During years of sanctions, four factors pushed the petrochemical industry, particularly the private sector, to switch to methanol production in Iran. These factors included shift to Chinese financing, allocation of land near sea, low-cost gas price and the purchase of natural gas-methanol technology before imposition of the sanctions. Therefore, over the coming five years Iran’s methanol production capacity will reach 25 million tonnes. That would serve Iran’s petrochemical industry enormously if strategic management applies. The petrochemical industry development used to be limited to ethylene because due to the abundance of ethane, most products became ethylene-oriented and the downstream industries could grow to a large extent. But for more growth in the petrochemical industry, arrangements have to be made for the production of propylene. Propylene creates and feeds an extensive chain of downstream industries. Therefore, Iran plans to convert methanol to propylene.

Twelve new methanol projects are under construction in Iran. Ten of them will definitely come on-stream by 2021, which would bring Iran’s methanol production capacity beyond 20 million tonnes a year. At least five new methanol projects are expected to become operational within two years. The Kaveh Petrochemical Plant with an annual production capacity of 2.310 million tonnes, Phase 1 of the Bushehr Petrochemical Plant, Middle East Kimiaye Pars Co. (MEKP), Sabalan and Dena with a combined production capacity of 1.650 million tonnes are complete between 61 and 100%. These projects will have come on-stream by 2021.

Furthermore, five other methanol projects including Apadana petrochemical, Aryan dipolymer, Siraf, second development phase of Kharg and Lavan are complete between 25% and 44%. They will have come online by 2022.

However, the construction of the Arman methanol project with a capacity of 1.650 million tonnes (22% complete) and Arg Shimi Parsa with a capacity of 990,000 tonnes (12% complete) has been halted. Once all the 12 under-construction methanol projects have come on-stream, the methanol production capacity in Iran will increase to about 25 million tonnes annually, making Iran the biggest producer of methanol in the world.

The latest data provided by Global Data Energy about methanol production in the world shows that Iran will see the highest methanol production increase in the coming years. From 2018 to 2022, Iran will be increasing its annual methanol output by 30 million tonnes. The US and China come second and third with forecasts of 12-million-tonne and 10-million-tonne increase. Current projections show that Iran will be accounting for 54% of global methanol output increase up to 2022. Iran is planning to build 12 methanol plants. The Dayyer methanol plant owned by the Kaveh Methanol Co. is projected to have the highest capacity (2.3 million tonnes). The US will account for 22% of global methanol production capacity growth by 2022, as it is expected to build six new methanol plants. By that time, China will account for about 18% of global methanol production capacity growth through 10 new methanol plants.

Methanol-to-Propylene Conversion

Today, methanol is among low-value petrochemical products in Iran. The private sector is seeking to develop their capacity. Iran is currently spending only 5% (232,000 tonnes) of its methanol production domestically with the rest destined for exports. Now, even no serious and effective action is undertaken to develop the methanol value chain, Iran’s private sector is following up on plans to significantly enhance production of this group of products.

Once the methanol plants under construction become operational, Iran’s current 6.6-million-tonne output will reach 25 million tonnes a year, which would definitely send shockwaves all across the global markets. That might explain why Iran’s National Petrochemical Company (NPC) is no longer issuing permits to domestic and foreign investors for building methanol plants.

Iranian petrochemical experts have over recent years managed to master the technical savvy for the conversion of methanol to propylene. They have even acquired the pilot for this technical knowhow. Although the government is banned from investing in the petrochemical sector, permit has been issued for the NPC’s investment in developing the technology.

The NPC recently announced the establishment of a 120,000-tonne propylene via methanol (PVM) plan under a joint venture between the NPC and a European bank.

Light olefins, ethylene, propylene and butylene are key elements in the petrochemical industry. They are largely used as raw material for producing polyolefin. Ethylene and polypropylene are key feedstock at petrochemical plants. They are widely used in manufacturing chemicals and plastics. According to forecasts, the average annual growth in demand for propylene will reach 4% between 2015 and 2020.The consumption of propylene in polypropylene and acrylic acid will be faster. The daily increasing difference in the propylene supply and demand will encourage moving towards new procedures that would fill the existing voids.

Since early 1990s, light olefin production has seen significant changes. In the meantime, customary procedures like steam cracking and catalytic cracking as well as new technologies like propane hydrogenation and conversion of methanol to light olefins top the agenda of commercial companies.

Given the feedstock used in propylene production, the PVM process is widely used due to the accessibility of methanol. Methanol is produced from coal or natural gas. Five petrochemical plants in Iran are currently supplying methanol with a rated capacity of 6.6 million tonnes a year.

In light of the fast growth of the petrochemical industry in the past ten years and the planned construction of numerous methanol production units in coming years, the production of this chemical is on the rise in Iran. Therefore, one economic option for using the surplus methanol would be converting it to high-value products like propylene.

Iran’s top position in terms of oil and gas resources keeps the country at the focal point. The growth and development of energy technologies, from exploration to refining and processing of oil and gas in Iran on one hand, and the civilizational identity and strategic geopolitical position of the country on the other, have helped Iran become the energy hub in the future.

The most important advantage for investment in and development of the petrochemical industry in Iran is undoubtedly access to feedstock like natural gas, ethane, and naphtha and gas condensate massively at a competitive price. Iran’s gas treatment and transmission capacity currently stands at 750 mcm/d, which will soon increase to 1,000 mcm/d. Furthermore, access to ethane as feedstock will be instrumental in solidifying Iran’s competitive status for manufacturing petrochemical products.

Once South Pars gas field development phases have been completed, it would enable us to recover 650,000 b/d of gas condensate and 6.7 mt/y of liquefied petroleum gas (LPG) including propane and butane as well as 4 mt/y of ethane. South Pars ethane will be wholly given to the petrochemical industry and the rest will be supplied upon request.

In addition to easy access to petrochemical feedstock, Iran enjoys other competitive advantages which could not be ignored easily. The growing domestic market of petrochemical products, the availability of skilled manpower, extensive communication infrastructure, sharing border with 15 countries particularly in Central Asia and South Caucasus, establishment of special economic petrochemical zones, political stability and pro-investor laws like tax exemptions are among such advantages which would be instrumental in the development of upstream and downstream sectors. Add to them the possibility of dipping into National Development Fund (NDF).

Courtesy of Iran Petroleum