Iran’s Influential Role in Propylene Production
Mohammad Hassan Peyvandi, a former senior manager at National Petrochemical Company (NPC), has said the petrochemical industry and GDP of oil exporting nations are mutually effective.
Peyvandi highlighted the huge investment Iran has made in order to increase methanol production capacity.
He said: “Since methanol production results in propylene production, we should no longer worry about increasing the methanol production capacity; rather we should know that Iran would be instrumental in global propylene production.”
Peyvandi referred to certain political conditions prevailing in the world, particularly in the Middle East, and categorized challenges faced with by the petrochemical industry.
He said: “The issue of shale gas in North America and its impact on LNG and ethane exports to Europe and Asia is important. The next issue is charcoal production in China and its impact on synthetic gas production from charcoal and access to technologies converting methanol to propylene and ethylene.”
Peyvandi added: “This is exactly what South Africa did during the Apartheid, and during full sanctions year, it transformed charcoal to synthetic gas and then GTL. In Europe, investment and production are affected by crude oil prices because Europe has always been an oil and gas importer and has largely invested in downstream industries.”
He said another challenge to the Middle East petrochemical industry was the change in the LNG market direction.
Peyvandi added: “This direction is not under way from the Middle East or Far East to America, but from America to the Middle East for Far East.”
He said another challenge in the Middle East was the emergence of Daesh militants. “These negative developments have reduced investment. Meantime, International Energy Agency (IEA) reports indicate that hydrocarbons will be playing the major role in global energy supply up to 2040 and natural gas will be more influential than renewable energies by that time.”
Peyvandi said hydrocarbons, particularly natural gas, was instrumental in electric power and fuel supply, adding that Iran could be a major market player.
US LNG Market Share
Peyvandi touched on the shale gas role in the natural gas pricing in international markets since 2013, saying: “With the entry of shale gas, natural gas production increased in the US. In 2013, the US had no share in the LNG market, but in light of the growing shale gas production, the US will have a 10% share of Middle East market by 2020.”
He said: “The Americans knew that they would need to build a terminal for ethane and they did so and then they found marketplaces. These terminals are currently ready and in the phase of production.”
Peyvandi said the first ethane shape docked in Europe’s ports in March 2018, creating big potential for the US and contributing to polyethylene price cut.
He said that Saudi Arabia’s SABIC and India’s Reliance were now among the major ethane target markets.
Peyvandi referred to changes in long-term planning in this sector, saying: “Even for the transfer of this product and navigation of vessels, major changes were made in the Panama Canal.”
“The Panama Canal is not wide and therefore it could not handle the navigation of a large number ethane and LNG carrying vessels due to customs red tape and particularly logs and dykes. Therefore they had to control the volume of water. Huge investment has then been made in this sector in order to accelerate the navigation of vessels and provide better services in line with shale gas production to markets in Japan, China and Southeast Asia.”
Peyvandi said: “Enlarging the Panama Canal would allow very large vessels to navigate. Currently 80% of LNG carriers cross through this canal, which is much higher than the previous 9%. After new changes, the time needed for vessels to travel from the US to East has declined to 15 days.”
Good Conditions for Petchem Development
Peyvandi referred to Iran’s investment in methanol production due to access to gas resources, saying: “It has to be taken into account that the six main substances in the petrochemical market are ethylene, methanol, benzene, propylene, chlorine and paraxylene.”
He added: “Methanol and propylene production has grown significantly since 2014. We should also keep in mind that polypropylene is produced from methanol using MTP and MTO technologies.”
Peyvandi said: “Through its big investment in methanol, Iran can be influential in global propylene production.”
He said Iran’s methanol production capacity would cross 20 million tonnes by 2024, adding: “Currently, more than 6 million tonnes of ethylene and less than one million tonnes of propylene is being produced in the country. Therefore, more investment has to be made in methanol-to-propylene production in Iran.”
Peyvandi recounted a memory from his trip to China, saying big methanol storage facilities had been built there.
“When I asked the manager of that section why they had made big storage facilities, he said they always look at the market conditions,” he said.
Peyvandi said: “Many say the petrochemical industry has gone astray in recent years, but we were first after producing primary products like olefins and aromatics and then we sought to produce glycol, methanol, styrene and polystyrene. We have to have such substances first before developing downstream industries. Without such materials, how substances that need propylene would be produced?”
Polypropylene Production Prioritized
Peyvandi, who has recently authored a book on the petrochemical industry to share his experience, said: “I reiterate that we have to move towards polypropylene production. It can set the roadmap for Iran’s petrochemical industry, but it’s not complicated. It’s an issue which requires high-level decision-making.”
He said: “In Iran we have the advantage of natural gas and we must be able to move towards MTO and MTB production and polypropylene derivatives.”
Peyvandi said the petrochemical industry was still dependent on GDP growth in various countries, adding: “Under such circumstances we enjoy good advantages. For instance, olefin feedstock is getting heavier and everyone does not have access to low-cost feedstock. We are the only one to have access and this advantage could be effective for us.”
“The diversity of market products is attractive us, but we have to look for new technologies and markets and attract more investment in the upstream and downstream sectors,” he said.
Peyvandi said Iran had always made efforts for the transfer of technology into the petrochemical industry.
He added: “For example, we made efforts with a view to buying from international companies and we even sought to acquire Basel, but the Americans blocked our initiative because that would have armed us with technologies.”
Peyvandi said: “I want to say that we took significant measures, but they did not come to fruition.”