New Body to Coordinate Petrochemical Exports

New Body to Coordinate Petrochemical ExportsNew Body to Coordinate Petrochemical Exports

A new entity should be established to regulate and coordinate the petrochemical exports of Iranian companies that claim a bigger stake in foreign markets following the removal of trade restrictions against Tehran in January.

Oil Minister Bijan Namdar Zanganeh made the statement in a meeting with six major petrochemical companies on Thursday, IRNA reported.

"A coordinating body for the sale of petrochemical products should be established under the supervision of the National Petrochemical Company," Zanganeh said, without elaboration.

NPC is the country's chief regulatory body in the petrochemical sector. The state-owned company used to be a conglomerate of dozens of petrochemical firms that are now privatized as part of Iran's push toward privatization of its major industries. Zanganeh also said that forming this entity is the most reasonable way to minimize "damage to the export of some petrochemical products".

The proposed establishment is potentially an effort to boost the marketing of Iran's petrochemicals in a global market that is still cautious of doing business with Iran more than five months after the removal of sanctions against the country's nuclear program.

The body can also streamline some processes for export, including shipment and insurance coverage that still face hurdles.

The US and EU sanctions undermined Iran's oil and gas sector, and consequently left their damaging mark on the petrochemical sector, Iran's second most valuable industry.

But the Middle East nation is on a quest to bolster its petrochemical production which, according to some analysts, can become more valuable than its oil sector in the long run.

Zanganeh added that the ministry is keen to address the issue of feedstock supply to petrochemical plants, which is one of the main concerns of domestic and foreign investors alike.

However, the floating price of feedstock in Iran compared to the competitive and fixed tariffs of some Arab neighbors can stymie investments in this sector.

The government came up with a formula last year that set the price of gas as feedstock at between 8.5 and 9 cents. But according to reports, most units still procure feedstock at a price of 13 cents per cubic meter that had been in place before the introduction of the new framework for pricing.