2025 Petchem Diversity Planned
Iran’s petrochemical production capacity currently stands at 66 million tonnes a year, earning the country more than $17 billion in revenue. By 2025, the output capacity is planned to reach 133 million tonnes per annum.
Ali-Mohammad Bosaqzadeh, director of National Petrochemical Company (NPC) projects, told "Iran Petroleum": “We plan to concentrate on the value-added chain of products up to 2025 so that the plants produce more value-added products.”
Noting that Iran’s petrochemical production capacity grew fast through 2013-2017, resulting in higher revenue, he said: “That is why we decided to set the year 2013 as the benchmark to compare production growth and hard currency revenue for petrochemicals. To that effect, we have considered three jumps for the petrochemical industry. By the end of each four-year period, Iran’s petrochemical production capacity and hard currency revenue would increase.”
He added that in the first jump (2013-2017), Iran’s petrochemical plants saw a 13% growth in output to reach 64 million tonnes of products a year, raising revenue 9% to $15.7 billion.
In the second jump (2017-2021), the country’s petrochemical production capacity would grow 56% from 64 million tonnes to 100 million tonnes a year with revenue set to jump 45% to $25 billion. In the run-up to the second jump, 27 projects would come online.
The second jump would materialize in two years. In other words, by early 2022, $17 billion worth of petrochemical projects would become operational to bring the number of operating projects to 83. These plants would be fed with 62 million tonnes a year of feedstock, which is equivalent to 1.4 mb/d of crude oil. Therefore, Iran’s petrochemical industry would achieve an annual production capacity of 100 million tonnes with a $70 billion investment, which would bring revenue to $25 billion per annum.
Bosaqzadeh also touched on the planned third jump, during which 25 petrochemical projects would come online.
He said that in the third jump (2021-2025), the production capacity of petrochemical projects would see a 33% growth to reach 133 million tonnes a year with revenue experiencing 50% jump to $37 billion.
By early 2026, Iran’s petrochemical projects are expected to reach 109 in number with a feedstock receipt of 74 million tonnes. That would require $23 billion in investment and production capacity of 130 million tonnes a year. Investment in Iran’s petrochemical industry would reach $93 billion by early 2026.
Bosaqzadeh said: “In the first jump, our objective was to meet domestic needs in widely consumed materials like chemical fertilizers or polymer products and export surplus production. The feedstock was mainly gas, condensate, rich gas and naphtha. In the second jump, efforts have been made to implement projects with mega tonnage in order to supply domestic needs, particularly in the downstream chain.”
He added: “In the third jump, we tried to focus on the value-added chain of products in light of abundant gas feedstock like ethane, propane and butane so that plants would have a higher output.”
“In other words, if we used to convert gas to methanol now we would convert methanol to propylene and then polypropylene for a 30% cut in feedstock receipt. In fact, we plan to reduce semi-raw feedstock exports and instead export products of higher diversity,” said Bosaqzadeh.
He said all these projects were being operated by the private sector and that necessary budget had been earmarked.
“Within two years, the second jump projects would be over and there is no problem with their financing. Although sanctions have slowed down work, so far we have not had any specific problems,” he added.
Bosaqzadeh said in the third jump, the primary focus would be on domestic supply of resources.
He said eight projects had been financed and the remaining ones were waiting for finance. He added that domestic financing and stock market would account for part of finances, while the rest should be foreign. “Ninety percent of private companies have announced they would be able to provide necessary financing,” he said.
1st PHD Unit
Bosaqzadeh said in the third jump, some projects would become operational for the first time.
“For instance, the Lavan development project with a capacity of 1.3 million tonnes would be for the first time producing ammonia and methanol. The Salman Farsi petrochemical plant, as the first PDH unit, would be producing propylene and polypropylene from propane with a capacity of 1 million tonnes,” he said.
He added that the Entekhab, Sahand and Petro San’at Pishtaz petrochemical projects would be producing propylene by applying a new method. He said the Arg petrochemical project would be producing acrylonitrile with a capacity of 140,000 tonnes for the first time in Iran.”
Bosaqzadeh went on to say: “The East Badr project with a capacity of 2.6 million tonnes and the Sina chemical industry project with a capacity of 2.9 million tonnes of GTPO would become operational in Chabahar.” He said these projects would be fresh and offer a new supply chain.
Incentives for Petro-refinery Projects
Asked if any petro-refinery project was envisaged in the third jump, he said: “Petro-refinery projects were implemented in the past too, but since they were financed by the government they were implemented sectorwise; one sector was charged with refining and distribution, the Petroleum Ministry was responsible for another section and petrochemical plants accounted for some other sectors, including the Abadan petrochemical plant and the Abadan refinery.”
Bosaqzadeh said the projects had no problem as long as their shares were owned by government.
“But as soon as privatization began, the shareholders of these units were separated, causing friction among them. Therefore, investment in petrochemical production was set on unifying the shareholders of petro-refinery units. Therefore, the Tabriz refinery and petrochemical plant and the Kermanshah refinery and Bistoun petrochemical plant were put in the hands of a single stakeholder,” he said.
Bosaqzadeh said: “In the third petrochemical jump we have stressed that the stakeholders must be identical in order to prevent any inconvenience in the production chain and feedstock supply.”
He added: “On the other hand, the government envisages some incentives for investors in petro-refinery projects and within a specific period of time, the investors would be granted a grace period for paying for feedstock up to a specific ceiling. In other words, investors would receive feedstock in proportionate with the investment ceiling and would pay nothing for feedstock throughout reimbursing their loans (depending on the project capacity) and after the end of this period, they would do their payments.”
70% of Catalysts Made in Iran
Bosaqzadeh also touched on the production of catalysts, saying; “During the first round of sanctions that started in 2010, we conducted good infrastructure measures in this regard and we managed to domestically manufacture catalysts that were subject to sanctions, like petro-refinery catalysts. Currently we consume catalysts in ammonia and methanol production, eight of which are being manufactured domestically.”
“The last domestically manufactured catalyst was synthesis whose agreement has been signed. This catalyst is expected to be used in the ammonia and methanol units by early next calendar year,” he said.
Bosaqzadeh said: “Currently, we are manufacturing many polymer and polyethylene catalysts domestically. Within two months, these catalysts will reach production and supply a large portion of domestic needs.”
He said: “Therefore, we have produced more than 70% of catalysts on our own and most catalysts would be manufactured domestically by the end of the second jump.”