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Petrochem Industry Needs Massive Investments

Petrochemical production capacity is expected to increase by 64 million tons over 5 years through 2015 but requires investments worth $49 billion, the Managing Director of the National Petrochemical Company (NPC) Abdulhussein Bayat said.

Addressing the press on the sidelines of Iran's 16th International Oil, Gas, Refining and Petrochemical Exhibition he said the Fifth Five-Year Economic Development Plan calls for an annual $5 billion to $6 billion in investments for the key sector. The National Development Fund and foreign firms are expected to provide $3 billion and $2 billion respectively, IRNA reported.

Priorities
NPC priorities for 2011-12 include improving feed supply, issuing forex and rial participation bonds, putting eight projects into operation, signing 30 trade plans, attracting foreign investors and finalizing a contract for constructing a major gas pipeline to provide feed for petrochemical units in the western regions.

Sanctions
On the effects of largely Western economic sanctions imposed on Iran over its nuclear energy program, he said the sanctions had no negative effect on exporting petrochemical products. "Fruitful negotiations have been held with investors."

He added that "We have sort of got used to the sanctions and penalties...They have indeed helped the country to make progress in a variety of fields."

The subsidy reform plan did not hinder production process despite the fact that factories and related production units face the challenges of rising energy prices, the reporters were told.

Gasoline Production
Some petrochemical factories whose main feed is gasoline are continuing fuel production but the process has been halted in others.

" NPC is ready to use the capacity of petrochemical units to produce gasoline and help meet domestic need when required."

Gas Pipeline
The official noted that the government is preparing the infrastructures for an ethylene pipeline in the west of the country, adding that the contracts would be signed with contractors in the near future. Bayat said "petrochemical units in Fasa, Jahroum, Darab and Estahban will be supplied by this pipeline."
Twenty percent of the shares of the companies are owned by the NPC and the remaining by private firms.

Majlis Inquiry
Commenting on the Majlis inquiry into the huge petrochemical industry, he said a number of issues raised in the inquiry are unrelated to the petrochemical industry.

"Raising the issue of inquiry in the media discourages businesses from making new investments in the industry" and this is not good for the country.

Investments
The official said $48 billion were invested in the growing petrochemical industry in the period during 1963-2009 which led to the production of 49 million tons of different kinds of petrochemicals.

Bayat told IRNA investments in petrochemical industries would be guaranteed and an organization affiliated to the Ministry of Economy would guarantee the principal amount plus profits.

Many foreign companies already active in Iran's petrochemical sector have renewed their cooperation deals due largely to the profits they had made so far, he noted.

Private Sector Role
Calling for an active private sector role in the industry Bayat said "The Razi Petrochemical Complex was fully run by Turkish companies while other foreign investors had a share of up to 50 percent in other petrochemical companies."

Earlier he had said "Iran ranks second in petrochemical production in the region."

The petrochemical industry generated almost a million jobs across the country, he said, without mentioning in which period.

"The industry had managed to help curb social deprivation in several regions, including in the southern oil city of Mahshahr. "

According to official sources, Iran has the capacity to annually produce 51 million tons of petrochemical products.

© Iran Daily 2011