Iran’s Petrochemical Industries on the Brink of Bankruptcy Due to Water Shortage

Reuters has compiled a list of major petrochemical projects in Iran whose construction or completion has been delayed due to water scarcity. Poor planning and mismanagement of information are the reasons behind the delays of all these projects.

Based on reports from Iranian media and statements from traders, managers, and major shareholders, Reuters has compiled a list of incomplete petrochemical projects in Iran. This list shows that the ambitious goals of Iranian officials to optimally utilize the country’s oil and gas reserves lack reliable planning and responsible management.

1. Khorasan Petrochemical

The establishment of the second phase of the Khorasan Petrochemical project was approved in 2015 and was supposed to produce 660,000 tons of urea and 4,000 tons of melamines annually. TAPICO (Oil, Gas and Petrochemical Investment Company), one of the main shareholders of this project, announced in summer 2019 that the second phase of Khorasan Petrochemical has not yet started because the company does not have sufficient water resources to produce its products.

2. Kermanshah Petrochemical Industries

The capacity expansion of these industries to produce 120,000 tons of propylene has been halted due to water shortage. Propylene is the second most consumed base material in the petrochemical industry worldwide.

The project manager told Reuters that this project, which has all necessary permits, was supposed to be completed and launched by 2018, but by autumn 2019, only 30% has been completed. He announced a new completion date of 2022.

3. Firuzabad Petrochemical Project, Related Industries

This project, aimed at producing ethylene worth 500 million dollars annually, began a decade ago but now project managers say “the water requirements of this project were not properly assessed and the project remains incomplete due to water shortage.” Fasa Petrochemical Company and Darab Petrochemical Company, each owning 30% of the Firuzabad Petrochemical project shares, did not respond to Reuters’ request for comment.

Four other industrial projects that were supposed to use the ethylene produced by Firuzabad have also been suspended. Companies involved in these projects—Jahrom, Darab, Estahban, and Fasa petrochemicals—were unwilling to comment.

4. Golestan Petrochemical

Twelve years after purchasing land for launching Golestan Petrochemical, there is still no news of its opening. When speaking with Iran’s state radio and television network, officials cited water shortage as the reason for the project’s delay. Golestan Petrochemical was supposed to produce 677,000 tons of ammonia and over 1,000 tons of urea annually. Project managers have not responded to Reuters’ questions.

5. Kohdasht Petrochemical

Seven years after the formal inauguration of Kohdasht Petrochemical project, Tasnim news agency wrote that this project “is just a fenced empty land.” Kohdasht Petrochemical was supposed to produce 11,000 tons of isobutane, 80,000 tons of diethylene glycol, and 45,000 tons of ethylene annually. One trader familiar with the project said lack of water resources and difficult access to raw materials are the reasons for the project’s delay.

6. Dana Petrochemical

Farmers around the Dana Petrochemical complex in Boyerahmad are deeply concerned about the project’s impact on the region’s water resources. IRNA news agency reports that 85% of water consumption in Kohgiluyeh and Boyerahmad province is in agriculture, 12% is domestic, and 3% is in the industrial sector. The government wants to change water consumption patterns.

However, the problem is that providing facilities for the Dana Petrochemical project requires 15 million cubic meters of water annually, which has sparked widespread protests from farmers in the region. Reuters reported that Dana Petrochemical Industries declined to comment on this matter.

7. Khomein Petrochemical

Water shortage in Khomein in central Iran is a serious problem. However, the Iranian government decided to launch a petrochemical plant there as well. Khomein Petrochemical was supposed to produce 185,000 tons of polypropylene annually using raw materials produced in Isfahan and Shazand refineries. Reuters reported that it could not find a way to contact the project managers.

8. Second Phase of Shiraz Refinery

The second phase of Shiraz Refinery, located near Bamu National Park north of Shiraz, was supposed to refine 120,000 barrels of oil daily. Widespread opposition from environmentalists and residents around the refinery has caused delays to this 1.5 billion dollar project. Nevertheless, representatives from this region in the Islamic Consultative Assembly emphasize that this project should not be moved out of Fars province. Shiraz Oil Refining did not respond to Reuters’ request for comment.

9. Isfahan Refinery

Isfahan Oil Refinery, according to its design, requires 8 million cubic meters of water annually, which it was supposed to receive from the Zayandeh Rood River. This refinery is now facing water shortage due to drought. Hashmatalah Ebrahimi, the refinery’s executive director, stated in 2018 that if a long-term solution to this problem is not found, 50% of the refinery’s capacity will be shut down.

10. Abadan Refinery

Abadan Refinery, one of Iran’s largest refineries, was forced to suspend operations for a period in 2018. The reason for this suspension was damage to water pipes.

According to the public relations director of Abadan Oil Refinery, the decrease in Karun River water level and the increase in salinity of this river’s water have damaged the pipes. The cause of Karun River’s salinity is a dam built in a salt valley in the river’s course. This dam is also called another environmental disaster in Iran.

11. Shazand Petrochemical

Shazand Petrochemical has drilled deep wells to access groundwater. Iran’s state news agency IRNA reports that drilling and extracting water from these wells has caused serious concern among environmental activists and experts.

One of the company’s officials told Reuters that they are looking for a contractor to implement a 10 million euro project aimed at recycling wastewater from urban centers for Shazand Petrochemical.

Source: DW