Iran’s petrochemicals defy sanctions as exports, output on the rise

Iran's petrochemicals production and exports are set to increase in the current year started in March, with Russia considered a key destination despite sanctions by the US and Europe on its energy industry, the country's deputy oil minister for petrochemicals told S&P Global Commodity Insights in Tehran.

Production will climb to about 83 million metric tons in the March 2024-March 2025 period from about 75 million mt in the year-earlier period, Morteza Shahmirzaee said Sept. 10 on the sidelines of a petrochemicals conference.

Exports are expected to rise to 34 million mt from 30 million mt over the same period, he said. Some 560 types of petrochemicals are exported to five continents, led by Russia with other destinations South America, Africa, eastern Europe and Asia, he said.

"Any barrier including the sanctions could slow down our work, but our determination is stronger than the sanctions," Shahmirzaee said. "The sanctions have occasionally caused problems for transferring our money and foreign currency. But there has been no particular problem reported so far."

Petrochemicals are included in US sanctions against Iran, with the US Treasury in February last year adding sanctions on nine companies that it said were involved in trading Iranian petrochemicals with buyers in Asia.

Iran's ethylene production capacity is 8 million mt/year compared with 18 million mt/year in Saudi Arabia, which Iran considers its primary competitor in the Middle East, according to Hassan Abbaszadeh, the planning director at state-run National Petrochemical Co., in a report by oil ministry news service Shana in August.

Ethylene prices have been on the rise for most of this year. Platts, part of Commodity Insights, assessed the global ethylene index at $886.52/mt on Sept. 6, the highest since July 2022 and was little changed at $884.54/mt on Sept. 10.

Iran's production in the 2024-25 year will include 10 million mt of methanol, 8 million mt of urea, 7 million mt of ethylene and 5 million mt of ammonia, he said. Between now and March 2029, an additional 35 million mt/year of petrochemical capacity will be built, he said.

Iran uses about 13 million mt/year of petrochemicals domestically, with reformate used to increase domestic gasoline octane and naphtha used in olefin units of Iranian plants including Tabriz, Imam Khomeni and Shazand, according to Shahmirzaee