Petrochemical Market Report Iran Is Iran the new Country of Endless Possibilities for Petrochemicals?
Oil-rich Iran is hungry for investments in its downstream industry after a decade of foreign sanctions. After not joining the Opec states in the discussion of a possible oil production freeze, the country sets its sights on a bigger goal: Iran wants to become the number one regional downstreamplayer until 2025…
The lifting of over a decade long sanctions on Iran has attracted huge international interests onto the country. A huge domestic market characterised by a 79-million strong population adds to Iran’s geographical advantageous location in the Middle East which in turn gives it access to strategic maritime passages making it a viable market for global access and hence increased investment potential. Development of the petrochemical value chain is one of the most promising avenues that is expected to significantly add value to its non-oil economy.
“Abundance of feedstock, relatively suitable infrastructure, low cost of production and access to skilled labours are key factors that make Iran interesting for investors in the petrochemical space. The country’s natural reserves of Ethane, Propane and Naphtha are sufficient to set up new petrochemical complexes within the next ten years”, opines Ali Mirmohammad, Senior Consultant and Business Development Manager for Iran at Frost & Sullivan.
He further adds that “the Government is adopting a foreign policy approach to not only strengthen local capabilities but also to increase non-oil exports to more than USD 50 billion based on downstream verticals derived from petrochemical and mining industries.”
In the past, over 75% of foreign investment on an average went to upstream oil and gas projects; today, the country plans to divert more of the foreign investment into downstream projects. As far as petrochemical capabilities are concerned, development of downstream projects is a key factor to significantly reduce dependency on an oil-based economy.
Iran Vision 2025 provides the desired impetus
According to Iran vision 2025, the country plans to emerge as the largest producer of petrochemical products along the value chain in the region. Plastics, rubbers, paints and resins, fertiliser and pesticides, chemicals and solvents, fibres and textiles, medicines, cosmetics, composites, and detergents are the various downstream petrochemical products that the country proposes to focus for development in the next 10 years.
Iran requires at least USD 70 billion of financial resources to develop the entire petrochemical industry to achieve its vision of 2025. Such an investment is expected to catalyse growth in exports of its petrochemical industry from less than USD 12 billion in the year 2015 to over USD 40 billion by the end of 2025.