The industry’s performance under President Masoud Pezeshkian’s
administration, from September 2024 through June 2026, points to a broader
shift in strategy: from simply increasing output toward strengthening
resilience, developing technology and maximizing the value of Iran’s
hydrocarbon resources.
According to data compiled by the National Petrochemical Company,
Iran’s nominal petrochemical capacity reached about 101.4 million metric tons a
year across 79 operating complexes by the end of June. During the 22-month
period, producers manufactured about 124.2 million tons of petrochemical
products.
Net sales totaled about $39 billion, combining domestic and export
sales. Exports accounted for roughly 49 million tons worth $21.7 billion,
underscoring the sector’s role as one of Iran’s most important sources of
non-oil export earnings.
Exports Sustain Foreign-Currency Flows
Petrochemical exports remained a critical source of foreign currency
as Iran faced sanctions and pressure on its broader external revenues.
At the same time, producers continued supplying the domestic market,
with petrochemical products offered through the local exchange to support
downstream manufacturers. The dual focus on exports and domestic supply became
particularly important during periods of disruption, when shortages of
industrial feedstock could have spread through the manufacturing chain.
The result was a balancing act between maintaining international
market access and ensuring that domestic producers had access to essential raw
materials.
Feedstock Security Becomes a Strategic Priority
For an industry built around abundant hydrocarbon resources, securing
reliable feedstock has become one of its most persistent constraints.
Petrochemical companies increasingly participated directly in projects
designed to capture associated petroleum gas that would otherwise be flared.
Projects involving Bidboland Gulf Gas Refining, Maroon Petrochemical, Hoveyzeh
Gulf Petro Refining and Dehloran Petrochemical Refinery are examples of efforts
to connect feedstock security with infrastructure investment and emissions
reduction.
The approach reflects a broader recognition that expanding
petrochemical capacity alone cannot guarantee sustained production. Feedstock,
power, logistics and supporting infrastructure must develop alongside
processing capacity.
Reassessing Projects to Unlock Capital
The National Petrochemical Company also reviewed previously issued
licenses and projects with insufficient progress, with some permits subject to
cancellation or revision.
The objective was to redirect scarce capital toward projects with
stronger economic and strategic potential, including those capable of
increasing production, completing value chains, supplying downstream industries
and producing strategically important products.
Twenty-six priority projects have been identified under Iran’s Seventh
Development Plan.
New financing mechanisms are also being explored. Access to Chinese
credit facilities and instruments such as foreign-currency Murabaha bonds have
created additional channels for financing capital-intensive petrochemical
projects.
Nine Projects Completed
Nine major projects have been completed during the current
administration, covering a range of products and infrastructure.
Among them are the acrylonitrile butadiene styrene project of Padjam
Polymer, projects associated with Bidboland Gulf Gas Refining’s flare-gas
collection program, Apadana Petrochemical’s methanol project, Kimia Sanaye
Dalaho, Arghavan Gostar Ilam, Petro Entekhab Isfahan, Dehloran Petrorefinery,
and the olefin and monoethylene glycol units of Bushehr Petrochemical.
The mix is significant because it extends beyond conventional capacity
expansion. It includes higher-value polymers, olefin production and projects
aimed at recovering previously wasted gas, indicating a stronger emphasis on
value creation from existing resources.
War Tests the Industry’s Resilience
The most demanding test, however, came from two wars lasting 12 and 40
days, which placed petrochemical facilities under pressures extending well
beyond the industry’s traditional economic challenges.
Maintaining operational safety, preventing secondary incidents,
sustaining production and exports, and ensuring domestic supply became
simultaneous priorities.
Following the outbreak of hostilities, the National Petrochemical
Company established emergency coordination mechanisms involving relevant
agencies and production complexes. Particular attention was given to reducing
risks associated with hazardous chemicals and preventing fires and explosions.
Export flows through the ports and terminals of Pars and Mahshahr were
maintained, while efforts continued to keep the West Ethylene Pipeline and
dependent complexes operating safely.
The industry also adjusted supply management to prevent shortages of
essential petrochemical feedstocks for downstream manufacturers.
Damage to facilities was assessed, with recovery and reconstruction
plans developed for affected sites. One of the key achievements was the
restoration of about half of production capacity in Assaluyeh and Mahshahr
through the deployment of independent steam units and access to electricity
from the national grid.
The experience demonstrated that resilience depends not only on
installed capacity but also on emergency preparedness, infrastructure
flexibility and the speed of operational decision-making.
From Buying Technology to Developing It
Technology has emerged as another strategic focus.
Under an energy-diplomacy approach, Iranian petrochemical companies
and institutions have pursued cooperation with foreign technology providers
aimed at knowledge transfer and joint development. Agreements with Chinese companies
to localize propane dehydrogenation, or PDH, technology are intended to support
the expansion of Iran’s propylene chain, a critical building block for numerous
downstream petrochemical products.
The shift from simply purchasing technology toward participating in
its development could reduce long-term dependence on foreign licensors while
creating new opportunities for domestic technological capabilities.
Domestic Catalysts and Artificial Intelligence
The industry has also strengthened ties with Iran’s knowledge-based
companies. Twenty-one Iranian companies are now active in producing catalysts
and chemicals required by petrochemical plants.
Catalysts are strategically important to many petrochemical processes,
making domestic production relevant not only to foreign-currency savings but
also to operational security and supply-chain resilience.
Artificial intelligence is another emerging priority. The industry has
unveiled an AI strategy covering 30 projects across 14 areas, with potential
applications ranging from predictive maintenance and energy optimization to
production planning, market analysis and supply-chain management.
That agenda signals an effort to move toward more data-driven
industrial management, particularly in an industry where equipment reliability
and energy efficiency can have a direct impact on margins.
Projects in the Pipeline
The expansion program is set to continue through the end of 2026, with
several major projects targeted for completion.
They include flare-gas collection projects at Maroon Petrochemical;
Arman Sepahan’s isopropyl alcohol project with annual capacity of 36,000 tons;
Kangan Petrochemical Development’s olefin project with annual capacity of 1.089
million tons; Sadaf Assaluyeh with 136,000 tons a year; Hengam Urea with annual
capacity of 1.072 million tons; Kangan’s high-density polyethylene project with
300,000 tons a year; and Sabalan Methanol 2, also known as Dena, with annual
capacity of 1.65 million tons.
Together with projects being reassessed and those designated as
priorities under the Seventh Development Plan, the pipeline provides a basis
for continued expansion while placing greater emphasis on product
diversification and value-chain development.
From Export Earner to Resilience Engine
The petrochemical industry’s performance over the past two years
cannot be measured solely by production, exports or the number of completed
projects.
Its more consequential change may lie in how the sector is being
managed: through tighter control of project licensing, greater attention to
feedstock security, new financing mechanisms, technology partnerships, domestic
catalyst production, artificial intelligence and crisis preparedness.
Iran’s petrochemical industry has effectively been operating on three
fronts at once—production and revenue, development and technology, and crisis
management.
Its competitive position in the years ahead will depend less on access
to hydrocarbon feedstock alone and more on how efficiently that feedstock can
be converted into higher-value products, how deeply domestic value chains can
be developed and how effectively the industry can withstand disruptions.
For Iran’s economy, that makes petrochemicals more than an export
industry. It is increasingly being positioned as a strategic buffer—one capable
of generating foreign currency, supporting domestic manufacturing and
sustaining economic activity when conventional sources of resilience are under
pressure.