Investment in Iran Petchem Sector
One of seminars held on the second day of the IPF focused on investment and finance. The gathering was attended by Mohammad-Reza Saroukhani, managing director of Bank Mellat, Issa Mashayekhi, managing director of the international branch of National Petrochemical Company, Shahryar Hakimi, managing director of Silk Road Strategic Consulting Company and Mohammad-Hadi Rahbari, managing director of Pasargad Energy Development Company.
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 outlook 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 the gas share 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).
Shahryar Hakimi , the managing director of Silk Road Strategic Consulting, says Iran Foreign Investment ACT supports international investment in the country.
Hakimi praised Iranian government for encouraging foreign investment, saying “the current situation in the country is very positive.”
He introduced to the forum a number of Iranian rules and regulations that help reduce investment risk in the country.
He said Iran Foreign Investment ACT has been updated now, so that foreign investors are able to hold the ownership of the projects they are in charge in Iran. But, he added, the law has remained unknown due to external restrictions, including US-led sanctions.
The law is “a viable gateway for investment,” which has “added guarantees and benefits” for international investors, he said.
Indian ambassador to Tehran D.P. Srivastava says his country will continue petrochemical trade with Iran, hailing Tehran's decision to hold a petrochemical conference.
On the sideline of the 11th international Iran Petrochemical Forum in Tehran, the ambassador said in an interview on Sunday that his country prefers to import petrochemicals from Iran, which is “very close” to India. In the meantime, he said, India “lacks feedstock” therefore, it needs to import petrochemical products from an oil and gas rich country like Iran.
He also said it was “an excellent idea” to hold such a conference in Tehran as it gathers consumers and producers together. “The exchange of views was very helpful.”
The ambassador expressed hope that the political and economic relations between the two sides will improve.
Regarding the pending oil payments, he said that the Indian government already announced that Tehran can use the payments to buy “pharmaceuticals and food.”
Iran should create a logistic hub to complete a value chain in the petrochemical sector, said a petrochemical expert.
“According to a client, it costs a businessman only $30 to transfer a container full of polymer from Jebel Ali [Free Zone in the UAE] to Shanghai. And we want to have clients in Iran and Saudi Arabia, and we are ready to help Iran create a logistic hub,” said Wolfgang Hoppman, technical director of Germany’s Karl Schmidt Spedition GmbH & Co. KG.
He encouraged a “smart planning” that would help Iran’s petrochemical sector to more easily export millions of tons of products per annum, while prices will remain competitive and shipments will be safe and fast at the same time.
He said transportation of a shipment should take 7 to 10 days maximum. “So Iran needs giant warehouses, where products can be stored for 10-15 days before they are exported.”
Before the start of the forum, a deputy head of National Petrochemical Company had said that US-led sanctions against Iran's petrochemical sector have also hurt European companies over past years.
"In my opinion, sanctions against Iran's petrochemical industry severely hurt Europeans, who could benefit from providing finance and technical support for the Iranian industry," said Mohammad Hassan Peyvandi.
He said the forum this year host more foreign guests compared to previous years. He also expressed hope that the Iranian petrochemical sector will grow rapidly if Iran and the P5+1 group – the five permanent members of the UN Security Council plus Germany – reach a comprehensive deal, which is believed to lift all existing sanctions.
"We can't expect a jump in exports immediately after the Geneva deal, because issues like money transfer and insurance must first be addressed, as agreed, during the negotiation process," he said, referring to an interim nuclear deal reached in November between Iran and the P5+1. The deal eased the sanctions which have been imposed on Tehran over a decade of dispute with the West.
Peyvandi said the NPC did not wait for the final outcome of the negotiations and a possible relief of sanctions. "We decided to hold the forum while the [nuclear] talks continue."
The forum, he said, is also aimed at encouraging private investors to get actively involved in the Iranian petrochemical sector. "According to law, the NPC is only able to invest in deprived areas," so it is a great opportunity for the private sector to fill the gap and help develop the sector.