Iranian petrochemical production and exports grew by 8% and 5% respectively between July 2021 and April 2022, and reached 32 million tons and 22 million tons compared to a year ago.
Based on data from the National Petrochemical Company's news website Nipna, the sector’s nominal output capacity is around 75 million tons, but shortage of feedstock and not having a strong presence in global markets do not permit the industry to operate at full capacity, the Energy Today website reported.
The nominal production capacity of 67 major petrochemical complexes, mostly concentrated in the cities of Mahshahr (Khuzestan Province) and Asalouyeh (Bushehr Province), is forecast to reach 90 million tons by March 2023, with actual output forecast to reach 42 million tons in seven months.
Of the total production (32 million tons) over the 10-month period, close to 22 million tons were sold in international markets and generated about $14 billion in revenues. The figure experienced a 5% rise in volume and 62% growth in value compared with the corresponding period of a year ago.
The rest of the production (10 million tons) was sold domestically and earned half as much as export revenues.
NPC’s annual output was 3 million tons in 1979, which has now reached 60 million tons.
According to Hassan Abbaszadeh, NPC’s director for planning and development, 920,000 people are active in the industry and a rise in NPC’s production by 1 million tons can create jobs for at least 170,000 more people.
He noted that over 30 projects have been planned to reduce the import of petrochemical products worth $1 billion.
Importing Petrochemicals
Annually, about $1.5 billion worth of petrochemical products are imported. Nevertheless, with the help of 33 development projects, their import will reduce by 70%.
With the implementation of these projects, NPC also seeks to diversify the range of petrochemical products and help complete the value chain in the petrochemical sector.
Currently, 68 projects, worth $35 billion, are underway across the country to increase petrochem output by 50 million tons per year and help develop the downstream sector.
The annual production capacity of Iran's petrochemical industry will soon reach 90 million tons per year from the current 75 million tons per annum and plans are underway to boost the same to 135 million tons in six years.
The petrochemical industry has played a key role in Iran’s economic growth, as it creates value-added and reduces the sale of oil and gas on which the economy has been dependent for decades.
With abundant hydrocarbon reserves and new private sector investments, Iran is working hard to maintain its global status in the key sector and broaden its scope.
According to Abbaszadeh, annual revenues from the petrochemical industry will reach $50 billion by 2027.
About 67 petrochemical 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.
“The figure is expected to surpass 2 million barrels per day in six years,” he added.
Global Demand
Demand for oil derivatives rises by 0.9% per year globally while the figure stands at 5% for petrochemical products, which indicate the importance of the strategic sector.
“NPC has invested close to $80 billion in petrochem projects 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 NPC official noted that petrochemical revenues from exports and domestic sales in the past seven years exceeded $110 billion, noting that as petrochemical production rises, less crude oil will be exported.
Unlike other major industries that have not grown over the last four years primarily due to the US economic siege, petrochemical output is rising and production capacity is near 75 million tons a year.
“Almost 90% of the petrochemical firms performed beyond their financial commitments and repatriated export earnings,” he added.
Abbaszadeh said petrochemicals are rapidly becoming the largest driver of global oil demand, adding that the growth in demand means petrochemicals would account for over a third of growth in oil demand to 2030, and nearly half in 2040.
Petrochemical factories in Iran are projected to consume an additional 56 billion cubic meters of natural gas by 2030, equivalent to about 20% of annual gas consumption now (255 bcm).
