Russian methanol industry hardly solves its current problems, but it doesn`t belittle brilliant strategic prospects of the industry.
The international conference "Methanol 2011" was held by Creon on Friday, October 30 in Hotel Baltschug Kempinski Moscow. Quest International Trading and Metaprocess were the partners of event. Russian methanol industry is in quite difficult situation, as it can`t realize yet its competitive advantages in raw materials. Volumes of production of this chemical is now significantly below the pre-crisis level, mainly because of the loss of positions on international market by Russian companies. At the same time, there are a lot of new investment ideas and new projects in the industry. The fact that after the forced timeout industry has come to revival again and its members are actively making plans for the future, can not but rejoice industry players. This was mentioned by Creon`s CEO Sandjar Turgunov in his welcome note to the audience.
The review of Russian methanol market, drafted by Creon and IAC "Kortes", was presented by Anastas Gatunok, director of the conference. For the last five years consumption of methanol in Russia has grown insignificantly, the production has decreased because of export reduction in the crisis years. Taking into account the fact that about half of total methanol consumed in Russia is processed by producers themselves, the free market of this product proves to be sufficiently narrow. The export of Russian methanol to Europe isn`t growing as a result of increasing competition with Middle Eastern countries. It`s carried out mainly through the ports of Finland, which have all required infrastructure for methanol transshipment.
About half of all Russian methanol is processed into formaldehyde and then into formaldehyde-containing resins (phenol-formaldehyde resins, melamine-formaldehyde resins, urea-formaldehyde resins). MTBE synthesis takes more modest place in the structure of consumption (about 30 percent), but this area of processing develops more dynamically due to growing demand for high-octane fuels. Russian prices for methanol in fact reproducing the global ones and over the past five years they have increased insignificantly, and while taking into account the inflation, even declined. The sharp fluctuations of prices for recent years haven`t been observed in the market, the situation is stable now.
In the 2000s the methanol industry attracted a lot of investments, in fact it is the only petrochemical not directly associated with the polymer business, in which expansion significant funds were invested. Investment development continues even now. Until the end of 2011 a new unit of methanol with capacity of 450 thousand tons will be launched at the "ShchyokinoAzot", "Akron" will bring the capacity up to 175 thousand tons in the coming years. The projects of the plant "Ammonia" in Mendeleevsk (230 thousand tons) and "Ural Methanol Group" in Nizhny Tagil (600 thousand tons) are in the different stages of the implementation. However, even existing capacities are not fully utilized and to avoid over-production of methanol by 2015, in the opinion of Mr. Gatunok, it is necessary to develop further processing of this chemical inside the country.
Alexander Klimentiev, CEO of Eastern Siberian Gas and Chemical Company told about projects on establishment of methanol production in Eastern Siberia and Russian Far East. Methanol projects are based on resources of regional gas fields, first of all, Kovykta, Chayanda and resources of the Sakhalin shelf. China should become the basic consumer of production, as the synthesis of methanol from natural gas is now legally prohibited to save the resources of the latter in this country. The Korean and Japanese companies are also showing their interest. Totally the applications were collected for the supply of 5 million tons of methanol, including 2 million tons in the framework of the signed contracts. Key issues of all projects are the dependence on single customer, difficult climate conditions and poorly developed transport infrastructure. It is planned by the Eastern gas program to construct the GPC in Yakutia (two complexes), the Krasnoyarsk region, Irkutsk region and Primorsk region. The company, which was represented by the reporter, intends to use Japanese technology for production of 1.34 million tons of methanol in Yakutia, as well as a variety of motor fuels from gas feedstock. The plant is planned to be located in 20 km from Yakutsk. Also Gazprom together with the Japanese company Mitsui plans to create gas and chemical complex on the basis of the LNG plant in Nakhodka, where ammonia, methanol, helium, and other chemicals will be produced. The key issue is the price for gas, as the thesis about the prices of "equal profit" for gas to the Russian Far East leads to its value in minus 60 dollars for 1,000 cubic meters, if we compare prices to the United States. Now gas is sold to consumers for 70 USD. At the same time GTL technology is not established well even in Japan when it hasn`t left the stage of early production. Transport tariff for transportation of methanol from Yakutsk to Nakhodka is 78 dollars, however, it is unclear what it will be in the moment of production start. Methanol plant construction project with capacity of 450 thousand tons on the basis of the Bratsk field will be implemented jointly with Itera starting in 2012, and then the same implementation will start in Yakutia. The launch of the new plants will take place not earlier than 2015.
The leading scientific officer of RAS Energetics Systems Institute Elina Tyurina told about developments in the sphere of methanol and electricity combined manufacture. The traditional technologies of methanol production are not notable for their high efficiency. The possibility of syngas and other semiproducts usage is in the focus of researches as well as extraction of inert helium from their combustion products. And the costs of such extraction will make up 3 dollars per cubic meter. Approximate capacity of such plants has to make up about 1500 tons of methanol and 300 MW of electrical capacity. Estimated volume of investments is USD 934 mln. Now these developments are in the stage of design and mathematical modeling of the process. The participants of the conference were interested by Mrs. Tyurina`s report, but the most of the questions concerned perspectives of its practical implementation, particularly, ensuring of simultaneous stable production of both methanol and electricity.
Andrei Zolotarev, head of marketing and investment department of Sayanskkhimplast introduced with company`s plans of establishing gas and chemical complex in Sayansk to the audience. According to his words, production of PVC, which needs ethylene and ethane, is the priority of the company. Methanol could become the new product of the company, which could help to solve the problem of natural gas balance. Approximate capacity of the plant, which could be created in framework of this project, is over 1 mln tons. China`s going to be the main sales area. At the same time Mr. Zolotarev mentioned, that coal chemistry is actively developing in the Celestial Empire, and more than two tens plants producing olefins from coal, "coal" methanol is also rather cheap. A competitive positions of Russian products totally depends on natural gas price, which is estimated at 70 dollars for 1000 cubic meters.
CEO of Metaprocess Group Kirill Lyats told about untraditional derivatives of methanol. Mr. Lyats told about the company`s experience in production of methanol with small-scale plants, two of them are working now with capacity of 12 and 40 tons, one more is prepared for launch in NovaTEK. Methanol is used by the gas company for its own needs. Now Metaprocess together with one of the largest methanol producers in Russia develops the project of creation of manufacture of untraditional products from gas. The general scheme of production implies processing of rich gas into mixture of aromatic hydrocarbons (benzene, toluene, xylene), which could be further processed into PET and other products. The technology is proven at laboratory level, and is being realized in Nyagan, together with Chinese partners. Investments in large-scale project will make up 260-300 million euros, the estimated payback period is only four years. The technical director of the department of foreign and special construction of the "Stroytransgaz" Valery Ovsiannikov told about the status of the gas processing in Russia and prospects for the creation of gas processing and petrochemical facilities in the Irkutsk region. According to him, in a scenario of full development of gas processing and chemicals manufacture in Irkutsk region, creation of a complex of production facilities with the annual revenue of 1.5-2 billion dollars is possible. 5 billion cubic meters of gas and 362 thousand tons of gas condensate from the fields in the region can serve as raw materials for it. Stroytransgaz has experience of designing "turn-key" gas processing plant in Syria with a capacity of 2.5 bln cubic meters, however there were a political decision and great efforts of the government behind this project, which are absent in Russia yet.
Chief specialist of Vostokneftezavodmontazh Nikolai Bychkov told about construction of new producing facilities for methanol on the base of ShchyokinoAzot with capacity of 450 thousands tons per year. The plant, which was built together with Japanese Mitsubishi will be launched by the end of the year, the grand opening is scheduled for October 20. Alexandra Karyagina, regional manager of Haldor Topsoe, which technologies were used for construction Shchyokino plant, told about company`s other projects in Russia and worldwide. Haldor Topsoe built its first plant in 1969 in USA, since 2003 the company works on building of high-tonnage ammonia and methanol units. Now the company occupies 30% of global market of methanol plants. Mrs. Karyagina reminded the audience the technology of methanol production, in which 60% of the costs are associated with the output of syngas. The company offers both single-stage and double-stage reforming plants. Among the embodied and realizable projects of the company are plants in Iran (3030 and 5000 tons per day), Norway (2400 tons per day), Nigeria (10000 tons per day), and also the project of Ural Methanol Group in Russia (1800 tons per day), in which the single-stage reforming is used. According to Mrs. Koryagina estimates, minimal efficiency of modern aggregates is 1500-200 tons per day, but mega-units with much larger capacity are being designed. Autothermal reforming instead of tube furnaces of the reactor is used for them. The technology of hybrid production of ammonia and methanol from syngas is also exists, it allows to receive product which is in demand on the market at any point in time and make the production more flexible. Plants of this type have already been launched in Malaysia. In Russia, project of this kind is implemented in Tatarstan (Ammonium in Mendeleevsk), where in a hybrid mode of operation, 1382 tonnes of ammonia and 668 tonnes of methanol per day could be achieved.
The independent expert Valery Sharykin told about global and Russian market of methanol, formaldehyde and its derivatives. Price for methanol in the world almost replicate the dynamics of oil prices, as oil prices recur prices for natural gas, which is raw material for production of methanol. And now methanol is relatively cheap in compare to oil. In 2011 the whole range of Russian methanol producers operated erratically, mainly because of difficulties with the sale of products and the maintenance of high utilization of large units. However, another factor limiting production of methanol is the need to maintain acceptable prices to the producer in the domestic market. While in the world contract prices for methanol are above the spot ones for a good long time. The most notable examples of it could be found in Europe, while in China there is a shortage of methanol, and prices in the southern and eastern regions of the country vary significantly (300 and 350 USD respectively).
The world demand on methanol amounts to 45.5 million tons, more than 15 millions of which are processed into formaldehyde. The other volumes go to MTBE, acetic acid, methylmethacrylate, methylamine, organosilic compounds. In China there is a growing demand for fuel derivatives of methanol (DME, etc.). Demand growth is supported by the creation of new large plants with a capacity of 1 million tones and more in Oman, Egypt, Brunei, and Venezuela. Shale gas has revived the production of methanol in Canada.
As for the market of formaldehyde, two-thirds of the demand for the product is formed by the manufacturers of resins, and half of this amount is occupied by resin on the basis of melamine. The reporter noted polyoxymethylene, isocyanates and 1,4- butanediol from the range of other products of formaldehyde processing. Deputy CEO of VNIIDrev Vitaly Strelkov spoke with the report on development of the Russian market of resins on the basis of formaldehyde. The production of woodchip, MDF and other wood-based panels in Russia has not yet reached the pre-crisis level, but it is expected that this will happen in 2011.The boom of investment activity is visible in the industry: 15 projects are already being implemented, while another 20 are declared for implementation. This will help to correct a strange situation, which is observed in Russia for years: woodchip and MDF plates are imported in the country, while plywood is an important export product. As a result of realization of the announced projects, the demand for methanol with the producers of formaldehyde resins based on it will grow up to 570 thousand tons by 2015, and up to 1,000 thousand by 2020.The geographical demand structure is going to change as the share of regions of Siberia and the Far East where resin from China is actively imported, will increase.
Deputy CEO of VNIINP Alexander Danilov made a review of fuel applications of methanol usage. According to his words, the methanol in its pure form is not used as the fuel mainly because of its toxicity; however, the derivatives of methanol are widely used as components of motor fuels. MMA is permissible to enter into gasoline at a concentration of 1%, MTBE and other ether additives in the amount of up to 10%, and DME and other synthetic fuels are able to fully replace traditional petroleum products. The demand for MTBE in Russia is estimated to be around 700 thousand tons, for which production about a quarter of a million tons of methanol is necessary; however, another 400 thousand MTBE is exported. MTBE could become an important export product of the Russian petrochemical industry; however, its production is limited by the deficit of isobutylene and the threat of tightening environmental standards in Europe and other regions of the world. The demand for MMA is stable, but on the Russian market there is a wide presence of Chinese manufacturers of this additive, the rumors about the toxicity of which, in the opinion of Mr. Danilov, are exaggerated heavily. As for DME, in Russia, in contrast to China for example, there is no state program of support of the car engines production, which could effectively work on this fuel, however, the Russian companies can successfully export the product.
As Fares Kilzie, the head of Creon considers, methanol will always remain needed product on the market. Moreover, now there are a lot of technologies opening new market niches for it, either in the Middle East or in China the projects of deep processing of methanol being actively developed. But in addition to deeper processing of methanol in Russia, as it had been discussed for many years, the creation of new capacities in the port areas becomes increasingly important. Port plants allow not only simplifying and reducing the cost of transportation of methanol, but also make enterprises more flexible in choosing clients, open access to the international "methanol club of exporters". In Russia, fortunately, attitude to the methanol as an easy way to the export monetization of cheap natural gas has already gone into the past, it is perceived as an independent product which needs the promotion and development. There are no port methanol plants in the country yet, but there is a lot of interesting investment projects and that`s why Mr. Kilzie is sure that Russia will continue to occupy 10-15% of the global methanol market.