IRAN - The Petrochemicals Plan To 2015.
"Our aim", Minister Zanganeh said, "is to produce 70 million tons (per annum) of petrochemical products in 2015, worth 20 billion dollars". Over the past Iranian fiscal year, which runs from March 21 to March 20 of the following year, Iran produced just over 16 million tons of petrochemical goods, worth $2.7 billion, of which $1.2 billion worth of products were exported.
"We hope over the current year to pass the $3.5 billion mark and to increase our (petrochemical) production by 50% in the following year", in 2005/06, the minister said. All new petrochemical ventures involve foreign companies, mostly as partners and technology providers and/or as EPC contractors.
Zanganeh said $11 billion of investments were to be pumped into the petro-chemical sector under Iran's five-year plan of 2005-2010. In 2010, he said, "we should have reached a production level of 56 million tons (per annual), earning Iran seven billion dollars in exports".
Iran's ambition is to clinch a 5.6% share of the world's petrochemical output and as much as a 30% stake in the Middle East by March 2006. The years 2006-10 will be most challenging for Middle East producers of petrochemicals geared for export, as markets on both sides of Suez could then be saturated with goods from so many ventures in this field that would have come on stream.
French, Italian, British, Japanese, South Korean and multinational companies are all active in the Iranian petrochemical sector. Iran is also trying to negotiate a $500 million petrochemical venture with the Saudi Arabian Basic Industries' Corp. (SABIC), the huge state-controlled combine that has become trans-national since its acquisition of the Dutch firm DSM Petrochemicals in 2002.
(The IPF conference's opening on May 1 coincided with Wahhabi terrorist attacks at a major petrochemical complex in Yanbu', the Saudi industrial zone on the Red Sea coast, in which Western engineers were killed. Foreign investors participat-ing at the Tehran event compared the deteriorating security situation in Saudi Arabia with that in Iran. On May 29-30, Wahhabi terrorists affiliated to Osama Bin Laden's Qaeda network held many expatriates hostage at a housing compound in Al-Khobar, an oil town in the Saudi Eastern Province, on the Gulf coast, and the drama resulted in 22 people killed - see Recorders of the APS Diplomat.
(Iran's National Petrochemical Co., owned by the state and affiliated with National Iranian Oil Co., is much smaller than SABIC. Owned 70% by the state and 30% by private Saudi and other GCC shareholders, SABIC has become the 11th largest petrochemical producer in the world. Before it bought DSM, the Saudi company was the world's No. 22. The acquisition raised its ethylene output by 1.2m tons to 6.9m t/y and gave it a good key to the European market. While expanding at home, SABIC is on the lookout for other major acquisitions or joint ventures on both sides of Suez.
(All of SABIC's plants at the Saudi industrial cities of Jubail and Yanbu' keep raising capacity or are having their output streams diversified. Their plants, numbering 17, are mostly JVs between SABIC and foreign firms. Their production capacity exceeds 42m t/y, up from SABIC's capacity of 22m t/y in 1995. SABIC and partners in Jubail and Yanbu' produce more than 45 kinds of petrochemicals and other products. SABIC says its plants and JVs at home and abroad should exceed 65m t/y by 2010 and 75m t/y by 2015. SABIC was well represented at the IPC conference and presented a paper).
Minister Zanganeh told the Tehran conference: "Our primary targets are the markets in Asia, and then the European market". The Asian markets currently account for 90% of Iranian petrochemical exports, while the European market makes up for only 4%.
Western industry experts do not share Iran's optimism, however. "Iran must first find the markets, at a time when there is world overproduction", said a European executive. Olivier Appert, president of the Institut Francais du Petrole (IFP), which took part in the conference, said the success of Iran's plans depended on world growth rates, currently running at close to 4%.
Appert said: "We are optimistic as regards world growth. Demand is carried by major consumer products, and by growth in China and Asian countries. "We can also be optimistic over Iran's capacity to develop its petrochemical output as the country has the necessary resources, especially the gas, to bring well-priced raw resources to the market". But, he said, a lot would depend on the inflow of investments.
"Question marks remain about the rate of investments and whether the investments can be raised within the timetable. That is the challenge", said Appert. But he said the ethylene and propylene markets were promising. "You have to set ambitious targets and then try not to be too far away", he said, referring to the Iranian minister's address.
Iran's petrochemical ventures are concentrated mainly in two industrial zones, and both have major gas processing facilities: Bandar (port) Assaluyeh, a coastal area closest to the giant South Pars gas field, and Bandar Imam (formerly known as Bandar Shahpour and later Bandar Khomeini) near the northern end of the Persian Gulf. There are petrochemical plants in various other parts of Iran, including Isfahan, Shiraz, Tabriz, Arak and Ilam. There are special economic zones (SEZs) at Assaluyeh and Bandar Imam.
$180 Bn In Private Ventures: Private companies and financiers have invested more than $180 billion in the special economic zone of the Bandar Imam Petrochemical Complex. The government predicts that the private sector will also invest more than 4,400 billion rials in the petrochemical sector.
NPC projects the total investment in the course of the current third development plan (2000-2005) will amount to around $10 billion, compared with $11 billion for the 2005-2010 plan. The bulk of the current investment is going to Assaluyeh (Pars special economic energy zone), in Bushehr province.
There are 10 major projects under now under execution in Iran and due to be completed by March 20, 2005. Most of them are being built at Assaluyeh and Bandar Imam.
Iran considers the petrochemical sector a key element in its drive to expand the non-oil economy by relying on its vast natural gas reserves as feedstock ranked second in the world after Russia. In its drive to expedite the development of the sector, NPC has pledged to provide both national and foreign investors with their needed natural gas at a low price.
|Printer friendly Cite/link Email Feedback|
|Publication:||APS Diplomat Operations in Oil Diplomacy|
|Date:||Jun 21, 2004|
|Previous Article:||IRAN - Focusing On The Non-Oil Sector - Part 5.|
|Next Article:||IRAN - Big Increase In Fertiliser Production.|