Denmark to Help Iran Develop Sabalan Petchem Plant
Iran has made plans for some 80% of its future petrochemical projects. This sector needs investment to implement its projects. Now that banking and monetary restrictions have been eased, Iran hopes to be able to benefit from foreign loans for developing its petrochemical sector and complete incomplete projects. According to plans, Iran’s petrochemical industry needs at least $50 billion for its projects.
Many of stakeholders in Iran’s petrochemical projects are pinning hope in enhanced gas production from South Pars gas field and the presence of foreign investors over the coming two years. Once South Pars development phases have been completed, Iran would be able to recover 650 tb/d of gas condensate, 6.7 million tons a year of liquefied petroleum gas (LPG), which comprises both propane and butane, and 4 million tons a year of ethane.
Iran’s Ministry of Petroleum plans to use ethane totally for petrochemical projects. Therefore, petrochemical projects currently under way and those planned for future will be pursued more seriously by shareholders and manufacturers.
Petrochemical projects in Phase II of Assaluyeh would take up added significance when one takes into account that this zone would account for 40 million tons of a total of 60 million tons of petrochemicals, Iran plans to add to this output by the end of 6th Economic Development Plan in 2020.
Most incomplete petrochemical projects in Phase II of Assaluyeh are under construction in the vicinity of Kangan city. Most of these projects need foreign loans and financing. Over recent years, development of these projects has been slowed down for a variety of reasons including sanctions and financials shortcomings.
China has accepted to finance 5 out of 22 projects in Assaluyeh in southern Iran.
Sabalan Petchem Plant which houses a methanol production plant is one of projects located in Phase II of Assaluyeh. This project, which is 50% complete, is financed by China Export & Credit Insurance Corporation, commonly known as Sinosure.
Mohammad Zali, CEO of Sabalan Petrochemical Company, has said that this plant would produce 5,000 tons a day of AA-grade methanol. The Sabalan plant would be built on a piece of land measuring 7 ha in area and close to Damavand Petchem Plant.
Zali referred to a 45% progress in Sabalan Petchem Plant, saying: “The financing of this project is done by China’s credit line. This financing became operational in January 2015. The technical knowhow for this plant has been provided by Denmark’s Tapso and an EP-based commodity purchase contract has been struck by Petrochemical Industries Design and Engineering Company (PIDEC).”
He said that detailed engineering and commodity purchase at Sabalan Petchem Plant are respectively 70% and 60% complete. He noted that Tapso has applied the state-of-the-art technology for methanol production in order to boost output.
“Although this project is financed by China, the management and shareholders are putting efforts into using the assistance of domestic manufacturers,” said Zali.
He said assessments show that the products of this plant would have foreign buyers, adding that the market for these products would become lucrative in 15 years.
“Since this project is being run by Sepehr Energy Co, it seems that this company would launch downstream processes in this plant in the near future. Countries like China and India are main foreign buyers of products of Sabalan plant by March 2018,” he said.
Zali stressed the need for respecting environmental regulations in petrochemical processes and engineering, saying: “The latest environmental standards will be used in this plant.”
He said that converting gas to methanol would be one of the main advantages of construction of Sabalan Petrochemical Plant.
“Currently, methanol enjoys a good market due to its high diversity in consumption,” he added.
Zali said more than 76,000 cubic meters of natural gas and 95,000 cubic meters of oxygen are fed into Sabalan Petrochemical Plant per hour, adding all utility equipment at this plant are supplied by Damavand Petrochemical Plant.
He referred to spatial restrictions at Sabalan petrochemical project, saying: “Sepehr Energy Investment Company, as the holding company of Sabalan petrochemical project, has plans on the agenda for building downstream units and supplying products of higher value-added. Preliminary studies are under way for that purpose.”
He said that over 95% of the shares of Sabalan petrochemical plant belong to Sepehr Energy.
Zali said the project is estimated to cost $600 million with a projected rate of return at 22%.He expressed hope that construction of Sabalan petrochemical plant would pick up speed, thanks to the implementation of Iran’s nuclear deal with six world powers, dubbed the Joint Comprehensive Plan of Action (JCPOA).
Projects in Phase II of Assaluyeh still need foreign loans and financing, although construction operations have begun and investors have been decided upon.
Iran’s petrochemical projects constitute an incentive for foreign investors. The country hopes to double its revenue from petrochemical projects to $40 billion. Petrochemical projects in Phase II of Assaluyeh are likely to make great contribution to this big jump.