Under the Seventh Development Plan, the Iranian petrochemical industry is tasked—with reliance on macroeconomic policies and in line with achieving the target of 8% economic growth—with raising its nominal production capacity from the current 96.6 million tons per year to 131.5 million tons.

According to Hossein Alimorad, NPC’s Director of Planning and Development, this will be achieved through 66 development projects totaling 35 million tons in nominal capacity, some of which will come online by the end of this year. The main focus, beyond capacity expansion, will be completing the value chain in methanol, ethylene, propylene, and aromatics, thereby boosting the share of high–value-added products in the export basket and reducing reliance on basic product exports.

Alimorad stressed that realistic planning requires taking into account resource constraints and environmental conditions. He said the strategic vision of developing the value chain in the Seventh Plan has been crafted with these limitations in mind, and he hopes productivity gains will add 1.5–2 percentage points to the planned 8% growth.

Gov’t targets 131m tons nominal capacity

Asked about the measures to reach the government’s target of 131 million tons by the end of the plan, Alimorad explained that NPC has laid out specific strategies for developing the methanol, ethylene, propylene, and aromatics value chains. While annual growth in nominal capacity will exceed 8% in some years and fall short in others, the average over the plan will be 8%. This growth will positively impact GDP as downstream and complementary industries develop alongside petrochemicals.

The planned 8% production growth is tied to new investments and projects—not productivity improvements from unused capacity. If bottlenecks such as feedstock shortages, equipment procurement, and maintenance planning are resolved, production could surpass 8% growth and reach full nominal capacity. Employment creation and reliance on domestic resources for financing and capital markets are also included in the plan.

Under Article 47 of the Seventh Plan, the industry’s nominal annual capacity is to rise from 96.6 million tons to 131 million tons. By 2028, capacity will increase by 11.6 million tons in propylene, 700,000 tons in methanol, 3.3 million tons in ethylene (excluding polyethylene), 8.6 million tons in polyethylene, and 3 million tons in downstream aromatics.

Balancing capacity expansion, value chain completion

Traditionally, development projects were designed around available feedstock. But with hydrocarbon resources—especially natural gas—becoming more limited, feedstock availability for downstream industries is also constrained. Thus, new projects are designed to complete the value chain and boost exports without facing earlier challenges.

The Seventh Plan includes 66 active petrochemical projects with a combined nominal capacity of 35 million tons and total investment of $26 billion, averaging 60% physical progress. Twenty-eight strategic projects are being closely monitored by NPC, of which 15–19 will be commissioned this year. Meeting the 131-million-ton target will also ensure balance between upstream and downstream development.

High share of basic products in exports

Despite repeated emphasis on reducing raw material exports, basic products still dominate petrochemical exports. Balanced industrial development requires equal investment in upstream, midstream, and downstream sectors, supported by adequate financing, feedstock, skilled labor, and technology.

Historically, upstream investment occurred in the 2000s due to available hydrocarbons and some financial capacity. However, financing downstream projects—especially those with billion-dollar costs—has been challenging. Domestic banks and consortia lack the capacity to fully fund them, despite attractive returns.

Since 2014, over 70% of saleable petrochemical output has been exported. Even under US sanctions after 2018, production and exports continued to grow, showing that the sector is effectively sanction-proof. Last year, over 29 million tons—mostly basic products—were exported, generating more than $13 billion in foreign currency.

NPC’s nominal capacity is 96.6 million tons, but actual production is 75 million tons, with about 14.5 million tons lost due to feedstock shortages. If feedstock availability improves, output could rise by 15 million tons—70% of which could be exported—injecting an additional $4.5 billion into the economy without new investment.

Private sector, public investment

One objective of the Seventh Plan is to increase public participation in industrial development. NPC aims to encourage investment through mechanisms like mutual funds, project funds, and public joint-stock companies. Islamic bonds backed by petrochemical assets will also be issued to pool public funds for working capital and project financing.

Projects for commissioning

Fifteen petrochemical production projects and four feedstock projects are slated for commissioning in 2025. These include East Karun flare gas recovery (Phase 1), Apadana Methanol, Kimia Petrochemical polystyrene plants in Esfahan and Dalahu, Arman Sepahan, Dehloran Petrorefinery (NGL 3100), Arghavan Goster polypropylene, Marun flare gas recovery, Karun PET, Hengam urea, Kangan Petrochemical olefin, Bushehr Petrochemical olefin and monoethylene glycol, Kangan HDPE, Phase 2 of Hoveyzeh Gas Refinery, Marun EO, Sadaf Assaluyeh, Petronad ethoxylates, and Salman Farsi PDH.

Product portfolio changes

Currently, Iran produces 20 polymer products (408 grades) and 90 non-polymer products. By year-end, at least three new products—such as propylene from propane via dehydrogenation and ethoxylates—will be added. The aim is to raise the average export value per ton to levels comparable with Germany ($1,200) and Saudi Arabia ($800). The Petrochemical Research and Technology Company will play a key role in developing high-value grades.

Digital transformation, AI integration

Under Article 44 of the plan, NPC must establish a national smart monitoring system for petrochemical production and consumption, using mass flow meters and AI analytics. The “National Petrochemical Complex Monitoring System” project will be rolled out in three phases:

1. Data Mapping and Equipment Definition

2. Installation of Mass Flow Measurement Systems and Data Collection

3. Advanced Monitoring, Process Modeling, and AI Integration for predictive maintenance, process optimization, safety enhancement, quality control, and cost reduction.

End-of-plan outlook

Since 1964, more than $90 billion has been invested in the petrochemical industry—less than $1 billion per million tons of capacity. Under the Seventh Plan, total investment will surpass $100 billion to reach the 131-million-ton goal. NPC is confident of meeting Article 47 targets with only minor adjustments, provided $12 billion in financing is secured from banks, the National Development Fund, capital markets, and shareholder reinvestment, aided by incentives like feedstock discounts.

Currently ranked second in the region (after Saudi Arabia) and around 10th–12th globally with a 2.5% share of world output, Iran aims to exceed 4% by the plan’s end. It seeks to raise its share of basic products in the region from 30% to 45% while expanding into higher-value markets.

Interview by:

Younes Sadeqi