Petchem revenue tops $14.5b in a year

Mohammadi said last calendar year was marked with success for petrochemicals production as production forecasts came true.

He said the petrochemical output reached 31 million tons last calendar year, 23 million tons of which was exported and the rest was supplied on domestic markets.

Mohammadi noted that petrochemicals prices dropped 30% on average last calendar year year-on-year, adding that petrochemicals exports earned Iran $9.5 billion while domestic market purchased $5 billion of petrochemicals.

The official said that Iran’s petrochemicals production saw 6% growth during the first 50 days of the current calendar year year-on-year. That is while the Covid-19 outbreak had slashed demand. Demand for petrochemicals was down 40% due to lower demand for crude oil in the world. Mohammadi; however, said the conditions are improving.

Iran’s petrochemical industry is moving towards stability and remains a key segment in Iran’s economy. It is noteworthy that the Persian Gulf Petrochemical Industries Company (PGPIC), a major petrochemical holding with a big share in petrochemicals production and exports, was slapped with US sanctions last year. Mohammadi said the major impact of US sanctions targeting PGPIC was the imposition of additional costs on exports, particularly in the transport sector.

 No production hitch

Despite all restrictions imposed by the Covid-19 outbreak on the global economy, Iran’s petrochemical industry plans to operate 16 projects with a total investment of $12 billion in the current calendar year. Once operational, these projects would bring Iran’s petrochemical production from 31 million tons to 37 million tons. However, the main question which remains is whether or not these projects would be affected by the Covid-19 outbreak.

Mohammadi said four projects were likely to be delayed due to Covid-19 outbreak, but 12 projects will definitely come on-stream to add 20 million tons to Iran’s petrochemicals output.

Iran’s petrochemicals production capacity currently stands at 66 million tons, which would at worst, reach 86 million tons by next March.

Focus on investment packages

In addition to completing petrochemical projects, several methanol projects would come online by March 2022. Many worry about the economic viability of methanol projects.

“To resolve this issue, investment packages for using surplus methanol to produce propylene and supply national needs are focused on this product,” said Mohammadi.

He called for more steps to be taken in the petrochemical industry for a smarter development of the petrochemical industry. These projects are on the agenda for petrochemical development in the methanol, propylene, ethylene and benzene sections.

These projects would cut foreign imports, create prosperity and attractive jobs in the downstream sector of the petrochemical industry and improve the value chain and supply products of higher value.

Propylene shortages

Iran would make up four percent of world propylene production by 2025, while this figure will be 18 percent for the entire world, 21 percent in China, 17 percent in the U.S. and 16 percent in Saudi Arabia.

Minister of Petroleum Bijan Zanganeh has already offered solutions for compensating for propylene shortages. “By setting up two propylene lines – one extending from northern Iran to southern Alborz and one extending from Assaluyeh to central Fars – an extended propylene chain could be created,” he said.

Mohammadi has put at 175,000 tons, the amount of propylene Iran currently needs. In other words, with the production of 985,000 tons of propylene by Iranian refineries and petrochemical plants, 175,000 tons more is needed. Iran’s propylene production is planned to reach 1.95 million tons by 2024, while the country would be faced with 700,000 tons of propylene shortages.

2 propylene lines in Iran

Two propylene production lines are envisaged for the production of 3-3.5 million tons of propylene in the country. The first pipeline extends from Assaluyeh to Marvdasht, which would be operated by NPC. Propylene would be produced from surplus methanol in Assaluyeh to be injected into a 430km pipeline. It would then be transported to a storage hub in Marvdasht to be used in the development of a propylene chain in Fars and Isfahan provinces, as well as some cities in other provinces.

The second pipeline would extend from Neka to Damghan. The propylene produced from natural gas would be stored in Damghan to be used for the development of downstream industries in North Khorasan, Khorasan Razavi, South Khorasan and Semnan provinces.

NPC would be also operating the GTPP project in Eslamabad Gharb in order to expand the propylene chain. These projects will be GTPP or MTP, which would help end Iran’s propylene imports.

Mohammadi expressed hope that this project would be started under the 12th administration. He said this project would push petrochemical industry development towards smart development and help produce higher-value products based on domestic needs.

Propylene chain and petchems

In Iran, propylene is merely converted to PP and EH2. By 2025, Iran would be producing four derivatives from propylene.

By implementing leading industries, 12 products would be manufactured from propylene. In the meantime, all MTP and GTTP projects would be implemented using technical knowhow provided by Petrochemical Research and Technology Company (PRTC).

Mohammadi said the MTP project in Assaluyeh would have a 470,000-tonne capacity, while the GTTP project would have a 120,000-tonne capacity. PRTC owns the licenses of both projects, thereby dispensing with the need for foreign technology.

Diverse products with high value-added

Iran has experienced a big jump in its petrochemical production over the past seven years. There are other projects underway to help enhance petrochemicals supply. However, the key point is whether there is demand for these products.

Mohammadi said: “We need to remain vigilant about what is happening across the world. We must know where we are or where they are.”

“By making efforts towards development of technical knowhow, we need to push the petrochemical industry towards more diversity in products of high value-added with a view to completing the supply chain in order to make the petrochemical industry more attractive,” he said.

Mohammadi said: “We need to follow the world in order to have a proper assessment of development. Blind development and implementing projects with long yields should be excluded as they would lose their attractiveness in the world after several years. Therefore, we need to move towards an intelligent development of the petrochemical industry in order to survive in the global market.”