Iran's Petchem not got rid of gas shortage yet

By Dalga Khatinoglu

Despite increasing the country's gas production by 15 percent during 2014, the output hasn't met the petrochemical units' gas feeds yet.

The latest report about the country's petrochemical production level during last eight months indicate that this sector couldn't fulfill its commitments based on the country's present production capacity.

Iran's petrochemical production capacity is about 60 million metric tons per year, but the output was about 40 million metric tons in last Iranian fiscal year, while the figure is expected to reach 42 million metric tons in current year.

Iran's fiscal year starts on March 21.

Ali-Mohammad Bosaqzadeh, production control manager of National Petrochemical Company told Shana Dec.14 that Iranian petrochemical companies' production increased by 8 percent to 30 million metric tons during the first eight months of the current year, indicates using only 71 percent of total production capacity level.

According to Bosaqzadeh's statement, the major obstacles in reaching the petrochemical production volume to the full capacity level are delays in repairing the units and shortage in gas feedstock.

Iran increased gas production, a major feedstock for petrochemical units, by 75 million cubic meters per day (mcmpd) during 2014 -mostly after July- however, the internal consumption growth was in a high level that delivering more gas to petrochemical units remained approximately unchanged.

Iran increased gas supply to the domestic sectors by 11 billion cubic meters (bcm) during first eight month of current fiscal year to 110.75 bcm, which of 39.525 bcm was supplied to power plants, indicates a 7.9- bcm increase, according to the National Iranian Gas Company's statistics. Then, Iran only increased about 3.1 bcm of gas supply to other sectors, including housing, industrial sectors, CNG plants, gas injections to old oil fields, etc.

This is while Iran's housing sector's gas consumption rose 2.5 times since last month to above 365 mcmpd and is expected to reach 450 mcmpd in winter.

Iran's gas production level in 2013 was around 485 mcmpd and with regarding a 75-mcmpd increase during 2014, the country's production is about 560 mcmpd. However, Iran is supplying 110 mcmpd of gas to the industrial sector, then the country wouldn't increase the petrochemical production level during winter and the final production likely would stand at 42 million metric tons in current fiscal year.

Exports

The latest report released by Custom Administration report indicates that Iran exported 11.399 million metric tons of petrochemical products during first eight months of fiscal year, 94.32 percent more than the previous year. the total value of exported petrochemical products was $8.961 billion, 53 percent more that the same period last year.

However, Bosaqzadeh says that the petrochemical products stockpile in the country's storage facilities have been declined. It means Iran increased exporting petrochemicals by selling the unsold stockpiled products remained from the previous years.

After imposing western sanctions on Iran in mid 2012, the country's petrochemical products export decreased from 21.26 million in 2011 to around 14.5 million metric tons in 2013. Iran had to store the unsold products then and increased the export volume after easing the sanctions due to interim nuclear accord obtained in November 2013 between Iran and P5+1.

Iran and the P5+1 group (the US, UK, France, Russia, China plus Germany) agreed to extend nuclear talks until July 1, 2015 after failing to meet the 24 Nov. deadline to reach a comprehensive nuclear agreement.

Dalga Khatinoglu is an expert on Iran's energy sector, head of Trend Agency's Iran news service
Follow him on @dalgakhatinoglu

Edited by CN

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