Relevant topics

2022 May 27

Methanol and ammonia logistics

Methanol and ammonia unit. Image source: Shchekinoazot

RF Government has issued a Decree on creation of a special economic zone (SEZ) of industrial and production type in Ust-Luga. It is to host a gas chemical cluster with a direct access to the sea. Numerous gas-to-chemicals projects have been announced in Russia but there is still a lack of terminals dedicated for handling of the products.

A Special Economic Zone of industrial and production type has been officially established in the port of Ust-Luga. Large facilities for liquefaction of natural gas and production of polyethelene will be created within the SEZ. Read more about the project in our article.

In fact, exports of Russian gas will be limited amid the sanctions. In this situation, it is reasonable to use the volumes released for creation of products with added value, the ones consistently demanded in the global markets: carbamide, ammoniam methanol, hydrocarbon. Therefore, gas processing is a promising sector of the industry which offers good products with high added value such as carbamide, polymers. etc.

Quite a lot projects of that kind have been announced in Russia. As Artyom Lebedskoy-Tambiev, expert of Vygon Consulting, said at the 5th Anniversary Congress and Exhibition “Syngas Nitrogen Russia and CIS”, about 20 gas and chemical facilities with various levels of processing are planned for creation in Russia. In case of their implementation, ammonia production is to increase by about one third by 2030, to 28.5 million tonnes per year, methanol – three times to about 16.8 million tonnes per year. Besides, carbamide supplies are expected to increase driven by ammonia production growth. Expansion of the existing ammonia production facilities at TOAZ and KuibyshevAzot will add 1.3 million tonnes of carbamide per year.

Methanol terminal, port of Hamina-Kotka. Image source: Shchekinoazot

According to Analytical Center for Fuel and Energy, Russian Energy Agency, RF Ministry of Energy, methanol exports from Russia are expected to surge six-fold by 2030 making 12 million tonnes per year.

By 2030, Russia is expected to implement six large-scale projects on production of methanol: NFP JSC (Primorsky Territory, 1.8 million tonnes per year by 2025), ESN Group (Amur Region, 2.2 million tonnes per year by 2028), AEON (Volgograd Region, 1.5 million tonnes per year by 2025), two projects in the Baltic region (1.8 million tonnes per year each by 2027), Ammony-2 (Tatarstan, 500,000 tonnes per year by 2028). Their total capacity will thus make 9.6 million tonnes per year.

According to Artyom Lebedskoy-Tambiev, infrastructure for handling of methanol is poorly developed in Russia but oil product terminals can be converted for that purpose. Only small volumes of methanol are handled at the ports of Kavkas and Temryuk. The bulk of its volumes used to be exported via the Finnish port of Hamina-Kotka.

Russian ammonia also used to be handled in foreign ports: Ventspils (Latvia), Sillamae (Estonia), Antwerp (the Netherlands), Yuzhny (Ukraine).

For obvious reasons, logistics involving European ports is currently in jeopardy with logistics via Ukrainian ports being impossible, hence the need for replacement.

According to Olga Gopkalo, Senior Specialist, Morstroytechnology, who spoke at the Congress, seaports handle 60% of export methanol with 40% of it exported by land routes.

Among the solutions to resolve the problem of insufficient domestic terminals for gas chemicals products could be conversion of LPG terminals but there few of them in Russia as well (Ust-Luga, Taman and Temryuk).

The facilities for handling carbamide in bulk are also insufficient. Over a half of it used to be handled in foreign ports (Sillamae, Riga, Hamina-Kotka).

Besides, Russia has no dry bulk terminals for ammonia nitrate. It used to be exported via the neighboring states’ ports such as Tallinn, Riga and Sillamae. Great Port of Saint-Petersburg accounted for 60% of ammonia nitrate exports – it handles packaged products.

Olga Gopkalo believes that creation of clusters near ports similar to that being created in Ust-Luga could be a solution.

Independent expert Sofya Katkova said, in her turn, that it is virtually impossible to build the required port infrastructure within a short period of time. Therefore, containerization is the only solution for the near future, she believes.

However, containerization of methanol for its transportation in tank containers is associated with certain challenges: although it is possible and tank containers are available, such a logistics can proved to be too expensive taking into account the cost of product. Nevertheless, something is better than nothing.

So, just like in many segments, the key challenges of gas chemical industry development are logistics and lack of dedicated terminals which should be built promptly now.

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