National Petrochemical Company; history & structure

Petrochemical industry is a driving force behind other industries in Iran and plays a major contribution to the country's non-oil exports and the economic development. It's important for other aspects of the economy such as development of downstream petrochemical industries, creation of job opportunities, and development of home-grown technologies that the industry requires. The most significant advantages that Iran's petrochemical enjoys is feedstock diversity, access to international waters and highly qualified human resources.

The cornerstone of petrochemical industry in Iran was laid in the late 1950s, when the Fertilizer Authority was established by the Ministry of Economic Affairs and Finance, leading to the implementation of Marvdasht fertilizer project in Fars Province in 1958. Due to the broader specialized activities needed to be conducted in harmony with the oil and gas industries, the establishment of a sovereign organization seemed necessary so that it could lead the development of petrochemical industry. Hence, the National Petrochemical Co. (NPC), a state-owned entity and an affiliate of the National Iranian Oil Company, was set up in 1964, in order to integrate all the activities related to the development of petrochemical industry in Iran.

Development Process of Petrochemical Industry

Petrochemical industry's development process in Iran consists of some specific stages:

1- The Genesis Stage: It dates back to 1963 when NPC was established and Shiraz Petrochemical Company which was a fertilizer facility came on stream in 1964.
2- The Early Expansion Stage: During this period, NPC started constructing several petrochemical facilities including Razi, Abadan, Pazargad, Carbon Ahvaz, Kharg, Farabi, Bandar Imam and Shiraz expansion project. These plants were completed during 1964-1977. The output capacity of NPC was around 3 million t/y in 1977.
3- From Stagnation Stage up to the Great Leap (1979-1997): After former Iraqi dictator Saddam Hussein invaded Iran in 1979, Iranian petrochemical facilities came under heavy bombardments. As a result, production plummeted to a record low and the completion of Bandar Imam Project came to a halt. Despite the war, work continued on several petrochemical projects including the expansion projects of Shiraz.
Because of its advantages and potentials, the industry received high priority in the country's long-term development plans. Shortly after Iraq's war on Iran ended in the late 1980s, the Iranian petrochemical industry launched its first 5-year development plan (1989-1993) which set its sight on the following goals:
- Reconstruction and renovation of damaged facilities
- Improvement of the structure and optimization of the operation of the existing producing facilities
- Meeting the needs of downstream industry, export of petrochemicals and contributing to the country's economic independence
- Preparing the grounds for a self-administered industry
- Improving the country's home-grown technological base
- Optimal use of domestic facilities and potentials

Following the implementation of the country's first, Iran immediately began its second 5-year development plan, as the result of which several unfinished plus a number of grassroot projects were completed. Consequently, output capacity of the industry stood at 14 mt/y at the end of the second development plan.

4- The Great Leap and Stabilization Stage: During this period, the country's third, fourth, fifth and sixth 5-year development plans were implemented as a result of which Iran's petrochemical sector grew further to establish itself as a world class industry. This period stands out because of the rapid growth in the quantity and value of the products, promotion of the industry among the country's non-oil exports, the expansion of petrochemical industry's share in the national economy and its emergence as a global player.
Implementation of numerous projects during the development plans, paved the grounds for the significant growth in petrochemical products increasing the production capacity from 3 mt/y in 1977 to around 68 mt/y in 2019.

At present, under the Second and Third Leap programs, 55 petrochemical projects are under construction at different phases of implementation. When they become fully operational by the end of 2025, the production capacity of Iran's petrochemical output will jump to 133 mt/y.

NPC plays a new role as a regulator and development organization

With the formal application of the Article 44 of the Constitution, all petrochemical companies were handed over to the private sector and NPC, as a development company, changed its mission from an economic corporation to a regulatory and policy-making company responsible for development of the country's petrochemical industry. The main roles of NPC in its new mandate are as follows:

1-Applying maximum use of technical and professional capabilities for a fair, balanced and optimized organization and management of feedstock allocation to upstream and midstream petrochemical industries.
2-Conducting necessary interactions with the relevant authorities such as Ministry of Petroleum, specialized committees of the Parliament to ensure for fair pricing of the upstream feedstock.
3-Efficient cooperation with relevant authorities in setting long term pricing formula for the feedstocks received from upstream resources, taking a balanced approach towards the country's national interest and economy of the private sector.
4-Assisting and monitoring product commercialization.
5-Assisting the establishment and development of infrastructure facilities required for development of petrochemical industry.
6-Assisting the removal of production barriers that petrochemical complexes might face, through interactions with other parties involved and expediting the implementation of feedstock-supply projects.
7-Participating in the allocation of urea quotas and overseeing the performance of production companies in delivering their urea output to respective government bodies .
8-Facilitating the provision of new technologies to remove production barriers.
9-Assisting the supply petrochemical products to local market and balancing the supply and demand in order to plan for timely provision of raw materials for downstream industries.
10-Assisting the control of products prices in local markets by allowing petrochemical companies to sell their products in Iran Mercantile Exchange.
11-Coordinating the production and sales of certain grades of products much needed by local market with aim of reducing the import of such products.
12-Supplying the information on petrochemicals production and sales capacities to the private companies active in the land and sea logistics of products in order to plan for building future infrastructure facilities.
13-Assisting the expansion of export markets of Iran's petrochemical products.
14-Planning to establish executive and legal institutes in order to perform regulatory roles in petrochemical industry.