Continuation of the leadership of the chemical and petrochemical groups

Continuation of the leadership of the chemical and petrochemical groups

According to the Mehr correspondent, Behzad Mohammadi, CEO of the National Iranian Petrochemical Company, in a press conference on June 16 this year, revealed the implementation of a plan to produce propylene from natural gas or methanol in the near future, which experts believe is not economically justified. Mohammadi in the mentioned meeting, while implicitly confirming that this plan is not economically justified with the current conditions of gas feed rate, told Mehr that the implementation of such a plan is not very attractive for investors and we intend to consider gas feed allocation to make it attractive up to the allowed limit.

. On the other hand, we will create tax incentives in this area to attract investors to inject capital. To build this project, the National Petrochemical Company will build a pipeline near the gas pipeline from the south to the north of the country to establish land management in the northern part of the country.

In this regard, the Ministry of Oil recently submitted a plan to revise the price of petrochemical gas feed to the Cabinet.

According to the CEO of the National Petrochemical Company, the current production of this product in the country is 980,000 tons, of which there is a shortage of 200,000 tons, and this shortage will reach 700,000 tons in the near future. Thus, in 2021, we intend to activate a plan to increase the country’s propylene production to three million tons by converting gas to propylene or methanol to propylene.

What is the use of propylene?

According to the Mehr reporter, propylene is of special importance as a basic product in the petrochemical industry. Because downstream products with valuable value are produced from this basic material, which is the main food of the textile, plastic, cosmetics and automotive industries, and will also create employment, reduce imports and generate wealth for the country.

According to the Mehr reporter, currently most of the production of propylene in the world is in the form of indirect processes and propylene is produced as a by-product. Due to the shortage of propylene in the world and the growth of consumption of this product, the processes of direct production of propylene due to lower investment costs and production of propylene as the main product of the process (higher share of propylene in process output products) have received more attention than indirect methods.

Propylene is the second most widely used petrochemical base product after ammonia and ethylene, which is currently produced in the world with a capacity of about 120 million tons.

Growth in consumption of downstream propylene products in the world

However, according to experts, the reason why such a plan is on the table of the National Petrochemical Company is to increase gas production in the country, which uses the “discount” lever to create attractiveness and guide investors to this plan. Because the plans to continue the methanol chain as a popular product that also has an attractive feed discount, is basically not economically justified.

Preparing Methanol Feed Methanol to propylene conversion units directly from the market are not attractive enough to invest in any of the price scenarios. By calculating the economic indicators, the process of converting natural gas to propylene in an optimistic scenario and comparing it with the economic indicators of converting natural gas to methanol is determined.

Production of propylene from natural gas will be much lower profitability than methanol production in the country. In fact, due to the lower investment cost to set up a methanol production unit compared to other processes and the greater profitability of methanol sales, investing in value chain development and propylene production will not be profitable.

According to the plan of the National Petrochemical Company, a pipeline is to be built near the gas transmission pipeline as well as reservoirs for storing propylene; It is necessary to estimate how much the discount is intended to justify such an investment and what the return will be for the country.