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Iran continues to decrease gas price for petrochemical units

Business Materials 19 October 2016 20:46 (UTC +04:00)

Baku, Azerbaijan, Oct. 19

By Fatih Karimov – Trend

Iran has decreased feedstock gas price for petrochemical units for the second straight month, the oil ministry’s SHANA news agency reported Oct. 19.

The oil ministry decreased the price to 2,642 rials (31,666 rials make one USD) per cubic meters for the sixth calendar month of Shahrivar (Aug. 21-Sept. 21) compared to 2,680 rials in preceding month.

The price was set at 2,790 rials, 2,702 rials, 2,464 rials and 2,313 rials per each cubic meter for previous months of current Iranian fiscal year (started March 20). Feedstock price is a key factor when it comes to investment in petrochemical projects.

The tariffs are deduced from a pricing formula that was approved last year and will be in effect until 2025. As per the new formula, the price of feedstock will be contingent upon prices at major global gas trading hubs, including the US Henry Hub, Alberta Hub in Canada and the UK NBP Hub.

The deduced prices will take a 10 percent cut in the first half of the year and will increase by 10 percent over the second half. Iranian petrochemical plants use about 13 billion cubic meters of gas per year (bcm/y), while some 2.8 million tons/year of ethane is consumed in this sector.

The country’s actual production capacity is around 61 million tons per annum, but the shortage of natural gas as feedstock, old production units, and the problem of sanctions, which has dropped exports, have caused petrochemical complexes to work at lower capacities.

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