Iran Breaks Ground on $52m Ethylene Pipeline

Oil Minister Bijan Namdar Zanganeh on Thursday broke ground on a $52 million (2.1 trillion rials) pipeline project to connect Tabriz Petrochemical Company in East Azerbaijan Province to Miandoab Petrochemical Co. in West Azerbaijan Province.

The 154km pipeline will feed 200,000 tons of ethylene annually from Miandoab to Tabriz for production of a wide range of petrochemicals, Shana reported.

Tabriz Petrochemical Co. and Ghadir Investment Company, a subsidiary of Bank Saderat Iran will provide funding for the project.

Ethylene is the building block for a vast range of chemicals, from plastics to antifreeze solutions and solvents, and is also used in the agriculture sector for ripening fruits. With an estimated global output of over 150 million tons in 2016, ethylene is the most commercially produced gaseous compound. It is also produced in nature.

The petrochemical complex in Tabriz has an annual production capacity of 370,000 tons, but the capacity is set to double upon the pipeline's completion by 2021.

According to reports, the complex is also planned to receive ethylene and naphtha from Kavian Petrochemical Complex, Iran's largest ethylene production plant in the southern city of Asalouyeh, through a 1,200-kilometer pipeline that runs from Asalouyeh through the country's northwestern regions.

"Tabriz should turn into a hub of petrochemical development," Zanganeh said, adding that the government is keen to accelerate petrochemical investments in Tabriz by offering 30% discount on the gas feedstock to new plants in the region.

The ethylene flow will enable Tabriz Petrochemical Co. to produce petrochemicals with higher value added, officials say.

Javad Soleymani, managing director of Tabriz Petrochemical Co., said on Thursday that nine new petrochemical units are planned to be added to the complex to feed on the ethylene supplies from Miandoab.

"Construction of the new petrochemical units will result in some 3,000 direct and 6,000 indirect jobs," Soleymani noted.

--- Petrochemical Market

Officials say the fast emerging petrochemical industry needs $72 billion in foreign investment for 80 major petrochemical projects.

Annual petrochemical production capacity is around 65 million tons a year, but plans call for boosting the capacity to 130 million tons per annum by 2020 before reaching 180 million tons by 2025.

Iran exported $9.6 billion worth of petrochemicals in its previous fiscal that ended in March 2016. Despite a predicted rise in volume, the value of exports is forecast to take a hit in the present fiscal and drop to $9 billion.

But Tehran hopes that a tighter oil market in 2017, supported by a global pact to cut crude supplies by nearly 1.8 million barrels a day, will lead to higher revenues from the sales of petrochemicals which typically fluctuate in line with crude prices.