Iran Eyes Downstream Petchem Development
ran has seen a 21-fold increase in its petrochemical production capacity, 9-fold increase in the number of petrochemical plants, 33.5-fold increase in petrochemical production and 37-fold increase in petrochemical exports over the past four decades. However, due to non-development of downstream industrial chain, it has yet a long away to go to reach a higher profitability. The value of development in the downstream industries may be clarified with a simple example. Job creation in downstream industries is possible with lower costs and in bigger numbers. In the upstream sector, $94,000 should be invested for creating each job, while in the mid-stream industries; about $780,000 in investment is needed. The figure is down to $21,000 in the downstream sector. For each upstream sector job, 500 downstream jobs may be created. The rate of return on investment in the upstream sector is 10-15% versus 35% in the upstream sector.One million tonne of raw petrochemicals is valued at $300 million. But when the same raw materials are converted into products, Iran would get $670 million in revenue. That is key to economic development via downstream petrochemical industries. Petrochemicals exports have become instrumental in Iran’s non-oil economy. Based on official data, the petrochemical sector is the second largest revenue generator after crude oil in Iran. Petrochemicals make up a 33% share in Iran’s non-oil exports. Measures are under way to raise this percentage to 35. Sustainable development means creating value-added nd the petrochemical sector would serve Iran’s economy the most. The petrochemical industry is able to play an effective role in upgrading Iran’s economy, creating jobs and generating revenue by processing and supplying valuable products.Iran’s Petroleum Ministry plans to invest $75 billion in the petrochemical sector over eight years. Meantime, it hopes to bring the South Pars gas field to full production within three years. These two developments promise fast growth in the petrochemical sector and generally in Iran in coming years. If sufficient feedstock is available, Iran could produce at least 60 million tonnes a day of products. Meantime, completion of more than 60 petrochemical projects launched under the 3rd, 4th and 5th national development plans could help double Iran’s petrochemical output capacity.Stopping Raw Material SalesThe petrochemical industry development is one of the most important pillars of dynamic economy in Iran. With the infrastructure available in Iran, the petrochemical industry can grow into one of the most profitable industries in Iran. In order to reach the objectives envisaged in the development plans, in addition to new investment and completion of incomplete projects selling raw materials should stop and the petrochemical products mix should be diversified. Therefore, efforts must be made for the construction and completion of upstream projects and increased output, while downstream petrochemical industries would be the best alternative to crude oil and upstream petrochemical products exports. Due to the high profitability of downstream industries, their development has to be taken into account more than ever. Development of downstream petrochemical industry has been taken into consideration by authorities over the past decade because a balanced development of the upstream and downstream petrochemical sectors would prevent selling raw materials and create a high value-added. Amid numerous challenges especially during years of sanctions, Iran’s petrochemical industry has been seeking balanced development and completion of its value chain. Now in the post-sanctions era, this industry needs national will and determination.Iran’s petrochemical industry is now on the way of growth and development and therefore needs to complete its value chain. Therefore, concurrently with the development of its upstream sector, the downstream sector of this valuable industry has to be taken into consideration as a national strategy. Just like in the upstream sector, opportunities are availabl