Iran should set long-term prices for petrochemical feed to attract investment

Business Materials 25 September 2014 17:24 (UTC +04:00)

Baku, Azerbaijan, Sept. 25

By Umid Niayesh - Trend:

Iranian Minister of Industries, Mines and Trade Mohammad Reza Nematzadeh says that the Islamic Republic should determine the long-term gas prices for petrochemical units, in order to attract investments to the sector.

If the prices are set for a long-term period, the foreign and domestic investors will be able to study the profitability of the petrochemical projects and make the decision, Iran's SHANA news agency reported Sept. 25.

Nematzadeh went on to note that annual changes in prices for petrochemical feedstock prevent investors from participating in the petrochemical projects.

SHANA also quoted Iran's oil minister, Bijan Namdar Zanganeh as expressing readiness to set a formula to determine the prices till 2025 depending on the sale prices of the petrochemical products.

Based on the current year's budget bill, the government was supposed to decrease the gas price for the petrochemical complexes in order to support domestic producers. Iranian parliament has approved that the price should not be less that 13 cents.

The county averagely feeds 35 to 40 million cubic meters of natural gas per day to its petrochemical units. The figure accounts for some 6 percent of the country's total gas production.

Experts believe that in order to compete with the Gulf states in the petrochemical industry, the Iranian government needs to provide the domestic petrochemical complexes with natural gas at the same price of the neighboring countries.

Petrochemical complexes in the Gulf Arab states buy natural gas at the prices of 3 to 6 cents per a cubic meter.