The message by Mohammad Shariatmadari, CEO of Persian Gulf Petrochemical Industries Company (PGPIC) reads as follows:
“Following an ill-executed privatization process, Iran’s petrochemical industry faced extensive challenges. Recognized today as one of the key competitive advantages of Iran’s economy in the region, the petrochemical sector has undergone a turbulent journey since its inception in 1963. Research and expert opinions indicate that the industry has passed through distinct phases during its growth and development.
The initial spark of the industry was ignited in Fars Province, the cradle of Persian civilization. Soon after the establishment of Iran’s first petrochemical plant in Shiraz in 1964, the National Petrochemical Company (NPC) was founded through parliamentary approval, officially making Iran the first country in the Middle East to develop a petrochemical industry. By the end of the 1970s, a series of plants such as Razi, Abadan, Pazargad Carbon Ahvaz, Kharg, Farabi, and parts of Bandar Imam Petrochemical Complex had been launched alongside Shiraz.
In those early years, the primary role of these nascent complexes was to meet domestic demand—particularly for products like chemical fertilizers and basic chemicals including carbon black, sulfur, liquefied gas, carbonate, PVC, and plasticizers. The eight-year Iran-Iraq war brought operations to a halt, especially since many facilities in southern Iran were targeted by Iraqi airstrikes. However, immediately after the war, significant efforts were made under the first Five-Year Development Plan (1989–1994) to rehabilitate the sector. With the commitment of policymakers and engineers of the time, a large portion of damaged units returned to production.
The post-war era witnessed a renewed outlook from the administrations of Reconstruction and Reform, treating petrochemicals as a key axis of economic power and a competitive national advantage. Many of today’s leading companies within the Persian Gulf Petrochemical Industries Group—including Urmia, Bouali Sina, Khuzestan, Tondgouyan, Pars, Arya Sasol, Nouri, and Karoun—emerged during this future-oriented phase, which economists regard as the beginning of the industry's development boom.
However, the industry’s momentum was soon disrupted by what many economists describe as a deviation in the privatization process. In a rushed attempt to settle government debts, numerous petrochemical companies were transferred to various stakeholders, including social security funds, civil service pension funds, oil sector funds, and military organizations.
This hurried privatization and fragmented shareholding led to considerable damage. A key issue was the division of interconnected production chains among stakeholders with conflicting interests, resulting in disputes, production disruptions, feedstock supply challenges, and decreased profitability. The consequences extended beyond operations and design to downstream sales, creating opportunities for emerging competitors in East, West, and South Asia to strengthen their presence in regional markets.
Many of the current imbalances and uneven development across Iran’s petrochemical landscape can be traced back to this period, which disrupted the industry’s structural coherence from design through to production and market delivery. Under pressure from local demands and lacking comprehensive long-term studies, many new plants—mostly focused on urea and methanol—were established one after another. As a result, the critical goal of completing the value chain and maximizing added value was sidelined. Over time, the negative impact of these fragmented developments became more evident, especially the disconnect in the value chain. Several companies handed to pension funds suffered from technical mismanagement and undisciplined hiring practices, leading to unstable leadership and financial losses.
Fortunately, by the late 2000s, with the efforts of industry advocates, the rash privatizations were halted, and remaining strategic companies were consolidated under the newly founded Persian Gulf Petrochemical Industries Company (PGPIC). Today, PGPIC accounts for approximately 40% of Iran’s petrochemical production, sales, and exports—significantly reducing the risk of further industrial disintegration.
In 2013, PGPIC entered the capital market through a public offering, becoming the largest listed company on the Tehran Stock Exchange. In less than a decade, its market value reached nearly 800 trillion tomans (approx. USD 16 billion). Additionally, since 2021, the PGPIC Trading Company has generated around USD 6 billion in annual foreign currency revenue for the country.
International experience shows that the success of petrochemical industries in developed economies stems from integrated and coordinated large-scale operations. Under modern management models, completing the production chain and creating added value has become a policy priority. A glance at regional dynamics confirms this: for example, Germany’s BASF once accounted for over 50% of national petrochemical production and held the title of the world’s largest producer until 2023, when it was surpassed by China’s Sinopec.
Based on such insights, there is no doubt that Iran’s petrochemical industry must take bold macro-level decisions and reform its management model to remain competitive. As many economists argue, energy and petrochemical-related funds must shift from direct ownership to becoming strategic shareholders—allowing professional and specialized management to guide governance structures. The petrochemical industry, which has played a pivotal role in sustaining national production and earning foreign currency under sanctions, now more than ever requires serious attention from policymakers and strategic decisions at the highest levels of government.”