After over a decade of heavy international sanctions, Iran’s petrochemical industry is trying to recover from its losses and regain its position as an important competitor in the global arena. Iran has an ambitious new plan to heavily invest in the industry and increase production capacity from 64.1m tonnes/year in 2015 to 130m tonnes/year by 2025. The important question is: What are the value-added products that can do most to help the country reach this goal?
In recent years, the 60% share of olefins in the global petrochemical market and their increasing demand, as well as new technologies such as local methane gas-to-olefins/produced methanol-to-olefins (GTO/MTO) and methanol-to-propylene (MTP) which has been more utilised by China and east Asia, have been exciting topics for Iranian policy makers. But is there enough strategic planning to implement this policy?
The starting point of these new policies occurred when investments in methanol projects increased along with concerns of surplus methanol capacities among Iranian policy makers. As new concerns about the economic feasibility of MTP technology evolved, the petrochemical industry elected to go with MTO technology (using produced methanol), but now is finding its way towards GTO (local methane gas to methanol to olefins).
An important question is: Will the world wait for the Iranian petrochemical industry to increase olefins capacity to supply the increasing demand? Do the local competitive feedstock costs, based on modern technologies, along with new developments such as the North American shale gas revolution and low oil prices on one hand, and increased local investment in China which has caused lower product prices, on the other, make the current policy feasible?
IRAN NEW OLEFINS PROJECTS
Growth in demand is prompting Iranian petrochemical policy makers to increase investment in its petrochemical industry. This new policy led to 27 new projects under execution in order to produce around 23m tonnes/year of olefins by private and semi-private investment groups. These new projects will require capital investment of around $26bn-30bn.
The majority of these projects are based on China’s favourite technologies – MTO and GTO. Some of these projects have not been studied properly and are only based on recommendations made by technology providers and/or licensors.
GLOBAL OLEFINS SUPPLY WAVE
With significant demand growth for ethylene and propylene in the global market, there is a great motivation for investment throughout the world and Iran is not the only country that is attempting to satisfy this additional demand by planning new projects. Field studies show there are 85m tonnes/year of new capacity under construction in the world other than Iranian projects.
due to Iran’s rich sources of methane, can be very interesting for Iranian investment. However, policy makers in Iran’s petrochemical industry are pursuing MTO and GTO technology which is being used by China and which could be very risky.
The increase in olefins capacity in the world, the competitiveness of the market and a decrease in prices will eliminate many projects that are less feasible. Meanwhile, projects based on GTO and MTO which are pursued mainly in eastern Asia are facing a riskier situation compared to ethane and naphtha. However, these technologies will remain active in countries such as China that have strategies to increase self-sufficiency.
ue to Iran’s rich sources of methane, can be very interesting for Iranian investment. However, policy makers in Iran’s petrochemical industry are pursuing MTO and GTO technology which is being used by China and which could be very risky.
It can be said that Iran has great gas resources with very low share in downstream products such as plastics. China on the other hand has no gas resources with very great market share in downstream products, especially plastics and textiles. Therefore, it should be asked of Iranian policy makers in the petrochemical industry, who are following Chinese policies: If Iran’s goal is to get a reasonable share of the market, isn’t it better to find more suitable technologies in order to produce more valuable petrochemical products to help them to reach this goal? This easily can be achieved by a revised strategic direction.
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