Petrochemical Industry has Projects Worth 162 Billion in the Pipeline: Iran, China and US to Become Petro-Hotspots

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A rekindling of direct foreign investment in Iran’s huge petrochemical sector could therefor reap large rewards for nimble investors with the significant fortitude necessary to assume relatively high levels of economic and political risks, says market analyst company HIS. According to a recent IHS Chemical analysis, Iran’s many risks include an extremely high degree of political risk, legal uncertainty, and bothersome levels of administrative and bureaucratic obstacles.

Yet despite these risks, Iran has a number of important advantages to potential petrochemical investors, including low-cost feedstocks and access to major markets. Iran has the world’s fourth-largest supply of proven oil reserves and the second-largest supply of conventional natural gas reserves, much of which is rich in ethane, a petrochemical feedstock. This is significant given that chemical feedstock availability in other countries such as Saudi Arabia, Kuwait and Oman, has become more limited.

“An Attractive Opportunity” – Despite the Risks

“If you are a global petrochemical producer looking at Iran for its investment and growth opportunity, and you can forget for a minute about the major business and political risks involved, it presents an attractive opportunity,” said Michael Smith, vice president of Europe, Middle East and Africa at IHS Chemical. “Major chemical players are champing at the bit to explore the potential that Iran offers, but they will not be doing so haphazardly. These companies are used to operating in risky environments and managing significant risk—it’s the nature of the business, but the reward has to significantly outweigh the risk, which is something they will be assessing very carefully and deliberately.”

IHS estimates that Iran’s current petrochemical production capacity is just below 60 million metric tons (MMT). The country produces a wide range of petrochemicals, roughly 100 different products, ranging from acetic acid to mixed xylenes.

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