Iran is close to completing the world’s largest methanol plant. The Kaveh mega methanol project, being implemented in the Persian Gulf city of Bandar Dayyer, is expected to produce two million tons of methanol per annum or 7,000 tons per day, once completed.
According to the deputy head of Iran’s National Petrochemical Company (NPC) Mohammad Hassan Peyvandi, the plant is 70 per cent complete and is expected to start production in 2016, which is four years behind the initial schedule.
The new plant is an integral part of Iran’s plan to raise its methanol production capacity to 25 million tons per year in the next five years. This would help establish the country as the biggest supplier of the product which, many believe, can displace American shale gas as a fuel and feedstock for petrochemical production.
Methanol is a chemical with the formula CH3OH (often abbreviated MeOH) which is widely touted as the alternative to both diesel and LNG. While traditionally 40 per cent of of methanol has been used as feedstock to create products as diverse as plastics, plywood, paints, explosives, and permanent press textiles, it has also been successfully used as alternative fuel in ships, to power light aircraft and racing cars.
The methanol-rich country already produces 60 million tons of petrochemicals, which is expected to rise to 180 million tons next year as a number of projects are coming on stream.
Methanol is cheaper and more abundant than diesel and much easier to carry than LNG since, unlike liquefied natural gas which has to be super-cooled 162 degrees Celsius below zero for transportation, methanol can be stored in ordinary tanks.
Iran hopes that its cheaper petrochemical products will challenge U.S. shale gas for domination of the European market, while its access to the Persian Gulf and its proximity to Indian and Chinese markets could make the country an ideal source of energy.
“The US needs to create transportation capacities and establish petrochemical units in Europe in order to export its shale gas products. It would be much cheaper for the European countries to import from Iran instead of the United States,” Peyvandi told Iranian media.
Many are concerned, however, that these ambitious projects, able to earn Iran as much as $70 billion per year once the projects start production, might get derailed due to insufficient funding. On Tuesday, parliament agreed to withdraw nearly $5 billion from the National Development Fund of Iran – the country’s safekeeping for rainy days – to finance its oil and gas projects.
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