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Polyolefin Outlook 2016: Iran seen doubling PE, PP capacity by 2020: Beroe

Nusa Dua, Indonesia — Iran's polyethylene capacity will grow at an annual rate of 13% to 8 million mt/year by 2020, from 4 million mt/year in 2015, due to post-sanctions investments, an analyst with petrochemicals-focused Beroe Consulting said Friday.

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"Natural gas as a cheap petrochemical feedstock is a game changer for Iran," Jayant Mukherjee said Friday at the Polyolefin Outlook 2016 conference in Bali. "Today it sits on 18% of global gas reserves, sharing the largest [natural gas] field in the world -- the South Pars -- with Qatar."

Mukherjee said Iran's polypropylene capacity will also grow at 9%/year to 2 million mt/year from 1 million mt/year between 2015 and 2020.

After sanctions ended, Germany's Linde and Japan's Mitsui Chemicals were quick to announce a $4 billion investment into several Iranian petrochemical projects, while BASF said it will invest $6 billion in Asaluyeh, near South Pars, Mukherjee said, although the projects are only in their initial stages.

Post-sanctions Iranian ethylene capacity is poised to grow an average of 9%/year from 6 million mt in 2015 to 11 million by 2020, with South Pars projects representing the majority of this capacity, he said.

The cash cost of producing ethylene from Iranian ethane is an estimated $50-$80/mt, making it one of the most competitive in the world, he said.

Iranian propylene capacity is forecast to grow an average of 15%/year to 3 million mt by 2020, bolstered by future methanol-to-olefin and methanol-to-propylene projects, Mukherjee said.

Methanol capacity, which is expected to feed the MTO/MTP projects, is forecast to grow an average annual rate of about 13% over the period, he said.

"Demand from the EU and Africa will drive Iranian PE and PP exports in the future, but [Iran] will face competition from the US," Mukherjee said, citing the likely increase of US PE output from shale gas-related projects.

--Yi-Jeng Huang,
--Edited by Jonathan Fox,