Can Iran Become a Significant Petrochemical Power?

A rapid expansion of Iran's petrochemical industry is currently underway – set to increase the nation’s output by around three million tons before 2023 is out – but it’s only latest morsel of promising news coming out of the sector. With the value of the country's petrochemical exports soaring to around $18 billion since March 2022, according to figures reported by the National Petrochemical Company (NPC), Iran is definitively displaying tangible signs of becoming a significant global player in petrochemicals. 

This impressive $18 billion represents a $3 billion increase on the previous year, an increase that reportedly surpassed NPC’s Managing Director Morteza Shahmirzaee's prediction for the annual export of petrochemicals. All things considered, Iran’s petrochemical sector now represents the highest added value in the country's oil industry value-chain, further solidifying its strategic importance. Shahmirzaee highlighted the significance of propylene chain products, which currently make up 70% of the country's total petrochemical imports. As part of a scramble to tip the nation’s balance of payments in favour of exporting, Iran has been rapidly developing its propylene production at time when the current annual capacity (of one million tons) still falls short of meeting domestic needs. Overall, though, petrochemical exports now make up nearly 33% of the country's non-oil exports, providing a vital revenue stream only surpassed by crude oil. As such, Iran's ten-year strategic outlook for the petrochemical industry forecasts the initiation and/or completion of 35 new projects, adding a nominal capacity of 13 million tons per year for propylene production and raising the total production capacity to 14 million tons annually, with 11 million tons earmarked for polypropylene use and three million tons for other sectors. 

And with 69 active production units, including service units that provide essential utilities like water, electricity, and steam, the petrochemical industry is a great big magnet for foreign currency – and Shahmirzaee knows it, publicly emphasising the industry's massive value-creating and job-generating potential with minimal risk to investors. But by no means is international investment the be-all and end-all for Iran; Shahmirzaee has flagged up the West Eslam-Abad petrochemical project as an example of a fully domestically-produced and –funded initiative. Institutes like the Petrochemical Research and Technology Company as well as the Research Institute of Petroleum Industry are at the forefront of these efforts. 

Of course, like all things, Iran's bid to become a significant petrochemical power is not a done deal. Bridging the gap will involve a whole swathe of investment into cutting-edge technology and a skilled workforce that can stay competitive on an international stage that is not wanting for participants. And like all of its competitors, Iran will have to demonstrate its commitment to environmental considerations and sustainability in a decade that’s set to be decisive in the fight against climate change. 

Clearly, then, the projected growth of Iranian petrochemicals, its increasing in exports and packed schedule of strategic domestic production initiatives, are highly promising indicators that the country may be a future petrochemical power. But getting there requires the successful navigation of a domestic and international labyrinth of economic, political, environmental and technological challenges.