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MOP Focus on Downstream Petchem Industries in 13th Government

MOP Focus on Downstream Petchem Industries in 13th Government
(Sunday, September 17, 2023) 09:30

TEHRAN (NIPNA) -- The Islamic Republic of Iran, with its top-ranking hydrocarbon reserves, plays a significant role in the hydrocarbon supply chain, having made remarkable progress in developing the petrochemical industry at the regional and international levels through investments made over the past four decades.

In the petrochemical industry, crude oil and gas are transformed into various polymer and chemical products. Currently, more than 370 polymer grades and 80 chemical products are produced in our country.

Petrochemical products are considered raw materials for downstream industries, such as automotive, textiles, footwear, household goods, packaging, paints and resins, adhesives, solvents, cosmetics and hygiene products, pharmaceuticals, and many other industries. Therefore, the petrochemical industry is regarded as the driver of other industries.

The Supreme Leader's office has long emphasized avoiding the sale of raw materials and, in his recent remarks during a meeting with the leaders of the system in late April of last year, he stated, "Unfortunately, raw materials are exported from the country at cheap prices, and the final products are imported at high prices, while with knowledge-based production, this process should be corrected, and final products should be produced and exported."

As mentioned, final products refer to the industrial products that use petrochemical products. These final products include pharmaceuticals, clothing, shoes, machine-made carpets, fertilizers, pesticides, paints and resins, detergents, household goods, and many other materials and products.

One of the economic sectors that has taken steps away from the sale of crude oil and gas is the petrochemical industry. However, although this industry is on the path to avoiding crude oil sales and completing the value chain, petrochemical product exports are still considered semi-finished, and efforts should be made to convert these products into finished products for domestic consumption or export.

It is true that the petrochemical industry is currently the most foreign currency-earning industry in the country, but from a national perspective, we believe that if these products are converted into finished products and then exported, the country's foreign exchange earnings will increase significantly. This hope exists that one day petrochemical product exports will decrease (assuming production remains steady), but exports of finished products will increase. This will not only create more jobs but also increase foreign exchange earnings.

It should not be overlooked that one of the biggest challenges facing downstream industries is securing capital in circulation to procure raw materials.

One of the ways to secure this liquidity is through the credit sale of petrochemical products. In this regard, the Ministry of Petroleum and petrochemical industry executives have engaged in numerous negotiations and correspondence with holdings and petrochemical companies, many of which have provided appropriate support in this regard.

As an example, credit sales of petrochemical products on the stock exchange reached an unprecedented figure of 5,800 billion tomans just in the month of Khordad (June) this year. This means that the petrochemical industry has provided 5,800 billion tomans in facilities to downstream industries to procure raw materials.

Abbas Gholami

Director of Downstream Industries Development, National Petrochemical Company

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