With the imposition of sanctions against Iran, cooperation with foreign companies and financial institutions has faced some difficulties, but at the same time, appropriate cooperation has been and is continuing with China, Russia, CIS countries, the Indian subcontinent, Latin America, and African countries.”

Hassan Abbaszadeh, CEO of NPC, recently referred to the forthcoming forum on Iran-Africa economic cooperation, noting that in addition to exploring Africa’s diverse markets for Iranian petrochemical markets, the event would provide a chance for foreign companies to get familiar with Iranian petrochemical markets through B2B meetings.

Ajami emphasized exploring new markets, saying: “In the event of implementing value chain completion and development plans, it is necessary to identify new and diverse export markets in addition to existing traditional markets. These markets include countries in the region, members of the Shanghai Cooperation Organization, BRICS member states, Eurasia, African countries, etc.”

Investment Management

While planning is underway for the current calendar year, the performance of the last calendar year should not be forgotten. Basic agreements were given for 17 new projects last calendar year, while basic agreements were renewed for another 39 projects.

Furthermore, to explore and attract domestic and foreign investors, a booklet on investment opportunities in Iran’s petrochemical industry has been prepared in Persian, Arabic, English, Chinese, and Russian, and hard copies and electronic copies have been made available to applicants. Another issue that needs to be mentioned is the processing of applications from applicants for investment and the implementation of petrochemical projects through the comprehensive system of permits and plans for the oil industry online and electronically, without the need for in-person visits, which is still ongoing as an ongoing activity.

The NPC Directorate of Investment was established to manage investment in the petrochemical sector. It has held meetings with various special zones to reach an agreement with them. Parsian Energy-Intensive Industries Special Economic Zone, Qeshm Free Zone, and Chabahar Free Zone are cases in point.

Moreover, to improve the state of cooperation, a memorandum of understanding was signed with the Secretariat of the High Council of Free Trade, Industrial and Special Economic Zones on the topic of “preparing a roadmap for cooperation to attract investment and support the development of petrochemical, petrochemical refining industries, downstream units and industrial clusters, as well as the balanced and targeted development of the aforementioned industries in free and special economic zones, which aims to enhance product exports, prevent raw material sales and reduce imports of strategic petrochemical products”. These domestic activities demonstrate the country’s readiness and alignment of decision-making institutions with the petrochemical industry officials. They also demonstrate Iran’s desirable capacities in projects, science-based institutions, and domestic manufacturers, which ultimately will lead to a clear and transparent picture of this industry’s capabilities and also introduce it to global markets.

Iran Petroleum