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Iran Economy News: New Refineries, Untapped Export Potentials, Oil Revenue

Source: Iran Investment Monthly, Turquoise Partners


New Refineries: Malaysia's L1 was selected for the construction of a refinery in the southwestern province of Khuzestan according to an agreement signed with the Iranian private company Rahyab Behineh on the EPC (Engineering, Procurement, and Construction) basis. Under the agreement, which is valued at over $2.7 billion, a refinery with a capacity of 150,000 barrels per day (bpd) of crude oil will be built near the city of Andimeshk. Liquid gas, gasoline, jet fuel, and diesel fuel will be the products of the refinery which will be used for domestic consumption as well as export. Another deal is being negotiated between the National Iranian Oil Refining and Distribution Company (NIORDC) and Essar Group of India for a $2 billion project that involves construction of an oil refinery near the southern Iranian port of Bandar Abbas with a refining capacity of 300,000 bpd.  The Managing Director of the NIORDC also announced that the Ministry has agreed to allow the private sector to construct two refineries in Qeshm. A gas condensate and a crude oil refinery, with capacities of 120,000 and 160,000 barrels per day (bpd) respectively, will be built on the island.  In order to meet the fast growing domestic demand for refined petroleum products, significant investments must be made over the next years for modernizing existing refineries as well as constructing new ones in Iran. According to Ministry officials, an 18 billion dollar fund has been allocated to the development and expansion of the nation's oil refining capacity to meet its rapidly growing domestic fuel requirements.


Untapped Export Potentials: Iran remains the number one producer of pistachio nuts in the world, producing 38% of total world production. In terms of export however, Iran has not been able to secure the corresponding market share due to poor management as well as problems in the packaging, and marketing of the product.  The same applies to Saffron production, in which Iran produces over 90% of world production but has a tiny share of world trade.  Another sector which Iran has an untapped competitive advantage in is construction stones. Iran's total production of construction stones is around 2.5 million tons which is second in the world after China.  However, lack of investment in modern cutting and processing plants has resulted in low quality end-products, which are mostly used domestically in Iran, and the export of non-processed stones to other countries with modern technologies, such as Italy, who benefit from the real added value in this sector.


Petrochem Production:  The National Petrochemical Company of Iran (NPC) has announced that the company's production has increased by three fold over the last 15 years to reach 15 million tons during the current Iranian year. It also added that the export of petrochemical products will reach $2.9 billion by the end of the year (March 2007) which shows an impressive eight fold rise compared to 15 years ago. NPC, a Petroleum Ministry affiliated company, currently produces 67 different types of petrochemical products.


Oil Revenue:  According to Petroleum Ministry officials, Iran is expected to earn around $52 billion in oil revenues during the current Iranian year, ending March. Iran's average crude oil price for the year is expected to stand around $56 per barrel.


Mobarakeh Steel Complex: According to company officials, Mobarakeh Steel Complex (MSC) has been able to attract around $100 million of foreign investment in recent months for its development and expansion projects. MSC, which is located in the central Iranian province of Isfahan, is one of the Middle East's major steel production plants with an annual capacity of 4 million tons of steel products. The company currently exports more than 1 million tons of its products. It is worth noting that MSC is amongst the first companies that will be privatized under the recently approved Privatization Program and the Initial Public Offering of its shares on the Tehran Stock Exchange is  expected within the next few months.


About Turquoise: Turquoise is a boutique investment bank based in Iran with offices in Tehran and London. Turquoise publishes Iran Investment Monthly with the aim of keeping its recipients updated on the latest macroeconomic developments in Iran, providing an in-depth analysis of the Tehran Stock Exchange as well as introducing new financial products and private equity opportunities to potential investors. For more information please visit:

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