Aug 30 2010 |
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China to Bankroll Petchem Projects
Iran and China will finalize a pact in the coming days under which China will invest $1 billion in Iran's petrochemical projects.Talks are underway between the National Iranian Petrochemical Company (NIPC) and a Chinese consortium for china to finance Iran's petrochemical projects, Mehr News Agency reported.
It is the first time Chinese companies participate in the construction or development of petrochemical projects.
NIPC is also negotiating with Turkish Pektim Company and Yurukum Company of Singapore about the construction of two methanol blocks.
There are also negotiations with a company from Oman concerning the construction of urea and ammonia blocks in Hormuz petrochemical company.
NIPC is also discussing with Indonesia about the construction of urea and ammonia units at Hengam petrochemical company, and with Venezuela for building a methanol block at VenIran petrochemical in Assalouyeh. The company is also in talks with Russia's Sibour for building three petrochemical plants, and South African company Sasol may be in charge of Olefin 12 construction in Bushehr petrochemical project.
The construction and development of 28 petrochemical projects will cost a total of $43 billion. Some 61 petrochemical projects will become operational in the fifth five-year development plan (2010-2015).
When implemented, the projects will increase Iran's annual petrochemical production to 100 million tons.
NIPC has also signed agreements with Iran's Export Development Bank and Bank Melli , under which the banks will provide financial resources for the projects.
Export Development Bank will allocate $1 billion and Bank Melli 's support will be $2 billion.
Bank Melli also plans to issue some $1 billion worth of participation bonds in the current year.
In recent years, China has filled the gaps in Iran's energy sector left by western firms forced out by international sanctions.
Deputy Oil Minister Hossein Noqrehkar-Shirazi said in July that the volume of Chinese investment in upstream oil and gas projects is $29 billion.
According to AFP, in 2009, China became Iran's premier trading partner, with bilateral trade worth $21.2 billion compared to the figure of three years earlier, $14.4 billion.
According to official data, western sanctions paved the way for Chinese companies. Chinese firms are steadily expanding their presence in Iran's oil sector.
Last year, Chinese refiner Sinopec signed a memorandum of understanding with the National Iranian Oil Refining and Distribution Company to invest $6.5 billion for building oil refineries.
Commercial ties between the two countries were almost non-existent 15 years ago, amounting to just $400 million.
Iranian estimates also suggest that an equivalent amount was imported indirectly through the United Arab Emirates in 2009.
Petchem Exports
Some 7.14 million tons of petrochemical products valued at $4.2 billion were exported during the first five months of the current Iranian year (started March 21).
Iran produced 16.47 million tons of petrochemicals in the said period, of which some 2.8 million tons of the products supplied the domestic markets.
It plans to produce 44 million tons of petrochemicals by the end of the current year.
Petrochemical output is expected to reach 100 million tons by the end of 2015.
The petrochemicals industry has become an important aspect of Iran's non-oil economy and the basis of the country's economic diversification.
BMI estimates that Iranian petrochemicals output totaled approximately 30 million tons in 2009/10, an increase of 13 percent year-on-year (y-o-y).
Output has been boosted by increased capacity and domestic demand faring better than expected. In Q1 2010, NIPC commissioned six petrochemical complexes in Assalouyeh, on the southern coast of Iran, including a complex with capacity for 645,000 tons per annum (tpa) of ethyl benzene and 600,000 tpa of styrene belonging to NPC subsidiary Pars Petrochemical; a 1.65 million tpa methanol complex owned by Zagros Petrochemical; and a 245,000 tpa butadiene plant operated by Jam Petrochemical .
Several new jetties at the Pars petrochemical port in Assalouyeh were also completed, bolstering its position as one of the major specialized ports in the Middle East for exporting petrochemicals products. It has the capacity to export 35 million tpa of liquid and solid products.
In April 2010, Oil Ministry announced that work was underway on the privatization of the refining sector. Oil Minister Masoud Mirkazemi told Mehr News Agency that "all petrochemical units and refineries" will be sold to private hands.
Privatization is being carried out under the terms of Article 44 of the Iranian constitution, which requires 80 percent of the country's state-owned companies to be sold.
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