Iran has announced several projects to expand the local gas transportation network, lending support to local pipe producers. In spite of effective import duties, suppliers from abroad will also benefit from growing steel pipe demand in the country amid implementation of the new pipeline projects, according to Metal Expert – a Ukraine-based provider of news and analysis on steel products and steelmaking raw materials industries.
Iran plans to lay 6,000 km of gas pipelines nationwide, thereby raising the total length of the gas transportation system to 40,000 km in the coming years, according to Hassan Montazer Torbati, managing director of Iran Gas Engineering and Development Company. The company also aims to develop the network of gas compressor stations. Apart from the existing 76 facilities operated by IGEDC and 10 similar projects that are underway, 36 new stations are to be built in the future.
Substantial investments in the national gas pipeline system is related to Iran’s plans to ramp up production and hydrocarbon exports after the removal of sanctions imposed against the country over its nuclear energy program. By 2020 Iran plans to step up gas production to 385 billion cubic meters per year, with daily output to increase more than 1.5-fold from the current 735 million to 1.2 billion cubic meters, according to the National Iranian Gas Company.
Sanctions were removed in January as part of a landmark deal struck between Iran and world powers last year. In exchange Tehran has agreed to limit the scope of its nuclear program.
The government’s ambitious plans in oil and gas sector will support local pipe producers, especially the largest ones such as Ahwaz Pipe Mills Company, Safa Industrial Group, and Sadid Industrial Group. Flats producers also benefit from rising demand in the pipe segment. Now annual demand for steel pipes is around 1.8 million tons in the country and no less than 2 million tons of flats are required to produce that volume, Mobarakeh Steel Company, the largest flats producer, estimates.
Moreover, despite an effective 5-26% import duty for pipes depending on product type, foreign suppliers also have good chances to occupy their niches in Iran.
According to the Syndicate of Steel Pipe and Profile Manufacturers, about 70% of Iran’s 4-million-ton-per-year steel pipe manufacturing capacity has remained unutilized due to weak domestic demand.
