The Persian Gulf Petrochemical Industries Company was ranked second in terms of capital spending on the list of major chemical companies in 2018 issued by the Independent Chemical Information Service.
In ninth place in 2017, PGPIC moved up seven places to be second, with over $3 billion of capital spending, the Oil Ministry news agency Shana reported.
The top of the list belongs to German chemical company BASF, the largest chemical producer in the world, with $4 billion spending.
Capital spending (also known as capital expenditure, capital expense or capex) is the use of funds by a company to acquire physical assets to improve its value or increase long-term productivity.
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PGPIC is Iran’s largest petrochemical company, owning more than 11% of the domestic capital market.
It was among the 20 top chemical companies that had the largest operating profits in 2018. With over $3.2 billion in profit, it was in 17th place with 44.5% increase.
The holding, which was ranked 38th in the ICIS list of top chemical companies in 2017, improved its status the following year and sat on the 35th place.
Being the largest and most lucrative company in Iran, it is ranked third among the regional companies in terms of size and profit making.
PGPIC sales surpassed $10 billion in 2017 and increased by 24.5% compared to 2016. It had a 2.7%-rise in sales from 2017 to 2018, lifting its revenues to $10.2 billion.
Sanctions No Bar
Last May, the US pulled out of the nuclear deal signed between Iran and six world powers in 2015 and later imposed new sanctions.
The US Treasury Department announced in June new restrictions on Iran's petrochemical sector that would apply to PGPIC and 39 of its 60 subsidiaries and foreign sales agents.
PGPIC managing director Jafar Rabiei said Monday that the US penalties on the key petrochemical industry, which seek to “zero” Iran’s exports “have failed but did cause us trouble”.
PGPIC accounts for 37% of the total national petrochemical production, which is close to 60 million tons per year. It also accounted for 41% of Iran's petrochemical exports in 2017.
“The company’s output will rise by 6 million tons per year by the end of the current year (March 2020) after the launch of three major petrochemical and refinery projects,” he added.
In August, Rabiei said that the PGPIC had $10 billion worth of petrochem manufacturing projects underway, noting that it is an indication that the firm is on track despite the illegal sanctions.
Output, Exports and Revenue
Iran’s petrochemical sector is the second-most important industry in Iran after oil and gas. Improvement and optimization of petrochemical plants is underway to boost productivity.
Currently 56 plants are operational and 23 are under construction, which are expected to start production by 2025.
Iran produces a large variety of petrochemicals (350 types), for which there is high international demand, and exports to 30 Asian, European and South American countries.
Iran has invested $53 billion in the industry and total investment will reach $93 billion by 2025.
According to plans, annual petrochemical production capacity, which now is 66 million tons, would cross 100 million tons by 2021 and reach 130 million tons four years later.
The petrochemical sector is planned to generate more than $25 billion by 2022, and $37 million by 2025, compared to the present $17 billion.
