Foreign licences and sanctions on Iran’s petrochemical industries

Iran Materials 6 December 2011 14:26 (UTC +04:00)
Foreign licences and sanctions on Iran’s petrochemical industries

Head of the Trend Persian service Dalga Khatinoglu

Australia involved the United States and Europe Union leaded sanctions against Iran on Thursday by imposing more sanctions on Iran's petroleum and financial sector.

Last month, the U.S, UK and Canada imposed new sanctions on Iran following the IAEA report on the probable aspects of Iran's nuclear programme. The UK cut all its financial and banking relations with the Islamic Republic's central bank and other banks and the US announced that it had undersigned new sanctions on Iran's petrochemical industries. According to Reuters, South Korea imported $350 million worth of petrochemicals from Iran last year, but is now planning to cut these from Iran.

Foreign licences

Based on a report by Iran's ministry of industries and mines, domestic refineries produce 42,952 tons of petrochemicals, of which 15,033 tons are produced under the licence of German companies. In fact, Germany holds a 35 per cent share in Iran's petrochemical production. UK, France and the Netherlands rank the next with 18 per cent share, 12 per cent share and 11 per cent share, respectively.

Percentage of Iranian petrochemicals' dependence on foreign licences


Current projects

Future projects







Saudi Arabia


















Great Britain






Others / unknown



With an eye to these statistics, Iran is highly dependent on foreign expertise in the petrochemical sector. Over half of the country's petrochemical output will be dependent on the above four mentioned countries by 2015, the report says. Of course, the statistics do not include those plans for which licensors have not yet been introduced.

Considering the advancement of such foreign countries in the technological fields, the remaining 22 per cent of Iran's petrochemical output should be seemingly secured under the licence of such countries in the future.

Sanctions and insufficiency of Iran's petrochemical industries

In the December report of the U.S. Energy Information Administration, Iran's petrochemical sector was referred to as one of the major challenges of the Iranian government in implementing projects.

On the other hand, according to a report by the ISNA news agency on Thursday, Iranian petrochemical companies are at the top of the list of Iranian companies which are in the red.

In its report, the U.S. Energy Information Administration has highlighted the reduced progression of Iranian refinery construction projects due to financial problems.

Currently 38 petrochemical units are in operation across the country. Based on a report by the Ministry of Industries and Mines, Iran exported some $11.5 billion worth of petrochemical products last year (total sales amounted to $18 billion). However, the petrochemical sector holds only a 1.5 per cent share in the gross domestic production of Iran, which is the second and third largest holder of the world's gas and oil reserves.

Nine gasoline refineries are currently operational in Iran, as well. The country is planning to boost its refinery capacity to 3.2 million barrels per day from 1.5 million barrels per day through launching six new refineries.

Iran has announced that the daily gasoline production capacity will increase to 70 million litres per day by the end of the current calendar year (March 20, 2012).

According to the ISNA report, 'some quarter of the 21 companies, which have been introduced as the most indebted Iranian ones, are active in the petrochemical sector'. According to the latest statistics related to the fiscal year 2009-2010 which grades top 300 companies by the Industrial Management Organisation, five petrochemical companies are on the list of the most indebted Iranian firms.

Iranian news agencies have recently reported that the construction of the country's largest gas condensates refinery, named the Persian Gulf Star, is now 40 per cent complete, but construction has stopped since the beginning of the current solar year. The refinery, which is projected to produce 55 million litres of oil products, is planned to be built in three phases. The first phase is scheduled to come on stream with the daily production capacity of 12 million litres of gasoline and six million litres of gas oil, by March 2013.

According to Towfiq Azarmgin, the refinery's managing director, some one billion dollars has so far been invested in the project and around another $1.7 billion is needed to complete the project.