Propylene Shortage Hurting Petrochem Sector Growth

EghtesadOnline: Completing the value-added petrochemical production chain in petrochemical sector can help cut import of strategic commodities like propylene and also develop the key downstream sector, managing director of the state-owned National Petrochemical Company said.

News ID: ۷۸۶۲۳۶

10 March 2021

“NPC imports close to $1.5 billion worth of petrochemicals a year, of which $600 million plus is propylene for which there is a chronic shortage in the market,” the Oil Ministry news portal quoted Behzad Mohammadi as saying.

There are 55 petrochemical companies in Iran producing 60 million tons a year. But propylene output is as low as one million tons because an efficient value-added chain is lacking, Mohammadi said.

"Propylene--the second most important starting product in the petrochemical industry after ethylene-- is an important commodity. It can be transformed into value added goods like polypropylene and create jobs in the downstream sector."

The final phase of a petrochemical unit is downstream where natural gas and oil is transformed into marketable petroleum products. Overall, the downstream process has multiple parts, including distributing and selling the goods.

The primary material for propylene comes from cracking naphtha and other liquids such as gas oil and condensates. However, propane can also be used to produce propylene.

Iran produces a large variety of petrochemicals (350 types), for which there is high international demand, but for propylene it is an importer.

“Due to the shortage of propylene downstream and complementary industries have been unable to function as expected."

Most chemical industries depend on propylene rather than being ethylene-based.

The NPC chief said, “studies show we are facing an annual shortage of propylene (250,000 tons) and if action is not taken the deficit will grow to 800,000 tons in five years”.

Development Plan

To overcome the major deficiency, a development plan has been drawn up for raising annual propylene production to three million tons. The plan is being implemented in three regions in the south, west and north of the country.

The first region is Asalouyeh in southern Bushehr Province, which is suitable due to methanol surplus, he said. The second is Eslamabad-e-Gharb County in western Kermanshah Province where construction of a petrochemical plant has started. It will include a methanol-to-polypropylene unit.

Construction is underway to annually produce 120,000 tons of polypropylene. “The third region is Amirabad District of Nour County in northern Mazandaran Province,” Mohammadi said, adding that infrastructure in the region is in place for producing propylene.

Already a major item in the global energy market, the role and significance of petrochemicals continues to grow. Demand for plastics – the most familiar group of petrochemical products – has outpaced almost all other bulk materials (steel, aluminum or cement), and has nearly doubled since 2000.

Petrochemicals are rapidly becoming the largest driver of global oil demand, he recalled, adding that the growth in demand means petrochemicals would account for over a third of the growth in oil demand to 2030, and nearly half in 2040.