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High Gas Feedstock Prices Lamented

High Gas Feedstock Prices Lamented High Gas Feedstock Prices Lamented

The price of gas feedstock supplied to Iran's petrochemical plants is the most expensive in the world, thus deterring investment, director general of Petrochemical Employers Association said, ILNA reported Wednesday.

The 13-cent price of petrochemical complexes' feedstock is unreasonably set, Ahmad Mahdavi said, adding: "Investment in petrochemical industry would decrease drastically should the pricing remains the same."

Saudi Arabia currently offers gas and liquid feedstock at a 30% discount, whereas Iran's discount amounts to 5 percent of free-on-board (FOB) prices, which would only cover transportation costs.

Apart from Persian Gulf states, prices of gas feedstock for petrochemical plants is cheaper in Russia and Canada, with the average price in Persian Gulf, North America, and Africa standing at 5.5 cents.

"Few countries are willing to invest in petrochemical industry given the current price of feedstock," Mahdavi stated, adding that prices must be set in a transparent manner and for a longer term.

According to the law, the government is required to offer a 10% discount to those who have signed a contract for provision of feedstock to downstream and midstream sectors, taking into account the average volume of exported, imported, and domestically consumed gas.

While the price of Iranian gas stands at 48 cents per cubic meter, it is sold to petrochemical complexes at a price of 13 cents. "The current prices would only result in illegal trade of feedstock," Mahdavi asserted.

A long-term price formula is crucial for foreign investment, deputy oil minister Abbas Sheri- Moqaddam said Monday. Some countries provide investors with cheap gas, and instead impose taxes on producers, while no tax is imposed on investors operating in Iranian Free Zones as well as remote regions.

Iran ranks first in the world in terms of natural gas reserves and third in terms of oil reserves, according to the latest statistics compiled by BP.

 

Financialtribune.com