Think tank: Iran's petrochemical sector drives toward self-sufficiency

21 June 2013 10:03  [Source: ICB]

Iran's drive to attain self-sufficiency has gone into top gear, thanks to the re-enforcement of the US-led sanctions.

The slowdown in imports and investments into Iran's petrochemical sector has left players with no option but to accelerate their efforts to produce locally the products that they traditionally imported from the advanced economies.

 Iran is increasingly leaning on local expertise and equipment

Copyright: RexFeatures

The Iran petrochemical industry's progress towards self-reliance was a key topic at the 10th Iran Petrochemical Forum (IPF) held in Tehran in May.

Iran's petrochemical sector has circumvented US-led sanctions by developing technology and equipment to meet the requirements of local petrochemical plants, Ramezan Oladi, director for planning and development of state-owned National Petrochemical Co (NPC), said on the sidelines of the IPF.

About 78% of the equipment and machinery used by the Iranian petrochemical industry was provided by local companies, Oladi said.

However, the lack of equipment and machinery appears to be a more serious problem than some Iranian companies are ready to admit.

"We've just completed and handed over the Arak Refinery, and this may be our last refinery project in Iran for a while because of the sanctions," a source close to the project said.

But now there is some hope that sanctions could be eased with the election of a new moderate president.

In the meantime, localisation has helped Iranian firms cut costs. A telling example is the 1m tonne/year Kavian ethane cracker project at Assaluyeh.

Because of the US-led sanctions, no foreign equipment suppliers or contractors would take on the Kavian cracker project, said Davood Reza Rabhani, managing director of Bakhtar Petrochemical Co, the parent company of Kavian Petrochemicals.

"Therefore, we had to maximise the role of Iranian suppliers and contractors, which enabled us to significantly lower costs," he said. The final cost of the project was $260/tonne of ethylene compared with the original estimated cost of $400/tonne of ethylene, he added.

Iran has set ambitious targets for its petrochemical sector. By the end of the country's sixth Five-Year Plan in 2020, Iran is expected to account for 41% of Middle East production capacity, said NPC president Abdolhossein Bayat.

"Iran's development plan 2020 aims at getting Iran to occupy first place in the Middle East in terms of petrochemical production value," he added.

Author: Chow Bee Lin and Prema Viswanathan

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