Iran has begun construction work on a new fertiliser complex at Masjed-e Soleiman (MIS), near the city of Ahwaz in the south of the country.

The 400-acre complex, some 120 kilometres from Ahwaz will produce 4 million tonnes a year (t/y) of urea and will be built in four phases at a total cost of $4bn, according to Yousef Davoodi, managing director of MIS Petrochemical Company, state-owned Shana news agency reports.

The first phase includes the construction of a 1.2 million tonne-a-year (t/y) urea plant. The total investment required is estimated at $675m, with foreign investors accounting for 73.2 per cent, a source close to the project tells MEED.

The plant will require 60 million cubic feet a day (cf/d) of natural gas, along with 34,560 cubic metres a day (cm/d) of water. This will produce 75,000 t/y of ammonia and 1,075,000 t/y of urea.

The company says it has secured a 25-year natural gas supply contract for 70 million cm/d at a cost of $0.60 a million BTU. Water will be supplied at $0.012 a cubic metre. Carbon dioxide from the ammonia plant will be recovered and reused in the urea plant.

Construction is expected to take 40 months. The second phase is expected to come on-stream six months after the completion of the first phase. Davoodi did not name the engineering, procurement and construction (EPC) contractor or technology provider.

According to Davoodi, 15 per cent of the total scheme is funded through domestic resources and 85 per cent had been provided by a foreign company in the form of finance. 

The local market for nitrogen-based fertilisers is approximately 3.1 million t/y, and MIS expects this to rise to 3.75 million t/y by 2014. Local production in 2004 was just 1.68 million t/y.

Iran intends to increase its annual urea production to about 9-10 million tonnes over the next decade, from  4.5 million t/y currently turning the Islamic republic into one of the world’s largest producers of urea fertilisers.