Russian methanol plans might add to overcapacity

Jan 21, 1997 01:00 AM

Russian petrochemical activity is set to increase significantly with European industry sources saying Tobolsk Petrochemical has now given the go ahead to plans to build an 825,000 ton per year methanol plant in Siberia. According to sources contracts have been signed with Deutsche Babcock and Kvaerner Process Engineering, for the plant, to be completed in late 1999. Deutsche Babcock will be responsible for construction services and Kvaerner for carrying out the engineering work. The plant will use Davy and Ici Lpm methanol technologies. Output from the plant is expected to a be consumed domestically and the financing will come from a barter arrangement for hydrocarbon products, primarily LPG.
Other plans by Gazprom, and Germany's Ferrostal for a methanol plant in Arkhangelsk are less well advanced, with project financing understood to be still being sought. According to Ferrostal, discussions are underway with various financial institutions and are expected to be concluded later this year. The capacity of the plant has been confirmed at 900,000 tons per year and basic engineering has been completed by German Lurgi, which is also to build the plant. Natural gas feedstock will be supplied from the Barents Sea and the Komy republic and all the methanol will be exported. However, industry sources say cold weather in the region could make exports difficult, although the port has now laid on equipment to keep it free from ice.
These plants will be coming onstream at a time when global methanol markets have been through a period of over-capacity. Plants are planned in Trinidad, Chile, Qatar and Saudi Arabia and analysts are predicting that global utilisation rates will plunge below 80 % during the 1998-2001 period. In Europe, the situation will not be helped by the new 830,000 ton per year methanol plant due to come onstream in Norway later this year, and plans by UK chemicals to build an integrated methanol/ammonia facility in Scotland, or north-east England. This plant is scheduled to have an 875,000 ton per year production capacity.

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