An overview of Iran’s petrochemical industry
The initial step towards development of the Iranian petrochemical industry dates back to 1963 when a fertilizer plant was installed in Shiraz, southern Iran.
In 1965, Iran’s National Petrochemical Company (NPC) was established to undertake the operation and development of the petrochemical industry. Since then, through joint investments with internationally recognized companies, NPC has established several petrochemical plants, which are operated by subsidiary companies that produce various chemicals for both domestic and foreign markets.
The NPC’s major activities focus on manufacture, production, sale, distribution, and export of commodities derived from hydrocarbons and related materials, both organic and inorganic.
To reduce imports and promote exports, NPC has conducted various projects within the five-year development plans.
In keeping with Iran’s policy of achieving more active presence in world markets and deviating from a single-product export relying on crude oil export, the industry has received significant attention in development plans.
NPC is determined to fortify international credit and keep pace with rapid developments in foreign markets.
Petrochemicals are chemical products made from crude oil. Although certain chemical compounds found in gasoline can be derived from other sources like coal or natural gas, petroleum is the major source.
Crude oil substances are divided into two main categories of olefins (including ethylene and propylene) and aromatics (including benzene and xylene isomers), both of which are produced in extensive quantities.
Recently, the environment surrounding the petrochemical industry in the Middle East has been changing rapidly. In particular, the Middle East oil producing countries, including Iran have in recent years promoted a policy of reducing their dependency on oil revenue and are actively tackling the industry as a pillar to foster domestic industry.
With their superiority in supplying feedstock, they are proceeding with extensive plans for their petrochemical industries, in some cases unrelated to world’s supply/demand balance of petrochemicals.
As of April 1999, prices of petrochemical feedstock have soared. Ethane-based price competitiveness of oil producing countries has rapidly recovered, posing a threat to the world’s petrochemical companies in consequence.
The trend in the Middle Eastern petrochemical industry, which directly and greatly affects the world’s industry, should thus be monitored by all companies and organizations, which are directly or indirectly involved in the industry.
Investing in Iran’s petrochemical industry has competitive advantages of indisputable and exceptional commercial attractions.
Iran’s gas reserves, which provide huge resources for industrial activities and the petrochemical feedstock, are added advantages.
The industry also provides other benefits including, a vast local market, diversifying petrochemical chains, availability of skilled and cost-competitive workforce, infrastructure developments especially those which link Iran to its neighboring countries, introduction of appropriate laws, protection of investment, an evident growth in the downstream petrochemical sector but chiefly, sustainable economic stability.
The positive impact of these factors will eventually bring to the forefront, the comparative and competitive advantages that the industry has for attracting local and foreign investments.
The Ministry of Petroleum and its subsidiaries have resolved to unabatedly meet the petrochemical industry’s feedstock requirements and other essential inputs related to the organization for an extensive period with competitive prices to enable it to secure a suitable share of the global market.
A precise look at the government’s policies for developing the sector demonstrates that plans are formulated with long-term prospects.
With steady use of these policies, the industry, in tandem with other major industries, can delineate a bright prospect for Iran’s economy at an international level.
Based on these policies, NPC should develop and diversify the petrochemical chain by attracting local and foreign investors and increase its annual output capacity of salable products during the Fourth Five-Year Development Plan (2005-2010).
NPC’s current plans hinge upon the priority to use ethane, LNG, and condensate and will manufacture wide-ranging products, including polymers, chemicals, fertilizers, and fuel which will meet the overseas and domestic markets during execution of the Fourth Plan.
Some petrochemical complexes for construction this year include Lordegan and Borujen in Chaharmahal-Bakhtiari Province and the petrochemical companies of Golestan and Rejal as the first private companies in Mahshahr Special Economic and Petrochemical Zone.
The company has also inked an agreement to complete the project of Phase 3 of Shiraz Petrochemical Complex as well as another unit in Kermanshah Polymer Company.
In a recent report released by the Customs Administration, Iran exported over 12.5 million tons of petrochemical products valued at over $5.3 billion during the first eleven months of the last Iranian year.
The figures show 11 and 131 percent increases in terms of weight and value respectively when compared to those in the corresponding period a year earlier.
During the stated period, petrochemical products constituted 42.4 and 38.8 percent of total non-oil exports in terms of weight and value respectively.
The report also reveals that gas condensates, propane and butane took a lion’s share of the value of petrochemical exports, followed by polyethylene, methanol, benzene, and tar.
Meanwhile, NPC exported 5.9 million tons of its products valued over $3.6 billion during the same period. Price of petrochemical exports represents 26.5 percent of total non-oil exports.
NPC took a 1.3-percent share in gross domestic product (GDP) of the country.