Baku, Azerbaijan, June 9
By Dalga Khatinoglu, Mehdi Sepahvand – Trend:
All Iranian petrochemical projects need processing technologies imported from abroad. Since Iran has developed its gas industry, the need for gas-to-olefin, polymers, and engineered rubbers process technologies has significant importance now, according to Erfan Haji Ali Akbar, Iran representative at International Petrochemical Technologies (IPT Srl).
"Expertise in licensed process technologies in Iran is limited to the R&D activities of some institution like National Petrochemical Research and Technology Company that achieved some technologies in cooperation with international companies, but with low competition value in the market," Akbar told Trend June 9.
He said that although many local companies have matured in engineering, procurement, and construction activities since they made good cooperation during past years with international companies, in key equipment manufacturing (reactors, rotary high pressure turbines and pumps, , Instrument and control devices) and catalysts there are big gaps to be filled.
Regarding financing, Akbari said improvement in investment regulations and infrastructures, bureaucratic procedures, international banking system and risk factors are some major obstacles on this way. He noted that risk factor for investment in Iran has decreased to 63.3 in 2017 and is still to go down.
On the other hand low labor cost, strategic geographic situation between Europe, Asia and Africa, political and security stability, access to free waters and tremendous oil and gas reservoirs are favorable factors for investors.
He went on to note that Iran Petroleum Contracts (IPC) in petroleum upstream sector can be pioneer in foreign investment. "However, no IPC contract has yet been struck. Development of upstream industries will lead to more naphtha and ethane production that will make the petrochemical sector more attractive."
"According to development of gas industry in recent years, by 2021 ethylene production capacity will reach to 15.3, PE and PP production will reach to 9.9, and 1.9 mt/y. Methanol and ammonia are also meant to see production increments of 24 and 15.4 mt/y respectively."
"Petrochemical producers mainly depend on the government. Due to low oil price and also subsidized support of government to consumers instead of producers, demands are low and problems are there."
Akbari noted that eighty percent of Iran’s petrochemical industry depends on ethane as feed for of its production, while only eight percent of it depends on naphtha.
"Price difference of ethane and naphtha is also an issue right now. The main reason of such low price of naphtha in that Iran injects its major produced oil to international market."
Banking system that delays investments, money transferring issues and limited access to international monetary market, are still problems facing Iran’s petrochemical industry, he said, adding these are mostly due to US primary sanctions that prohibit Iran to use USD licensed in transactions, cumbersome bureaucratic procedures, processing technology dependency, and low expertise in this field.
According to Akbari, Iran started to develop its petrochemical industry about a decade later than its regional competitors like Saudi Arabia and Qatar.
"Power generation from renewable sources is not significant and power plants’ hydrocarbon consumptions are growing up that has negative impact on the petrochemical industry. Furthermore, at the moment hence real estate industry is growing very slowly, local markets for products like PVC, PE and PP are not growing much."
He further pointed out that there is a lack of systematic marketing based on new strategies and weakness in competition strategies with neighbouring countries is the case. "To tackle this, we need to study local, regional, and international markets prior to designing facilities."
"Last Iranian fiscal year (March 20, 2016 to March 20, 2017) capacity usage reached to 77 percent, which in comparison to the preceding year showed 9 growth. But low gas supply, old petrochemical facilities, technical issues and sanctions in place are some reasons for not utilizing the full capacity. Whilst there is opportunity to increase production capacity of olefin and polymers since there are newer facilities."
Akbari nevertheless mentioned that because of growth in local car productions, usage of products in tire, engineering rubbers, and polyurethane will increase.