National Petrochemical Company; the history & structure

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), an 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 five 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.

3-The Stagnation Stage: 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, several petrochemical projects including the expansion projects of Shiraz continued.

4-The Revival and Renovation Stage: When the war ended in the late 1980s, the execution of Iran's first and second 5-year development plans which included several development projects such as Isfahan and Arak facilities as well as phase one of Bandar Imam plant, which used to be known as Iran-Japan Petrochemical Co. (BJPC), brought the output to 12 million tons by 1999.

5-The Great Leap and Stabilization Stage: During this period, the country's third, fourth and fifth 5-year development plans were implemented as a result of which Iran's petrochemical sector grew further to establish itself be known as a world class industry. This period stands out because of 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 promotion of its position among regional and global players by optimal use of the country's comparative advantages.

The symbol of such presence is the change made in NPC's economic indexes and parameters including production, export, investment, added value and national production share, regional partnerships and expansion of target export markets.

By March 2018, the nameplate capacity and production output amounted to 64 and 53.6 million tons respectively and petrochemical industry share accounted for %36.9 of Iran's non-oil exports while its share of industrial products export jumped to %38.5.

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.