Published on December 30, 2014

The petrochemical industry in Iran processes around 5 per cent of the hydrocarbon resources utilised by the country, to generate $20 billion for the local economy. In the past decade, the industry had to face a number of issues, including the implementation of Western sanctions, government decision to lift subsidies on fuels, and privatisation of state-owned petrochemical firms.

The lifting of fuel subsidies have affected the petrochemical industry and has resulted in a rise in prices for crucial feedstocks. For instance, natural gas prices have gone up from 2.5 cents/m to 13 cents/m3, and liquid feedstock has become more expensive.

The Western sanctions also affected the petrochemicals industry- the industry had to face a lot of problems on the production front, but it has helped give impetus to local ventures providing support to the industry. It has also helped diversify the petrochemical industry by giving access to credit lines of local finance. Methanol and urea markets have received significant investments.

Around 20 mtpa of methanol capacity is expected to be established in the coming five years, boosting 5 mtpa methanol capacity currently in operation. This capacity is being established in Assaluyeh, providing easy access to feedstock and markets. Methanol prices will be affected by this as well as the shale gas revolution in the US.

Moreover, 10 mtpa of urea capacity will also be added. Apart from supplying export markets for methanol, a significant amount will be used as raw material for producing olefins, especially olefins via the MTO/MTP route.