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By 2035, the production of methanol in Russia may increase by 2.4 times compared to the level of 2022 to 11 million tons, and ammonia by 36% to 23 million tons. This is stated in the review of the Analytical Center (AC) of the Fuel and Energy Complex (TEK), which was reviewed by Vedomosti.

The review notes that in the world, the main increase in demand for gas, which is the raw material for the production of methanol and ammonia, until 2035 will be concentrated in Russia-friendly China (on average +1.9% per year), India (+6.1%) and the Middle East and Africa (+3%).

Global gas demand, according to the forecasts of the Analytical Center of Fuel and Energy Complex, will increase by an average of 0.9% annually and by 2035 will reach 4.55 trillion cubic meters per year, of which 880 billion cubic meters (i.e. 19%) will be supplied in the form of liquefied natural gas. At the same time, the demand for gas for ammonia production will grow at a faster pace – by 1.5% per year and by 2035 it will reach 230 billion cubic meters. The demand for gas for methanol production will also increase at a faster rate of 3.7% per year, reaching 150 billion cubic meters by 2035.

For comparison, the growth in demand for gas for gas thermal power plants will average 1.5% per year, for the needs of the population and utilities – 0.5% annually.

There are currently 10 methanol production plants in Russia and 17 ammonia production plants, the review notes. At least four more enterprises for the production of methanol and three for ammonia are planned to be launched.

Artem Lebedskoy-Tambiev, head of the Directorate for Gas Processing and Transportation at the Fuel and Energy Complex, explained to Vedomosti that Russia plans to build methanol facilities in the west of the country with a capacity of more than 4.5 million tons per year, and in the Far East – by 1.8 million tons. Although, due to the logistical difficulties of sanctions, not all projects in the European part of the country can be implemented, he admits. The total capacity of new ammonia production projects, according to Lebedsky-Tambiev, is about 4.2 million tons.

According to the AC TEK, the growth of methanol production in Russia will begin after 2025, before that it will be at the level of 5 million tons. Ammonia production will grow by 18% by 2025 to 20 million tons by the level of 2022, the review says. But for the successful implementation of gas chemical projects in Russia, infrastructure development is necessary, analysts at the Energy and Energy Center point out.

By 2035, the total demand for methanol in the world will grow by 61% relative to the level of 2022 to 148 million tons, for ammonia – by at least 22% to 230 million tons (and under the green scenario of global economic development – by 76% to 333 million tons).

The largest Russian producers of methanol are Metafrax, Tolyattiazot (part of the Uralchem Group), Shchekinoazot, Tomet, NAC Azot (part of Eurochem) and Gazprom Methanol. The key ammonia–producing holdings are Eurochem, Uralchem, Akron, Phosagro, Kuibyshevazot, Azot (Kemerovo) and Minudobrenia (Rossosh).

Russia is also preparing to launch several new large-scale projects for the production of methanol and ammonia. For example, in 2017, the Yakutsk Fuel and Energy Company announced plans to build a methanol production plant worth about $ 1 billion (the capacity of the first stage is 1.75 million tons per year), and Ruschem Gas company - to create an enterprise for the production of 1.8 million tons of methanol per year on the basis of Korovinsky and Kumzhinsky gas condensate fields in Nenets Autonomous District, where it was previously planned to build the Pechora LNG plant. Novatek, the Northeastern Alliance company and the Energia Foundation also had plans to create plants for the production of ammonia and methanol.

Alexander Kotov, Head of Net Research consulting, calls AC TEC's estimates for the production of methanol and ammonia in Russia realistic. He notes that the country's methanol capacity is 5.6 million tons, although production in 2023 decreased by almost 14% year-on-year to 3.9 million tons. Taking into account the large number of announced projects, the output of 11 million tons, according to him, "does not look fantastic."

Kotov recalls such new projects as the OTECO gas processing complex in the port of Taman (it involves the production of up to 2.5 million tons of ammonia and 5.5 million tons of methanol per year) and the Nakhodka Fertilizer Plant (up to 1.8 million tons of methanol). Almost all domestic majors have plans to expand their ammonia production capacities, he adds.

But Maxim Malkov, head of the practice for providing services to companies in the oil and gas sector of Kept, points out the risks of implementing the forecasts of the Fuel and Energy Complex for methanol. Global demand for this product will grow, but it is not clear how much it will increase by 2035, especially for methanol from Russia (given the expansion of sanctions. – Vedomosti), he explains. Sergey Grishunin, Managing Director of the NRA rating service, agrees with him. He considers the output volume of 7-8 million tons per year by 2035 to be more realistic.

The key markets for methanol and ammonia will be Asian markets, says Grishunin. Kotov adds that China is the largest market for methanol consumption, so projects for the production of this product in eastern Russia are more promising.

All new ammonia and methanol production plants in Russia were built under licenses from companies from unfriendly countries, in particular the Danish Topsoe (formerly Haldor Topsøe), recalls Kotov. After the departure of Western licensors and equipment suppliers, the situation has become more complicated, but it is not a dead end, he believes. Russian GIAP and Novatek have the appropriate technologies, the expert points out. The equipment, he notes, can also be purchased in China and Iran.

According to NefaResearch, methanol prices in China have increased by 5% since the beginning of the year to $380/ton after declining last year. Ammonia in China, according to the NRA, now costs $350-370/ton – 20% less than in January.

Correction, a representative of the Ministry of Industry and Trade told Vedomosti that the volume of methanol production of 11 million tons by 2035 could be achieved through the implementation of "all declared investment projects." He explained that these are projects in Nakhodka (NZMU), Nenets Autonomous District (Ruschem), as well as projects for the production of methanol in Volgograd together with Chinese investors with a capacity of 1.8 million tons per year and in Ust–Luga of the Leningrad Region (Baltic Methanol LLC) - also 1.8 million tons per year.

Source: https://www.vedomosti.ru/business/articles/2024/04/24/1033741-rossiya-mozhet-rezko-narastit-vipusk-metanola-i-ammiaka