Iran undertakes huge petrochemical project plan

Iran is undertaking an expansion plan to increase its petrochemical capacity on an enormous scale. Under the multi-phase development program, The National Petrochemical Company (NPC) has planned to grow Iran’s capacity to make petrochemical intermediates and final products from the 9 million tons per year produced in 2001 to 20 million tons per year in 2005 and to 27 million tons per year in 2013. Project investment could be $10.5 billion for the current phases up to 2005. Approximately 50% of the total petrochemical costs are in hard currency, which is invested through Engineering Procurement (EP) contracts with foreign and Iranian contractors. This can be made available depending on the type of project and project contract. Around 85% of EP contract prices cover financing arrangements with international financial resources and the remaining 15% come from NPC’s own resources. Currently under review is the Olefins 8, which will be based around a new 1.25 million tons per year plant erected at the Bandar Imam complex by Linde AG. Joint venture investment is under discussion with Shell. The cost of the Olefins 8 project is expected to be in the region of $500 million. Linde also won a contract for a 525,000 ton per year plant in 1999. It will also include the 268,000 ton per year facilities for ethylene oxide and ethylene glycol. These have been held over from the Olefins 6 and 7. The plant will be completed in 2003.
The production figures see the total polyethylene capacity of the Olefin 6 as 440,000 tons per year, which includes 140,000 tons per year HDPE and 300,000 tons per year LLDPE. The Olefin 7 site’s total polyethylene capacity is 600,000 tons per year, including 300,000 tons per year HDPE and 300,000 tons per year LDPE. The plant is a joint venture between Elenac GmbH (55%) and the NPC (45%). The plant will use Elenacýs Lupotech T technology. The plant is scheduled to be commissioned in 2004. The deal will allow the German company, hitherto restricted to Europe, to access the cheaper raw materials of the Middle East. Elenac is a consortium of BASF AG and Shell.

Another contract for a 140,000 ton per year HDPE facility as part of the Olefin 6 complex in Bandar Imam was awarded to Krupp Uhde by the Petrochemical Industries Development Management in Iran. The facility was 75% complete in November 2001 and should be in operation before 2003. It will use technology from Hoechst. The NPC has constructed a 160,000 ton per year facility for propylene with engineering services supplied by Tecnimont and installed technology from Spheripol and Montell.
Another 80,000 ton per year polypropylene plant is currently being commissioned near Bandar Imam. Contruction is by Mosavar. The engineering contract was awarded to Krupp Uhde and Targorýs Novolen is installed. The polyethylene terephthalate (PET) facility at Bandar Imam will cost in the range of $400 million. The plant will have a capacity of 235,000 tons per year of pure grade PET and 180 000 tons per year of bottle grade PET. The complex also includes a purified terephthalic acid (PTA) facility with a capacity of 350,000 tons per year. Both plants are scheduled to be in operation by mid 2002. The macro project plan is divided into five phases. Phases 1 and 2 comprise 10 projects due for completion by 2002. These units have a total capacity of 5.3 million tons per year of final products. The first two phases might require $3.5 billion of financing. The six units that make up Phase 3 of NPC’s development program will have capacity to produce 4.3 million tons per year of intermediates and 6.9 million tons per year of final products. The Phase 3 units are tentatively slated for start-up in 2002-5. Targeted for operation in 2004 are the Olefin 7, 9, and 10 complexes, the 4th Aromatic plant, and the 4th Methanol plant. The third phase could demand as much as $7.2 billion of investment, half of which would go to engineering and services.
NPC has outlined Phases 4 and 5 of its expansion program, which encompass the periods 2005-9 and 2009-13 respectively. Phase 4 covers five projects in the region with ten different final products and should provide up to 3.6 million tons per year of added capacity production. These phases will increase NPCýs final product capacity by a combined 5.4 million tons per year. To buffer the negative effects of the threat of investment sanctions, observed mainly by default, Iran has gone to great lengths to attract the major foreign technology and investment required for projects. Cheap access is allowed to feedstock and excise tax concessions are offered. No limits are set on foreign operators equity ownership of plants. A special economic zone has been created around Bandar Imam and tax holidays for petrochemical investors can be as long as nine years.

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