Joint Ventures Based on Détente

Iran Petrochemical Forum (IPF 2001) felt the big start as Bijan Namdar Zangeneh, Minister of Petroleum, walked to the rostrum to present his address. The oil minister made a clear reference to the Islamic Republic of Iran’s policy of détente for the promotion of regional and international cooperation.

Strategic Policies: We are now at the beginning of the second year of Iran’s Third Economic Development Plan. In this plan the policies governing all the cultural, social and economic sectors have been set out with great care, and the strategies to practice these policies have been specified quite explicitly. The plan also envisages very clear policies for the development of the petrochemical industry within the framework of the development of the Iranian industry. The most important of these policies include a special emphasis on lifting a major portion of state monopoly, privatization, making transparent decisions, strengthening competitiveness, increasing production, improving the grounds for attracting foreign direct investment, organizing the activities of the industrial sector toward expansion of exports and developing the industries which depend on natural competitive advantages.
In connection with these activities, the National Petrochemical Company of Iran (NPC) has been able to transfer 46% to 100% of the shares of a number of petrochemical complexes to non-governmental sectors, decrease its role and in fact the state’s role in downstream industries, provide a major portion of the required investment from foreign sources in various ways, increase petrochemical exports twofold in two years to $830 million in 2000, and increase the use of natural gas which is regarded as a competitive advantage in the Iranian economy.

Feedstock Availability: As Iran’s Third Development Plan stresses the development of the petrochemical industry and an increase in non-oil exports, the Petroleum Ministry and the National Iranian Oil Company (NIOC) have given top priority to supply feedstock to new investment projects in the petrochemical industry while they have made plans to develop the exploitation of Iranian oil and gas resources. They have signed a contract for five more phases of the development of South Pars gas fields and are negotiating with tenderers for four other phases. In addition to the 12 phases, NIOC is prepared to define new phases for any other kind of downstream consumption such as GTL and LNG projects. Given the abundance of natural gas resources in the country, supplying gas-based feed to petrochemical projects has been planned as a strategy. In line with this strategy, two gas separation plants are being constructed by NPC in Khouzestan Province and Assaluyeh, and a further plant has been put to tender by the National Iranian Gas Company.

International & Regional Cooperation: The most important strategic policies of Islamic Republic of Iran’s international relations pivot around détente, development of international cooperation, and more effective restructuring of foreign economic relations for a strong presence in international markets. Establishing stronger politico-economic relations with neighboring countries can facilitate the successful implementation of these policies. Such relations can lead to more fruitful results for all the neighboring countries, particularly in connection with oil, gas and petrochemicals, and can create more areas for consolidation of stability in international markets.
I pointed out in IPF 2000 that nearly all the countries in the region including Iran are launching major investment activities to develop their petrochemical industries and emphasized that such a situation might lead to inefficient and futile business competitions and ultimately result in serious damages in regional countries arising from the creation of surplus capacities and waste of resources. To face this challenge, regional cooperation seems inevitable. International trade during the past two decades has also shown that increased productivity and competition potential in countries which have had remarkable achievements in this area owe greatly to regional cooperation.
I invite all the regional countries, especially oil producing countries, to join in for the expansion of cooperation and regional work distribution while ensuring that the interests of all the parties are protected. Such cooperation can include joint ventures, exchange of information on the plans and markets, carrying out joint marketing activities, cooperation in design and engineering, manufacture of machinery and equipment, implementation of projects, and removing customs barriers.