The use of petrochemical products ranges from the ink used in the pens to food preservatives. Fertilizers, wax, detergents, plastic bottles are the samples of petrochemical products which are used in every corner of the world. Natural gas and oil are the basic raw materials for manufacturing of petrochemicals.
Iran has the fourth largest proven oil reserves and the second proven reserves of natural gas, which means impressive hydrocarbon resources and feedstock availability for petrochemicals.
Abundant basic raw material, countrys geographical location and access to wide domestic market determine Iran as a new investment paradise.
In general, production costs in Iran compared to those in Saudi Arabia or North America is the lowest in the world. Besides, Iran has a strategic location with the Persian Gulf and Strait of Hormuz that is a vital point for passage of goods. Lastly, Iran with a large population of 78 million seems to have a great potential to increase domestic demand, immediately after the lifting of sanctions. Signing of JCPA between Iran and world powers has lowered the political risk of the country. Lifting of sanctions would accelerate petrochemicals production plans and drive progress on many proposed projects.
The capacity of petrochemical production of Iran is about 60 million tons including a wide range of petrochemicals with the purpose of providing domestic needs and some of them are aimed at exports. Ethylene, polyethylene are the key petrochemical products as well as methanol and urea. Iran is a major methanol producer and exporter, with 5 million tons of capacity, and producers also benefit from very lower production costs.
According to Vice President Eshaq Jahangiri, the Government of Iran considers investment in the petrochemical sector a top priority and it would fully support both local and foreign investment in the sector. It is notable to mention that the price of gas as feedstock for petrochemicals is determined by the government at a lower price compared to the other countries in the Middle East to encourage the private sector to participate in the development programs.
According to Irans Petroleum Minister, the government is committed to facilitate investment in the petrochemical sector. It would also provide incentives such as tax exemptions, customs, and insurance assistance for petrochemical firms investing in the country. Iran needs around USD 70 billion in investment to expand plans in the petrochemical sector.
Expanding non-oil exports has been one of the objectives of the governments in the past two decades. In order to raise non-oil exports, petrochemicals is one of the key sectors that the government has started working on required facilities. The share of petrochemicals in exports during the last Iranian year is about 28.65% as depicted in chart below.
Finally, Iran is expected to have a rapid growth on the petrochemicals industry after the lifting of sanctions mainly due to easier access to the global markets. It would cause further positive effects on the countrys economy through access to foreign capital markets, trade, financing, markets and technology providers.