The Effect of Natural Gas Shortage and Its Price on the Economy of Petrochemical Plants

Iran is the third producer of natural gas in the world. Due to various reasons, including lack of investment and increased demand, Iran has faced a shortage of natural gas in the cold season. Now the basic question is that if domestic, commercial, and transportation sectors are still the priorities of gas consumers from the governmental points of view, what will be the impact of gas shortage and increasing gas prices on the economy of petrochemical plants?

Natural gas is used as feedstock for several methanol plants or to complete the value chain for producing polyolefins.

The financial internal rate of return (IRR) of methanol and polyolefin plants based on the plant capacity factor (feedstock shortage) and different gas price scenarios is given in the following tables. (It should be noted that there is no discount has been considered for natural gas as a feedstock).

As can be seen, the economy of GTM is more sensitive to the capacity factor (i.e., the annual availability of natural gas as a feedstock) and the gas price in comparison with GTO. Therefore, with the completion of the methanol downstream chain and production of polyolefins such as Polypropylene (PP) and Polyethylene (PE), in addition to producing more added value products and improving the economics internal rate of return of the project (IRR), it will lead to a reduction in the sensitivity of IRR to the natural gas shortage and its price, simultaneously.

#Methanol #Olefins #Polyolefins #Polypropylene (PP) #Polyethylene (PE) #Petrochemical #Natural Gas #Economics