Iran Learns from Previous Sanctions
After the United States moved to tighten sanctions against Iran’s petrochemical industry last July, experts said those sanctions were merely symbolic. Five months have now passed since the US made that decision, while Iran’s petrochemicals sales continue despite the imposition of those sanctions.
Hossein Alimorad, director of investment at National Petrochemical Company (NPC), told "Iran Petroleum": “We had the experience of previous round of sanctions and we had experimented ways of countering the sanctions.”
He added: “Through interaction with investors and our customers we managed to find ways of attracting investment for industrial development. It was tough, but we managed to afford it.”
Alimorad said despite US threats, NPC’s negotiations were under way, noting that NPC preferred to push ahead with its talks in total silence.
First Round Experience
Iran’s Minister of Petroleum Bijan Zangeneh recently said the country was exporting petrochemicals at a satisfactory pace. He noted that over 95% of petrochemical companies had brought back home the foreign currency achieved from selling products.
So, it implies that the US sanctions targeting Iran’s petrochemical industry had no impact on petrochemical products exports.
Even Jafar Rabiei, CEO of the Persian Gulf Petrochemical Industries Company, said the sanctions against Iran’s petrochemical sector had failed.
Alimorad said the most significant reason for the ineffectiveness of US sanctions against Iran’s petrochemical industry was the previous experience of sanctions. He added: “We had the experience of the previous round of sanctions, which helped us find various solutions for countering the sanctions.”
He said investors and customers were both looking for options to invest in Iran without being affected by the sanctions.
More Anti-Sanctions Options
Alimorad refused to reveal ways of bypassing the sanctions, but said: “The sanctions have had no impact because we tested various ways and they proved to be effective. We are now expanding these options, and we are following them.”
NPC has announced that it would continue making efforts towards the second and third jumps in the petrochemical sector. Iran hopes to bring its petrochemical production volume to 150 million tonnes a year in the third jump. The country would need to invest $17 billion for the second jump and $23 billion for the third jump.
Asked if foreign investment would be needed for the second and third jumps to materialize its goals, Alimorad said: “In the second jump, we have made necessary projections for financing the projects. We have presented a suitable mechanism to the Petroleum Ministry, which would empower us to use foreign financing.”
Challenging but Not Worrying
Alimorad said there was nothing to worry about with regard to financing mechanisms.
He said: “We have nothing to worry about with regard to financing the second jump. In fact, in light of government’s support and coordination with the Central Bank, Ministry of Economy and Finance and Petroleum Ministry, we can provide the necessary financing.”
He; however, said: “We may face challenges in attracting foreign investment for the third jump in the petrochemical sector, in light of the current circumstances.”
He added: “As you know our negotiations with famous European petrochemical companies have been affected by the sanctions, but in order to acquire necessary technology for the third jump, there are other options. Backed by Petroleum Ministry and NPC, our investors are working on these options in order to gauge their feasibility so that we would provide financing for the third jump and achieve necessary technology.”
No Halt in Talks
Alimorad said NPC’s negotiations with foreign investors were under way. He added: “You need to take into account that our previous talks with foreign investors were continuing without any halt.”
He said: “We will also try to pursue our negotiations so as to cause no problem to foreign investor and company.”
Alimorad said sanctions were haunting Iran’s petroleum industry and the US was making every effort to block attraction of foreign investment for this industry.
“Therefore, it seems that Iran would face a big challenge in this sector and fail to achieve its objectives,” he added.
Alimorad said despite all sanctions faced with by the petrochemical industry, this sector remains attractive to foreign investors.
He added: “Our ability to attract foreign investment under conditions of sanctions depends on investors. But we will continue our activity under the conditions of sanctions and direct and unilateral pressure from the US.”
Alimorad said foreign investors’ interest in Iran’s petrochemical industry resulted from Iran’s advantages in this sector.
He added: "Our market is not limited to Iran’s 80-million-strong population. We have 13 neighboring countries, i.e. a 400-million-strong market. Another issue is permanent, reliable and stable access to feedstock in Iran, which would encourage investment in the petrochemical industry.”
Alimorad said: “As the previous sanctions strengthened our position in the industry and we managed to develop good interactions with neighboring countries, we will leave behind the sanctions, too.”
He said that NPC had drawn up six development plans, the last of which would be based on economic resilience and using homegrown technical savvy.
“That is why I suggest that foreign companies willing to invest in Iran reconsider the domestic technical knowhow,” he said.
Alimorad added: “In case foreign investors prove their real intention and their technical capability, the Petroleum Ministry and NPC will cooperate with them.”