History and structure of the National Petrochemical Company (NPC)

The petrochemical industry in Iran dates from the 1950s. In the late 1950s, the then Ministry of Economy established a chemical agency to promote the petrochemical industry in Iran. In 1958, a chemical fertilizer plant was constructed in Marvdasht in Fars Province, southern Iran. As the growth of the petrochemical industry required broader specialized activities and further coordination with the oil and gas industry, an organization was needed to be established to develop and govern the sector. That was why in 1963, National Petrochemical Company (NPC) was established under the authority of National Iranian Oil Company (NIOC). All activities related to the petrochemical industry were centralized under NPC.

Petrochemical Industry Development

Introduction

The petrochemical industry, as one of the main sectors of the country's industry, is a pioneer in creating value added from oil and gas resources. Leading non-oil exports, the industry plays a key role in Iran's economic prosperity, sustainable development, localization of technology, development of downstream industries and job creation. The main advantage of this industry in Iran is the variety of feedstock resources, access to high seas and specialized manpower.

More than half a century has passed since the emergence of the petrochemical industry in Iran. It was in the late 50s that the chemical agency was established by the order of the then Ministry of Economy; in 1958, construction of Marvdasht Chemical Fertilizer Plant in Fars Province as the first unit of Iran's petrochemical industry began. Years later, with the expansion and development of units, the plant was renamed to Shiraz Petrochemical Plant and became the first petrochemical production unit in the history of this industry in the country. Since the growth of this industry required more specialized activities in line with the growth of the oil and gas industry, the establishment of an organization to develop and steer this fledgling industry became necessary more than ever. That was why in 1963, National Petrochemical Company (NPC) was established under the authority of National Iranian Oil Company (NIOC). All activities related to the petrochemical industry were centralized under NPC.

The process of beginning, development and evolution of the petrochemical industry in Iran is historically divided into several specific stages:

Birth of the petrochemical industry and initial emergence 1963-1979

From the establishment of Marvdasht Chemical Fertilizer Plant in 1958 until the victory of the Islamic Revolution in 1979, the development of this industry was carried out in the form of three development plans (1964-1977). One of the main objectives of these three plans was to meet the domestic needs for chemical fertilizers and some basic chemical and petrochemical items. Construction of Razi Petrochemical Complex (Shahpour), Abadan, Pazargad, Ahvaz Carbon (Iran), Kharg, Farabi (Iran Nippon) and Shiraz Petrochemical Development Projects and implementation of the major part of Bandar Emam Petrochemical Plant (Iran-Japan) are the result of this era. In 1977, NPC's output reached roughly 3 million tons of intermediate and final products.

From stagnation to re-emergence of petrochemical industry 1980-1997

The outbreak of the imposed war shortly after the victory of the Islamic Revolution forced reduction and cessation of production and damage to the petrochemical units located in the war zones, southern Iran. But during the same years, despite the difficult conditions caused by the military conflict and the economic siege of the country, some semi-finished projects were completed, including the development project of Shiraz Petrochemical Plant by making maximum use of domestic resources.

The attractiveness and profits of the petrochemical industry in the growth and development of the country quickly made this fledgling industry a priority in development schemes. After the imposed war and parallel with the formulation of the first five-year development plan of the country in for the 1989-1993 period, the five-year Petrochemical Development Plan was also devised and approved with the following objectives:

• Focus on rebuilding and renovating damaged capacity.
• Modification of the structure and optimal operation of existing production units.
• Meeting the needs of downstream industries (the Import Substitution Initiative), exporting petrochemical products and helping to wean the economy off petrodollars in the long run.
• Providing grounds for the growth of an independent industry and the establishment of domestic technology and greater use of domestic potentialities.
• With the implementation of the first and second five-year plans for petrochemical development, that entailed reconstruction of complexes damaged during the imposed war, completion and operation of semi-finished projects, as well as construction of new projects by 1999 and the end of the second petrochemical industry development plan, the annual production capacity of the industry reached 14 million tons.

Transformation and Stabilization

During this period (Third to Sixth Development Plans), the goal of the petrochemical industry was to move towards world-class establishment. The distinctive goals and characteristics of this period are production leap, enhanced output and increased value of products, expansion and completion of production value chain, promotion of petrochemical industry in export of non-oil goods, increasing share in national economy, relative promotion of the Iranian petrochemical industry in the region and world.

Implementation of various projects during development plans led to a significant growth in production of petrochemicals; likewise, the production capacity of petrochemical products increased from three million tons per year in 1979 to about 68 million tons in 2020.

Currently, 55 projects are being developed in the framework of the second and third leaps of the petrochemical industry and it is expected that by completing and launching them, the capacity of this industry will exceed 133 million tons per year by 2025.

NPC: A Developmental, Regulatory Organization

With the implementation of Article 44 of the Constitution, all the productive companies in the petrochemical industry were privatized, and the National Petrochemical Company has been transformed from an economic enterprise into an organization in charge of developing and regulating the industry. Here are the main NPC roles in its new status:

• Maximum application of its technical and specialized capacity for management and organization, and fair, balanced and optimal allocation of feedstock to upstream and mid-stream projects in the petrochemical industry;
• Interacting with relevant institutions, including the Ministry of Petroleum and specialized committees of the Islamic Consultative Assembly, regarding the fair pricing of upstream feedstocks while ensuring national interests;
• Effective cooperation in determining the long-term pricing formula of feedstock received from upstream sources while ensuring national interests and balancing the economy in the private sector;
• Collaborate, pursue and monitor commercialization of economic resilience projects;
• Cooperation and follow-up of construction and development of the infrastructure required by the petrochemical industry;
• Cooperation in removing production bottlenecks of petrochemical complexes, especially ensuring implementation of industrial feedstock supply projects;
• Cooperation and follow-up in order to remove production barriers of petrochemical complexes through upstream and inter-complex interactions;
• Participate in urea fertilizer quotas and follow up and monitor the performance of urea fertilizer companies in delivery to the agricultural sector;
• Facilitate the process of using the power of companies with technical knowhow to remove production barriers, including provision of new technologies;
• Ensuring the supply of the needs of the domestic market for petrochemical products and creating a balance in the process of supply and demand in the market with the aim of meeting the needs of downstream industries;
• Cooperation in controlling the prices of products in the domestic market by requiring petrochemical companies to offer products on the stock market;
• Coordination in the production and supply of grades of the items required by the domestic market, which has reduced import of these products;
• Provide data on the production and sales capacity of the petrochemical industry to private sector companies operating in the field of land and sea freight logistics to create appropriate infrastructure in the coming years;
• Exert efforts to expand the export markets of Iranian petrochemical products and carry out necessary studies to penetrate new markets, especially in Africa and Europe;
• Exert efforts to achieve the executive and legal arms to play the regulatory role in the petrochemical industry.