Hassan Abbaszadeh, Deputy Petroleum Minister and CEO of the National
Petrochemical Company (NPC), said the country's current installed petrochemical
production capacity stands at about 100 million tonnes and is expected to grow
to 131 million tonnes by the end of the seventh plan horizon.
Speaking at a meeting with representatives from the Supreme Leader’s
economic office and the National Development Fund (NDF), Abbaszadeh stressed
the need to develop the value chain and curb raw material exports. “Investment
indicators and priorities for downstream petrochemical industries will be
defined and submitted to the NDF to guide funding,” he said.
Feedstock Security and Investment Remain Key Challenges
Abbaszadeh pointed to two major obstacles: feedstock shortages and
limited access to investment. He revealed that around 22% of the country’s
current petrochemical capacity is idle due to insufficient
feedstock—particularly natural gas.
To address the feedstock gap, the government is accelerating flare gas
recovery projects. The Persian Gulf Holding Company is investing $1.1 billion
in projects across oil-rich regions, which will eventually extinguish over 50
flares. Fourteen of them are expected to be shut this year, supplying ethane to
Gachsaran Petrochemical and other plants.
Additional feedstock sources include the recently launched NGL 3200
and ongoing NGL 3100 projects in the western Ilam province, which are expected
to return 10 million cubic meters of gas per day to the national network.
On the upstream side, Abbaszadeh said Bakhter Group and Petrofarhang
have signed contracts to develop two gas fields. Once operational, they are
expected to yield 25 million cubic meters of gas per day for petrochemical use.
Investment Needs to Exceed $5 Billion Annually
NPC estimates the petrochemical industry needs $5 billion annually in
investment to meet seventh plan targets, increasing to $7 billion for the
eighth plan. Foreign investment once hit $4 billion but has since dropped to
$3.5 billion, mostly sourced from domestic funds.
Abbaszadeh said NPC is designing new investment models to attract
capital and highlighted the importance of supporting technologies—but
emphasized that feedstock reliability and funding are currently greater
priorities than technological gaps.
Downstream Development and Site Allocation
The deputy minister said Iran is prioritizing development of
downstream petrochemical units near both consumers and feedstock sources. “If
investors are willing to establish downstream plants close to feedstock, we
have prepared sites within special economic zones with flat terrain and no
legal encumbrances,” he said, adding that these sites are just 18 kilometers
from major petrochemical hubs.
A dedicated corridor will provide utilities and services to upstream
and midstream partners operating in these zones.
Exports and Import Substitution
Iran exports about 70% of its petrochemical output, including 28
million tonnes of urea annually. Abbaszadeh said many products are still
exported in raw form, like methanol, which could instead be processed
domestically to support small-scale industries and increase added value.
Iran also imports around $2 billion worth of petrochemical products
annually, primarily base chemicals and feedstocks for downstream use.
Abbaszadeh cited $200 million spent on importing propylene oxide despite local
plans to produce it at Maroon Petrochemical.
Legislative and Strategic Measures
The NPC has negotiated with the NDF to prioritize sectors that offer
maximum economic impact. A final list of investment priorities and impact
metrics will be submitted to the fund within 10 days.
Looking ahead to 2051, the NPC is preparing a list of 60 strategic
projects aimed at boosting domestic production and downstream development.
“Sustainable feedstock for downstream units will likely come from integrated
petro-refineries,” Abbaszadeh said, noting that two new condensate refineries
are expected to launch this year.
However, the shift of condensate supplies toward fuel production has
strained petrochemical feedstock availability and affected the high-value
aromatics chain.
Abbaszadeh warned that continued allocation of natural gas and
condensates to fuel, rather than petrochemicals, is harming the value chain.
“We must reform energy consumption to reduce the burden on the petrochemical
industry,” he said.
Incentives for Value Chain Development
The Seventh Plan includes a new provision allowing up to 30% feedstock
discounts for certain downstream chains—a move previously available only to
upstream producers. Abbaszadeh said this could significantly enhance the
viability of strategic value-added projects.