TAPPICO Potential in production

Naft & Energy Milestones Agency (NaftEMA): Mohammad Hassan Peyvandi, managing director of Tamin Petroleum & Petrochemical Investment Company (TAPPICO), about the benefits of investing in the Iranian market, the company’s broad range of petrochemicals projects and its plans for 2018. TAPPICO is an investment company with diversified assets in 32 companies active mainly in petrochemicals, refining and oil and gas production.

TAPPICO is an Iranian investment company with diversified assets in 32 companies active in petrochemicals, refining, oil and gas production, and the tire and cellulose industries. The holding employs more than 18,500 people either directly or through its subsidiaries. It produces 10 out of 12 products in the ICIS Global Petrochemical Index. TAPPICO owns more than 10% of Iran’s total petrochemical production capacity.

On strategic plans: “This is our strategic planning for the future: to focus on and develop as much propylene as possible. There is great potential in this production and its supply will benefit many industries in Iran.”

On Persian Gulf Star Refinery progress:“The first phase was recently inaugurated [in April 2017], and we are aiming to have next two on stream by 2018. By the end of the year, hopefully it will be running at its full capacity.”

Which factors make Iran an attractive market for foreign companies?

The first attractive point for an international investor is the country’s security, given the region in which we are located. Security and stability are probably the most important aspects to consider for any foreign investor. Iran’s second advantage is related to its vast resources and good access to feedstock. Both the price and the availability of feedstock in Iran are very attractive to investors.

The market’s size also makes it attractive. The country’s large population means vast amounts of energy are required to satisfy domestic consumption. Iran has the world’s largest natural gas grid; therefore, we need a lot of methane.

The country’s good positioning in terms of geography and connectivity highlights another of its key strengths. We currently have a pipeline that connect us to Turkey and from there we could reach Europe. There are several competitive advantages that make Iran a great place in which to invest. There are also many ways Iran can capitalise on foreign presence in the market, either through technology transfer agreements, FDI or direct financing of projects.

What is the scope of TAPPICO’s activities in the market?

From the holding’s different strategic business units [SBU], our primary focus lies in petrochemical activity. However, we are also involved in other oil and gas activities.
Our Refining SBU is also key in our portfolio. Apart from the Isfahan Refinery, all lubricant oil refineries in Iran including Tehran, Shiraz, Bandar Abbas, Tabriz and Shazand Arak are under TAPPICO’s control, through one of our subsidiaries – Iranol Company. Furthermore, in the refining sector, we are also involved in bitumen production and exports through another of our big subsidiaries – Pasargad Oil Company.

Why is the Persian Gulf Star Refinery project important for Iran?

This represent our most significant ongoing project at the moment, as TAPPICO owns a 49% stake. This is a large project along the coast of the Persian Gulf in close proximity to the Bandar Abbas Refinery. This new refinery is fairly unique because of the type of feedstock, which is gas condensate recovered from South Pars. The supply for this refinery is approximately 360,000 bpd.

This refinery was constructed in three phases. Once fully operational, it will reach a production capacity of 36 million litres of Euro 4 and Euro 5 petrol, making it the first Iranian refinery to produce this fuel and overall the largest petrol production facility. Additionally, it will be producing 14 million litres of diesel and nearly 3 million litres of LPG.

The first phase was recently inaugurated [in April 2017], and we are aiming to have next two on stream by 2018. By the end of the year, hopefully it will be running at its full capacity.

What is TAPPICO’s approach to enhancing propylene production in the country?

One of our new projects is Petro-olefin Fanavaran, which is located in the Mahshahr Petrochemical Special Economic Zone with access to roads and a jetty. At the moment, we are producing 1 million tonnes of methanol there under Fanavaran Petrochemical Company. This project will give us access to 1,650,000 tonnes more.

We are aiming in the short term to start converting methanol to propylene through an MTP or MTO [methanol-to-polypropylene or methanol-to-olefins] project. That is, we will convert to either olefins or propylene. The main goal with this project is to have access to these materials.

There is a very low supply of propylene, which is one of the biggest challenges affecting the country’s petrochemical sector. However, the current levels of ethylene production are very high. To compare, we have a yearly production of close to 6 million tonnes of ethylene and less than 1 million tonnes of propylene.

The alternative route for increasing the production of propylene is converting methanol to propylene. Because we have access to methanol stocks and an available feedstock, we decided to expedite a grassroots project for the production of 500,000 tonnes of methanol converted into both propylene and ethanol via methanol-to-olefins.
This is our strategic planning for the future: to focus on and develop as much propylene as possible. There is great potential in this production and its supply will benefit many industries in Iran.

What is involved in TAPPICO’s restructuring process?

TAPPICO is currently working on restructuring the holding. As managing director, I have submitted three strategic plans to the board of directors as well as to Shasta, the Social Security Investment Company [which holds 83% of TAPPICO].
One of the plans is to institute four deputies in charge of planning, subsidiary company supervision, finance and human resources, respectively. My second submitted strategy proposed building a new structure for this organisation. We are hoping to move into our new corporate building by the beginning of 2018. In that building we will have departments for planning, training, merging and feasibility studies.
Finally, my third proposal suggested that TAPPICO invest in human resources in a sustainable way. In this sense, approximately 40 people from Iranian universities such as Sharif University of Technology and Abadan Petroleum University of Technology will be selected and trained over the next two years. TAPPICO needs to start investing in future human resources, not only in the hardware. The position requires high technical knowledge because the task at hand is challenging.

What are TAPPICO’s objectives for 2018?

Within the restructuring, we are aiming to establish new departments in the company exclusively dedicated to training, planning, study, international activity, research and marketing, information and documentation centre. Furthermore, in terms of human resources, we will be selecting 30-40 smart graduates from our universities that we will provide training for and invest in for the future of the company.
Secondly, we are targeting the completion of key projects such as the last phases of the Persian Gulf Star condensate refinery and the Marjan and Ilam petrochemical plants by the end of 2018. We will also start the conversion project of methanol to propylene within the Siraf Refinery Park, converting condensate to polyolefin or petrol.
In addition, we will begin operating in the fuel distribution segment through our brand Persiran. In this context of privatisation, we are looking to open 40 petrol pumping stations next year to deliver high-quality fuels to the end users.