Propylene, Missing Link in Downstream Industries
Over recent decades, petrochemical value chain has been developed at a slow pace.
The process of ethylene conversion in southern Iran has been under way at a high speed. All across the world, 60-70% of ethylene is converted into polyethylene and glycol and non-polyethylene polymer products. Iran is rich in polyethylene; therefore, related industries have grown in Iran; however, chemical industries dependent on propylene have not been developed sufficiently. That is while these products constitute raw materials for a big chain of downstream industries. Propylene and polypropylene are produced more massively than polyethylene and ethylene. That is why many local and foreign experts believe that insufficient propylene is to blame for the non-development of propylene-related downstream industries.
Propylene is the second widely used petrochemical substance in the world, just behind ethylene. More than 92 million tonnes of propylene is supplied on the market every year.
Propylene is a key petrochemical product used as feedstock for producing various polymers and intermediate products. The main derivatives of propylene are polypropylene, acrylonitrile, propylene oxide, phenol, oxo-alcohol, acrylic acid, isopropyl alcohol and oligomer. These derivatives are used in electronics, car manufacturing, construction and packaging among other sectors.
Among petrochemicals, olefin is one of the most valuable substances. Ethylene and propylene, with an extended value chain and diverse usages, are among the most valued petrochemical products. Iran has taken significant measures for producing ethylene and propylene, but due to a variety of reasons, ethylene has overtaken propylene in production and therefore demand for propylene is growing. Under the present circumstances, downstream industries fed on polypropylene have been faced with shortage of propylene in certain periods of time.
Over the past five years, 25 million tonnes would be added to Iran’s average methanol output. Kaveh methanol, Marjan methanol and Bushehr methanol projects are in their final stages with respectively 97%, 80% and 60% physical progress. Within two years, Iran’s methanol production would grow by 5.61 million tonnes to bring the total output to 10 million tonnes.
Iranian experts say for completing the petrochemical value chain, there would be no option but to move towards development of the chain of olefin and such products as polyurethane, polyol, ethoxylate, glycol ether and acrylate.
Methanol-to-Propylene
Iran’s petrochemical industry is expected to become propylene-based. That is why permissions are no longer issued for methanol plants unless France’s Total would launch new grades in Iran.
Iran can supply 25 million tonnes of methanol on the global market over five years, but up to 16 million tonnes would be absorbed in the market.
Concerns over the future market of methanol come while a high value-added may be generated by converting gas to methanol and then converting methanol to propylene and finally converting propylene to polypropylene.
It is currently possible to convert natural gas to methanol on a large scale. At Iran Petrochemical Research and Technology Company (PRTC), a pilot project for converting methanol to propylene in Mahshahr with an annual capacity of 120,000 tonnes has been implemented successfully.
The PRTC section of Arak is envisaging a project to convert propylene to polypropylene. PRTC experts and managers hope to launch a propylene unit with a capacity of 130,000 tonnes by March 2020. It is currently in the pre-commissioning phase and its commissioning would complete the petrochemical industry value chain.
PRTC has produced propylene with 99.6% purity in its Mahshahr research center. Propylene is the most valued and the most widely used grade in the petrochemical products chain.
China Strategy for Petchem Value Chain
A major difference between Iran and other nations in development policies is that Iran directly goes towards development of enterprises, while in other countries investment is made in bodies filling the needs of these enterprises, requiring all of them to establish such entities. Otherwise, they would lose any support. Turkey is a case in point. In Turkey, everyone has to deal with entities. In the Iraq market too, the associations are decision-makers and companies have no authority. In China, no agreement would be signed without approval from China’s commercial attaché in Iran, but in Iran, entities are forgotten.
Reviewing the experience of successful nations in the development and completion of value chain and interaction between upstream and downstream chains would offer options for Iran’s petrochemical industry in reaching its development objectives.
Iran’s 6th Five-Year Economic Development Plan targets exporting more than $112 billion worth of non-oil commodities and services (gas condensate not inclusive) in 2021. To reach this objective, Iran’s non-oil exports must grow more than 21% a year and the petrochemical industry, particularly downstream products, could play an effective role in the materialization of this objective.
China is the world’s top chemical power. Its petrochemical industry has successfully developed its value chain, defined a centralized state management, regulatory system and policymaking structure. In 2015, China sold about €1,408.8 billion of chemicals and petrochemicals.
China started developing its petrochemical industry from 1950 to 1977 through implementing self-sufficiency and industrial development. It also revised its model of petroleum and petrochemical industry equipment supply, which was controlled by the central government. The long-term objective set by China was not to export crude oil in large quantities; rather it had inclination for expanding its petrochemical industry. Therefore, the petrochemical industry turned into one of the most important industries in China in the 1980s.
China’s open doors policy of late 1970s was a turning point in the country’s economy. In order to finance its equipment, study its oil fields and renovate its petrochemical industry, China received more than $500 million in loan from the World Bank in addition to aids from UN, Japan and other nations.
Attracting foreign investment into the petrochemical sector motivated restructuring of industrial management in this country, leading to the establishment of giant and centralized national companies to compete with foreign rivals.