Petrochemical Industry is one of the most important industries for the world’s economic development. This industry and its products play an enormous role in our daily life. It is the foundation of wide variety of industrial production processes such as plastic and container industry, textile industry, rubber industry, agricultural and fertilizer industry. In the exact scientific definition, petrochemicals are a set of very specific chemical compounds, which can be made from oil, natural gas, coal, plants or other sources. In addition, the vast majority of petrochemicals products also derived from oil or natural gas.

The two most common petrochemical classes are olefins (including ethylene and propylene) and aromatics (including benzene, toluene and xylene isomers). Oil refineries produce olefins and aromatics by fluid catalytic cracking of petroleum fractions. Chemical plants produce olefins by steam cracking of natural gas liquids like ethane and propane. Aromatics are produced by catalytic reforming of naphtha. Olefins and aromatics are the building-blocks for a wide range of materials such as solvents, detergents, and adhesives.

Global petrochemical market is projected to reach 758.3 billion USD by 2022 in terms of value and the amount of production is also expected to grow. Increasing demand for petrochemical products in industries such as transportation and construction is expected to grow over the next seven years. Growing demand for petrochemical products is attributed to the presence of abundant raw materials in Middle East & Africa. Furthermore, rising Shale gas exploration in North America coupled with E&P[1] in China is expected to have a propel growth. However, fluctuation of crude oil and naphtha prices due to political instability in OPEC nations and supply-demand gap is expected to hinder the upward trend in this industry. In the figure below the expected trend of global petrochemical market volume by products during 2012-2022 has been shown:

Petrochemical industry 1

Source: Grand View Research

 

Total active petrochemical projects are shown in the figure below by region. The Middle East contains the second-highest number of active petrochemical projects, with nearly 160 projects. In the region, investors heavily have invested in building up its downstream products portfolio because of available potentials existing in the region. This includes multibillion-dollar investments in the construction of mixed-feed crackers, as well as ethylene derivatives capacity.

Petrochemical industry 2

Source: Hydrocarbon Processing’s Construction Box score Database

 

Petrochemical industry in Iran

Petrochemical industry in Iran has a history of more than 60 years. Fertilizer unit establishment in Iran’s National Petrochemical Company around 1963 in Shiraz was the first project which run in this industry in Iran.

Initial development of the industry began by establishing Razi Petrochemical Complex, Abadan, Ahvaz carbon (Iran), Pazargad, Kharg, Farabi, Bandar-e Emam Khomeyni and Shiraz Petrochemical Development.

Iran as a seventh oil producer in the world in 2014, has a comparative advantage in the petrochemical industry over many countries of the world. The main advantages of Iran in this industry are accessibility to: the rich resources of gas and gas condensate with competitive prices, international waters, available ports for exporting to other countries, massive gas resources in the Persian Gulf and also strategic geographical location in terms of accessibility to Asian markets such as China, India and Europe via Turkey.

Petrochemical industry used to produce less than 3 million tons per year from the beginning until the Islamic Revolution of Iran, but nowadays, the production reached to 61 million tons in 2015 by developing nominal capacity.

Industry’s production capacity could touch 120 million tons annually by the completion of in-progress projects in 2016. By defining new projects, production capacity will amount to 180 million tons per year by the end of 2024.

According to Ali Mohammad Bosaghzadeh[2] “production of petrochemical industry in 2015 was over than 46.4 million Tons with sustainable feedstock for petrochemical complexes” he said in an interview with Payampetro news agency. This amount included approximately 80% of the nominal capacity and was more than one hundred percent of production over the same period last year.

In addition, the export sector experienced an increase of 23 percent compared to 2014. Exporting of petrochemical products with value of 3,542 million Dollars allocated 33.82 percent of the industrial exported goods. Iran’s export to top Middle East producers in terms of volume in 2015 has been shown in the figure below:

Petrochemical industry 3

Source: Whispering Bell’s Report

Conclusion

The Joint Comprehensive Plan of Action has abled active international companies to enter Iran after years of sanctions. International companies can benefit to this industry in Iran in terms of attracting financial resources and also up to date technologies. As a result, the representatives of Asians, Africans, Europeans and even Americans companies were sent to Tehran and announced their willingness to engage with Iran.

Swift opening and sanctions removal has created a good opportunity to increase our exports of petrochemical products with lower cost.

Furthermore, reviewing and prioritizing the developing projects of petrochemical industry such as building of industrial park near free waters, increment of production of current units, using new technologies in development plans like OCM (Conversion of natural gas into ethylene), MTP (Converting methanol to propylene), MTO (Convert Methanol to Olefins) and Cyclar (New technologies for the production of aromatics) are in progress.

As all mentioned above, the hope of increasing oil price provides good prospects for Iran’s petrochemical industry.

[1] Exploration and production

[2] Director of Production Control in Iran’s National Petrochemical Company (NPC)