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Mohammad-Reza Nematzadeh.

Officially referred to as "Senior Adviser to Iran's Petroleum Minister, Nematzadeh has been regarded as the most efficient man in the sector. Until he was dismissed on Oct. 14, 2008, he was deputy petroleum minister and President of National Iranian Oil Refining & Distribution Co. (NIORDC), a post he had taken up in January 2006. He remains highly respected in the industry and will no doubt be given a top position in the future.

From August 1997 until early 2006, Nematzadeh used to be deputy petroleum minister and president of National Petrochemical Co. (NPC). He was moved to head NIORDC because the refining sector and the country's fuel distribution system were grossly inefficient and lacked the capacity to meet Iran's rapidly rising demand for fuels, particularly gasoline. He was authorised to spend heavily on a programme to expand the refining sector at top speed (see down15IranRefApr9-07).

Dr. Nematzadeh had been prominent in all governments since the 1989-97 presidency of Rafsanjani. He and then Petroleum Minister Zanganeh have had a long friendship, with Nematzadeh having headed the state's Power and Transmission Company Tavanir in the late 1980s - Tavanir being under the energy ministry. Until October 2008, he was also a member of the Supreme Economic Council (SEC), the top decision maker for the country's major projects.

An exceptionally efficient administrator and an excellent engineer, Nematzadeh is a hard worker. After having expanded the petrochemicals sector at top speed (see his NPC background in down15IranPetchmApr11-05), in 2006-08 he presided over an equally rapid growth of the refining and fuel distribution systems.

Dr. Nematzadeh is an Azeri. He was born in Tabriz (eastern Azerbaijan province) in 1945. He got a bachelor's degree in mechanical engineering from Tabriz University, a master's degree in industrial management from Tehran University and a PhD from the University of California at Berkeley. He left theological studies in 1977 and joined the Khomeini movement. After the revolution he became in charge of an inspection committee at the Labour and Social Affairs Ministry; director of the Iran National Co.; labour minister after the fall of Mehdi Bazargan's government in late 1979; industry and mines minister from September 1980 to August 1981; CEO of Tavanir from February to August 1989; and industry minister from August 1989 to late 1995. In the latter position, he was in charge of both light and heavy industries which were merged in September 1994. He then began a drive to privatise both light and heavy industries that were under his ministry.

Aminollah Eskandari, the director for refining affairs at NIORDC, in September 2008 said the company was spending $22 bn on plans to construct seven refineries and add more than 1.5m b/d to its capacity. He said all seven refineries would be commissioned by 2012. He expected to increase capacity to 3.3m b/d from 1.566m b/d, making Iran the second largest refiner in the Middle East after Saudi Arabia.

Eskandari said: "Given the economic growth of big consumers such as India and China, a proper field has been provided for the country to make huge investments in oil refining". He said: "Crude [oil] refining patterns in the country follow old versions, causing a rise in kiln oil output by 29%, while the world's standards are at a 10% level". On Aug. 4, 2008, the then CEO of NIORDC Nematzadeh said the ground was being prepared for ceding the Tabriz, Bandar Abbas and Lavan refineries to the private sector and related documents were to be delivered to the Iranian Privatisation Organisation (IPO). Then addressing the First Seminar on Oil Industry Legal System and Contracts, Nematzadeh said the stage was being set for a gradual privatisation of NIORDC. He stressed that much had to be done to improve NIORDC's performance and profitability before its privatisation process was to begin.

On Sept. 18, Eskandari said Iran will surpass Saudi Arabia's capacity once the new NIORDC plan had been implemented. On April 22, 2009, he said Iran will resume diesel exports before end-June as increased gas supplies had cut consumption of the liquid fuel in power plants. He said a new scheme to monitor purchases by motorists would cut deeper into domestic consumption. He said NIORDC was considering monthly exports of up to 450,000 barrels through the third quarter, adding: "We can export at least two cargoes a month, until just before the winter season".

Eskandari said Iran's diesel demand has fallen by around two million litres, or about 48,000 b/d, since March. The new smart card scheme will help cap the amount of diesel motorists buy at the pump and reduce smuggling, he said. Each purchase will be monitored on the card. He added: "This will mean they can only pump their requirements at the petrol station and this also helps to reduce smuggling". About 50-55% of Iran's diesel consumption comes from the transportation sector. He said in the first three months of 2009, Iran imported as much as 5m barrels of diesel, or around 55,000 b/d.

'Adel-Nejad Salim: Deputy Petroleum Minister and Managing Director of National Petrochemical Co. (NPC) since Sept. 20, 2008, Salim was promoted by Minister Nozari to replacing Gholam-Hossein Nejabat. Until then, Salim was managing director of BIK Petrochemical Co. Nejabat had been head of NPC since October 2006 (see his profile in down17IranWhoApr23-07).

On April 22, 2009, NPC signed a preliminary contract with Turkey's Petrochemical Holding Corporation (Petkim) for the creation of a methanol and polyethylene complex in Iran. The planned polyethylene facility will have capacity of 300,000 t/y and the methanol plant will have a capacity of 1.65m t/y. Saudi-based Injaz Projects took a 10% stake in Petkim in late 2007 as part of a consortium with Azerbaijan Oil & Gas Co. (Socar), Kazakhstan's Kazmunaigaz and Turkey's Turcas Petroleum.

In early April, NPC said it exported $7.1 bn worth of petrochemical products in the year ending on March 20, 2009. Methanol, polyethylene, LPGs/NGLs, and ethylene were the main exports. NPC said it had produced 29.7m t/y of petrochemicals in the 12-month period and expected to boost exports to 39m t/y in fiscal 2009-10.

Iran's petrochemicals sector has faced many problems since Nematzadeh moved to NIORDC in early 2006. In mid-April 2006, NPC cancelled the olefins-11 ethylene project. That summed up the troubles affecting the contracting market in Iran. Over the previous two years, one project after another had fallen by the wayside. Najabat, then head of NPC's tendering arm, was partly to blame for the cancellation. Affected by that was a consortium led by Linde of Germany and including Hyundai Engineering & Construction of South Korea and the local Sazeh Consult, which was the only contender left with a valid bid for the project. The group had proposed doubling the size of the plant to reduce costs and feed a new ethylene pipeline planned for western Iran. But NPC, acting on orders from the Petroleum Ministry, abruptly cancelled the project. As a result, serious damage was done to NPC's reputation among foreign and local contractors (see the background in down16IranPetchmApr16-07).
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Publication:APS Review Downstream Trends
Date:Apr 27, 2009
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