One of the most important challenges facing the
petrochemical industry, which is capital-intensive, is the attraction and
timely provision of financial resources for projects. The negative impact of
sanctions on financing petrochemical projects cannot be denied.
However, in contrast to this challenge, the
advantages of this industry were highlighted, including the sustainability of
Iran's petrochemical exports during the peak years of sanctions (from 2010 to
2013), exporting $16 billion worth of products in 2022, easy and inexpensive
access to feedstock, incentives and export-import exemptions in special
economic zones, a large domestic market, skilled workforce, and supportive laws
for foreign investment (FIPPA).
Commencement of a New Chapter in Collaboration
between the National Petrochemical Industries Company and the Capital Market
for Financing Petrochemical Projects
To overcome challenges and obstacles in the
financial supply field, after holding the first Investment and Financing
Conference for the Petrochemical Industry at the Koushk Conference Center of
the Ministry of Petroleum, specialized task forces (including capital market,
banking, and foreign exchange) were formed at the initiative of the National
Petrochemical Industries Company.
The first meeting of the Expert Task Force on the
Capital Market for financing petrochemical projects, with the participation of
the managers of the National Petrochemical Industries Company and capital
market activists, was held on Tuesday, February 6.
In this meeting, the National Petrochemical Company
and capital market managers discussed challenges, solutions, and innovative
investment methods and financing in Iranian petrochemical projects.
Reza Nikouei, the investment manager of the
National Petrochemical Company, stated, "There are 123 projects with
various progress levels in the country, requiring $93 billion in
He emphasized the crucial role of the capital
market in financing development projects in Iran's petrochemical industry, stating,
"After the successful first Investment and Financing Conference for the
Petrochemical Industry held in December of the current year, task forces were
formed to facilitate the financing and investment process in industrial
One of these task forces is the Expert Task Force
on the Capital Market, which aims to utilize the existing capacity and
potential of the capital market to attract the necessary resources for
Another initiative undertaken by the National
Petrochemical Industries Company is the establishment of a Financial Clinic to
accurately identify the issues, challenges, and financial problems of projects
and provide comprehensive and actionable solutions to expedite their financing
This clinic, depending on the identified
challenges, will refer the matter to relevant specialized task forces,
including the Capital Market Task Force, for in-depth examination and solution
He added, "There are currently 75 active
petrochemical complexes in the country, with a production capacity of about 96
million tons. This capacity is expected to reach around 200 million tons in the
next 10 years, requiring approximately $7 billion in annual investment in
The investment manager also addressed concerns
about the capital market and the imbalance in gas feedstock and its impact on
the activities of petrochemical companies. He stated, "At present, the
issuance of permits for gas-fed projects is limited, with 19 permits issued for
a total investment of $5.7 billion in 2023. Most of these permits are for
downstream projects with limited gas consumption."
He added, "Moreover, permits issued for
gas-fed projects in previous years are under review, with some being canceled
and others undergoing changes in project scope. Petrochemical holdings have
also committed to guaranteeing feedstock for upstream oil projects to alleviate
feedstock shortages for petrochemical projects."
The investment manager emphasized the need for a
change in the capital market's perspective regarding the appropriate returns of
petrochemical projects, stating, "The goal of holding meetings in various
task forces is to engage experts and present perspectives, prevent hasty
decisions, and prevent capital flight from petrochemical projects."
Challenges Identified by Senior Capital Market
The main challenges facing the petrochemical
industry, as raised by experts and specialists in the first meeting of the
Expert Task Force on the Capital Market, are as follows:
- Imbalance and noticeable shortage of natural gas as
the main feedstock in the coming years.
- Creating desirable transparency regarding feedstock
and petrochemical project product conditions and rates.
- High-interest rates, financing, and return affected
- Non-issuance of foreign exchange securities.
- Lack of project prioritization system.
- Non-systematic access to centralized utilities.
- Difference in perspective between investors and
financial providers on the value chain compared to regulatory
- Inadequate financing of petrochemical projects
considering the available resources in the capital market.
- Exchange rate shocks.