1. WORLD
PETROCHEMICAL
March2016 MAGAZINE1708109
Iran Inks First
PostSanctions Petchems
Deal: Will It Catalyze
Sector Revival?
I
ran has signed its first petchems
technology deal since the lifting of
international sanctions, renewing access
to the state-of-the art technology crucial to
reviving Iran’s petchems expansion.
Danish process technology firm Haldor
Topsoe this week announced a preliminary
deal to supply licenses, engineering,
proprietary equipment, materials and
catalyst for a methanol plant to be built by
an affiliate of state National Petrochemical
Company (NPC) at a new industrial zone
near the port of Chabahar, on the Gulf of
Oman outside the Strait of Hormuz.
While the deal is the first petrochems
agreement since international sanctions
against Tehran were lifted in January, it will
be dwarfed by anticipated upstream oil and
gas development deals and also in refining,
where Italy’s Saipem has already secured
revamps of the Shiraz and Tabriz plants.
The two biggest requirements for Iran’s
petrochemicals expansion to be put back
on track are increased supplies of gas
both ethane and methane are key
feedstocks, whose availability will be
boosted by new South Pars gas field
phases coming onstream(see p8) – and
foreign investment.
NPC’s output is expected to be boosted
quickly by rising supply from South Pars.
NPC production control director Ali
Bossaqzadeh says NPC output is expected
reach 47mn tons in the current Iranian year
(ending 20 March 2016) and 52mn tons for
201617- up from 44mn tons for 201415-.
Iran’s Oil Minister Bijan Zanganeh this
week projected NPC would earn $18bn on
petchems sales in the current Iranian year up
from$16bnfor201415-.Hesaysthecountry’s
petchemsincomeisexpectedtoreach$22bn
by 201718-.
0
I
ranhassigneditsfirstpetch-
emstechnologydealsince
theliftingofinternational
sanctions,renewingaccess
tothestate-of-thearttechnologycrucial
torevivingIran’spetchemsexpansion.
danishprocesstechnologyfirmhaldor
Topsoethisweekannouncedaprelimi-
narydealtosupplylicenses,engineering,
proprietaryequipment,materialsand
catalystforamethanolplanttobebuiltby
anaffiliateofstatenationalpetrochemi-
calcompany(npc)atanewindustrial
zoneneartheportofchabahar,ontheGulf
ofOmanoutsidetheStraitofhormuz.
whilethedealisthefirstpetrochems
agreementsinceinternationalsanctions
againstTehranwereliftedinJanuary,it
willbedwarfedbyanticipatedupstream
oilandgasdevelopmentdealsandalso
inrefining,whereItaly’sSaipemhas
alreadysecuredrevampsoftheShiraz
andTabrizplants(meeS,29January).
ThetwobiggestrequirementsforIran’s
petrochemicalsexpansiontobeputback
ontrackareincreasedsuppliesofgas–both
ethaneandmethanearekeyfeedstocks,
whoseavailabilitywillbeboostedbynew
Southparsgasfieldphasescomingon-
stream(seep8)–andforeigninvestment.
npc’soutputisexpectedtobeboosted
quicklybyrisingsupplyfromSouthpars.
npcproductioncontroldirectorAli
Bossaqzadehsaysnpcoutputisexpected
reach47mntonsinthecurrentIranianyear
(ending20march2016)and52mntonsfor
2016-17upfrom44mntonsfor2014-15.
Iran’sOilministerBijanZanganeh
thisweekprojectednpcwouldearn
$18bnonpetchemssalesinthecurrent
Iranianyearupfrom$16bnfor2014-15.
hesaysthecountry’spetchemsincome
isexpectedtoreach$22bnby2017-18.
mrZanganehsaysIran’supstreamand
downstreamexpansionplansrequire
atotalinvestmentof$200bn:$130bn
upstreamand$70bnforpetchemsandre-
fining.Iranisassiduouslycourtingforeign
firmsnowthatsanctionshavebeenlifted.
financingwillbestreamlinedfurthernow
thatIrancanagainaccessfinancethrough
theSwiftelectronicbankingsystem.
TECHNOLOGY KEY ç
YetrevivingIranianpetchemswill
notbepossiblewithoutaccesstostate-
of-the-arttechnology,whichismainly
ownedbywesternfirms.Lackofgasand
moneywerethekeyfactorsbehindthe
stallingofmorethan60Iranianpetch-
emsprojectsundersanctions,butmost
werealsoreliantonwesterntechnology.
haldorTopsoesaysitisgoingtoopen
apermanentofficeinTehran.Thiswill
helpthecompanyreviveitspre-sanctions
“greatworkingrelationship”withnpc
anditsmanysubsidiariesandaffiliates.
npc’sstalledprojectsincludenine
whichincorporateTopsoetechnology.
Thesearemainlymethanolplantsat
Assaluyeh,closetotheonshoreprocess-
ingplantsforSouthparsgas.These
plants,onwhichdevelopmenthasalready
begun,willhaveacombinedcapac-
ityof13.7mntons/year(seetable).
ButthelatestTopsoecontractisfor
anewproject,withastart-upcompany
calledBadr-e-Sharghpetrochemical
complex–likelyannpcaffiliatewith
Iranianprivatesectorinvolvement.
Topsoealsohopestoresumeworkon
thestalledprojectsatAssaluyeh.Topsoe
signedtechnologylicensesformorethan
80%ofthe16.7mnt/yofmethanolcapacity
includedinthe67projectsforwhichnpc
hadstarteddevelopmentworkbutwhich
werelaterhaltedbysanctions(meeS,10
October2014).npc’splanforkick-starting
development,giventheavailabilityof
feedstockandoutsideinvestment,isto
prioritizeprojectsthathaveprogressedby
morethan70%tocompletion(according
tonpc’sownreckoning).meeSestimates
thatthesehaveacombined2.7mnt/yof
fertilizer,polyolefins,ethyleneglycol,elas-
tomersandisocyanatescapacity(seetable).
AbbasShari-moqaddam,untilthisweek
npcmanagingdirectoranddeputypetro-
leumminister,saystheseprojectswere
prioritizedbecauseraisingcapitalwould
beeasierthanforotherstalledprojects.his
replacementmarziyehShahdaei,formerly
npcprojectsdirector,becomesIran’sfirst-
everfemaledeputypetroleumminister.
Besidesthepetrochemicalplants,npc
willlooktocompletethreeotherprojects
thathaveprogressedmorethan70%.These
areacentralutilitiesplantinthe damavand
pe
capacitytoprovide1.9Gwofelectricityand
1,900tons/hourofsteam;completionofa
600,000t/ycrackerforthe13thOlefincom-
plex;andphasetwoofthewesternethyl-
enepipeline,takingcapacityto3.5mnt/y.
Otherwesterntechnologylicensors
forstallednpcprojects,whichnowmay
beseekingtorevivetheirworkprograms,
include:Sweden’schematur(isocyanates);
Germany’sUhde(propanedehydrogena-
tion);france’sTechnip(ethanecrackers);
Shell(ethyleneglycol);Uk’smwkel-
loggandthenetherlands’Stamicarbon
(ammonia/urea);Switzerland’scasale
(methanol);Italy’sVersalis(formerly
polimerieuropa,polystyreneandde-
rivatives);Germany’sLurgi(methanol);
Italy’sIGS(pVc);andLyondellBasell
andfrance’sAxens(polyethylenes). ¶
TOPSOE’S PRE-SANCTIONS IRAN PROJECTS*
Plant Final Products ‘000 T/Y
7th methanol methanol 1,650
8th methanol methanol 1,650
9th methanol methanol 1,650
12th methanol methanol 1,650
14th methanol methanol 1,650
15th methanol methanol 1,650
1st ammonia/methanol methanol 990
ammonia 300
2nd ammonia/methanol methanol 990
ammonia 300
14th ammonia/urea urea 1,075
ammonia 125
Total 13,680
IRAN'S PRIORITIzED POST-SANCTIONS PETCHEMS PROJECTS
Plant Location Final Products ‘000 T/Y
7th ammonia/urea marvdasht urea 1,075
ammonia 75
assaluyeh eG assaluyeh monoethylene glycol (meG) 500
Diethylene glycol (DG) 50
lorestan Pe lorestan linear low/high density polyethylene (llDPe/hDPe) 300
mahabad Pe mahabad linear low/high density polyethylene (llDPe/hDPe) 300
Kordestan lDPe Sanandaj low density polyethylene (lDPe) 300
elastomers bandar imam Styrene butadiene rubber (Sbr) 30
Polybutadiene rubber (Pbr) 18
hamedan Pvc hamedan Polyvinyl chloride (Pvc) 45
isocyanates 2 bandar imam methylene Diphenyl Diisocyanate (mDi) 40
Total 2,733
*all at aSSaluyeh. SOurce: NPc, .
Behrooz Mirzaei
B.M@Engineer.com

2. WORLD
PETROCHEMICAL
March 2016MAGAZINE 1708 110
WORLD
PETROCHEMICAL
The feedstock flexibility doesn’t just
stop at LPG. Ineos was due to receive its
first trans-Atlantic shipment of USfracked
ethane at its Rafnes cracker in December,
a spokesman said previously .
The Rafnes cracker has a capacity of
560,000 mt/year. This will be followed by
another shipment at Ineos’ 1.06 million
mt/year cracker in Grangemouth which is
slated to arrive in 2017.
Ineos launched the first ships to bring US
fracked ethane to Europe in order to cut
feedstock costs at the two steam crackers.
But it will also supply ethane from
Grangemouth to Shell Chemicals Europe
and ExxonMobil Chemical for cracking at
their Scottish Fife ethylene plant.
The companies did not disclose the
volume or price of the deal, but it will
start in 2017 and according to analysts,
will transform Ineos into an ethane
distributor.
So far, Ineos, Sabic and Borealis have
committed to bring in US shale gas. But
those deals were signed when naphtha
was trading at a $700/mt premium over
ethane. That premium has now sunk
below $300/mt.
Future deals on US ethane are
questionable. Versalis which announced
last year that an US ethane deal was
imminent, has not followed up on it yet.
LyondellBasell recently ruled out US
ethane for its European crackers.
LPG imports carry logistical benefits
relative to ethane imports and also
require less investments in naphtha
crackers to change flexibility.
Naphtha’s share as a feedstock in
Europe is expected to decline amid the US
oversupply in NGLs. European producers
are not complaining about it. Dow has
said that its margins from LPGs have risen
fivefold since 2010.
European spot cracker margins swelled
to average at $563/mt this year, compared
to last year’s average of $255/mt.
While the main factors were “unprec
edented” outages in Europe amid a fall
in euro against the dollar hampering
imports, advantageous gas cracking was
also seen as a contributor.
LPG‌‌ ‌imports carry
logistical benefits relative
to ethane imports
and also require less
investment
especially bearish which has incentivized
cracker operators to maximize propane
and butane use wherever possible. LPG
prices on a weight basis have generally
been at a 20-30% discount to naphtha
values throughout 2015, and we see this
trend continuing, as the outlook for
crude prices remains bearish, especially
given year-end movements, and the
NGLs market will continue to be dogged
by oversupply, as the US continues to
produce,” he said.
Other analysts have echoed similar
views. In a report released in
December, UK-headquartered bank
HSBC said an oversupplied US propane
market is likely to result in large export
volumes, and is in line with the view
that European producers are likely to
do all they can to maximize their
feedstock flexibility.
In the first nine months of 2015 the US
exported 207.6 million barrels of LPG.
This represents a 50% jump compared
with the first nine months of 2014.
The Rafnes cracker has a capacity of
560,000 mt/year. This will be followed
by another shipment at Ineos’ 1.06
million mt/year cracker in Grangemouth
which is slated to arrive in 2017.
Ineos launched the first ships to bring
US-fracked ethane to Europe in order
to cut feedstock costs at the two
steam crackers. But it will also supply
ethane from Grangemouth to Shell
Chemicals Europe and ExxonMobil
Chemical for cracking at their Scottish
Fife ethylene plant.
The companies did not disclose the
volume or price of the deal, but it will
start in 2017 and according to
analysts, will transform Ineos into an
ethane distributor.
So far, Ineos, Sabic and Borealis have
committed to bring in US shale gas. But
those deals were signed when naphtha
was trading at a $700/mt premium over
ethane. That premium has now sunk
below $300/mt.
Fu
qu
an
eth
fol
rec
Eu
LP
rel
req
cra
Na
Eu
US
pro
Do
LP
Eu
ave
to
Wh
“un
am
ha
cra
co
LPGDISCOUNTS TONAPHTHAINCENTIVISEPETCHEMUSE($/mt)
200
400
600
800
1000
1200
Jan-16Jul-15Jan-15Jul-14Jan-14Jul-13Jan-13
Butane CIF NWE Naphtha CIF NWEPropane CIF NWE
LPG DISCOUNTS TO NAPHTHA INCENTIVISE PETCHEM USE ($/mt)
LPG prices have been especially bearish which has
incentivized cracker operators to maximize propane and
butane use wherever possible