Iran is expecting a boost in petrochemical production that will raise annual production from $17bn to $25bn over the next two years, according to the country’s deputy oil minister.
Speaking on Thursday, May 30, Behzad Mohammadi said that the current petrochemical capacity of 65 million tons should reach 92 million tons by 2021 and 130 million tons by 2024.
However, Iran is currently utilizing 50-70 percent of its production capacity, due to export difficulties, and any expansion would make sense only if U.S. sanctions end and the country is able to sell petrochemicals, freely.
Iran had aimed to export $14 billion of petrochemical products last year, but Mohammadi – who also heads Iran’s National Petroleum Company (NPC) – stopped short of disclosing whether targets had been met.
The NPC has not published statistics concerning its output for months, while reports filed by Customs and Iran Trade Promotion Organization only present combined figures of petrochemical and some crude oil exports.
Nevertheless, the latest statements published by the Ministry of Industry, Mines, and Trade show that Iran has exported less than $10 billion of petrochemical products in the past 11 months, showing a 2.3 per cent increase without any change in the volume, compared with the previous year.
Furthermore, the official statistics show that the petrochemical plants across the country worked with 70 per cent of their capacities last year.
This would leave nearly one-third of plants idle, either because of a shortage of feeding material or repairs and difficulties in finding a market.
Mohammadi said 64 petrochemical projects are currently underway in Iran, while the total capacity of production in the country's petrochemical industry is expected to rise by 95 per cent by 2024.
“The development plan will provide the petrochemical industry with at least 51 million tons of chemicals available for sale,” Mohammadi said, reiterating that such a level will generate $25bn in income.
U.S. sanctions on Iranian oil and metal exports have left Iran struggling to compensate for its losses with other exports – these followed Washington’s withdrawal from the nuclear dear, 2015’s Joint Comprehensive Plan of Action, last year.
Petrochemical products constitute more than one-fourth of Iran’s non-oil exports. Iran exported these products to 30 countries across the world, the government claims, at least up until the full impact of U.S. sanctions came into play.
In August 2018, NPC officials said Iran’s petrochemical industry was “sanction-proof” and that the exports would continue on schedule.
The U.S., however, has several types of sanctions targeting Iran’s petrochemicals sector, not least via its Specially Designated Nationals and Blocked Persons list. Then, there are U.S. banking sanctions, which it very hard for Iran to repatriate the hard currency it earns from any exports.