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| National Welfare, Ultimate Goal
Mohammad-Hassan
Peyvandi is the National Petrochemical Company’s director for planning and
development and the secretary of Iran Petrochemical Forum (IPF).
Aware of the fact that the Iranian petrochemical sector is expected to bring in forex
revenues and reduce dependence on oil exports, Peyvandi elaborates on the status of NPC
and challenges ahead.
Our Status: Iran’s
petrochemicals production capacity currently stands at 15.5 million tons, which is the
country’s capacity before last year’s inauguration of Kharq Methanol Unit by
President Mohammad Khatami. Through inauguration of two more units, our annual production
capacity will exceed 16 million tons by early next year. This indicates a noticeable
growth compared to the beginning of petrochemical industry marked with the inauguration of
a small chemical fertilizer unit in Shiraz some 36 years ago. At the end of the imposed
war, Iran’s petrochemicals production capacity stood at approximately 800,000 tons
that mainly comprised chemical fertilizer, and the country’s established
petrochemical capacity in 1995 stood at 3.7 million tons. At present, we are taking
advantage of about 92 percent of our installed capacities. Shortage of feed and quality of
feed are the main reasons behind not using the other 8 percent.
To
produce petrochemicals, our country is blessed with comparative advantages including
suitable feed, regional advantages |
NPC has formulated a development plan for
Iranian petrochemical industry which would be carried out in five phases. Phases one and
two of the plan, currently under way, have been integrated to speed up the process.
National Petrochemical Company has established a special petrochemical zone to facilitate
implementation of petrochemical plans. Based on a permit issued by the Free Zones
Organization’s board of directors, all the projects will be carried out in the
“Petzone” located in Imam Khomeini Port. When phases one and two go on stream,
the capacity for producing final products will increase by approximately 5 million tons.
The Third Economic Development Plan:
Based on our projections, with the completion of phases one and two, five million tons
would be added to sellable products and the figure is expected to reach 8.5 million tons
by the end of the third phase. However, by the end of the Third Plan net production will
hit approximately 30 -35 million tons.
Phase two is, in fact, the basis of our
projects during the Third Economic Development Plan. It has been designed according to the
feeds produced by phases one, two and three of South Pars development plan. Our strategy
was to switch from oil feed, which relies on crude oil and refinery, to a natural gas
feed. When the Oil Ministry and National Iranian Oil Company implement their plans in
South Pars field, we will be receiving some 120,000 barrels of gas from South Pars’
third phase for our aromatic complexes. We have also drawn up certain plans for 1.3
million tons of methane extracted in South Pars field.
On the other hand, natural gas, which is used in the country, contains 10 percent of
ethane. Therefore, we camp up with a plan for olefin feed, according to which 1.2 million
tons of ethane would be extracted for the complex. Also, another plan has been formulated
for extracting ethane from Pazenan gas reserves and delivering it to Bandar Imam
Petrochemical Complex to be used for olefin seven. Executive operations of phase three are
currently being carried out in Assaluyeh. Relevant contracts for phase three of South Pars
have been already concluded and a tender is going to be launched for the tenth olefin.
Iranians or Foreigners: All projects have different phases.
During the first phase, blueprints of the project are drawn up. The next phase pertains to
technical and economic appraisal. When the project is approved by the Supreme Council of
Economy, executive operations are kicked off. All petrochemical projects are chosen in
accordance with their economic saving and profitability. Therefore, profitability and
economic justification are the main factors for the implementation of any project.
After these phases are completed relevant technology is selected. Foreign technologists
are identified and negotiations are held. They purchase tender documents and a contract on
detailed engineering, equipment engineering, installation and operation are signed. In the
past, all these stages were conducted outside Iran. At present, only the technology and
basic engineering operations, which form a small part of the overall project, are done
abroad and all detailed engineering operations are carried out by domestic consultant
engineers, all of whom are working for seven companies that are involved in domestic
petrochemical projects. In short, the contract is signed with an Iranian side and foreign
companies are subsidiary partners.
Private Sector: The
private sector has a one-hundred-percent involvement in the projects. Iranian contractors
are also active in the installation and construction parts. Increased domestic
capabilities have decreased projects’ cost. Bandar Imam’s paraxylene tower,
which is the highest petrochemical tower worldwide, was constructed inside the country.
These are results of simultaneous advances in the industry and petrochemicals. Expansion
of the petrochemical industry is not solely dependent on increased capacity. Instead,
other aspects such as construction engineering, installation and building should also
grow. Another important point is the issue of research and expansion of technological
sector. We are vigorously working on this issue.
Privatization is a definite goal of National
Petrochemical Company. The process would be carried out in three ways. First, cession of
old units or those involving simple and small processes, which can be run by the private
sector. Anyway, these units are national assets, whether they are run by the state or the
private sector. The second method is selling their shares in the stock market, which is
the case with petrochemical complexes of Kharq, Arak and Isfahan.
The third method is handing over the project to the private sector, At any stage, when we
make sure that a project is viable, we welcome public participation.
I personally believe that the private sector would promote production, because state-run
sectors do not think economically. Therefore, it is obvious that cession of the industrial
units to the private sector has many advantages. Privatization will convert private
capitals, which are circulating in non-profit activities, to production sector and
increase its output.
Our Share: We are
currently exporting 5.5 million tons of petrochemicals annually. We run offices and
companies outside Iran including in London, Germany, Dubai, Singapore, China and India,
which are responsible for meeting the needs of our customers as well as marketing and
exports. Similarly. National Petrochemical Company has a trade department that is
commissioned with sales of products in and out of Iran.
The Middle East’s net trade of
petrochemicals in 2005, which is the deduction of petrochemical exports from imports,
would reach the positive balance of 14 million tons. At present, the figure is 9 million
tons, 9 percent of which belongs to Iran. We are hopeful that by the end of the Third
Economic Development Plan, 25 percent of the 14-million-ton net petrochemical trade would
belong to our country. Currently, we control half percent of the world market in terms of
value and we hope that the figure would hit 2 percent by the end of the Third Plan. This
does not mean that other countries will not progress in the field. It, rather, means that
petrochemical production in other countries would grow at the aforesaid rate and the world
figure would reach 1 billion tons by 2010. However, our growth trend will be so that
despite their rapid growth, we would be in control of 2 percent of petrochemicals trade.
Nonetheless, materialization of this goal requires all necessary facilities to be
provided.
National Welfare: While
we possess 16 percent of the world gas and 10 percent of its oil resources, our
international status with regard to petrochemicals is not optimal. Yes, petrochemical
industry has a high value-added and is very profitable, but what good will come out of
just reiterating for the next five hundred years that we rank the second in the world with
regard to natural gas reserves? The issue is important only when it is used to boost our
economy and national welfare. This goal, in turn, depends on attaching due importance to
the endeavors of our workers and industries such as the petrochemical industry which
enjoys high value-added.plus
inexpensive and specialized workforce |
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