{"id":15030,"date":"2025-08-06T04:07:20","date_gmt":"2025-08-06T04:07:20","guid":{"rendered":"https:\/\/roydadnaft.ir\/English\/?p=15030"},"modified":"2025-08-06T04:07:20","modified_gmt":"2025-08-06T04:07:20","slug":"strategic-investment-in-petchem-industry","status":"publish","type":"post","link":"https:\/\/roydadnaft.ir\/English\/15030\/","title":{"rendered":"Strategic investment in petchem industry"},"content":{"rendered":"

RoydadNaft – <\/a><\/span>\u00a0With the launch of several petrochemical projects in 2025, Iran\u2019s petrochemical industry is entering a new chapter. This sector is expected to play an even more vital role in boosting non-oil exports, securing foreign exchange, creating jobs, and generating added value. However, challenges like international sanctions and funding constraints make it imperative to adopt diversified strategies for attracting both domestic and foreign investment.<\/p>\n

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In a summer morning conversation, Shana sat down with Hamidreza Ajami, investment director at the National Petrochemical Company (NPC), to explore the roadmap for financing petrochemical projects, overcoming challenges, and encouraging investment.<\/p>\n

Ajami considers the petrochemical industry a pillar of national security, explaining that its expansion boosts Iran\u2019s economic and social stability. He estimates that the country will need approximately $100 billion in investment for 144 licensed petrochemical projects, and highlights that relying solely on domestic resources limits growth and competitiveness in global markets.<\/p>\n

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Q: Mr. Ajami, how significant is the petrochemical industry to Iran\u2019s economy given the existing investments?<\/strong><\/p>\n

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The petrochemical sector is a high-tech, value-generating global industry. It currently accounts for 25% of Iran\u2019s non-oil exports and roughly 19% of industrial value added. For example, early-stage downstream processes in petrochemicals yield at least 100% value added, while midstream activities generate 70% to 100%.<\/p>\n

This industry is a key link between upstream oil operations and a wide range of downstream industries, making it essential for entrepreneurship and job creation. It’s a prime example of passive defense in the economy\u2014resilient even under pressure. In recent years, about half of Iran\u2019s foreign currency needs have been met by the petrochemical industry.<\/p>\n

Petrochemicals also support broader economic, cultural, industrial, and national security development. A thriving productive economy fosters public trust, national belonging, and territorial loyalty\u2014factors essential to resisting external threats. The industry also plays a strategic role at border regions, where downstream developments can elevate economic and social security.<\/p>\n

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Q: How much investment has gone into this industry, and what mechanisms are in place for financing?<\/strong><\/p>\n

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Between 1979 and 2022, around $87 billion was invested in the sector. Roughly 19% came from foreign sources\u2014mainly Asian and European\u2014and another 11% from the National Development Fund and other internal or mixed resources. The rest came from shareholder contributions, loans, and asset sales.<\/p>\n

Under Iran\u2019s Seventh Development Plan, $22 billion is earmarked for the petrochemical sector\u2014$12 billion of which is already being executed. Several projects are nearing completion this year, with financing being secured for the rest to ensure on-time delivery.<\/p>\n

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Q: How many projects are currently licensed for investment?<\/strong><\/p>\n

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As of now, 144 projects are registered in the NPC\u2019s investment licensing platform, requiring nearly $100 billion in total capital:<\/p>\n

\u00a020 projects worth $11 billion, with 15.5 million tons in capacity, are over 70% complete.<\/p>\n

\u00a032 projects worth $22 billion, totaling 29 million tons, are between 20% and 70% complete.<\/p>\n

\u00a092 projects worth $67 billion and 86 million tons in capacity are under 20% complete.<\/p>\n

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Q: Given the sanctions, is foreign investment still a priority for NPC?<\/strong><\/p>\n

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Absolutely. Foreign investment is critical because domestic resources alone are insufficient for scalable growth and global competitiveness. NPC recently signed an MoU with the Organization for Investment and Economic and Technical Assistance of Iran to prioritize the petrochemical sector in international forums.<\/p>\n

We\u2019re also exploring partnerships through BRICS and Shanghai Cooperation Organization to attract more foreign capital to this strategic and high-return industry.<\/p>\n

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Q: If international sanctions persist, how can foreign funding still be secured?<\/strong><\/p>\n

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Despite sanctions, the industry has continued to grow using a combination of domestic and foreign resources. Several projects are being launched this year as evidence. Long-standing economic ties with key international players have enabled access to credit lines even under restrictions.<\/p>\n

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Q: How can investor confidence be secured in the face of sanctions, feedstock concerns, and currency volatility?<\/strong><\/p>\n

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Investor confidence hinges on the guarantee of capital safety and profitability. Iran\u2019s \u201cForeign Investment Promotion and Protection Act\u201d offers key incentives: equal treatment with domestic investors, no limits on foreign ownership, visa and residency facilitation for foreign staff and families, customs exemptions in free zones, and more.<\/p>\n

Other advantages include:<\/p>\n

\u00a0Rapid industry growth backed by international reports<\/p>\n

\u00a0Ongoing development and R&D<\/p>\n

\u00a0Strong domestic manufacturing and engineering capacity<\/p>\n

\u00a0Access to skilled, low-cost labor<\/p>\n

\u00a0Vast research and knowledge-based networks<\/p>\n

\u00a0Proximity to international waters and 15 neighboring markets<\/p>\n

\u00a0A growing and diverse domestic consumer base<\/p>\n

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Q: What are the investment priorities in the petrochemical sector?<\/strong><\/p>\n

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Investments must be strategic and value-generating. NPC, as a government-backed entity, guides development responsibly. Priorities include:<\/p>\n

\u00a0Value chain expansion<\/p>\n

\u00a0Gas flaring reduction projects for environmental sustainability<\/p>\n

\u00a0Seventh Development Plan-aligned projects<\/p>\n

\u00a0Completion of unfinished projects<\/p>\n

\u00a0High foreign-exchange earning ventures<\/p>\n

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Q: What are the main challenges to investment?<\/strong><\/p>\n

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Foreign exchange limitations are a major hurdle. The combined reserves of Iran\u2019s banking system, National Development Fund, and capital markets are finite\u2014yet petrochemicals alone need $100 billion over the next decade. That\u2019s in addition to over $100 billion needed by upstream oil.<\/p>\n

Logistics and maritime security issues also complicate petrochemical exports. Still, the industry\u2019s global credibility has sustained foreign partnerships. On feedstock, adjusting feed composition and importing liquid feed can help. Domestic knowledge-based firms are also stepping up in tech and equipment, making the industry increasingly self-reliant.<\/p>\n

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Q: To what extent is the domestic financial market used for funding?<\/strong><\/p>\n

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In 2024, banks issued $210 million in Islamic sukuk (Murabaha bonds) for the petrochemical sector. This year, over 120 trillion rials in bonds have been issued, including for the Persian Gulf Petrochemical Industries Co. and other private ventures. Another 80 trillion rials in supply-chain finance is expected by year-end.<\/p>\n

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Q: Is there a strategy for attracting public investment into petrochemicals?<\/strong><\/p>\n

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Yes. NPC encourages public participation through educational brochures and specialized forums. Negotiations with banks and the creation of project funds and public bonds are helping to open access for ordinary investors.<\/p>\n

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Q: With a focus on value chain completion, is priority given to incomplete projects or new investments?<\/strong><\/p>\n

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Both are pursued. However, given upstream feedstock constraints, base chemical projects face limits. The midstream and downstream sectors offer more flexibility\u2014requiring less capital and delivering higher employment benefits.<\/p>\n

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Q: Has Iran engaged in regional or international joint ventures in petrochemicals?<\/strong><\/p>\n

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Yes. Notable examples include:<\/p>\n

\u00a0Arya Sasol Polymer Co.<\/p>\n

\u00a0Karoun Petrochemical Co.<\/p>\n

\u00a0Mehr Petrochemical Co.<\/p>\n

\u00a0NPC Alliance (the Philippines)<\/p>\n

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These ventures underscore the petrochemical industry\u2019s international appeal and high-tech, innovation-driven nature\u2014key for long-term sustainability and security.<\/p>\n

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Interview by:<\/em><\/strong><\/p>\n

Younes Sadeqi<\/em><\/strong><\/p>\n<\/div>\n<\/div>\n

Updated on