Iran, World Petchem Hub
Development of downstream oil sector is the only way for Iran to reduce its crude oil sales. Establishment of petrochemical plants in Iran and location of new petrochemical hubs in Lavan Island, Chabahar Port and Iranshahr create opportunities for potential investors. Iran is the only country enjoying all tools, potential sand resources for a lucrative petrochemical industry.
To that effect, Tehran hosted the annual Iran Petrochemical Forum (IPF) on June 7 and 8 in order to exchange views with other countries and attract investment. A total of 330 Iranian companies, 50 foreign companies as well as 70 foreign guests from 23 countries attended the forum.
Petchem Investment Fund
Iran’s Petroleum Minister Bijan Namdar Zangeneh announced plans for the formation of a petrochemical investment fund.
“In order to help the presence of low-income classes in future profitable petrochemical industry projects, Petroleum Ministry is determined to take action for the establishment of petrochemical investment development fund,” Zangeneh told the inauguration of IPF.
“The private sector should be significantly present in Iran’s petrochemical industries, and we know quite well that proper business environment and investment along with good feedstock price and necessary infrastructure are prerequisites for the presence of domestic and foreign private sectors in this industry,” he said.
Zangeneh said the ministry feels obliged to encourage the private sector to investment in lucrative petrochemical projects. “To that effect, Petroleum Ministry has provided the required facilities for the private sector, while preventing any allocation of illegal rake-offs.”
He said diversity in petrochemical products supplied on international markets would spur investment in this sector.
Zangeneh said Iran has raised the value of its petrochemical sales from one to 22.5 billion dollars from 1989 to 2014.
“In late 2013, Iran’s petrochemical industries managed to export 12.8 million tons of products valued at 9.9 billion dollars to world markets and 14.5 million tons was supplied on domestic markets,” he said.
Zangeneh said Iran’s petrochemical products mainly include polyethylene, PET, polystyrene, PP and paraxylene.
He said Iran has won toehold in petrochemical markets across the globe over recent years.
“The latest estimates indicate that in the upstream and downstream sectors, we will need 70 billion dollars, 30 percent of which will be needed in the downstream sector,” he said.
Zangeneh also said that Iran holds around 33.6 tcm of natural gas with a daily gas processing capacity of 600 mcm which is expected to rise to 1,000 mcm/d.
He said the 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.
Gov’t Facilitating Petchem Investment
The Iranian government is ready to facilitate petrochemical development projects, Iran’s first vice-president said.
“Anywhere in the country (particularly special economic zones) where conditions are good for the development of petrochemical industry, the required permits will be granted for investment in this industry,” Es’haq Jahangiri told the opening of IPF.
He said the government would offer such facilities as reduced customs duties and insurance premiums in order to encourage potential investors.
“Iran is currently one of the most secure countries for investment in the petrochemical sector and those interested in investing in this industry must be assured that the Iranian government will provide full support for the participation of domestic and foreign private sectors,” he said.
Jahangiri said the government plans to construct petrochemical hubs in the Persian Gulf and the Sea of Oman.
He said Iran is currently producing 60 million tons a year of petrochemical products, adding that the output is expected to more than double in the near future.
Jahangiri said Iran, which holds 11 percent of the world’s oil reserves and 17 percent of its gas reserves is able to supply feedstock to petrochemical plants across the world on the long-term.
180 mt/y Petchem Output Targeted
Iran expects to raise its annual petrochemical production capacity to 180 million tons as new projects are hoped to come on-stream, the managing director of National Petrochemical Company (NPC) said.
“With the completion of 60 incomplete projects remaining from the previous administrations and the implementation of 36 new methane-fed projects, Iran’s annual petrochemical production capacity will soar past 180 million tons,” Abbas Sheri-Moqaddam told IPF.
“At present, Iran enjoys a 60-million-ton petrochemical production capacity, and due to a variety of reasons including feedstock shortage, only 68 percent of this capacity is used,” he said.
Sheri-Moqaddam said the new 36 petrochemical projects need 41 billion dollars in investment.
He said Iran will see its petrochemical production rise by two million tons a year by March 2015.
He said that four petrochemical hubs are to be established in Parsian Special Economic Zone in the east of Assaluyeh off Persian Gulf waters, Jask Free Zone off the Sea of Oman, Chabahar Free Zone and Iranshahr Special Zone in southeastern Iran.
Iran is determined to become the biggest petrochemical producer in the Middle East.
The country has significantly expanded the range and volume of its petrochemical production over the past few years, and the NPC has become the second largest producer and exporter of petrochemicals in the Middle East after Saudi Arabia.
Petchem Investment Opportunities
Iran is a unique country in the world in terms of opportunities for petrochemical investment, the head of Iran Petrochemical Forum said at the opening of the two-day event.
“Everyone knows that Iran is unique in the world in terms of holding hydrocarbon reserves for the establishment of petrochemical industry,” Mohammad-Hassan Peyvandi said.
He called on First Vice-President Es’haq Jahangiri and Petroleum Minister Bijan Namdar Zangeneh to prepare the necessary infrastructure for the development of petrochemical industry.
Peyvandi said a “new and rare opportunity” has been created for Iran to develop its petrochemical industry.
Iran is determined to become the biggest petrochemical producer in the Middle East.
The country has significantly expanded the range and volume of its petrochemical production over the past few years, and the National Petrochemical Company (NPC) has become the second largest producer and exporter of petrochemicals in the Middle East after Saudi Arabia.
Naphtha Exports to Resume
Iran is to resume exporting naphtha, a deputy head of National Iranian Oil Refining and Distribution Company (NIORDC) said.
Shahrokh Khosravani said the naphtha delivered to Bandar Imam Petrochemical Plant is to be exported.
He said naphtha exports will generate revenues for Iran, adding that marketing for naphtha exports has already been done.
Khosravani said similar plans are under way for the naphtha delivered to Nouri Petrochemical Plant to be exported.
Naphtha is a component of natural gas condensate or a distillation product from petroleum, coal tar, or peat boiling in a certain range and containing certain hydrocarbons. It is a broad term covering among the lightest and most volatile fractions of the liquid hydrocarbons in petroleum. Naphtha is a colorless to reddish-brown volatile aromatic liquid, very similar to gasoline.
Methanol Output Rise
A deputy head of National Petrochemical Company said that Iran plans to raise its methanol production in the coming five years.
Mohammad-Hassan Peyvandi told the Iran Petrochemical Forum that Iran is to produce 10 million tons of methanol in five years. “Almost every six months, a project starts production,” he said.
He said Iran’s petrochemical production capacity reached 60 million tons in 2013.
He acknowledged that due to international sanctions Iran’s petrochemical sector faced hurdles over recent years.
“We plan to speed up the development of petrochemical industry with a new approach,” said Peyvandi.
“Seven methanol projects are under way in South Pars with Chinese finance,” he said.
Peyvandi said Iran’s polyethylene production is to increase by one million tons by the end of 2015.
Bank Mellat Ready to Finance Petchem Projects
Iran’s state-run Bank Mellat is ready to contribute to the finance of petrochemical development projects, managing director of the bank said.
“As the second largest bank in Iran, Bank Mellat is fully ready to cooperate in the development projects of Iran’s petroleum industry, particularly in the petrochemical sector,” Farzad Saroukhani said.
He said that Iran’s massive oil and gas reserves promise a bright perspective for the country, adding that Iran’s economy could be revamped by funding oil, gas, refining and petrochemical development projects.
“By 2035, the share of oil in global energy supply will reach 36 percent and that of gas will reach 29.9 percent. These figures underscore the significance of investment in the energy sector,” he said.
Saroukhani said financial bodies in Iran are expected to support petrochemical industry.
“By 2025, 500 billion dollars must be invested in Iran’s petroleum industry, 74.5 billion dollars of which in the petrochemical sector,” he said.
Saroukhani said the establishment of energy fund in Bank Mellat is a major step in favor of Iran’s petroleum industry.
He said that another fund is to be established with the collaboration of National Petrochemical Company (NPC).
IPF Proves Energy Diplomacy Success
Iran Petrochemical Forum (IPF) which wrapped up on Sunday showed the success of Iran’s energy diplomacy, the head of the forum said.
“The successful organization of this forum showed that Iran’s petrochemical sector enjoys a special status at the international level,” Mohammad-Hassan Peyvandi said.
He said the coincidence of this year’s IPF with Iran’s nuclear talks with six world powers would bring about positive achievements for Iran’s petrochemical industry.
Peyvandi said Iran is willing to turn the page in its petrochemical activities, as more sanctions are hoped to be lifted.
He said 50 foreign companies from 23 countries attended this year’s IPF in which also participated 1,300 340 Iranian companies.
Peyvandi said positive talks were held on the sidelines of the two-day forum between Iran and foreign companies.
“A good opportunity has been created for further cooperation with international companies and this opportunity should not be lost,” he said.
$5b Investment Needed
Iran's Industry, Mine and Trade Minister Mohammad Reza Nematzadeh said the country needs at least $5 billion in investment per annum to reach petrochemical development plans by 2025.
In an address to the 11th IPF, Zangeneh said Iran has hydrocarbon-rich reservoir with ethane, methane, propane, and butane. He urged officials to provide the feedstock needed for petrochemical units.
He also urged the private sector to get involved in the petrochemical projects actively and underlined the need for officials to pave the ground for such an involvement.
“Feeding is an important issue which can be addressed by private investors,” Nematzadeh said. “Given the existing infrastructure, we need to have a comprehensive plan to supply feedstock, optimize oil and gas fields, and expand LNG plans,” he added.
The minister underlined the need to develop the petrochemical sector as an industry that could help develop downstream industries.
Iranian Deputy Petroleum Minister Mansour Moazzami said the NPC plans to export products worth $12 billion by the end of the year (March 2015), up from $10 billion in the previous year.
He said the recent sanctions relief "is going to be felt gradually," as the US-led sanctions have already affected two major issues: financing projects and providing technology.
To develop a petrochemical project, Iranian officials need to consider whether the site is near either a consumption market or a major feedstock center, Moazzami said.
It's not a true policy to create a petrochemical site in order to develop a city or province, he said, adding that every project needs to be economically viable.
Foreign Companies Eager for Cooperation
Aldo Belloni, member of the executive board of Germany's Linde Group, said his company can offer cracker technology for Iranian plants of up to 2 million MTA ethylene capacities.
Belloni said such units could be executed in the well demonstrated cooperation with local partners based on a split allowing significant work in Iran and a smooth execution as demonstrated before.
He said Linde will start cooperation with Iran as soon as sanctions are lifted.
Education and training of the operating staff as well as operational support is also offered by Linde for upcoming projects.
In addition, Linde can offer new technologies for petrochemical products, Belloni said.
Given the fact that Iran enjoys outstanding human resources and is number 2 in proven gas and number 4 in oil reserves, the country guarantees a sustainable advantage over competitors on the international petrochemical market, he stated.
Jorgen Nergaard Gol, executive committee member and vice president of Denmark's Haldor Topsoe A/S said his company will invest in Iran's petrochemical sector as soon as anti-Iran sanctions are lifted.
Gol said Iran can enjoy Haldor Topsoe's 74 years of experience in providing advanced solutions based on catalysis.
"The R&D efforts of Topsoe have always been distinguished by our strong focus on achieving fundamental scientific understanding – and our unique ability to continuously transform this knowledge to concrete benefits that provide our customers real competitive advantage," he noted.
Being a private company focused solely on catalysis, "we have the freedom to take the long-term perspective and we continuously work to approve our understanding of catalysis right down to the molecular level," he said.
Ragnar Berg, the business development director at Eastport Maritime Pte Ltd, said he is very "optimistic" about the future of the Iranian petrochemical sector as the quality of the Iranian-made products is acceptable in the world.
There is a great opportunity in the sector for Western investors, Berg said in an interview on the sidelines of the international petrochemical forum held in Tehran.
He said his company has been active in Iran since 2000, providing Iran with "suitable vessels" that help it "distribute its products in the Asian and European markets."
He touched on the "limitation of ship owners" in the country describing it as the biggest challenge the Iranian petrochemical industry has been facing. "We still have insurance problems with ship owners," he added.
He expressed hope that the political atmosphere will improve, as nuclear negotiations between Iran and the P5+1 – the five permanent members of the UN Security Council plus Germany continue to resolve a decade-long dispute over Tehran's nuclear energy program.
Executives of Axens, a leading French petrochemical company, have respected US-led sanctions against Iran so far, but they are now hoping that the ongoing nuclear talks will end up reaching a comprehensive deal between Iran and the P5+1 group so that the company can resume work at the Iranian petrochemical sector, said the company's CEO Jean Sentenac.
Sentenac noted that petrochemicals demand growth is set to continue to be higher than demand for oil demand.
"The high demand for petrochemicals is pushing refining industry to produce more and more petrochemical feedstock," he said.
"Integration between refining and petrochemical industries is today required to create opportunities as for example the higher valorization of molecules with low value either on refining side such as naphtha, propylene, BTX, or on petrochemical side Pygas and excess hydrogen," he said.
The general manager of Denmark’s Haldor Topsoe A/S said his company provides high quality catalysts that help enhance ammonia and methanol capacity.
“Increasing demand for larger ammonia and methanol plant capacities requires superior performance from synthesis catalysts,” said Henrik Surow Larsen.
Topsoe’s catalysts provide “this level of quality, proving through many references to have the highest activities on the market,” he said. “With our products, plant owners can expect efficient and profitable production as well as reliable plant performance.”
“The new magnetite-based catalyst [KM 111] is developed for optimal performance in the lower beds of the ammonia converter,” he said adding that the new product “in conjunction with our industry-leading catalyst KM1 increases the profitability of ammonia production through record high production levels, as well as savings in energy consumption.”
The company’s recent contributions also include a new methanol synthesis catalyst, MK151-FENCETM, whose qualities benefits to methanol producers – extended catalyst lifetimes for longer turnaround cycles, energy savings, and very high production levels with a minimum of by-product formation.
Andrea Borruso, president of Switzerland’s Borruso Polymers Gmbh, reviewed the increasing price divergence between natural gas and crude oil, particularly in the US.
He also talked about how the availability of ethane in the US, thanking to shale gas developments, has fueled a massive capacity expansion in North America.
“To complete the petrochemical feedstock revolution, the development of large coal based investments in China, sustained by the Coal-to-Olefin technology is creating a new geographical pole of petrochemical production,” he said.