India withdraws from investment in Iran’s petrochemical sector
Baku, Azerbaijan, Oct. 22 By Fatih Karimov – Trend Indians have decided to not make investment in Iran’s petrochemical sector, Ahmad Mahdavi, director general of the Association of Petrochemical Industry Corporations (APIC), said. He said that the high price of feedstock gas price for petrochemical units has forced the Indian investors to withdraw from investment, Mahdavi said, Mehr news agency reported Oct. 22.
Each ton of ethane was being sold at $240 to Iranian petrochemical units, when the oil price was $110 per each barrel, he said, adding that the price is almost the same at the moment, despite the sharp fall of the crude oil price. Petrochemical export can increase, only if the administration determines a reasonable price for feedstock, Mahdavi said.
Currently Qatar sells gas feedstock for its petrochemical units for 6 cent per cubic meters, he said, adding that the price is even less in Saudi Arabia, meanwhile Iran’s oil ministry receives 8 cent for each cubic meter of the sold feedstock from the petrochemical units.
The prices are not attractive for foreign investors, Mahdavi underlined. Iran has decreased feedstock gas price for petrochemical units 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. 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.