In a summer morning conversation, Shana sat down with Hamidreza Ajami, investment director at the National Petrochemical Company (NPC), to explore the roadmap for financing petrochemical projects, overcoming challenges, and encouraging investment.

Ajami considers the petrochemical industry a pillar of national security, explaining that its expansion boosts Iran’s economic and social stability. He estimates that the country will need approximately $100 billion in investment for 144 licensed petrochemical projects, and highlights that relying solely on domestic resources limits growth and competitiveness in global markets.

Q: Mr. Ajami, how significant is the petrochemical industry to Iran’s economy given the existing investments?

The petrochemical sector is a high-tech, value-generating global industry. It currently accounts for 25% of Iran’s non-oil exports and roughly 19% of industrial value added. For example, early-stage downstream processes in petrochemicals yield at least 100% value added, while midstream activities generate 70% to 100%.

This industry is a key link between upstream oil operations and a wide range of downstream industries, making it essential for entrepreneurship and job creation. It's a prime example of passive defense in the economy—resilient even under pressure. In recent years, about half of Iran’s foreign currency needs have been met by the petrochemical industry.

Petrochemicals also support broader economic, cultural, industrial, and national security development. A thriving productive economy fosters public trust, national belonging, and territorial loyalty—factors essential to resisting external threats. The industry also plays a strategic role at border regions, where downstream developments can elevate economic and social security.

Q: How much investment has gone into this industry, and what mechanisms are in place for financing?

Between 1979 and 2022, around $87 billion was invested in the sector. Roughly 19% came from foreign sources—mainly Asian and European—and another 11% from the National Development Fund and other internal or mixed resources. The rest came from shareholder contributions, loans, and asset sales.

Under Iran’s Seventh Development Plan, $22 billion is earmarked for the petrochemical sector—$12 billion of which is already being executed. Several projects are nearing completion this year, with financing being secured for the rest to ensure on-time delivery.

Q: How many projects are currently licensed for investment?

As of now, 144 projects are registered in the NPC’s investment licensing platform, requiring nearly $100 billion in total capital:

 20 projects worth $11 billion, with 15.5 million tons in capacity, are over 70% complete.

 32 projects worth $22 billion, totaling 29 million tons, are between 20% and 70% complete.

 92 projects worth $67 billion and 86 million tons in capacity are under 20% complete.

Q: Given the sanctions, is foreign investment still a priority for NPC?

Absolutely. Foreign investment is critical because domestic resources alone are insufficient for scalable growth and global competitiveness. NPC recently signed an MoU with the Organization for Investment and Economic and Technical Assistance of Iran to prioritize the petrochemical sector in international forums.

We’re also exploring partnerships through BRICS and Shanghai Cooperation Organization to attract more foreign capital to this strategic and high-return industry.

Q: If international sanctions persist, how can foreign funding still be secured?

Despite sanctions, the industry has continued to grow using a combination of domestic and foreign resources. Several projects are being launched this year as evidence. Long-standing economic ties with key international players have enabled access to credit lines even under restrictions.

Q: How can investor confidence be secured in the face of sanctions, feedstock concerns, and currency volatility?

Investor confidence hinges on the guarantee of capital safety and profitability. Iran’s “Foreign Investment Promotion and Protection Act” offers key incentives: equal treatment with domestic investors, no limits on foreign ownership, visa and residency facilitation for foreign staff and families, customs exemptions in free zones, and more.

Other advantages include:

 Rapid industry growth backed by international reports

 Ongoing development and R&D

 Strong domestic manufacturing and engineering capacity

 Access to skilled, low-cost labor

 Vast research and knowledge-based networks

 Proximity to international waters and 15 neighboring markets

 A growing and diverse domestic consumer base

Q: What are the investment priorities in the petrochemical sector?

Investments must be strategic and value-generating. NPC, as a government-backed entity, guides development responsibly. Priorities include:

 Value chain expansion

 Gas flaring reduction projects for environmental sustainability

 Seventh Development Plan-aligned projects

 Completion of unfinished projects

 High foreign-exchange earning ventures

Q: What are the main challenges to investment?

Foreign exchange limitations are a major hurdle. The combined reserves of Iran’s banking system, National Development Fund, and capital markets are finite—yet petrochemicals alone need $100 billion over the next decade. That’s in addition to over $100 billion needed by upstream oil.

Logistics and maritime security issues also complicate petrochemical exports. Still, the industry’s global credibility has sustained foreign partnerships. On feedstock, adjusting feed composition and importing liquid feed can help. Domestic knowledge-based firms are also stepping up in tech and equipment, making the industry increasingly self-reliant.

Q: To what extent is the domestic financial market used for funding?

In 2024, banks issued $210 million in Islamic sukuk (Murabaha bonds) for the petrochemical sector. This year, over 120 trillion rials in bonds have been issued, including for the Persian Gulf Petrochemical Industries Co. and other private ventures. Another 80 trillion rials in supply-chain finance is expected by year-end.

Q: Is there a strategy for attracting public investment into petrochemicals?

Yes. NPC encourages public participation through educational brochures and specialized forums. Negotiations with banks and the creation of project funds and public bonds are helping to open access for ordinary investors.

Q: With a focus on value chain completion, is priority given to incomplete projects or new investments?

Both are pursued. However, given upstream feedstock constraints, base chemical projects face limits. The midstream and downstream sectors offer more flexibility—requiring less capital and delivering higher employment benefits.

Q: Has Iran engaged in regional or international joint ventures in petrochemicals?

Yes. Notable examples include:

 Arya Sasol Polymer Co.

 Karoun Petrochemical Co.

 Mehr Petrochemical Co.

 NPC Alliance (the Philippines)

These ventures underscore the petrochemical industry’s international appeal and high-tech, innovation-driven nature—key for long-term sustainability and security.

Interview by:

Younes Sadeqi