Bandar Imam 2, Iran

Iran is planning an enormous expansion of its petrochemical capacity. Under the multi-phase development programme, the National Petrochemical Company (NPC) plans that Iran's capacity to make petrochemical intermediates and final products will grow from 9 million tonnes per year in 2001, to 20 million tonnes per year in 2005, then to 27 million tonnes per year in 2013. The project is divided into five phases.


Phases 1 and 2 comprise 10 projects due for completion by the end of 2002. These units have a total capacity of 5.3 million tonnes per year of final products. The first two phases might require $3.5 billion of finance.

The six units that make up Phase 3 of NPC's development programme will have capacity to produce 4.3 million tonnes per year of intermediates and 6.9t/yr of final products. The Phase 3 units are slated for start-up between 2001-05. The third phase could demand as much as $7.2 billion of investment. Half of this is expected to go to engineering and services.

NPC has outlined Phases 4 and 5 of its expansion programme, which encompass the periods 2005-09 and 2009-13, respectively. These phases will increase NPC's final products capacity by a combined 5.4 million tonnes per year.


The NPC 180,000t/yr paraxylene plant, which occupies a 5ha space, came on line in the last quarter of 1999. The plant will obtain feedstock from the rest of the Bandar Imam complex. Paraxylene production technology was imported from a South Korean company.

One of the ten projects planned to be completed by the end of 2002 is the Bouali Sina Petrochemical site, which is a sister company to NPC. They will run the 3rd Aromatic Project at Bandar Imam, which will produce 428,000t/yr of paraxylene and 179,000t/yr of benzene. This is scheduled to begin operations by the first quarter of 2003.

The Bandar Imam site also has NPC's 230,000t/yr benzene and 140,000t/yr isomer-grade mixed xylene plants. These had a six-week unscheduled shut down in the latter part of February because of a catalyst problem. This has left the company's European benzene customers and Korean mixed xylene customers without a supply.

Another project for chemical production has begun in Assaloyeh, a different energy zone, where the 4th Aromatic Project, to be run Borzoyeh, will produce 750,000t/yr of paraxylene, 100,000t/yr of oxide and 430,000t/yr of benzene. This is scheduled to start production by 2004.


Iran opened a 660,000t/yr methanol plant on Kharg Island in the Persian Gulf in March 2000. The cost of the new plant was $206 million. The produce will go partly to the Bandar (Imam) Khomeini petrochemical complex to make the petrol additive methyl tertiary butyl ether (MTBE). However, more than half of the plant's produce is expected to be sold abroad.


The NPC will also build a 400,000t/yr polyester plant near Bandar Imam. The contract, worth in the region of $160 million, has already been awarded to Lurgi Zimmer. The new plant will be operated by NPC's daughter company, Shahid Tondgooian Petrochemical Corporation. The facility will convert PTA and ethylene glycol to 352,000t/yr polyester granulate for textile uses and 60,000t/yr granulate for PET bottles using the continuous polycondensation technology of Lurgi Zimmer.

The company expects to break ground with two natural gas to liquid plants at the Bandar Imam site. They will have capacities of 100,000t/yr and 300,000t/yr of LPG respectively. They are due to come on line by mid-2002. This is part of an ongoing project to expand the fractionating facilities, which supply the feedstock to the Bandar Imam petrochemical complex.


Iran is well placed to develop a petrochemical industry, because of its ample oil and gas reserves. In the past it has largely relied on raw material exports. However, like many Middle Eastern producers, it wants to move downstream in order to exploit more value-added, less commoditised exports. This strategy was given an extra urgency by the low oil prices through most of 1999, although the subsequent price recovery in the latter part of the year and early 2000 relieved the pressure.

Almost half of the country's petrochemical output is exported. The most important markets are the Far East (especially China and India) and Europe. Thus, the industry provides a welcome source of hard currency for the country. The vast capital needed to fulfil the Iranian government's ambitious plans for the local petrochemical industry can only be achieved with foreign help. International companies are required for both technology and as partners in raising equity and loans.

Iran's poor relationship with the USA raises a difficulty. The US government has passed an act imposing sanctions on companies that invest more than $20 million in the petrochemical industry in Iran. This is regarded as unacceptable by the USA's allies and has not yet been implemented. Nevertheless it makes raising money for Iranian projects harder.

In light of this, Iran has gone to great lengths to attract foreign investment by upgrading its infrastructure, allowing cheap access to feedstock and excise tax concessions. Furthermore, Iran sets no limits on the equity interest a foreign operator can own in a plant on Iranian soil. To encourage investment in the country's petrochemical industry, a special economic zone has been created around Bandar Imam. The tax holidays available to petrochemical investors can be as long as nine years.