23 October 2017 - 11:51
  • News ID: 279216
Iran Plast Captivates Foreigners

TEHRAN, (Shana) -- Iran is trading each tonne of crude oil at around $500. That could be multiplied by 16 if crude oil is converted into other products, particularly petrochemicals. More fascinating figures will be achieved if the value chain in hydrocarbon materials is extended further.

 

Iran is trading each tonne of crude oil at around $500. That could be multiplied by 16 if crude oil is converted into other products, particularly petrochemicals. More fascinating figures will be achieved if the value chain in hydrocarbon materials is extended further. For instance, Iran is earning $300 million from each million tonnes of raw materials, but it could raise the figure to $670 million in downstream industry. It means the rate of return on investment is 12% to 15% in upstream sector and 30% to 35% in downstream sector.

Iran is expanding its petrochemical sector at a rapid pace. The country's petrochemical output, which was below three million tonnes in the early years following the 1979 Islamic Revolution, has exceeded 60 million tonnes a year.

Plastic industry is a key element in petrochemical production chain whose completion would prevent the sales of crude oil.

The 11th Iran Plast Exhibition, which is the main plastic exhibition in Iran, was held on schedule. Senior Iranian officials, including First Vice-President Es'haq Jahangiri and Minister of Petroleum Bijan Zangeneh, and senior MPs attended the inauguration. The presence of these high-ranking officials was a proof of the significance of the event among Iranians.

Petrochemicals make up only five percent of Iran's oil and gas production; however, the share of petrochemical industry in non-oil exports is currently above 40% with more than 50 million tonnes of products. It means the highest value-added and the growth of gross domestic product (GDP) in Iran.

Since 70% of petrochemical industry's value-added comes from downstream sector, development of this sector with the current volume of raw materials would earn Iran more than $48 billion a year, which would be nearly half the revenue from crude oil export.

Converting raw materials like methane, ethane and petroleum to products like bags, shoes, clothes, electric appliances, auto parts and equipment like desks and chairs, luxury products, components of computers and medical equipment all lie under downstream sector, particularly petrochemical industry.

Despite Iran's relative advantage in petrochemical industry, we are witnessing discontinuous chains in this sector. For instance, raw materials are exported to industrialized countries like China, Japan and the European Union before being resold to Iran at much higher prices in the form of products.

International exhibitions provide a good opportunity for interaction with domestic and foreign firms. Iran Plast is the most important event in Iran's petrochemical industry. This international event is held every 18 months. The 11th Iran Plast Exhibition was held from 24 September to 27September.

Foreigners Grow in Number

Marzieh Shahdaei, CEO of Iran's National Petrochemical Company (NPC), views Iran Plast as one of the most important events in Iran and in the Middle East.

She said at the inauguration of the 11th Iran Plast Exhibition that the presence of foreign companies saw a 100% growth thanks to the implementation of Iran's landmark nuclear deal with six world powers – dubbed the Joint Comprehensive Plan of Action (JCPOA) – in early 2016.

Shahdaei said the number of foreigners has grown significantly from 250 in the 9th Iran Plast to 524 in the 11th Iran Plast Exhibition.

She said that Iran Plast Exhibition had gradually experienced quantitative and qualitative growth. She said Iranian and foreign exhibitors present in the 11th Iran Palst totaled 1,100, much higher than 294 in the 1st Iran Plast Exhibition.

Reza Khalaj, director of NPC Public Relations, said Iran Plast Exhibition was aimed at bringing prosperity to the plastic industry, facilitate marketing in this sector, taking advantage of post-JCPOA atmosphere to attract foreigners with a view to attracting foreign investment and transferring technological knowhow.

He said that 600 Iranian companies and 524 foreign companies from 23 European and Asian countries were present at Iran Plast Exhibition. Germany was presented by 65 companies, Italy by 49, Austria by 19, France by 15 and Turkey by 24.

The 11th Iran Plast Exhibition experienced 39% growth in the number of Iranian participants and 21% growth in the number of foreign participants year-on-year.

Iran Plast Exhibition or similar exhibitions enjoy significant potential. Exhibitions and events like seminars, conferences and workshops could turn exhibitions into a place for more transactions, display of raw materials and foreign machinery, and introduction of opportunities for investment.

Relying on their significant potential, such exhibitions would become a venue to attract foreign investment, and they should not be only a place for foreign companies to sell their commodities and machinery.

Iran Plast Exhibition and similar events could serve as a center that brings together domestic and foreign potentialities for further development in the petrochemical industry with a view to providing more services.

The presence of foreign participants at this exhibition could be viewed from two aspects; first, long-term presence in Iran's market, participation in projects and investment in upstream and downstream sectors; second, selling machinery to downstream industry, raw materials including advanced polymers and compounds, as well as industrial parts.

The fact is that the most important element in the presence of foreign companies in the oil, gas and petrochemical industries is related to upstream units, oil and gas recovery and production of petrochemicals and polymer products, which require cutting edge technology and high financing.

This sector has not so far managed to directly attract international companies, which could be explained by national and international restrictions.

Unjust sanctions imposed on Iran by Western governments had blocked investment in Iran's upstream sector and paralyzed the country's efforts to compete with other countries in the region.

 

Courtesy of Iran Petroleum

News ID 279216

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