Outlook of Petrochemical Industry

11th IPF brought together experts and executives from all over the world. Below you see an overview of Iran's petrochemical industry executives and economists' vision in the inauguration ceremony.

The key to employment

Mohammad Hassan Peyvandi, Deputy Vice President of the National Petrochemical Company of Iran:

In the past two decades, investment in oil and gas industry was the key factor to employment in the country. Investing in Assalouyeh and Mahshahr strengthened our domestic manufacturing, engineering and installation capabilities. Plenty of jobs have been created. Iran has the potentials and the tools for a thriving petrochemical industry. Key to sustainable development of the industry would be a higher contribution to GDP and welfare.

Steps to expansion

Abbas Sha'ri Moghadam, Deputy Petroleum Minister and President of National Petrochemical Company:

The NPC used to be a holding company with almost 50 subsidiaries. It has undergone a wild transformation and most of the company has been privatized. The only state-run units at the NPC are now R&D, Mahshahr Special Economic Zone and the US$4.5 billion Damavand petrochemical project. The NPC is now functioning as a company with governance and development duties. The firm is to provide required infrastructure and investment incentives and reasonably priced feedstock for at least a 15-year period as well as technical and legal assistance.

Measures to be taken by NPC:

1- Maximizing the capacity; only 68% of Iran's nominal petrochemical output capacity, currently standing at 60 million tons is now utilized due to insufficient feedstock.

2- Surmounting the obstacles in the way of incomplete plants with 10% to 90% progress, namely financial resources. This would double the capacity to 120 million tons per year. There are plans for expanding four new sites this year.

3- Implementing 36 new projects based on methane gas worth around US$ 41 billion. The total capacity will be decreased by 60 million tons.

The NPC plans to expand four new hubs in Parsian(Assalouyeh), Jask Free Zone, Chabahar and Iranshar as well as four ammonia and urea projects in Lavan Island and several GDP units.

Influx of feedstock; our advantage

Bijan Zanganeh, Minister of Oil:

The value of Iran's petrochemical products sales rose from $1 B in 1989 to $22.5 B in 2014. Iran's prime products include polyethylene, PET, polystyrene and PP. Half of the production is domestically consumed. Hamedan PVC unit, Lorestan isocyanate and polyethylene, 7th ammonia and urea, Mahabad polyethylene and second phase of Iran polyethylene pipeline are to be finished in 2015. Our main competitive advantage in Iran is accessibility to natural gas, naphtha, ethane and liquefied gas.

Iran holds the world's largest gas reserves estimated at 33.5 tcm with a daily gas processing capacity of 600 mcm which is expected to rise to 1,000 mcm/d. Completion of phases 12-27 of offshore South Pars gas field will let Iran recover 650,000 b/d of gas condensate, 6.7 mt/d of liquefied petroleum gas (LPG) and 4 mt/year of ethane. There are also NGL plans and retrieval of C2+ gas projects.

Other competitive advantages of Iran's oil bonanza are human resource assets, transportation infrastructure, geopolitical position of Iran and neighboring with 15 countries in Caucasus, Special Economic Zones, political stability, proper business environment and facilities such as tax exemptions and National Development Fund allocations. According to the law passed by the Parliament the government is not allowed to invest in downstream and the private sector can step in with confidence. The latest estimates show that in both upstream and downstream, we will need US$70 billion, 30 percent of which will be needed in the downstream sector.

US$ 5 billion investment per annum

Mohammadreza Nematzadeh, Iran's Industry, Mine and Trade Minister:

An analysis in Iranian year of 1391(2012) showed that the country needs US$ 5 billion investment per annum for a period of 12 years which was almost twice the figure estimated in Iranian year of 1383(2004). Unfortunately in the past years our development companies were obliged to deposit the funds from selling stocks in State Treasury's accounts and this led to severe budget deficit. As a result the petrochemical companies failed to develop infrastructure, utilities and ports. We recently passed a law according to which 70% of the revenues are to return to companies such as IMIDRO and the National Petrochemical Company. Our other weakness is the lack of know-how in the global competition. In gas industry we stand strong and based on studies 25% of natural gas, 50% of liquefied gas and 100% of ethane gas need to be allocated to petrochemical industry.

Persian Gulf; the hub

Eshagh Jahangiri, Iran's first Vice President

Iran was the very founder of the petrochemical industry in the Persian Gulf region when it opened its Marvdasht plant in Shiraz, South Central Iran in 1963. Today the Persian Gulf region is an international petrochemical hub. Iran has the world's largest petrochemical feedstock in terms of natural gas and liquid resources and has domestically implemented the supply chain according to global standards.

Iran offers unparalleled status for petrochemical industry expansion and investments due to its geographical location, access to Persian Gulf ports, complete value chain, rising domestic demand, Free Zones, infrastructure and other facilities.