Iran’s low price petchem feedstock lures European firms

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On December 16, 2015, Posted by , In News, With No Comments

The 12th Iran Petrochemical Forum was held in the Iranian capital city of Tehran, December 13-14, to introduce existing capacities of the country’s petrochemical industry to domestic and foreign investors.

The forum was attended by representatives of 97 foreign companies from 25 countries as well as 368 Iranian companies.

What was quite conspicuous about foreign participants was their avid interest in fostering cooperation with their Iranian counterparts following the removal of Western sanctions.

They unanimously confirmed that the most attractive advantage of Iran’s petrochemical industry is the low price feedstock.

The representatives of several foreign companies explained prospects of cooperation with Iran in exclusive interviews with the Engluish-language paper Iran Daily on the sidelines of the second day of the conference.

Excerpts of interviews follow:

Iran has good natural resources

“Historically, we have worked for the National Petrochemical Company and other firms in Iran,” said Andrew Spiers, the senior vice president of the British Nexant Company.

The firm is an international consulting company operating in oil, gas and chemical sector.

It provides consulting services to chemical industries and does a lot of work in terms of the planning, feasibility studies and providing support to financers.

He added Iran is in a very good position in terms of natural resources.

“Globally speaking, petrochemical industry is a cost-based industry. Therefore, it needs competitive feedstock costs. There are not that many locations similar to Iran around the world. It is not surprising if there would be a lot of interests from international parties in collaborating with Iranian companies and investing in the industry. Iran clearly has a very strong domestic market and a large portion of the investments will be aimed at the export market, i.e. growing markets in Asian countries.”

The country also enjoys considerable flexibility in terms of feedstock pricing, Spiers said.

“Clearly, lower oil prices create more nervousness around investment, generally not just in Iran, but the whole world. An uncertain oil price environment does not help investment prospects anywhere. The volatility creates uncertainty. In such a circumstance, a major part of the investments will be gas-based. The relationship between gas and oil prices plays a critical role in increasing or decreasing competitiveness.”

The conference, a good mixture of Iranian participants and international parties, enjoyed a very high level, he said, adding the large number of the participants attending the event is indicative of the high level of international interests in funding Iranian projects and entering the country’s market, of course, once the sanctions are removed.

“On the whole, the confab was very insightful. The papers presented also gave a lot of insight to the prospects.”

Stressing that Iran’s petrochemical industry is a growing giant, he said although the country has been faced with a historical situation, it has done a great job so far and enjoys great prospects for further investments.

“I am sure that the country would be one of the major players in the petrochemical business in twenty years from now.”

Post-sanctions cooperation prospects, positive

Peter Borgardts, the vice president of Eisenmann firm said, “Prospects of cooperation in the post-sanctions era are very positive, otherwise we would not be here. After the removal of the embargoes, our business with Iran in petrochemical industry will recover, allowing both sides to have a fruitful future in collaborations.”

The German company is involved in building plants for environmental technology, exhaust-gas and water treatment as well as solid waste disposal, especially for petrochemical industry.

On the advantages of the Iranian petrochemical industry for foreign financers, Borgradts said Iran enjoys substantial oil and gas reserves which constitute the main feedstock for the industry, is located in the middle of the Middle East, which provides easy access to other regional markets, and has a large population with a great number of skilled workforce.

“Given that the sanctions are still in place, the ground is not fully prepared for a dramatic expansion of cooperation between Iranian and international firms,” he said.

Iran to become important market

Key Account Manager of Polytechs Company Maarten Bloem said, “With the lifting of the sanctions, Iran will become a very important market in the Middle East because the country has huge hydrocarbon resources. The Iranian government is also very keen on making investments in the sector. We are looking for the Iranian polymer producers to help them further grow their business.”

The French company is involved in the production of masterbatches and compounds. He said in the future, major polymer producers will invest in Iranian projects, helping the country further develop its polymer production, adding French firms would very much like to be a part of Iran’s accelerated petrochemical development.

“We are very positive about the future of collaborations, otherwise, we would not be here. Currently, we are exploring the possibilities for expanding cooperation and establishing connections with our future Iranian partners in the post-sanctions era.”

French companies have modern technologies that can be transferred to Iran to help the country improve the quality of its products according to European standards, he said.

“Stable oil prices are much more suitable for long-term investments. The downward trend in oil prices has [and will] lower interests for investments. Low oil prices are only attractive for short-term investments.”

He noted Iranian polymer producers are quite independent which is a positive point, adding they can freely sell their products to any country they opt for.

“The conference was very useful. All the participants were very optimistic about the future of cooperation,” he said.

Europe keen on Iranian exports

The business development manager of Group Gheys, Gerry Reynders, said, “We are here to establish connections with Iranian companies from which we will start exporting products, mainly granules and polymers, following the lifting of the sanctions. We believe Iran has a huge potential in petrochemical industry and will be able to export a large number of products to Europe. European countries are also very much interested in Iranian products due to their competitive prices. Iran has huge oil and gas resources, which help lower the prime cost of its petrochemical feedstock.”

Group Gheys, a Belgian company, is specialized in handling and transposing polymers, propylene and polyethylene. Reynders said at present, Europe is faced with the shortage of some products, especially polyethylene, that can be supplied by Iranian firms once the embargoes are removed.

“We are interested in handling Iranian companies’ logistics and help them build warehouses in Western Europe to be able to have direct contact with their customers and deliver their products in a shorter period of time.”

Commenting on the conference, he said it was very useful, adding I could obtain a lot of information and establish a lot of connections with other companies’ representatives.

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