The country’s 900 million dollar loss of methanol petrochemical gas feed

According to the economic correspondent of Fars News Agency, in the past weeks, the issue of petrochemical feed and fuel rates became the first topic of many media after the announcement of new rates.

According to the resolution of the Board of Ministers on May 17 of this year, the feed and fuel rates for petrochemicals are set at 7400 Tomans per cubic meter respectively (picture 1). This resolution was notified to the authorities by Mohammad Mokhbar, the first vice president, on June 29 this year.

Image 1

Until now, the price of petrochemical feed and fuel was determined based on the ceiling of Riyal 5 thousand tomans, because last year the owners of these industries protested the increase in the price of feed according to the pricing formula (picture 2), and proposed to the government to abandon this formula. They were, but now with the reduction of gas prices in global hubs, they want to return to the pricing formula.

Picture 2

* The loss of methanol petrochemicals is due to their insistence on semi-crude sales

The gas rate change has the greatest impact on the profitability of “methanol producer” and “urea producer” petrochemicals, as the biggest gas consumers in this industry. Due to the pricing formula of petrochemical gas and its dependence on two European hubs and price jumps in these two hubs in the past year, domestic petrochemical gas prices have also increased.

However, along with the increase in gas prices, the global price of urea has also increased from $212 to $577 per ton, and the profit margin of urea-producing petrochemicals has been maintained and strengthened, but the global price of methanol has increased from $225 to $277 per ton and remains almost constant, as a result of which methanol producers incur losses. have became.

According to Figure 3, the four urea companies in Kermanshah, Khorasan, Pardis, and finally Shiraz have the highest operating profit, but Zagros Methanol Petrochemical has faced a negative operating profit of 1 percent.

Picture 3

As a result, the only problem caused by the government’s new decree is the loss of methanol producers, which of course is not the fault of the government, but because of the insistence of the investors in this industry to sell semi-raw materials and the lack of development of the value chain.

* The multi-billion dollar loss of the country from giving gas to methanol producers

Granting gas to methanol petrochemicals to convert gas to methanol in these units, while the value of gas delivered to these units is higher than the value of methanol produced by them. According to the report of the Energy Solution Consulting Institute (Figure 4), from an economic point of view, in the last 10 years, the export of each cubic meter of natural gas has generated an average of 28.7 cents and the export of methanol equal to 29.9 cents.

Considering the costs of construction and operation, in the end, the income from the export of 1 cubic meter of methanol was about 6.8 cents “lower” than natural gas. In other words, the income of one cubic meter of gas export is equal to 28.3 cents and the income of one cubic meter of methanol is 21.5 cents.

Picture 4

Also, according to the Mahed policy think tank report (picture 5), the government’s income in 1401 from the sale of feed to methanol companies is equal to 1.2 billion dollars and the export value of methanol is also equal to 2.2 billion dollars in 1401.

Assuming raw gas sales (gas exports) or replacing gas instead of diesel in power plants, the resulting income is calculated as 3 and 6 billion dollars. In fact, methanol petrochemicals create reduced value for the country instead of added value.

Picture 5

In this regard, Mehdi Hashemzadeh, the director of the Mahed policy think tank’s energy group, in an interview with Fars economic reporter, explained the reason for the loss of methanol petrochemicals: More than 95% of the methanol produced in the country is exported, and no one is thinking of developing its value chain, which is also due to rent. is food After the war in Ukraine and the increase in gas prices, petrochemical companies asked the government to abandon the feed pricing formula and set the Riyal ceiling, but now they are again saying that the government should abandon the Riyal price and return to the formula.

He stated: If, instead of giving gas feed to methanol producers, we export the same gas, the foreign currency income of the country will increase by 900 million dollars every year. This income will be multiplied if gas is converted into electricity and electricity is exported, or gas is used in power plants and diesel is exported.

In general, it seems that the owners of methanol petrochemicals should think about developing the value chain and turning methanol into more valuable products instead of threatening the government to close the units and focus on increasing the feed rent. An interesting point is that urea-producing petrochemicals have also joined the campaign to reduce the feed rate despite high profit margins and want to change the government’s decree.

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