One of the most important elements of dynamic
economy in Iran is development of petrochemical industry. Since there is
suitable infrastructure in Iran, this industry could grow into one of the most
profitable industries in the country. In a bid to realize the objectives
envisaged for the development of this industry, in addition to new investment
and completing incomplete projects, selling raw materials must stop while the
basket of petrochemical exports must be diversified.
Plans are also needed for new upstream projects
and enhancing petrochemical production output. Meantime, downstream
petrochemical sector is the best and most suitable alternative to crude oil
exports and upstream petrochemical products. That must be taken into
consideration more than before because of its revenue generation.
Iranian petrochemical industry officials have
paid due attention to downstream petrochemical sector in the past one decade
because balanced development in upstream and downstream sectors of
petrochemical industry would bring a halt to raw material sales and generate
Regardless of existing challenges, particularly
during years of sanctions, Iran's petrochemical industry has been seeking a
balanced development and completion of value chain. Now in the post-sanctions
era, this industry needs national determination along with participation of all
actors of this value-generating industry to experience the second cycle of its
Already on the path of growth and development,
Iran's petrochemical industry needs to complete its value chain. Therefore,
along with the development of its upstream sector, its downstream sector must be
also taken into consideration as a national strategy.
In the wake of the removal of sanctions
following the implementation of Iran's landmark nuclear deal with six world
powers, the ground is prepared for the downstream sector to grow proportionate
with the upstream sector. Cutting edge technologies and new foreign investment
may be used for completing the value chain of petrochemical industry at a
higher pace. Energy experts maintain that investment in downstream industry
would be safe and profitable because of high value-added. However, weak points
must be removed and new planning is required.
Many years ago, the National Petrochemical
Company (NPC) and the Iran Small Industries and Industrial Parks Organization
(ISIPO) decided to build petrochemical parks in a bid to prepare the ground for
the growth and development of downstream petrochemical industry. It was
recently decided that downstream industries be established in industrial parks
and not be independent. Industrial parks are endowed with all advantages
required for the presence of downstream petrochemical industries. Development
of these parks, particularly in border provinces, could accelerate the
development of national petrochemical industry.
Due to its suitable position in the region,
Iran can export products of its downstream petrochemical industries to
neighboring countries with a market of around 600 million. Border provinces are
instrumental in the development of downstream petrochemical industries, and by
expanding border markets and setting up special export zones, national security
would be boosted while volume of downstream industrial products would increase.
In the 6th Five-Year Economic Development Plan, extensive planning
has been made for the development of downstream industries. The national
development plan has been formulated with a view to sustainable and balanced
development. Along with reducing the sales of raw materials, plans have been
formulated for the development of downstream petrochemical industries.
Undoubtedly, not selling raw materials and
instead completing the value chain of petrochemical industry would help the
goals envisaged in the national development plan materialize.
Access to new markets and diversification of
the basket of products are among achievements of development of downstream
petrochemical industries and will significantly enhance the production capacity
of this industry in coming years.
Identification of opportunities for investment
is a major strategy pursued by the Downstream Industries Development Office,
and by developing required infrastructure, the selling of raw materials will
stop and a high value-added would be generated.
The main mission assigned to Iran's economy for
the coming ten years is job creation, providing welfare for people and increasing
the economic strength of the country. To that end, the petrochemical industry
will be instrumental both in the upstream and downstream sectors.
Nonetheless, over the past decades, development
of value chain in this industry has been slow. Over recent years, converting
ethane produced in southern Iran has accelerated. Since 60-70 percent of
ethylene produced in the world is converted to polyethylene and glycol, and the
rest being converted to non-polyethylene polymers, there is sufficient
polyethylene in Iran. Therefore, polyethylene-dependent industries in Iran have
been developed while propylene-based chemical industries have yet to be
developed. That is while this group of products constitutes raw materials in
the value chain of downstream industries.
Products achieved from propylene and
polypropylenes are more diverse than those produced from polyethylene and
ethylene. Therefore, many Iranian and foreign experts believe that shortage of
propylene is the cause of non-development of propylene-based downstream
Propylene is the second widely consumed raw
material for petrochemical industry in the world, just behind ethylene. More
than 92 million tonnes a year of propylene hit the market.
Propylene is a key petrochemical product used
as feedstock for polymer and mid-stream products. The main derivatives of
propylene are polypropylene, acrylonitrile, propylene oxide, phenol, acrylic
acid, isopropyl alcohol and oligomers. They are used in electronics, car
manufacturing, building and packaging.
Olefins are the most valuable petrochemical
product. Ethylene and propylene, having an extended value chain and used for
diverse purposes, are the most valuable petrochemical products. In Iran,
important measures have been taken for the production of these two materials.
For a variety of reasons, ethylene has overtaken propylene in production and
there is a daily growing demand for propylene. Under the present circumstances,
downstream production units whose raw material is polypropylene have in certain
periods faced the shortage of this product.
With an annual output of eight million tonnes a
year of propylene, the Middle East region stands fourth after Northeast Asia
(China, South Korea, Japan and Taiwan), the European Union and North America.
The Iran Value Chain Studies Center says the
Middle East region, particularly Iran, are lagging behind in propylene
production. This issue must be taken into serious consideration in future
Iran's rated propylene production capacity
currently stands at 1.115 million tonnes a year. This capacity is fully based
on low-output methods. Ninety-five percent of propylene produced in the country
is converted to polypropylene and only the remaining five percent goes to
Shazand Petrochemical Plant to be transformed into 2-ethylhexanol. This is
while other valuable products are not manufactured due to various reasons
including shortage of propylene in Iran.
Given the diversity of gas and liquid resources
and the location of spots where petrochemical industry can grow in Iran,
precise studies are needed to be conducted on choosing the suitable process for
propylene production in Iran.
Over the coming five years, Iran's methanol
output is expected to increase 25 million tonnes. Kaveh, Marjan and Bushehr
methanol projects are currently in their final stages. The completion of these
three projects, which have had 97%, 80% and 60% progress respectively, would
enhance the country's methanol production capacity by a total of 5.61 million
tonnes over two years, which will exceed 10 million tonnes.
Iranian experts believe that completing the
country's petrochemical value chain would have no other solution than
developing the value chain of olefins and manufacturing such products as
polyurethane, polyol, ethoxylate, ether glycol, and acrylate.
Iran's petrochemical industry is expected to
become propylene-based ; therefore, no more licenses are issued for the
establishment of methanol units unless a company decides to launch new grades
in Iran, as has been the case with the French oil and gas major Total.
Iran plans to supply 25 million tonnes of
methanol on the market over five years, while the market can absorb only up to
16 million tonnes.
Concerns are growing about the future of
methanol market, but by converting methanol to propylene and then to
polypropylene, high value-added could be generated.
Currently, Iran has enough capacity to covert
natural gas to methanol. At the Petrochemical Research and Technology Company
(PRTC), the demo for converting methanol to propylene in Mahshahr with an
annual capacity of 120,000 tonnes has been executed successfully.
At the Arak unit of PRTC, a plan is on the
agenda to convert propylene to polypropylene. PRTC experts and managers hope to
launch the propylene unit of this center with a capacity of 130,000 tonnes next
March. The project, which is currently in the pre-start up stage, will help
complete Iran's petrochemical industry value chain.
PRTC has managed to produce propylene with a
purity rate of 99.6% at Mahshahr research center. This type of propylene is the
petrochemical product of the highest value and the widest use.
Courtesy of Iran Petroleum