0159 GMT January 16, 2019
As a value-generating industry, Iran's petrochemical sector has experienced significant growth in the past decade. A major project which is banked in on is the West Ethylene Pipeline (WEP) and petrochemical plants located along this route.
Minister of Oil Bijan Namdar Zanganeh has said that once this project has become operational as the country's third petrochemical hub in western Iran. Assaluyeh and Mahshahr are currently two petrochemical hubs in Iran.
WEP is the most important investment project by Iran's oil and gas industry for developing western areas of the country. Once the downstream sectors of these petrochemical plants have been launched, final products could be exported to Iraq and Turkey, thanks to communications with these two countries and absence of any petrochemical plants in eastern Turkey and northern Iraq.
Iran's petrochemical industry, which is heading towards growth and development in light of appropriate infrastructure, needs to complete its value chain.
In coincidence with the development of upstream sector, particularly South Pars Gas Field development phases, the downstream sector of this industry must be taken into consideration as a national strategy.
In order to make arrangements for balanced development of petrochemical industry, we have to envisage downstream industries all over the country.
Iran is currently building the world's largest ethylene pipeline in its western provinces for the purpose of developing petrochemical industry and generating more value-added from ethane.
Iranian officials say output from petrochemical projects under construction in western Iran would reach $8 billion by next March.
This year, petrochemical plants in western Iran are expected to supply a total of two million tons of products.
Senior Iranian petrochemical managers say WEP has potential to produce up to three million tons of products. So far, five compressors have been installed on this pipeline.
The investment made in petrochemical projects located along this pipeline totals $3.5 billion. The value of investment in projects under way reaches $1.2 billion. Therefore, a total of $4.7 billion will be invested in this project.
Last year, most of ethane produced in the refineries of different phases of South Pars was delivered to Kavian Petrochemical Plant to be converted to ethylene before injection into WEP.
Experts say WEP is the most important project remaining from Iran's 4th Five-Year Economic Development Plan in petrochemical industry.
WEP was approved by Iran's government in 2002 for the purpose of compensating for the backwardness of western provinces whose development index is lower than the state average index, creating jobs, engaging the private sector, stimulating production and upgrading technology in the oil sector.
The project was initially supposed to become operational in 2007, but due to many changes, technical challenges, increased costs and insufficient budget allocation, it has had just 80 percent of progress. Currently, 5,000 people are directly employed by petrochemical plants which are about to come online, and 3,000 more jobs are to be created. Downstream petrochemical sector is expected to drive this industry away from raw sales, as many plants would be fed by this pipeline in western Iran to supply petrochemicals.
Once operational, WEP would have the capacity of carrying 3.5 million tons of ethylene, 2.5 million tons of which would come from South Pars and the rest from Gachsaran. That would feed 12 petrochemical plants.
The WEP sections in Hamedan, Dehdasht, Mamasani, Boroujen and Kazeroun have yet to start. Tabriz Petrochemical Plant has announced that it will build its own connection, like Ilam Petrochemical Plant.
This pipeline is 2,700 kilometers long and feeds petrochemical plants in Kermanshah, Andimeshk, Lorestan, Kurdestan, Miandoab and Mahabad.
The pipeline was officially inaugurated by President Hassan Rouhani and Zanganeh last year.
Along WEP are located Kavian Petrochemical Plant, Lorestan Petrochemical Plant, Mahabad Petrochemical Plant and Kermanshah Polymer Plant.
The ethylene produced at Kavian Petrochemical Plant is supplied to Kermanshah Petrochemical Plant. WEP carries the Kavian plant's products to western areas in the country for the purpose of developing petrochemical industry.
Iran's petrochemical industry, which has experienced growth over recent years, will enter a new phase once petrochemical plants in western Iran come online.
Hamedan Petrochemical Plant is in its final stages of construction. Kurdestan Petrochemical Plant came online earlier this year and the first phase of Ilam Petrochemical Plant became operational several months ago.
Iran's western area could turn into a reliable industrial hub in the near future once petrochemical industry has been developed and plans would get under way for building downstream industries.
Then, in addition to meeting domestic demand, the western area of Iran could export petrochemicals overseas.
Marzieh Shahdaei, former CEO of NPC, said recently that WEP would create new jobs in western Iran. Meantime, startup of several other petrochemical plants would create jobs in the provinces located near the pipeline.
Given the conditions of WEP, the only body competent to decide about the status of this project in terms of remaining in the hands of state of being privatized is the government. Maintenance and safeguarding of this pipeline and accountability to consumers of ethylene is an issue of extreme significance and sensitivity.
With the implementation of Article 44 of the Constitution, all petrochemical units located along the WEP route will be handed over to the private sector, while no decision has been made on the fate of the pipeline.
The issue of status of WEP remains complicated in Iran's petrochemical industry because maintaining a 2,865-km pipeline carrying ethylene is sensitive and costly.
This article originally appeared in Iran Petroleum Monthly, affiliated to Ministry of Oil.