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Iran to Diversify Petchem Portfolio

 Iran to Diversify Petchem Portfolio

Saturday، 01 December 2018 | Article Rating

TEHRAN (Shana) --Official data indicates that petrochemical exports constitute a significant share in Iran’s non-oil exports. Iran’s Petroleum Ministry has over recent years operated numerous petrochemical projects in a bid to complete petrochemical supply chain besides seeking to increase Iran’s share of global petrochemical trade.



Official data indicates that petrochemical exports constitute a significant share in Iran’s non-oil exports. Iran’s Petroleum Ministry has over recent years operated numerous petrochemical projects in a bid to complete petrochemical supply chain besides seeking to increase Iran’s share of global petrochemical trade. Currently, Iran accounts for 5% of global petrochemical trade and 24% of the Middle East petrochemical trade. Petrochemical plants in Iran produced about 27.5 million tonnes by September 2018.

Ali-Mohammad Bosaqzadeh, director of projects at National Petrochemical Company (NPC), tells that nearly 30 projects would be implemented in Iran in line with the completion of supply chain and diversification of petrochemical products.

Here is the full text of the interview he gave to "Iran Petroleum":


Iran has in recent years invested heavily in its petrochemical sector for development and completion of the value chain in this industry. Do you think you will be able to broaden your business markets on par with such investment?

Petrochemical industry is among industries that could expand and replace other industries. Over recent years it has been among the most dynamic industries in the world in terms of production capacity and quality of new products. In short, it could be argued that this industry has gradually replaced many materials and alloys in the world. We are not worried at all for losing our consumers of petrochemicals. For instance, petrochemicals are used in home appliances or related equipment or in some instruments used in vehicles. We are trying our best to use petrochemical materials further in car manufacturing. Japanese car manufacturers have recently developed a car, 70% of which is made of petrochemicals and remaining 30% non-petrochemicals. That indicates the promising future of this industry at the global level.

In the meantime, supply of feedstock for petrochemical production is an important issue. Naturally, Iran which sits atop the world’s largest hydrocarbon reserves may take advantage of this opportunity in the best possible manner. That is why we have taken measures to develop petrochemical industries in Iran. Currently about 8% of gas production and 15% of liquid hydrocarbons like crude oil is used in the petrochemical industry. According to projections, by 2050, nearly 50% of world’s total gas and 50% of world’s total liquid hydrocarbon would be used in the petrochemical sector. Development of petrochemical industry requires raw materials, which are gas feedstock and liquid hydrocarbons, besides technology. Technology applications for petrochemical industry are expanding. Earlier, only American companies had access to technologies of petrochemical industry development. But now, Europe, Far Asia and even the Middle East are applying such technologies for development.

Since petrochemical products are used in all countries, there are always applicants and such demand is on the rise. Based on such principle, Iran has moved to develop its petrochemical industry. Of course I should highlight the point that we need a high level of investment in order to complete the value chain in this industry, in which case we have taken effective measures. Furthermore, we need to have further coordination with countries making progress in this sector in a bid to be able to benefit from their potential in terms of cutting edge technologies.


Do you think you have been successful?

As I mentioned, we have taken effective steps in light of the necessity of applying foreign investment and technology. As far as investment by foreign companies in Iran’s petrochemical sector is concerned, we have always eyed transfer of technology. Earlier, more than 80% of technology used in Iran’s petrochemical industry was owned by foreign companies, but now a significant number of licenses are offered domestically and this trend is growing.


What have you done with regard to attracting foreign investment?

We have mainly sought to take loans from other countries. We aimed to make foreign companies stakeholders in our petrochemical plants. That is not new and it existed before the 1979 Revolution; Shiraz Petrochemical Plant was built with France’s technology and money and Razi Petrochemical Plant was half owned by US companies. The same trend continued after the Islamic Revolution. Arya Sasol is supplying products in partnership with Iranian firms; Mehr Petrochemical Company is 60% owned by Japanese and Thai companies and 40% by Iranians. Even when it comes to the privatization of petrochemical companies we have had this issue on mind. For instance, 96% of Razi petrochemical plant is owned by Turkish private sectors and only 4% belongs to Iranian entities.


Foreign companies don’face restrictions for investment in Iran’s petrochemical industry, do they?

No, they dont. We have always welcomed the presence of foreign companies in the petrochemical industry. We believe that the petrochemical industry is among industries enjoying potential for facilitating partnership between Iranian and foreign companies in financing and transfer of technology. Fortunately some of our projects have been 40-60 or 50-50 partnership deals. In any case, Iran enjoys abundant advantages for investment in the petrochemical industry. We are near Persian Gulf waters, we have access to feedstock and raw materials, our domestic market is big enough and we are near consumer markets, too. These are all reasons which encourage foreign investors to consider investment in this industry. Of course, transfer of technology is highly important for Iran.


How many projects do you have under construction in light of completing the value chain and diversifying the portfolio of petrochemical products?

Nearly 30 projects are under way in line with value chain completion and diversification of petrochemical industry products portfolio. In line with such policy, we hope to see more diversity in products in new projects so that final products would be in the form of chain. We have worked out 18 GTX projects for converting gas to propylene, located primarily in Chabahar and Qeshm. Furthermore, there are 10 PDH (propane dehydrogenation) units converting propane to polypropylene, located in Assaluyeh and Mahshahr with a view to optimal use of gas feedstock to complete the value chain of petrochemical production.

Several more projects are also planned to come online before next March. We hope to see new projects come online every year. Hopefully, the projects under construction have had more than 90% progress. Some of them are Lordegan petrochemical project, Ilam olefin project, Miandoab petrochemical project, Kaveh methanol project and Phase I of Bushehr project.


Once these projects have become operational, how much will Iran’s share increase in the global petrochemical market?

Compared with the global average, Iran accounts for half of petrochemical per capita consumption. To that effect, we have to direct our domestic industrial production so as to increase per capita consumption. As far as Iran’s standing in the global petrochemical trading is concerned, the country’s share is about 5% internationally, which reaches 24% in the Middle East. In light of our variety of plans, we intend to claim the top spot in the Middle East in terms of value of petrochemicals by 2025.

As you know, the Iranian government does not directly invest in the petrochemical industry and the priority is for domestic and foreign private companies. Therefore, the government has to provide conditions to facilitate the presence of potential investors with full ownership on their capitals. Of course, in future petrochemical development projects we focus on the completion of value chain. Given the $80 to $90 billion in investment we need for the development of petrochemical industry we envisage the following policies: first, projects are required to be based on the completion of the value chain and higher value-added; second, products which have not yet been manufactured should be produced; and third, we must have transfer of technology. We have based our projects on such policy and we forecast that most of them would be developed via Iranian-foreign partnership. We have also held talks with big foreign companies for investment, which will be announced after finalization of agreements. Of course companies willing to finance projects are more diverse than direct investors.


Iranian private companies were planned to implement a number of projects in the Makran area in partnership with foreign firms. Have any projects been envisaged?

A mission assigned to the NPC was to study development of petrochemical industry in the Makran area. The advantages of industrial development in this area include proximity to feedstock and raw materials, $3-5 reduction in loading costs, diversity of Iran’s export market stretching from the Persian Gulf to the Sea of Oman, and proximity to consumer markets like Pakistan and India. Another advantage with the development of the Makran area is deep waters which facilitate loading of products. In Assaluyeh, very large vessels can handle 50,000 to 60,000 tonnes, while in the Sea of Oman there is capacity for 100,000 tonnes of products.

Given the readiness of a number of Iranian and foreign companies for investment in this area, infrastructure is being prepared for Phase 1 development. We expect that with the implementation of these projects in the Makran area, this zone will turn, like the Persian Gulf, into a strategic destination of exports to help Iran boost its share of energy trade.

Pasargad Energy Development Co. (PEDC) is an independent energy company based in Iran. PEDC is an integrated energy company whose activities span the entire value chain including exploration, production, refining, petrochemicals marketing, power generation & renewables as well as new high-tech venture capitalizing. Our headquarter is located in Tehran. PEDC is present across the Iranian continental shelf and international market through its subsidiaries. We create value for our shareholders through active investment, high-level monitoring of our projects, building world-class partnership and managing our risks effectively and making balanced portfolio. Meantime, we contribute to the sustainable development of the energy sector and communities in our country. PEDC’s competitiveness relies upon our values-based performance culture, with a strong commitment to transparency, cooperation and continuous operational improvement. As a wholly owned subsidiary of the Pasargad Financial Group, with Pasargad Bank being a distinctive shareholder, we owe our success to our experience, management knowledge and strong local/international partnerships since 2008. PEDC is committed to maintaining sustainability and being recognized as the strategic partner of choice in Iran’s energy and petrochemical sector.​

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