Analysts say Iran can make more money from natural gas and petrochemical products than it makes from oil, a crucial source of income that has provided the lion’s share of the country’s budget over the past three decades.
Albert Boghazian, an economic analyst and a university instructor, said Iran can turn to the petrochemical industry to make up for dwindling oil revenues, ILNA reported.
“The petrochemical sector can become the country’s primary source of revenue, but it cannot be done in the short run,” he said. “The issue of processing gas [into more valuable products] and establishing new refineries should be a priority, regardless of political factors or fluctuations in oil and gas prices.”
Iran is targeting $70 billion in petrochemical investment in the post-sanctions period and nominal production capacity is set to reach 70 million tons a year by March 2016.
The analyst added that the production of higher value added products from natural gas has always been an alternative when oil prices plummet, but “any such plans are forgotten as soon as crude prices rebound”.
Boghazian also singled out underinvestment in refineries as the underlying issue that thwarts petrochemical development.
“Little has been done over the years to expand the number of refineries and there is a lack of finance to build new refineries and export products with higher value added,” he said.
$40b Gas Potential
Iran’s gas sector can attract $40 billion after the lifting of sanctions under new build-own-operate and build-operate-transfer contracts, head of the National Iranian Gas Company said in a statement on Sunday.
“Iran can easily raise gas exports to neighboring countries by maintaining reasonable foreign relations after the removal of sanctions,” Hamidreza Araqi added.
“Having access to global markets, the world’s biggest gas reserve and the export infrastructure has helped the Persian Gulf country become a major player in the global gas market.”
Araqi also said supplying gas via pipelines of large diameters is justified for a distance of up to 3,000 kilometers. Officials in the past few months have stressed that gas export through pipelines is not a priority.
Iran exports natural gas via pipelines to three neighboring countries, namely Turkey, Armenia and Azerbaijan. Ankara receives more than 90% of Iran’s gas exports under a long-term contract, and Yerevan and Baku receive around 6% and 3% of Iran’s natural gas exports, respectively, under swap agreements.
