News ID: 4278
Date: Tuesday 5 August 2025 - 19:41

Chains that are not yet complete; Behind the scenes of the failure of MTO and MTP projects in Iran

Chains that are not yet complete; Behind the scenes of the failure of MTO and MTP projects in Iran
While value chain development has become a common buzzword in Iranian petrochemical industry literature, many projects, including MTO and MTP, are still stalled at the raw material sales stage. Petrochemical expert Mohsen Ansari considers “the need for large investments” and “feed instability” to be the most important reasons for the failure of these projects. According to him, in the current situation, the “ethylene” and “propylene” chains have the greatest potential for real completion in Iran and more focus needs to be placed on their development.

According to Energy Press, value chain development has become one of the most frequently used slogans in Iran’s petrochemical industry, and many projects are still stalled at the crude sales station; projects such as MTO and MTP, which were supposed to complete the missing links in the production of propylene and olefins from methanol, have stalled for various economic, technical, and political reasons. To more closely analyze these bottlenecks and understand the opportunities and deviations in the value chain development path, we turned to Mohsen Ansari, a petrochemical expert.
Mohsen Ansari, a petrochemical expert, said about the reasons for the failure of MTO and MTP projects in Iran over the past decade: The problem of the lack of progress of these projects is not limited to the last 10 years; rather, it has deeper roots and must be looked at from a more fundamental perspective. However, if we want to address specific reasons in recent years, three key factors have played a fundamental role in stopping or suspending these projects.
Heavy investment and incomplete value chain
According to Ansari, building an MTO or MTP unit with a capacity of 300,000 tons costs between $400 and $500 million. But this is just the beginning; because producing ethylene or propylene from methanol is economically viable when the value chain is also completed downstream, that is, units such as polyethylene or polypropylene are also built. Investment in these downstream units also requires about $300 million, and the total capital required, taking into account the conditions of sanctions and market fluctuations, may reach $1 billion; a figure that exceeds the financial capacity of many current holdings in the petrochemical industry.
Economic challenges and feed instability
Ansari says: In an MTP unit, we need about three units of methanol to produce each unit of propylene. Given the current price of methanol and propylene, this process is not economically viable and is not competitive compared to alternative methods such as steam crackers or direct propylene production. This issue is exacerbated by rising feedstock and gas prices and sharp changes in production costs. On the other hand, the supply of feedstock to methanol units is also unstable and in some periods methanol production may even be disrupted for months, an issue that increases the economic risk of projects based on it.
Expert disagreement on the development path
In addition to the two main factors, Ansari also points to a less mentioned factor: a deep difference of opinion among petrochemical experts and managers. Some see these projects as a necessity to complete the value chain, since a large volume of Iranian methanol is exported exclusively and the export market also faces serious challenges. But others believe that with more suitable resources for olefin production in Iran—such as ethane, naphtha, or even LPG—the move to MTO and MTP units is not justified, especially considering the operational difficulties of these units.
Comparison with China; Why does it work there?
Ansari believes that the main reason for the relative success of this process in China is the type of feedstock. The Chinese use coal to produce syngas and then methanol, which is more economical than Iran’s gas-based model. Meanwhile, in China, there have been reports of technical and economic problems with some MTO/MTP units, and only a few projects are operating sustainably.

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