Iran Petchem to See Two Output Jumps
Some may say petrochemical production would mean making money. But it may be expressed by those who live in a country rich in hydrocarbon reserves. Petrochemical production is by nature a value- generating industry. Throughout energy production, it generates value via specific and complicated procedures. Sitting atop huge oil and gas reserves, Iran is among nations that has switched to the development of the petrochemical industry and benefited from its advantages very soon. Iran’s petrochemical revenue currently stands at $17 billion, which is expected to make two significant jumps in 2021 and 2025. That would mean an enhanced role for the petrochemical sector in Iran’s macro-economy.
Iran’s Petroleum Minister Bijan Zangeneh has said the petrochemical sector is among few industries to have not been much affected by US sanctions. Rather, this industry has spared Iran’s economy harms from big crises amid sanctions.
Petchem Output at 150mt/y
Zangeneh told "Iran Petroleum" reporter: “After the second jump, we are now about to make a third jump in the petrochemical industry, under which we will bring Iran’s petrochemical production capacity to 150 million tones a year.”
He said that Iran’s petrochemical production was valued at $1 billion in 1997. “With NIOC’s cooperation, we managed to start major projects, some of which became operational by 2005. The rest also came online and our revenue reached $15 billion to $16 billion.”
The minister said efforts were made for finishing incomplete projects, which are mainly focused on plastic and olefin with feedstock having a major part.
He added: “In 2013, the ethane production stood at 4.2 million tons in 2013. It reached 7.3 million tons in 2018 and 16 million tons in 2021.”
Zangeneh said petrochemical production would reach $25 billion after the third jump, adding: “By 2021, in the run-up to the second jump in the petrochemical industry, about 27 new projects would become operational, while we are still under sanctions.”
He said: “We have a number of considerations now, including feedstock and product diversity. Until recently we intended to make maximum use of our ethane production. That is why we designed numerous plants for methanol and urea fertilizer production in order to use liquid feedstock combined with gas in order to reach our required propylene and diversify the value chain of this industry in the downstream sector.”
Quality Products
Behzad Mohammadi, CEO of National Petrochemical Company (NPC), told "Iran Petroleum" $17 billion was envisaged to be invested in the second jump and $23 billion in the third jump.
Asked what horizon would be envisaged for downstream industries in the second and third jumps and how diverse the products would be, he said: “That is not possible overnight and we undoubtedly need comprehensive planning. What we would achieve in 2021 would be increased production capacity and we can work more effectively on quality in the third jump. Therefore, we would not be able to fully realize quality standards in our 27 projects; however, we are looking for the development of a new method of thinking in order to move towards quality production.”
In response to a question on whether or not the ethane produced throughout this process would reach maximum, he said: “As far as excess methane is concerned we would think about combined feedstock and move towards polymers and aromatics.”
He added olefin projects have faced high demand for ethane. He said: “Moreover, they have to move towards combined feedstock. In addition to ethylene and polyethylene, we need to embrace propane and aromatic production.”
Mohammadi said in addition to ethane, gas condensate, propane and butane would be also given to applicants.
Ethane Surplus
Mohammadi said implementation of the Kangan and Parsian petrorefineries, in addition to South Pars projects, would strike a balance in the ethane consumption by 2023. He said that from 2019 to 2023, the country would see “golden excess”. He said from that time onward, Iran would have no ethane surplus.
“Of course, up to that time this excess production would reach 5 million tones. However, we have made plans to develop the petrochemical industry smartly based on our feedstock,” he said.
Regarding feedstock supply for this excess ethane production, Mohammadi said: “There is nothing to worry about, because we hold an extensive look at the supply of feedstock and we have six projects to feed the petrochemical industry, three of which is related to NGL 3100 in the Dehloran area, NGL 3200 in West Karoun and NGL Kharg. Upstream NGL projects in the Bidboland gas refinery are under way.”
He said that commissioning of these six projects would bring feedstock supply capacity to 15 million tons, while the petrochemical industry feedstock would increase from the current 650,000 barrels to 1.35 million barrels by 2025.
Therefore, with the horizon unfolding in Iran’s petrochemical industry, this economic activity in Iran can soon meet the expectations of domestic and foreign investors.
Relying on the homegrown knowledge in this sector and owing to experience gained over previous years, Iran’s petrochemical industry has not been much affected by sanctions. Furthermore, the accelerated profitability of this sector would provide investors with a good chance. Abundant manpower and low-cost feedstock for petrochemical projects in Iran, when compared with neighboring states, would allay the concerns of actors of this sector. Furthermore, the prevailing security and access to petrochemical tools would make investment in the petrochemical sector more and more economical.
Diverse Downstream Products
Ali Mohammad Bosaqzadeh, director of NPC projects, told "Iran Petroleum" the ground had been paved for further diversification of petrochemical products in the downstream sector.
He said over recent years, polymer and compounding manufacturing companies had made significant progress, which facilitated diversity in petrochemical production.
The official touched on the potential of Iranian companies, saying: “Given the capability of domestic companies, the government is expected to provide more support for domestic manufacturers, while imports of products whose similar prototypes exist in Iran should be kept in check.”
According to regulations, state support should be limited to the removal of obstacles to business. The government is barred from direct involvement in this market, paving the way for the private sector to operate based on free interactions.
Downstream petrochemical industrialists are currently pushing ahead with their production with minimum concern, and no crisis could stop this industry.
It would be no exaggeration to say that Iran is currently a haven for the petrochemical industry. In case some regulations and semi-bureaucratic obstacles remaining from previous years are modified, Iran’s petrochemical industry would become an influential sector with significant role in Iran’s economic growth and profitability.