Tehran gas sector will need Western help

Iranians go to the polls next month to elect their new president. After eight years of locking horns with the West, new leadership in Washington and Tehran could herald an improvement in diplomatic relations, which could ease the UN-led sanctions that have held back Iran's industry.

Tehran does not lack ambition. It wants to close the gap on its main regional rival, Saudi Arabia. Over the past two years, Iran's state-owned National Petrochemical Company (NPC) has unveiled plans to significantly increase its capacity, investing $30bn in the energy sector by 2015. Realising these plans, however, has been made harder by sanctions.

The UN-backed sanctions on trade with Iran have reduced the pool of willing technology and engineering partners, restricted access to international financial markets, and raised the cost of borrowing. The development of the upstream gas sector - the key to obtaining cheap feedstock - is the last frontier where Western international oil companies have the edge in experience and technical know-how.

Western collaboration will be vital to the future development of the gas sector. Without it, Tehran's ambitions for the petrochemicals sector will remain on hold.

In a little more than 10 months, the west ethy-lene pipeline, on which much of the petrochemicals sector's hopes are pinned, is scheduled for completion. Aimed at establishing a production base in less developed regions, the successful completion of the 2,163 kilometre-long pipeline project will be a crucial step in the development of the Iranian petrochemicals industry.

Any delays will have a serious impact on downstream production. But after more than five years of construction, with costs spiralling, the pipeline is still just over half complete.