Germans clinch Iran’s first methanol sales deal

Iran has signed its first contract for sales of methanol produced at a petrochemical plant which will come on stream soon, the facility’s managing director says.

The pre-sale agreement between Marjan Petrochemical Company and a major German firm came on the eve of the operation of the facility in Iran’s hydrocarbon hub of Asaluyeh, its CEO Hassan Beigi was quoted as saying Saturday.

“Marjan is the first petrochemical company to have sealed a contract for sales of products with European companies,” he said, without naming the German company.

The plant will operate with a capacity to produce 1.65 million tonnes of methanol per year, with the feedstock coming from South Pars gas refineries.

Beside Marjan, two other methanol projects - the first phase of Bushehr Petrochemical Co. and Kaveh Petrochemical Co. as the largest methanol project in Iran and the Middle East - will come online this year, doubling the country’s methanol production capacity to over 10 million tonnes.

Germany’s BASF – the world’s largest chemical producer – has been cited by Iranian officials as planning to make an investment of $4 billion in Iran’s petrochemical industry. Munich gas manufacturer Linde is also reportedly interested in investment worth billions of dollars in the Iranian petrochemical industry.

Iran wants to use its huge reserves of raw materials to establish itself as the largest supplier of basic chemicals in the Persian Gulf. Its petrochemicals industry needs $60 billion in foreign investment to more than double chemicals production capacity over the next decade.

"We will continue to expand our petrochemical capacity in the next decade from 60 million to 160 million tonnes per year," Marzieh Shahdaei, executive director of the National Petrochemical Company of Iran (NPC), has said.

According to Shahdaei, Linde and Japan’s Mitsui Chemicals planned $4 billion of investment in Iranian petrochemical projects.

Iran hopes to raise its methanol production capacity to 25 million tonnes per year and establish itself as the biggest supplier of the product.

Last November, Iran’s Persian Gulf Petrochemical Industries Co. said it was in talks with Asian companies to raise as much as $1.1 billion for an expansion including a methanol project intended to serve China and other Asian customers.

Methanol is used as an antifreeze and in feedstock to produce acetic acid and formaldehyde. It has been tipped as alternative fuel in ships. In 2014, Japan and South Korea won the first orders to build vessels powered by methanol.  

The fuel is already used in light aircraft and racing cars and its global demand is rising. Beside being a green fuel, it is cheaper and more abundant than diesel.

It is also preferable to LNG. Unlike liquefied natural gas which has to be super-cooled 162 degrees Celsius below zero for transportation, methanol can be stored in ordinary tanks.

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