The Iranian government is in talks with investors across Asia to establish petrochemical joint ventures in the southeastern port city of Chabahar, a source close to the matter said Sunday.
"The Iran government wants to develop Chabahar on the lines of Pars special economic zone in Assaluyeh," the source said. "The plan is to establish methanol, urea and olefins projects in Chabahar in association with foreign partners." The government has already marked a free trade zone in the Chabar for establishing the petrochemical plants, the source said, adding that no major plants are currently located in that city.
At the 9th Iran Petrochemical Forum in Tehran in May, the country's deputy petroleum minister Abdolhossein Bayat had said that petrochemical projects to be located in Chabahar will be given a tax holiday of 15 years.
The establishment of the projects in Chabahar is in line with Iran's plan for the port city to achieve a petrochemical production capacity of 15 million mt/year over the next five years, the source said. This will require investments totaling $20 billion, he added.
A senior official at Iran's National Petrochemical Company told Platts in July that the country needs "billions of dollars worth of investments" to attain its target of raising its petrochemicals production capacity from 51 million mt/year as outlined in its five-year development plan (2010-2015).
Iran's Fars news agency reported in May that the country has planned five methanol projects -- in addition to an ammonia project and urea project -- at Chabahar to be constructed over the next five years. Two olefins projects -- Olefins 18 and Olefins 19 -- have also been planned for the southeastern Iranian city. The capacities of these projects have yet to be announced.
The Tehran Times reported in mid-August that the government is making the required arrangements to supply about 20 million cubic meters/day of natural gas and 3.6 million mt/year of ethane to Chabahar. The gas is to be supplied from the South Pars gas field in the southern port city of Assaluyeh. Construction of a gas pipeline linking Assaluyeh and Chabahar is expected to be completed in the next 36 months.
Meanwhile, the plan for Chabahar comes close on the heels of news that India, one of the largest importers of petrochemicals from Iran, is directing resources to develop the Chabahar port.
At the 16th Indo-Iran Joint Commission meeting held in New Delhi in July, the two nations had decided to expedite the development of Chabahar port.
"Chabahar is one of the closest cities to India and the two nations see it as a strategic port," the source said. "India's involvement in Chabahar port makes it highly possible that the petrochemical companies that may invest in the Chabahar special economic zone will be Indian."
Foreign investments into Iran have been restricted because of international sanctions against Tehran over its nuclear program. Sanctions imposed by the US and European Union specifically target the oil, gas and petrochemical sectors in the country.
