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NPC, Linde,
Deutsche Bank

A vision on global cooperation, two international conferences, a lot of negotiation, and a stated will to boost market share is pushing the Iranian petrochemical industry ahead to the leading edge of the country’s industrial growth. According to the German engineering group Linde, it won a contract worth 350 million euros (333 million dollars) to build the world’s largest olefin plant in Iran’s free trade zone, Bandar Imam, by the Persian Gulf. The project was commissioned by the Iranian National Petrochemical Company (NPC) and was announced to coincide with the visit of President Mohammad Khatami to Germany, Linde said in a statement.
Olefins are hydrocarbons that form the basis for the production of plastics such as polyethylene and polyester. The plant, scheduled to be completed in 2003, will have an annual capacity of 1.1 million tons of ethylene and 200,000 tons of propylene. The contract also covers a natural gas separation facility which will supply the new olefin plant with ethane, propane and butane via a 100-kilometer (60-mile) pipeline. It is Linde’s second order in two years for construction of an olefin plant in Iran.

550 Million Euros: Construction of the world’s largest olefin plant is not the latest news of Iran’s petrochemical development. A consortium of European banks, led by Deutsche Bank, arranged a 550-million-euro loan for the financing of contracts with Iran’s National Petrochemical Company (NPC). The package will meet up to 100% of the financing requirements of the envisaged investment projects under NPC’s current development program.
According to the Middle East Economic Digest (MEED), the syndicate of German, French and Italian banks includes AKA Ausfuhrkredit, Bayerische, Hypo-Vereinsbank, Berliner Handels Frankfurter Bank, Commerzbank, DG Bank, WestLB, Kreditanstalt fuer Wiederaufbau, Banca Commerciale Italiana and Societe Generale.
The financial package, which has cover from the German, French and Italian state export credit guarantee agencies, is said to provide for parallel agreements by international trading companies to market NPC’s petrochemical products.
In another development, three European firms are reported to have been shortlisted for two upstream and downstream units at the 9th olefin plant in Assaluyeh while tenders have also been issued for the 10th olefin plant as well as the 4th methanol project. This came just a week after the private Kermanshah Petrochemical Complex announced a joint venture with a foreign consortium to build a $486 million fertilizer plant.

New Petrochemical Strategy: NPC President Mohammad-Reza Nematzadeh recently announced that his company, in addition to supplying raw materials to 6,000 industrial units in Iran, exports its products to 40 countries of the world through which it made $600 million in hard currency income.|
Referring to the joint ventures of NPC with domestic and foreign companies in the petrochemical field, he added that given the rise in the consumption of petrochemicals in the world, Iran should also try to make up for its shortcomings in this field. “Over the past 10 years, large investments have been made in the petrochemical industry and this trend will continue in the future.”
The global growth of GDP during the past decade has been 2.5%, and it is predicted that this would reach 3% in the following decade. This is while the increase in the petrochemical products was 5% in the past decade and it is predicted that it would reach 4.5% in the next 10 years.
Nematzadeh referred to the production capacity of petrochemical products at the international level in the coming decade, which is estimated to reach 1,000 million tons from a former 650 million tons. He added that the growth in the petrochemical products in the Middle East has been two times more than the growth of petrochemical consumption at the global level. The prediction of an 8% growth for the production of such products in the next decade shows that the Middle East maintains its key role in the global market.
According to Nematzadeh, as Europe and Asia are gradually becoming importers of petrochemicals, the Middle East is becoming a major exporter of them.
“Currently, most petrochemicals are produced based on liquid raw materials, but with the adoption of a new strategy, gas feedstocks will be used. About 20 million tons of needed petrochemical products can be produced from gas and in order to translate that into action, two petrochemical projects have been launched in Bandar Imam.”
Nematzadeh stated that the value of petrochemical products of Iran is $1.8 billion based on the Persian Gulf FOB prices. This figure will reach $7 billion by 2005. In the next five years, up to 70% of these products will enter the world markets and the volume of the income received from exports will reach $4 billion.