Musts and Mustn'ts in Petchem 3rd Jump
Iran’s petrochemical industry was born five decades ago. This industry has always moved in the direction of macro-objectives of national economic development plans. Over this period of time, Iran’s petrochemical sector has been through five phases: emergence, primary expansion, stagnation due to imposed war, revival and reconstruction, and finally the first jump through the third, fourth and fifth economic development plans. Iran’s petrochemical industry currently stands at a globally high level. The petrochemical industry has progressed in non-oil commodity exports, has seen its share grow in national economy, has registered significant success in research and technology and has upgraded Iran’s status in the region and the world.
Iran’s petrochemical production has a rated capacity of 66 million tonnes now. Thanks to the measures taken by Iran, the country’s status in this strategic industry has been promoted at the regional and global levels.
Petrochemical exports constituted about 34.7% of non-oil and 39% of industrial exports in terms of value in 2016, indicating the high value-added of this industry and its decisive role in the national economy.
After the implementation of Article 44 of the Constitution and defining a new mission for Iran’s National Petrochemical Company (NPC), the macro objectives are as follows:
Sustainable and balanced development of the petrochemical industry in favor of Vision 2025 for the petrochemical industry with a view to value chain completion;
Development of investment and creating new capacities for petrochemical products as well as increasing the value-added of hydrocarbon reserves by taking into consideration value chain completion;
Raising the petrochemical industry share in the national economy and effective presence in global markets; and
Development of technology and activity of domestic knowledge-based companies with a view to nationalizing modern technologies.
Relying on the growth and development of diverse petrochemical products market in recent years across the globe, Iranian policymakers have been striving to make optimal use of the existing economic resources in partnership with domestic and foreign investors and make optimal use of the strategic advantages of Iran’s geographical position based on the latest scientific and technological achievements.
Once the 6th development plan’s objectives are fulfilled, the second jump in the petrochemical industry development with a targeted output of 100 million tonnes would materialize. That would lay the groundwork for the subsequent phases of industrial growth and the third jump.
In the previous development plans, maximum use of gas resources and creating a more value-added from them, the possibility of applying new technologies for developing capacities and diversifying products were envisaged. Future development plans would be drawn up based on the country’s relative advantages, particularly access to rich hydrocarbon reserves and putting emphasis on "no raw materials sales" and completion of production chains, supplying domestic market needs, access to new international consumer markets, benefiting from domestic manufacturing capabilities and paving the ground for downstream industrial development in harmony with petrochemical growth. In this regard, using available feedstock potential (natural gas, ethane, propane, butane, naphtha, etc.) and completing the chain of intermediate products would provide private investors with a new chance to help materialize the third jump in the development of the petrochemical industry.
Development of the petrochemical industry highly depends on feedstock, technology, capital and human resources. Homegrown technology would serve as effective leverage in the development of this industry. Therefore, arranging research plans with a realistic view in line with industrial development plans could facilitate the implementation of projects by reliance on domestic resources.
According to NPC plans, a timely implementation of these plans would bring the petrochemical production capacity to 100 million tonnes in 2021, and to over 130 million tonnes by 2025.
However, in order to reach these objectives, besides feedstock supply, NPC’s role has to be clearly defined with regard to the creation and development of infrastructure needed for assuring investors, and facilitating operation of petrochemical projects particularly in the new hubs. In parallel with the completion of projects, the feedstock needed by these areas as well as ports, jetties and connection routes would be completed and provided to investors. Meanwhile, any deal and lack of coordination in the use of hydrocarbon reserves and investment by the private sector would be avoided.
Another important point with regard to the objectives of the “third jump in the petrochemical industry development” is to clearly define the role of Ministry of Industry, Mine and Trade in the formulation of a roadmap for the development of downstream petrochemical industries.
Over recent years, these industries have been completing the value chain and increased value-added. However, it is noteworthy that as investors in the petrochemical industry need to clearly define development plans based on the country’s economic policies and propose laws in support of projects, downstream industrialists would need transparent laws to reduce spending, create chances for renovation, development and establishment of new industries. That would create jobs, remove impoverishment in various areas, develop the domestic market of petrochemicals (particularly polymer products) and break into international market for downstream industry products.