Will South Pars help Revive Iran’s Economy?

According to Iranian Oil Minister Bijan Namdar Zangeneh, there is a lack of sufficient gas supply to the country’s power plants. As a result, Iran had to supply 46% of power plant fuel needs with liquid fuels in 2013. This ratio was reduced to 28% in 2014. Iran’s plan is to have decreased this amount by 15-20% by the end of the current Iranian year, which ends in March. In this vein, the Iranian government hopes that the launch of phases 15 and 16 of South Pars will be a crucial step toward resolving the long-standing issue of domestic gas shortages.

Natural gas also plays an important role in the petrochemical industry. Iran has several petrochemical facilities in Pars Special Economic Energy Zone, which includes 43,000 hectares (166 square miles) spread over three operational zones: South Pars (Zone 1), Pars Kangan (Zone 2) and North Pars (Zone 3). Most of the major petrochemical facilities in this southern part of Iran, including Pardis, Pars, Mobin and Zagros, use natural gas as their primary feedstock.

In contrast, other petrochemical facilities such as Nouri (Borzouyeh), Aria Sasol, Mehr, Jam and Morvarid mainly use gas condensates, ethane and ethylene as feedstock. Thus, one of the persistent difficulties of plants such as Pardis, Pars and Mobin, which have led them to operate below their nominal capacity, has been a lack of sufficient feedstock.

Considering Iran’s plans to increase exports of petrochemical products, especially amid the massive decline in natural gas and oil prices as well as reduced investment in upstream crude operations, the expansion of these petrochemical facilities has been made a top priority by the Oil Ministry. If phases 15 and 16 of South Pars reach their nominal capacity, they can substantially resolve the petrochemical feedstock deficiency, thus significantly increasing Iran’s revenue from downstream operations at a time when upstream activities are facing a crisis.

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