HOME

CONTENTS

Loaded with Projects

With officials bent on weaning Iran’s economy off oil exports, petrochemicals are stealing the show as National Petrochemical Company (NPC) expands its partnership with global players. Managing Director of NPC International Mohammad-Hadi Rahbari elaborates on measures underway to materialize the ambitions of Iranian petrochemical industry.

Foreign Investment: Talks are underway with ten foreign groups to attract investment for petrochemical projects in Iran. In three cases, negotiations center on design and engineering. Financing takes center stage in a fourth case. Another project has already been put out to tender and we are about to launch it pretty soon. Iran’s petrochemical projects are expected to bring in $6 billion in foreign investment. This will see the country’s petrochemical products rise by five million tons.
Three years ago, a petrochemical seminar in London jumpstarted the flow of foreign investment into the industry either as direct investment or long-term partnership. Several companies expressed readiness to put money into Iranian projects.
Negotiations, conclusion of agreements, executive talks, preliminary feasibility studies, outlining phases, advanced feasibility tests, executive operations and implementation are on the list of jobs to be done for such projects.

Advantages: A number of factors give Iran an advantage in drawing foreign investment; among them: abundance of natural resources including gas and oil, presence of efficient and skilled workforce, a century-old experience in oil industry, a 35-year petrochemical background, presence of engineering and contracting companies with remarkable technical abilities and construction companies. The advantages listed above save such projects at least 50% in costs as compared with other countries.

Production Today, Production Tomorrow: The installed capacity of Iranian petrochemical industry stands at 14.2 million tons this year. Last year’s figure was no more than 11.8 million tons, of which 7.1 million tons were final and saleable products. The 7.1 million tons of 2000 will hit 13 million tons in 2005 and 20 million tons in 2008. The foreign investment drawn for production of five million tons of petrochemicals will be recouped in five years. Presently, Iran accounts for half a percentage point of global petrochemical exports. The figure will hit a 2.1% high in 2005. Even in the absence of foreign investment, petrochemical projects will go ahead. In the past decade, Iran received $3 billion in foreign loans and managed to pay them off as scheduled. Timely reimbursement has brought Iran great credit with international banks. Foreign loans will facilitate implementation of such projects by local experts. At the same time, contribution of foreign companies will ensue exchanges of up-to-date expertise and information.

Potentials: Iranian engineers and contractors have the ability to bid at international tenders and carry out projects overseas. But first and foremost, some banks should be there to provide credit for implementation of foreign projects.
In terms of know-how, some equipment such as reactors are locally manufactured at the moment. Iran has the ability to render technical services overseas, however without the support of insurance companies, the idea will be a non-starter.
To make it onto global stage, three factors seem vital: Technical abilities and competitiveness, financial support of the state, state guarantee of political and trade risks that banks take. Unfortunately, these conditions are not in place in Iran yet.

Ethylene and Polyethylene: Petrochemical giants mainly focus on ethylene production that now stands at annual 700,000 tons in Iran. The figure is expected to hit a five million ton high at the end of the Third Five-Year Development Plan. Capacity of methanol production now hovers about 720,000 tons. Conclusion of some agreements will push the figure up to the five-million-ton level in 2005. Polyethylene production now stands at 500,000 tons and will reach five million tons in 2005.

Future Plans: Under a new project, Khuzestan Petrochemical Plant is to produce engineering polymers that are of great industrial importance. Besides, they have a high value-added factor. The production technology is already obtained. Within two years, a plant with an annual capacity of 35 thousand tons will become operational. The Third Development Plan also has production of isocyanates on the menu. Isocyanates have a wide-range use in auto industry, thermal insulators, industrial foams and home appliances.
A project that will eventually see the production of clean energy will give Iran a higher share of efforts to protect the environment and eliminate pollutants. The final product of this project is clean gas oil – a pollutant-free substance – which replaces the MTBE and leaded gas. The project is already under study and will finally produce 10,000 tons of clean fuel per day.
Projects involving production of polyethylene will soon become operational. Executive operations of two 300,000–ton polyethylene projects will be launched next Iranian year (starting March 21, 2002). At the same time, it is our hope that a project to produce isocyanates be launched at Imam Khomeini Port shortly.
Production of clean fuel is also in the cards. If studies find the project economical, it will be launched in 2006. Among other projects to be started next year are an MTBE production unit at Imam Khomeini Port with an annual capacity of 500,000 tons, parts of a heavy polyethylene plant (140,000 tons per year), a 350,000–ton capacity PET unit, an aromatic unit (610,000 tons per year), etc. Iran has recently received a one billion Euro credit from the European-Asian Banks Syndicate. The credit will support three petrochemical projects in Maroon and Assaluyeh.

Export Revenues: Petrochemical exports fetched Iran $29 million in 1990. The figure stood at $828 million last year. It is expected to retain last year’s level despite a slowdown in global economic growth and drop in prices. We expect exports to climb into all-time highs this year. Iran’s petrochemical exports are estimated to stand between three and four billion dollars in 2006.