The Gas Feedstock Advantage For Iran.

The natural gas pricing policy varies in different parts of the world. In the USA and Canada, it is a function of supply and demand and in Europe it is tied to crude oil prices.

In the Middle East and the Persian Gulf the natural gas is priced at a competitive rate. Since ethane is not traded, on a large scale, there is no established ethane price.

On the contrary, the price of naphtha is closely linked to crude oil prices. The reports show that naphtha's price is about 1.2 time the price of crude oil and the ethylene price is also 2.5 - 3 times that of naphtha.

You can see the effect of rising ethane price in the US and its effect on ethylene cash cost as well as the effect of rising naphtha prices in the US, Western Europe and Asia.

The low cash cost of ethylene production from ethane in the Middle East and its stability over a given period of time, shows the competitiveness of the Middle East compared to other regions.

Recent process improvements in methane reforming technologies, such as developments in improved Fisher-Tropsch processes for conversion of gas to liquids (GTL), production of olefins from methanol (MTO and MTP), fuel cell and DME are some of the more important areas on which NPC is planning to undergo feasibility studies.

Gas-To-Liquids (GTL)

Emerging technologies in GTL (fuels and chemicals) may play a significant role in monetizing natural gas resources. Gas derived liquids are free from sulfur, aromatics and metals and could assist refineries in meeting the new guidelines for cleaner fuels and environmental standards.

The cetane number as a measure of auto ignition properties for gasoil from the GTL process ranges from 45-50, which can easily meet current and future requirements of 40-55.

NPC now is studying a 70,000-b/d middle distillate (GTL) project. The study is expected to be completed in the middle of 2002. If the results of this feasibility study are positive, then the plant could be put into commercial operation by the end of 2005.

MTO

Conversion of natural gas into short chain light olefins such as ethylene and propylene via methanol is a potential means to adding value to methane.

In recent years there have been several developments in MTO technologies.

One of the potential benefits of the MTO process is the ability to separate the olefin production, location from the natural gas location, by building the MTO units in the most attractive locations.

The MTO process will be attractive because it does not depend on the crude oil price and it can provide ethylene at a competitive price, especially for the regions that have a major market for ethylene and its derivatives.

The ratio of methanol to ethylene by the MTO process is estimated to be around 4.6 and this is an attractive market for methanol.

MTP

The availability of low-cost methanol along with the rise in propylene demand provides the incentive to do research in this field.

Upon investigating different process alternatives, the route from methanol, to propylene has a very exciting potential. The global propylene consumption in the year 2000 was 53.5 million tons, and is expected to grow by around 5% annually.

Approximately 98% of the world propylene production is obtained as a by-product from steam crackers and FCC units. Today, producers are looking for new sources of high-quality propylene to cover this rising demand.

A new MTP process will be an attractive alternative, because it does not depend on the supply or the price of crude oil. The grid can provide propylene at a competitive price in any location.

The ratio of methanol to propylene by the MTP process is estimated to be around 3.3 and this is another market attraction for methanol.

Fuel cell

The fuel cell is a form of engine that converts the chemical energy of a reaction directly into electrical energy.

The invention of the fuel cell dates back to 1839, but had a slow growth rate, because other technologies have dominated the market place.

In recent years, however, the exceptional environmental performance, outstanding efficiencies, and escalating petroleum fuel costs have caused renewed interest in the fuel cell, aided by advances in engineering and material science.

The fuel cells of today provide a real and serious alternative for a cleaner way of generating and handling power,

Since electrical energy in a fuel cell is generated without combustion, fuel cells are extremely attractive as they generate very little pollution and have high-energy conversion efficiencies.

In a fuel cell, methanol acts as a source of hydrogen.

Practically every major automobile producer in the world has announced some type of research program to develop the fuel cell vehicle.

The leader in this regard is Daimler-Chrysler, together with Ballard power systems of Canada who have formulated serious plans to "kick off" the commercialization of the fuel cell vehicle by around the year 2OO4.

Development of the fuel cell in the future will be a good potential market for methanol, especially for the Middle East region, which has relative advantages.

DME

As the regulation for exhaust gases from diesel vehicles will be further tightened in the future, vehicle manufacturers are conducting various researches concerning engine modifications, development of catalytic converters and the use of alternative clean fuels such as dimethyl ether (DME).

DME as an alternative fuel has attracted interest due to its similarity to LPG and low exhaust emission. A number of research institutes have engaged their efforts on research and development of DME diesel engine.

Findings from diesel engine powered by DME indicate that it has better self-ignition characteristics. In addition to oxygen, contained in the molecule, the absence of direct C-C bond in DME is responsible for better spray combustion resulting in low soot emission.

Due to similar physical characteristics to that of LPG, DME has been considered as a suitable source of energy for industrial, commercial and residential purposes, bearing in mind that current LPG infrastructure and distribution network can be used.

As mentioned earlier, Iran holds approximately 16% of the world's natural gas reserves. We can utilize this opportunity to produce various petrochemicals.

As Iran's gas and petrochemical installations are located around the northern coast of Persian Gulf, it gives us the great advantage of access to international waters and hence assuring our customers of long-term supply.

NPC is prepared and willing to implement projects with interested partners on a J.V. basis.

The APS Conference: Mr. Payvandi's presentation was made during the APS Conference's 8th Session which was on petrochemicals. This Session was chaired by the President and CEO of NPC, H.E. Mr. Mohammad Reza Nematzadeh, who formerly served as Minister of Industry. The Moderator was Pierre Shammas, President of APS Energy Group. The other speakers at this session were Larry Wheeler, a Houston-based consultant and until mid-1999 President of Shell Chemicals Arabia; Aman Amanpour, the current President of Shell Chemicals Arabia; and Patrick Barr, a former BP executive who is now head of Oil, Gas and Petrochemicals at ANZ Investment Bank.

ANZ Investment Bank was one of the sponsors of the APS Conference and Exhibition, held in Tehran on Feb. 16-18, 2002. The 16th Annual APS Conference & Exhibition, Middle East Energy Strategy To The Year 2015, will be held in Tehran on Sept. 22-24, 2002. For details please apply to APS Conferences, E-mail: [e-mail] - Website: www.aps-energygroup.com