The new US economic blockade on Iran’s petrochemical sector will neither impact exports nor its development plans, the head of Mehr Petrochemical Company, a subsidiary of the National Petrochemical Company, said.
“Several petrochem plants have been under sanctions over the last five years. Nonetheless, both production and exports have experienced an upward trend since 2017, meaning it is futile to boycott this sector as the mechanism to sell petrochemicals differs from that of crude,” IRNA also quoted Mohammad Eslami as saying.
The US Treasury Department said on Thursday it was imposing sanctions on several Iranian petrochemical firms, including Maroun Petrochemical Company, Kharg Petrochemical Company and Fanavaran Petrochemical Company.
“We have the experience of the previous round of sanctions to mitigate the damaging effects,” he said.
“Iran will find new ways to circumvent US sanctions and develop the petrochemical industry under the new restrictions.”
With regard to Iran’s petrochemical advantages, such as abundant resources of natural gas as feedstock and domestic production that has significantly increased in the past few years, the industry will not face a serious problem.
According to the official, petrochemical ventures may take longer to complete due to sanctions, but export volume will not change.
"NPC is well-equipped to tackle the negative impacts of the sanctions," he said.
"The world's supply and demand for petrochemicals are balanced. It would be next to impossible to ignore Iran's market share."
Eslami noted that replacing NPC's production capacity in global markets needs long-term investment plans and restrictions on the import of Iranian raw materials will lead to the shutdown of many petrochemical units in Asia and Europe.
Prominent Players
The industry is at an excellent stage of development, as it can compete with prominent global players in terms of infrastructure, technology, equipment and labor force, he said.
The official stressed that petrochemical exports will continue as usual and with new petrochemical plants coming on stream later this year, the industry will register higher output and exports.
Official data show petrochemicals account for 32% of Iran’s non-oil exports.
Petrochemical is Iran's most important industry after oil and gas.
NPC’s annual output capacity was 40 million tons in 2013, which rose to 50 million tons in 2018.
The company’s current output at 60 million tons per year will reach 120 million tons per annum by 2023.
NPC has announced that revenues generated by selling petrochemical products in domestic and international markets are predicted to reach $21.5 billion by the end of the current fiscal year (March 2023).
“Close to 43 million tons of petrochemical commodities are expected to be produced in 67 petrochemical companies, of which 33 million tons will be exported in 2022,” Behzad Mohammadi, the former head of NPC, said.
“Exports of 27 million tons of products earned $10 billion in 2019. About 8 million tons of petrochemicals worth $5 billion were sold in the domestic market last year.”
According to Mohammadi, the launch of new plants, including Kaveh Methanol Company in Bushehr Province, olefin units in Ilam Petrochemical Complex in Ilam Province, Bidboland Persian Gulf Gas Refinery in Behbahan County, Khuzestan Province, Hegmataneh Petrochemical Plant in Hamedan, Miandoab Petrochemical Complex in West Azarbaijan Province and Kangan Petro Refining Complex raised NPC’s output capacity by 25 million tons in 2020.
40m Tons of Feedstock Supplied
Petrochem plants across the country received 40 million tons of feedstock, including condensates, ethane, natural gas and naphtha, in the last fiscal year, which was equivalent to 1 million barrels of crude per day that will rise to 2 million barrels per day in 2025,” he said.
With the inauguration of new complexes over the next four years, the number of petrochemical plants will reach 77, up 15% compared to the current situation.
“NPC has invested about $80 billion in petrochemical plans over the past four decades,” he said, adding that $25 billion are expected to be invested in the key sector in the next four years.
The former NPC chief noted that petrochemical revenues from exports and domestic sales exceeded $110 billion in seven years.
“Of the total earnings, $80 billion included exports worth $30 billion,” he said.
Reports say 67 petrochemical companies contributed 40% of the currency traded in the secondary foreign exchange market, known locally as Nima.
“As petrochemical production rises, less crude oil will be exported,” Mohammadi said, announcing that local sales have risen by 700,000 tons compared to a year ago.
The petrochemical industry has played a key role in domestic economic growth, as it creates value-added and reduces the sale of oil and gas on which the economy has been dependent for decades.
