Iran signs first indigenous HDPE deal worth $250 million

Iranian companies have signed a $250 million deal to set up a high-density polyethylene (HDPE) unit at Tabriz Petrochemical Company (TPC), IRNA news agency reported on Tuesday.

Under the agreement signed in Tehran, TPC and the Petrochemical Research and Technology Company (PRTC) will cooperate on indigenizing the technology for production of HDPE, it said.

“The construction of an HDPE unit at Tabriz Petrochemical Company will take three years, after which the production of high-density polyethylene will begin,” TPC Managing Director Siavash Derafshi said.

HDPE is a polyethylene thermoplastic made from petroleum. It is used in the production of plastic bottles, corrosion-resistant piping, geomembranes, and plastic lumber.

The agreement was signed on the sidelines of an exhibition of plastic, rubber, machinery and equipment (IRAN PLAST 2019) that opened at Tehran Permanent International Fairground on Sunday.

The plant will have a capacity to produce 310,000 tonnes of HDPE a year when it opens, bringing in $350 million in annual revenue at current rates from exports of the product, Derafshi said.

“It will also prevent $250 million from leaving the country because of the activation of factories and industrial units related to supplying materials and equipment required in the project,” he added.

TPC is a public joint stock entity established in 1990 with the main purpose of developing downstream industries for Tabriz oil refinery. The complex produces different grades of polyethylene, propylene and ABS.

The company, with an annual capacity to produce more than 815,000 tonnes of polymeric and chemical products, is also Iran’s sole producer of polystyrene which is used mainly as a plastic packaging material.

The new plant will make TPC the first Iranian company to indigenize technology for production of HDPE.

It comes in the wake of the most intensified US sanctions which seek to dry up Iran’s revenue sources. Washington is trying to stop Iran’s petrochemical, steel and copper exports, and to disrupt its ports and shipping services.

In June, the administration of US President Donald Trump announced new sanctions on Iran, targeting the country’s petrochemical industry, including its largest petrochemical holding group called Persian Gulf Petrochemical Industries Company (PGPIC).

The Treasury Department also imposed sanctions on the holding group's network of 39 subsidiary petrochemical companies and what it called "foreign-based sales agents”.

Iran shrugged off the sanctions, with CEO of Iran’s National Petrochemical Company Behzad Mohammadi saying they would have “no effect on the production and sale of Iranian petrochemicals”.

“The petrochemical industry has been grappling with sanctions for many years, and in this situation, we are looking to develop this industry,” Tasnim news agency quoted him as saying.

“Sanctions against Iran's petrochemical industry are not a new thing, because we have been struggling with these issues for many years, and have still been able to build an appropriate production and sale basis,” he added.  

Mohammadi has said the wide diversity of petrochemical products and high international demand for them made the industry unsanctionable.

On Sunday, he said Iran plans $93 billion of investment to expand its downstream refining and petrochemical chain by 2025.

In the petrochemical sector, Iran is seeking to build 25 projects which are estimated to require $32 billion in foreign investment. The projects range from ammonia and urea to gas-to-olefins (GTO) and gas-to-propylene (GTP) plants.

In May, Mohammadi said Iran was expecting a boost in petrochemical production that would raise annual production from $17 billion to $25 billion over the next two years.

He put the current petrochemical capacity at 65 million tonnes, which the country expects to reach 92 million tonnes by 2021 and 130 million tonnes by 2024.

Tehran received $11 billion from petrochemical exports in the year ending in March, Ahmad Sarami, a member of the Iranian Oil, Gas and Petrochemical Products Exporters’ Union, said in June.

In September 2018, the country scoffed at US sanctions by bringing online 3.4 million metric tons per year (mt/y) of new methanol, urea and ammonia capacity at a cost of $1.85 billion.

Marjan Methanol’s 1.65 million mt/y unit was inaugurated by President Hassan Rouhani along with 1.75 million mt/y urea and ammonia unit of Pardis Petrochemical Complex in Iran’s energy hub of Assaluyeh.