Petrochemical export taxation as energy-industrial policy in Iran: a product-specific value-chain analysis
Corresponding Author(s) : Amirali Saifoddin
Future Energy,
Vol. 5 No. 3 (2026): August 2026 Issue
Abstract
As a hydrocarbon-rich economy, Iran faces an energy-policy challenge in deciding whether to export oil and gas feedstocks as basic petrochemical products or convert them into higher-value materials. Iran’s petrochemical exports remain concentrated in basic and intermediate products, while downstream exports are limited. Using a descriptive-analytical design, documentary analysis, financial scenario analysis, and a comparative policy case study, this article examines the evolution of Iran’s petrochemical tax and export-duty policy from 2021 to 2025. The findings show that the initial approach sought to reduce the attractiveness of exporting basic and intermediate products by removing tax exemptions or imposing export duties. Evidence from the quantitative analysis reveals a structural imbalance between export volumes of raw materials (US$11.24 billion) and upstream and intermediate petrochemicals (US$11.43 billion) and the exports of downstream industry, which stood at US$0.36 billion in 2018. Import volumes of downstream industry were about US$0.56 billion and thus exceeded its export volumes. Policy projections for the modified tariff system generated about US$200 million in revenue. Taxes and tariffs can only support value chain upgrading if there is downstream capacity, comparative advantage, market demand, technological capability, and justifiable economies of scale. A comparative assessment of urea, methanol, and polyethylene shows that a one-size-fits-all policy is not appropriate for all these products. Overall, urea was eliminated, methanol was encouraged, and polyethylene needs support. The study concludes that export duty policy should move towards a more precise, product-oriented, and value chain-based regulation.
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References
Shirazi MA, Saifoddin A, Zahedi A, Abdoos M, Yousefi H. Renewable energy policies in OPEC and non-OPEC countries: a comparative SWOT and PESTLE analysis. Energy Nexus. 2026 Jul 11:100761.
Lebdioui A. The political economy of moving up in global value chains: How Malaysia added value to its natural resources through industrial policy. Review of International Political Economy. 2022 May 4;29(3):870-903.
Ebrahimizaker S, Shirazi MA, Farahani AJ, Ghabaei A, Mousavi SM, Yousefi H. Global review of the ISO 50001 standard and provision of a framework for improving energy management systems for Iran. Future Energy. 2026 Jun 15;5(3):25-49.
Allah Rabbi Shirazi, M. A. Idea generation and examination of environmental challenges of floating solar photovoltaic power plants on wetlands and its economic advantage for local communities. Journal of sustainable Energy Systems, 2024; 3(1): 39-51.
Larsen M, Tilsted JP. The future of fossil fuels, chemicals, and feedstocks: Outlining a research agenda on the role of China in the global petrochemical industry. Energy Research & Social Science. 2024 Dec 1;118:103750.
Ghazanfari Shabankareh M, Shesh Bulookii A, Kord M. Examining the methods of converting the threats caused by sanctions on Iran’s petrochemical industry to economic opportunities and investigating the growth rate of Iran’s petrochemical industry during sanction. International journal of energy sector management. 2024 Nov 18;18(6):2357-78.
Bayat A, Rahbar F, Vatani A, Razavi SA. An analysis of the value chains of the petrochemical industry with a focus on the new approach of petro-refinery. Petroleum Business Review. 2022 Oct 1;6(4):115-32.
Dussel ES. From export-oriented to import-oriented industrialization: Structural change in Mexico's manufacturing sector, 1988-1994. University of Notre Dame; 1996.
Hajarizadeh HA, Bakhtiari AS. Economic Advantages for Production of Basic Petrochemicals from Persian Gulf Gas Resources. InWorld Petroleum Congress 2000 Jun 11 (pp. WPC-30343). WPC. https://onepetro.org/WPCONGRESS/proceedings-abstract/WPC16/WPC16/WPC-30343/201961
Gabdullina GK, Mullagayanova GS, Khusainova SV, Gafiyatov IZ, Nygmetova BD. State regulation measures and existing state strategy for the development of petrochemical industry in Russia. InIOP Conference Series: Earth and Environmental Science 2022 Feb 1 (Vol. 981, No. 2, p. 022027). IOP Publishing.
Moezzi SM, Shirazi MA, Monfared AR, Yousefi H. Comparison of classical statistical models for forecasting CO₂ emissions, GDP, and TBL cancer indicators: A comparative analysis of East and West Asia. Energy Nexus. 2026 Mar 1;21:100682.
Zhang D. Can export tax rebate alleviate financial constraint to increase firm productivity? Evidence from China. International Review of Economics & Finance. 2019 Nov 1;64:529-40.
Shirazi MA, Moezzi SM, Arzaghi N, Yousefi H. Solar Energy Development Trends and Climate Impacts on its Performance in Iran: A Comparative Analysis. Results in Engineering. 2026 May 25:111229.
Fung KC, Korinek J. Economics of export restrictions as applied to industrial raw materials. OECD Trade Policy Papers. 2013 May 13;2013.
Bouët A, Estrades C, Laborde D. Differential export taxes along the oilseeds value chain: a partial equilibrium analysis. American Journal of Agricultural Economics. 2014 Apr 1;96(3):924-38.
Östensson O. Promoting downstream processing: resource nationalism or industrial policy? Östensson O. Mineral Economics. 2019 Jul 1;32(2):205-12.
Bobylev Y, Idrisov G, Sinelnikov-Murylev SG. Экспортные пошлины на нефть и нефтепродукты: необходимость отмены и сценарный анализ последствий (Export Duties on Oil and Oil Products: Need for Abolishment and Scenario Analysis). IEP Research Papers. 2012 Aug 7(161).
Tsani S, Chitou C, Overland I. Local content policies: Knowledge stock and future directions for research and policy making in view of the sustainability agenda. Environmental Science & Policy. 2024 Dec 1;162:103919.
Jennings ET, Hamlin PJ, Hamlin C, Cullen JM. Connected, complex, and carbonized: The country archetypes of the petrochemicals sector. Energy Research & Social Science. 2024 Dec 1;118:103826.
Xu D, Liu C, Du Q, Duan W, Zhang C. Expansion direction selection of the coal-to-olefin industrial chain in Inner Mongolia from the value chain perspective. Systems. 2024 Dec 2;12(12):537.
Trojbicz B, Françoso MS. The Political Economy of local content policy: The Brazilian Oil Industry in the 21st century. Resources Policy. 2025 Jan 1;100:105430.
Saifoddin A, Gholizadeh MH, Allahrabbi Shirazi M. Integrated analysis of advanced applications of artificial intelligence (AI) in modern energy systems. Journal of sustainable Energy Systems. 2026 May 28;5(2):297-327.
Allahrabbi Shirazi MA, Goldoust A, Khatami M, Abedi E, Janfeshan MH. Modeling and simulation of a solar tracker with bifacial panel: a case study of Tehran city. Journal of Sustainable Energy Systems. 2024 Sep 10;3(3):271-87.
Allahrabbi Shirazi M, Yousefi H, Fathi A, Baneshi M. Urban water sustainability through energy-free fog water harvesting: A review of fog-collecting systems. Urban Development Policy Making. 2027 Jan 1;3(1):69-94.
Khalili Y, Abbasi S. Artificial intelligence in petroleum production engineering: applications, optimization, and sustainability. Discover Artificial Intelligence. 2026 Jul 17.