Jask, Chabahar Seen as Future Petrochem Hubs

Jask, Chabahar Seen as  Future Petrochem HubsJask, Chabahar Seen as  Future Petrochem Hubs

Chabahar and Jask are the future petrochemical hubs, Mohammadreza Nematzadeh, the minister of industry, mine and trade, said at a conference on the 50th founding anniversary of the National Petrochemical Company (NPC), according to Shana news agency.

Chabahar can develop in the same manner as Assalouyeh owing to its abundant potentials, he said. "With construction of an industrial petrochemical park in Jask, the region will turn into a petrochemical hub."

Chabahar is a free port (Free Trade Zone) on the coast of the Sea of Oman the southern Sistan-Baluchestan Province. Due to its free trade zone status, the port city's significance in international trade has increased. Jask is a port city in Hormozgan Province, situated on the Sea of Oman. The port of Jask is also the proposed end of the Neka-Jask oil pipeline, stretching across a long corridor from Mazandaran Province down south to the shores of the Sea of Oman.

Assalouyeh is a city and the capital of Assalouyeh County, in Bushehr Province. Located on the coasts of the Persian Gulf, some 270 km southeast of the provincial capital of Bushehr, it is best known as the site for the land-based facilities of the huge Pars Special Energy Economic Zone (PSEEZ) project. Assalouyeh was chosen as the site of the PSEEZ facilities due to it being the closest land point to the largest natural gas field in the world, the South Pars gas field.

South Pars is shared between Iran and Qatar, covering an area of 3,700 square kilometers of Iran's territorial waters in the Persian Gulf. It adjoins Qatar’s North Field, which measures 6,000 square kilometers. It has a capacity of producing 820 million cubic meters (mcm) and 1 mcm of gas and gas condensates per day, respectively.

>>>Restrained by Mismanagement

Sanctions has had no impact on petrochemical industry, and rather it was mismanagement that resulted in the sector's underdevelopment, oil minister Bijan Namdar Zanganeh said Monday at the NPC anniversary conference.

Earlier, the NPC managing director said sanctions have impeded development of the petrochemical industry. Zanganeh said that imprudence, and not sanctions, has affected the sector. "Sanctions have no bearing in this regard, as they were enforced in 2012."

From the $600-700 billion oil revenues earned over the past few years, none has been invested in the petrochemical sector, Zanganeh noted, adding: "This shows a lack of resolution to develop the sector."

While petrochemical production was valued at one billion dollars in 2007, the figure has increased over the past years to stand at around $25 billion now.

Feedstock problem facing gas units of petrochemical complexes will be solved through increased production from South Pars gas field, the oil minister assured.

Production of ethane and liquefied gas from South Pars phases 15-18, with a capacity of 40 million tons, will commence next year (starts March 22), helping petrochemical complexes to overcome feedstock shortage. "The country won't be facing any problems regarding petrochemical feedstock supply next year."

"Iran's extensive gas distribution trunkline (IGAT) is one of the major advantages of which even Russia is deprived," he added. IGAT works with 60-70 of its capacity in summer, enabling petrochemical units to utilize the remaining unexploited capacity throughout the year, except for Dec-Jan period.

Besides Qatar and Saudi Arabia, other countries in the region lack a robust petrochemical sector, providing Iran with a great opportunity to increase its market share, Zanganeh said.

>>>Big Leap Ahead

Under desirable conditions, annual petrochemical output can reach 180 million tons, valued at $70 billion, Abbas Sheri-Moqaddam, managing director of the NPC said while addressing Monday's conference.

"Many problems contributed to this underdevelopment, including sanctions," he noted. "Hasty privatization also proved problematic for the industry," he added, making reference to the process through which petrochemical complexes were relinquished to pension funds instead of being sold to private investors.

Currently, the installed petrochemical capacity stands at 60 million tons. The entirety of this capacity has been transferred to private sector, without bringing about substantial revenues, and yet the NPC has to bear private investors' debts after they failed to fully repay the loans they have received in foreign currency, the official said.   

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

Nevertheless, incapability of domestic investors, fluctuations at the currency market, and imprudent privatization are among the problems impacting the industry, according to Sheri-Moqaddam.

Referring to 67 incomplete projects lacking finance, Sheri-Moqaddam said sanctions have impeded foreign investment, and domestic investors are also discouraged because of high interest rates. Moreover, acquiring foreign currency through the National Development Fund of Iran (NDFI) is very time-consuming, he noted. Completion of the semi-finished projects would require $36 billion.

The US and its allies imposed tough sanctions on Iran to curb the country's nuclear program which they claim is geared to military use. Iran insists its program is aimed solely at civilian purposes.

Since early 2012, the United States has led a campaign to accelerate the pace of sanctions, focusing on Iran's energy and financial sectors. The EU also has imposed sanctions on oil purchases from Iran. Overall, sanctions have sharply cut back oil exports and isolated Iran from international banking systems.

Iran and the P5+1 group (five permanent members of the UN Security Council, namely United States, Russia, China, United Kingdom, and France, plus Germany) have been holding marathon talks over the past year to thrash out a mutually acceptable deal.