Caution Against Unrealistic Job Prospects in Petrochem Sector

The petrochemical sector, one of the key industries after oil and gas, has huge potential for growth and development, but officials and experts are warning against unrealistic expectations and statements about the economic potential of petrochemical industry.

Abbas Shari-Moqadam, former managing director of the state-owned National Petrochemical Company, says that 1 million tons in installed petrochemical production capacity roughly creates between 20,000 and 30,000 jobs in the downstream supply chain, which includes facilities such as petrochemical plants, refineries and natural gas distribution companies, ISNA reported.

He made the statements in response to the views of a presidential candidate who has claimed that 600,000 new jobs will be created per 1 million tons in new petrochemical output capacity. Iran's presidential election will be held on May 19.

"Employment in the downstream sector is 10 to 15 times more than that of the upstream sector. Therefore, for every 20,000-30,000 downstream jobs, there would be some 2,000 upstream jobs," Shari-Moqadam noted.

He also responded to claims that domestic capacities are adequate to develop the key petroleum projects.

"A large number of the overall downstream units, including petrochemicals, have either stopped functioning, scaled back operations or cut production due to lack of advanced technology to produce at competitive prices and boost exports."

Other analysts say role of the petrochemical sector in creating jobs is less pronounced.

  Unfeasible Data

In an interview with ILNA on Friday, Hojjat Mirzai, deputy minister of cooperatives for planning and economic affairs, played down the prospect of creating 600,000 jobs by raising petrochemical output capacity by 1 million tons.

"If that could be true, some 24 million people would have been on the payrolls of the petrochemical industry with an annual production capacity of more than 60 million tons. But such assertions indicate a lack of basic knowledge and understanding about employment data and the labor market," Mirzai said.

Total employment in the country is around 23 million people, he said, referring to official government data.

"One unit with a capacity to annually produce 1 million tons of petrochemicals requires between $2.5 billion and $3 billion in investment, creating around 3,000 jobs in an optimistic scenario," Mirzai said.

"To create 400,000 petrochemical jobs, not one but more than 100 production plants with a million-ton capacity should be built… and this requires foreign investment along with improved business climate."

Tehran says nominal petrochemical output capacity will reach 72 million tons annually by March 2018 upon the completion of major petrochemical projects in the south.

Plans call for boosting production to 130 million tons per annum by 2020. Actual output exceeded 50 million tons in the previous fiscal that ended on March 20.