Dec 17, 2017, 2:21 PM
News Code: 82766468
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Ethylene pipeline, Iran's 3rd petchem hub

Tehran, Dec 17, IRNA - Under Iran's Vision 2025, petrochemical industry has been chosen as an option for the country to move towards reducing crude oil and natural gas sales and generating value-added.

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.

Iran's Minister of Petroleum Bijan Zangeneh has said that once this project has become operational the country's third petrochemical hub would be created in western Iran. Assaluyeh and Mahshahr are currently two petrochemical hubs in Iran.

WEP is the most important investment project by Iran's petroleum 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 tonnes of products.

Senior Iranian petrochemical managers say WEP has potential to produce up to three million tonnes of products. So far, five compressors have been installed on this pipeline. In addition to money spent for buying compressors, IRR 12,000 billion has been spent in this project.

$4.7bn Investment

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 gas field 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% 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 tonnes of ethylene, 2.5 million tonnes of which would come from South Pars and the rest from Gachsaran. That would feed 12 petrochemical plants.

The WEP sections in Hamedan, Dehdasht, Mamesani, 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 Minister of Petroleum Bijan Zangeneh 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.

Increased Exports to Western Neighbors

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.

Undoubtedly, 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.

Senior officials at Iran's National Petrochemical Company (NPC) says after the startup of Ilam, the focus is now upon three other petrochemical plants.
The Ilam plant is close to coming on-stream. The startup of several other petrochemical plants in western Iran would eradicate deprivation from those areas and build infrastructure in underdeveloped parts of the country.

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.

The Cabinet had assigned the project to the Ministry of Petroleum in 2002. At that time the project was limited to the provinces of Kohguiluyeh Boyer Ahmad, Kermanshah, West Azarbaijan and Kurdestan. But later on, other provinces like Khuzestan and Hamedan were included.

With the implementation of Article 44 of the Constitution, all petrochemical units located along the WEP route were hived off the private sector, while no decision has been made on the fate of the pipeline. The issue of status of WEP remains a complicated affair in Iran's petrochemical industry because maintaining a 2,865-km pipeline carrying ethylene is sensitive and costly.

Startup Operations May Be Privatized

Abdol-Hossein Bayat, deputy CEO of NPC for WEP affairs, recently said that the startup operations for the project were likely to be awarded to a private competent company without competitive bidding.

'Privatizing the ownership of this pipeline is out of the question,' he said.
'Whereas Phase 1 of this pipeline, stretching from Kavian Petrochemical Plant located in Assaluyeh to Kermanshah Polymer Plant for a length of 1,060 kilometers was launched in 2012, and Phase 2 of this pipeline stretching from Kermanshah Polymer Plant to Mahabad Petrochemical Plant for an approximate length of 1,766 kilometers is also ready to come online, it is necessary that the startup operations of these two phases be assigned to a competent company,' added Bayat.

'With the completion of phases 15, 16, 17 and 18 of South Pars and the supply of ethane to Kavian and Morvarid petrochemical plants and other olefin units in Assaluyeh, the required ethylene for all petrochemical plants located on the WEP route will be supplied and these two phases of WEP could be brought close to full operation by raising the ethylene pressure to 90 Bar and launching all pressure booster compressors,' Bayat said.
A scenario which has long been bandied about regarding the fate of WEP has been its assignment to Kavian Petrochemical Plant as a major producer of ethylene. However, conditions are such that the final producer and consumer of ethylene in this project is a single company.

Manufacturing some alcohol-based products, materials for agriculture, chemicals and other special products are among advantages of transmission of ethylene by this pipeline. That, along with other uses of ethylene in polymer production, has made ethylene production and transport prosperous in the market. That shows the very high value of this commodity. A major point in the Resilient Economy instructed by Supreme Leader Ayatollah Ali Khamenei with regard to the petroleum industry has been to avoid selling raw materials.

What could drive Iran away from oil-dependent and single-product economy towards a safe margin would be sustainable development, i.e. generating value-added, engaging in teamwork and making maximum benefit from whatever is already available.

WEP can render significant services to the economy of western Iran. The pipeline and petrochemical plants located alongside it are able to process, produce and supply products of high value-added; therefore, they play an important role in upgrading Iran's economic standing, reducing jobless rate, creating jobs and generating revenues.

Creating more profits through establishing permanent markets for petrochemical products, supplying products on the market with high profitability, contributing to national plans and creating jobs in the country, presenting an alternative model for the development of downstream industries across the country, facilitating further participation of the private sector in development plans, helping a more efficacious implementation of Article 44 of the Constitution, necessity of indirectly including downstream industries in the NPC basket and minimizing risks and possible shortcomings resulting from international sanctions are among advantages of development of downstream petrochemical industries alongside such important projects as WEP in Iran.

Source: Iran Petroleum monthly, affiliated to Ministry of Petroleum

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