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Foreign Firms to Invest In Petchem Industry

China, Turkey and Malaysia have expressed their readiness for investing in Iran's petrochemical projects, managing director of National Petrochemical Company said.

The announcement comes as the United States has voiced impatience with continued foreign cooperation in Iran's energy sector, despite its latest unilateral sanctions targeting Iran's oil and gas industry.

Abdolhossein Bayat told Mehr News Agency that foreign investment has decreased in comparison to a year ago, adding that the reduction is due to the recession in the global markets particularly European markets.

"It's not restricted to Iran, the amount of investment also reduced in Qatar and Saudi Arabia's petrochemical industries. Even, European nations have seen a reduction in investment," he noted.

It is the best time for the investors to seize this golden opportunity and invest in the sector which will yield considerable returns, said the official.

"We have a strong law for supporting foreign investors based on which capital and profits of investors will be guaranteed," Bayat said.

He highlighted that they can invest through finance and usance LC forms or contribute to the projects.

Privatization
Since the privatization of petrochemicals is underway, both foreign and domestic private investors can make investments ranging from one to 100 percent and can be entitled to ownership.

In April, Oil Minister Masoud Mirkazemi told Mehr News Agency that "all petrochemical units and refineries" will be ceded to private sector.

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.

SP Phases
In addition, managing director of Pars Special Economic Energy Zone said South Pars phases have seen an unprecedented development.

Mousa Souri pointed out that the executive operation and physical progress of new phases of South Pars are in tandem with the specified timeframe.

Concurrent with the implementation of the preliminary stages of gas phases, the majority of required facilities have been ordered to domestic and foreign manufacturers, he said.

Highlighting that there is no delay in implementing South Pars phases, he predicted that the land preparation and leveling the site for proposed refinery in some phases such as phase 14, 22, 23 and 24 would be completed ahead of the timeframe.

The official said some facilities required for South Pars projects have been ordered to foreign companies, adding it is predicted that close to 20-30 percent of facilities would be supplied from foreign companies. Despite sanctions imposed on Tehran's nuclear program, the hike in costs and duration of projects would be managed properly, the official added.

On July 26, the European Union imposed new sanctions on Iran, which mainly target investment in and technical assistance to Iran's refining, liquefaction, and liquefied natural gas sectors.

The EU sanctions followed UN Security Council and US sanctions on Iran over its civilian nuclear program, which the West alleges is a cover for a nuclear weapons program.

However, Iranian officials reject the allegations vehemently, saying that as a signatory to the Nuclear Non-Proliferation Treaty, the country has the right to use nuclear technology meant for peaceful purposes.

Souri called the petrochemical units in Pars Special Economic Zone as the most active petrochemical complexes in the region and world, saying Mideast's largest petrochemical production units are located in South Pars, he said.

The participation of all Iranians is required for development of the country, he concluded.

Key Aspect
The petrochemicals industry has become an important aspect of Iran's non-oil economy and the basis of the country's economic diversification.

Around 40 percent of non-oil exports, totaling $6.5 billion, were from the petrochemicals industry in fiscal year 2009/2010. This can attract foreign investment in the country.

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. Ethylene exports from Iran plunged in 2009 to about 450,000 tons per annum (tpa) from 700,000 tpa in 2008.

A $25 billion investment outlay is planned for 2010/11 to help meet these targets, with the beginning of the construction of 46 new petrochemicals projects adding 50 million tpa to capacity. Twenty-nine projects are already being built at the cost of $18 billion, adding 22.5 million tpa to current production capacity.

In Q1 2010, National Petrochemical Company ( NPC ) commissioned six petrochemical complexes in Assalouyeh, on the southern coast of Iran, including a complex with capacity for 645,000 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.

Compiled by Sadeq Dehqan

© Iran Daily 2010