CIS DOWNSTREAM SUMMIT 20 Th Annual

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2 CIS DOWNSTREAM SUMMIT 20 Th Annual H.Alimorad Investment Director / National Petrochemical Company (NPC) Board Member of Persian Gulf Petrochemical Industries Company (PGPIC) 2

3 Iran 2 nd largest economy in the Middle East and North Africa (MENA) region It also has the 2 nd largest population of the region after Egypt, with an estimated 78.8 million people in Iran s economy is characterized by its large hydrocarbon sector 3

4 Position in Hydrocarbons Reserves Proved Gas Reserves, Trillion Cubic meters Proved Oil Reserves, Thousand Billion Barrels Iran Ranks 1 st in the World 4 Iran Ranks 4 th in the World BP Statistical Review of World Energy June 2016

5 Current & Future Economic Situation Projection for Real GDP growth after Sanction 2016: 4.3 percent 2017: 4.6 percent Annual economic growth rate in the 6 th Five-year Development Plan ( ): 8% Drivers: Production side: higher hydrocarbon production Expenditure side: consumption, investment and exports 5 Source: IMF Jan. 2016

6 Given its substantial reserves of Oil and Gas, Iran has the potential to be a much greater player in global energy markets. 6

7 Development in Hydrocarbon Chain Upstream Oil & Gas Gas & Petrochemicals Investment Opportunities Oil & Product Trading Refining Industry 7

8 Opportunities in the Gas and Petrochemicals Attractive feed gas price creates competitive advantage for Iranian petchem projects. Gas-based Petrochemical Projects Gas Processing Plants GTL & LNG Plants Construction of several gas processing and NGL plants have been planned to handle huge increase in gas production. Gas Export Pipeline Iran s gas export strategy is to supply the neighboring markets via pipeline. 8

9 National Petrochemical Company (NPC) 9

10 The Core purposes of NPC After Privatization Act Macro Planning, Policymaking, Regulating, Create Infrastructure & Supporting sustainable development of the petrochemical industry To Improve the quality of people s life 10

11 Regulatory Role Feedstock and Land Allocation Managing private sector investment Creating Motives for Infrastructures and Capacity Development Preventing Monopoly 11 Supervision on private sector operations

12 Iran Petrochemical Output Capacity Growth (By the End of 2025) Million Tons AGR ( )

13 Million tons Iran Petrochemical Export & Domestic Demand AGR ( ) AGR ( ) 13

14 Petrochemical Industry Development Zones 14

15 Petrochemical Development Zones Caspian Sea Tehran Petrochemical Special Economic Zone (Mahshahr) Development under study Pars Special Economic Energy Zone Parsian Jask Development under study Lavan Qeshm Chabahar 15

16 New Zones for Development New special economic petrochemical zones: Chabahar, on the coast of the Gulf of Oman; Qeshm Island, near Bandar Abbas; Kish Island Lavan, on the south coast of Iran; North Pars, north of Assaluyeh. Development of Mahshahr Petrochemical SEZ in Bandar Imam and Jask are under study 16

17 Projects 17

18 Projects under Implementation No. of Projects 50 Design Capacity Sale Net Income (Estimated) Estimated Capital Investment 41 Million Tons/Yr 32 Million Tons/Yr 19 Billion USD/ Yr (Based on Persian Gulf FOB Prices) 32 Billion USD 18

19 Available Feedstock for 6 th Development Plan ( ) Feed Name Rich Gas Methane ( N.G.) Ethane Naphtha Propane & Butane + C 3 + C 5 19 Unit Million Ton/Year Million M 3 /Day Million Ton/Year Million Ton/Year Million Ton/Year Million Ton/Year Million Ton/Year Amount

20 Major Objectives Deployment of new technologies Production of specialty Petrochemical products Completion of value chains (e.g. GTO, GTX) Use of Methanol as feedstock to produce olefins Pursuing and Promoting Joint Ventures (FDI) Taking advantage of access to the various feedstock 20

21 New Projects No. of Projects 30 Design Capacity (Without feed supplier plants) Sale (Without feed supplier plants) Value of Final Products (Without feed supplier plants) Estimated Capital Investment (Including feed supplier plants) 49 Million Tons/ Yr 22 Million Tons/ Yr 21 Billion USD/ Yr (Based on Persian Gulf FOB Prices) 40 Billion USD 21

22 Development Strategy Basic Chemicals Fertilizers Olefins Aromatics Chlorine Commodity Chemicals EG s PTA Methanol Styrene Differentiated Polymers PE PP PS PET ABS PC Synthetic Rubbers 22 Performance Polymers Acrylates Polyurethanes Acetal Resins PBT Specialty Chemicals MDI/TDI Polyols Amines Ethoxylates Glycol Ethers PO Downstream Industries

23 The advantages of investment in Iran Petrochem Industry 23

24 The advantages of investing in Iran Economic diversification; Mines, Heavy Industries, Petrochemical Industry, Services, Availability of Hydrocarbon Feed Stock near international water The high level of urbanization The high level qualified and trained manpower/engineers Growing domestic market Strategic geographic position: access to international waters and Proximity to markets in Asia, Middle East and CIS Countries Economic Free Zones & Special Zones Well-developed export & import infrastructure (ports, ) Existence of domestic engineering and availability of contracting companies & equipment manufacturers reducing costs of projects implementation 24

25 The advantages of investing in Iran Based on FIPPA * Guaranteed compensation in case of nationalization and expropriation Foreign investment has the rights, protections and facilities equal to domestic investors The free movement of capital and currency gains from investment in a country or product (Mitigate Transferring Risk) The possibility of investment dispute to international authorities Take ownership of land in the name of the company (registered in Iran) in joint ventures * Foreign Investment Promotion & Protection Act FIPPA 25

26 Investment incentives in the Free Zones & Special Economic Zones 26

27 Investment incentives in the Free Zones & Special Economic Zones Tax exemption for 20 years from the date of operation for all economic activities; The possibility of foreign investment to the extent of one hundred percent investment; Free Transfer (entry & exit) of capital and profits; Protect and guarantee of foreign investment; Facilitated by laws and regulations on labor relations, employment and social security; The possibility of transferring part of the Product to mainland without paying Customs duties; The use of trained and skilled manpower of all around the world 27

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