Hossein Manafzadeh, Director of Engineering and Projects at Kharg Petrochemical has attended the company’s general assembly for the fiscal year 2024-2025. He referred to the complex’s synthetic ethanol and acetic acid development plans and said after the completion of some of the infrastructure for the methanol 2 project in 2022, it became clear that Kharg NGL project could not come into service in the near future and the methanol 2 project would not be implemented due to the lack of feedstock. Therefore, the company made a decision regarding the methanol value chain, that is, development based on existing products. So, the company conducted a series of studies on the economics of methanol value chain designs, and the synthetic ethanol and acetic acid design was determined to be more economical.
Manafzadeh added that in this regard, the company has negotiated with Chinese licensed companies, including Dalian Company, which is the licensor of Zagros Petrochemical Ethanol Project, and in parallel, another company announced its presence. The Chinese licensor announced that Kharg Petrochemical can produce synthetic ethanol through the intermediate product of acetic acid. Therefore, the second case was more attractive, because in the commercial conditions of the coming years, if the ethanol market is not suitable, the company can sell acetic acid.
That’s why the company chose this plan, and now negotiations are underway with the Chinese licensor company based on the production of synthetic ethanol through the intermediate product acetic acid, and they are almost in the final stages.
Regarding the financing and return on investment rate of the synthetic ethanol project, the Director of Engineering and Petrochemical Projects of Kharg said the implementation of the synthetic ethanol project requires an investment of about 292 million euros solely for the process part of the project, excluding ancillary services that are spent on the infrastructure of the complex. The internal rate of return for this project is estimated at about 24 percent, and the implementation period of the project is expected to be about 4 years from the date of the execution of the license agreement. In financing the synthetic ethanol project, the company has held negotiations with Bank Mellat and initial approvals have been obtained. Also, another part of the financing is expected through the National Development Fund and we are preparing a series of documents for submission, and it will most likely be funded.
Regarding the repair of Abuzar platform gas pipeline and its impact on the company’s income and profitability in the current and next fiscal year, Manafzadeh said that the Abuzar pipeline, which comes from Abuzar platform to Kharg Island, is built, maintained and repaired by the National Iranian Oil Company (NIOC), which had problems in 2017 and the feed gas decreased by 40 percent. The company’s management at that time made a good decision and implemented a project from the Foruzan platform and compensated for the gas shortage from the Foruzan platform, but it is lighter in terms of quality than the gas from Abuzar platform. Therefore, NIOC is currently carrying out a new pipeline project from Abuzar platform to Kharg Island, which will be operational in six months and the conditions before 2017 will be restored in the receipt of rich gas from this platform by Kharg Petrochemical, and it will affect about 40 percent of the company’s LPG production.
