Holding Stakes in Foreign Petrochem Complexes Unviable

Holding Stakes in Foreign  Petrochem Complexes UnviableHolding Stakes in Foreign  Petrochem Complexes Unviable

Purchasing shares of foreign petrochemical complexes is economically unviable, managing director of National Petrochemical Company said.

Asked about plans to buy and launch petrochemical units in other countries in post-sanctions era, Abbas Sheri-Moqaddam said, "The failed experience of purchasing a polyethylene unit in the Philippines—aka NPC Alliance Corporation—indicates that disadvantages of such investments far outweigh its benefits," IRNA reported.

According to the official, NPC bought a polyethylene unit in the Philippines to transfer surplus ethylene from Iran in order to produce polyethylene, but the unit made a big loss as it was not supplied with the much-needed ethylene.

"The economic performance of the complex is so weak that Persian Gulf Petrochemical Holding—the owner of the complex—is planning to sell it," he added.

The official believes that the problem is rooted in ethylene shortage.

"We assumed we would have surplus ethylene to export. However, there is a severe shortage of ethylene even for domestic petrochemical complexes, let alone those located overseas," he said.

Highlighting the fact that investing in foreign states can be beneficial in long run, Sheri-Moqaddam said tackling domestic challenges should be given priority over expanding petrochemical units abroad.

In 2006, Iran bought a 60% stake of the Philippines Bataan Polyethylene Corporation to produce polyethylene for Asian and European target markets.

NPCA was established as a world-class polyethylene plant that presently occupies 187,200 square meters in Bataan, Philippines.

Set up to provide high-quality resin to meet the rapidly increasing demand worldwide, NPCA could have been a key player in the petrochemical industry.

Currently, 45 petrochemical units produce around 60 million tons of products, accounting for 36% of the total non-oil exports. According to global estimates, Iran holds 24% of the Middle East's and 4.2 of the world's petrochemical production capacity.

Iranian petrochemical output is projected to hit 100 million tons, valued at $20 billion, by 2017. Iran's main petrochemical exports include methanol, urea, polyethylene and aromatics.

Iran will be capable of exporting $80 billion worth of petrochemicals by 2021, provided funding is allocated on time. Currently 67 semi-finished projects have a capacity of 60 million tons, the completion of which needs $36 billion.