Iran’s petroleum industry eyes speedy recovery on ending sanctions

Iran is aiming for a speedy recovery for its crude oil and petrochemicals industries as sanctions, which were imposed against the country almost a decade ago, are set to be removed as of early 2016 following the Iran Nuclear Deal.

Iran’s Oil Minister Bijan Namdar Zanganeh stated that they are planning to give priority to increasing oil exports following the removal of sanctions, according to the Islamic Republic News Agency, the IRNA. The country, holding the fourth largest oil reserves in the world, was exporting around 2.5 million barrels/day of crude oil prior to the sanctions imposed by the US and the EU by the end of 2011 and saw their exports decline below 1 million afterwards.

As part of its plans to boost crude shipments to pre-sanction levels, Iran is seeking to increase their exports by 500,000 barrels/day within a week after the sanctions are lifted and by 1 million barrels/day within six months of lifting sanctions.

Iran’s petrochemical industry is also expected to post notable growth following the removal of sanctions. The country is aiming to increase its petrochemical capacity to 47 million tons by the end of the current Iranian calender year on March 19, 2016. According to Mohammad-Hassan Peyvandi, the deputy managing director of the National Iranian Petrochemical Company, Iran’s petrochemical production in the previous calendar year was 44 million tons while the country has a capacity to produce around 60 million tons of petrochemicals per annum. Iran seeks to boost its petrochemical capacity to over 120 million tons by 2021, which marks the end of the country’s five-year development plan.

In order to develop its petrochemical projects aimed at tripling its production within a decade, Iran plans to attract €70 billion in investment, with some foreign companies mulling over investing in the country’s petchem sector. Local media reports have suggested that Germany’s BASF is planning to invest $6 billion in Asaluyeh where Iran is carrying out a gas development project.

The removal of sanctions is also expected to have an impact on Iran’s exports of petrochemicals. Iran exported around $15 billion worth of petrochemicals in 2011 prior to the sanctions. The country’s export volumes have improved since 2014 given limited sanctions relief for petrochemical products in November 2013, with its exports being projected to rise from 32 million tons in the past year to 35 million this year. Iran’s main destinations for petchem exports are China, Southeast and Central Asia, Turkey and African countries. The country is now expected to boost their sales to Europe as well while some Iranian sellers believe that they will be able to obtain better profits in Russia than Europe, according to media reports.