Economic Assessment of Gas Supply to Petrochemical Industries under Natural Gas Imbalance Conditions through LNG Imports Using a Virtual Pipeline and On-Site Regasification Approach

Abstract

This study aimed to assess the economic feasibility of supplying natural gas to Iranian petrochemical industries during periods of gas imbalance through imported liquefied natural gas (LNG), virtual-pipeline transportation, and on-site regasification. This applied quantitative techno-economic study examined 18 gas-dependent petrochemical complexes located in the principal petrochemical production regions of Iran. A facility-level analytical model was developed to estimate replacement-gas requirements, delivered LNG costs, transportation and handling expenditures, storage and regasification costs, avoided production losses, net economic benefits, benefit-cost ratios, break-even LNG prices, and investment payback periods. The analysis incorporated LNG procurement, international and domestic logistics, cryogenic transportation, storage, regasification, boil-off and handling losses, and petrochemical contribution margins. One-way sensitivity analyses and favorable, base-case, and unfavorable scenarios were used to evaluate economic robustness under changes in LNG price, transportation cost, curtailment duration, infrastructure expenditure, production margins, and other key operational parameters. Under the base-case scenario, the aggregate annual replacement-gas requirement was 975.88 million Sm³, with an estimated LNG supply cost of USD 573.96 million. Avoided petrochemical production losses reached USD 2,133.74 million, producing an annual net economic benefit of USD 1,559.78 million. Facility-level benefit-cost ratios ranged from 2.59 to 4.70, and all 18 complexes remained economically feasible. Break-even LNG purchase prices ranged from USD 38.74 to 67.18/MMBtu. Sensitivity analysis showed that LNG purchase price and petrochemical contribution margin had the strongest effects on economic performance. Even under the unfavorable scenario, the strategy generated a positive net benefit of USD 937.48 million and a benefit-cost ratio of 2.60. Imported LNG delivered through a virtual pipeline and regasified on site can provide an economically viable and flexible response to seasonal gas imbalance in Iran, particularly when supplies are prioritized toward petrochemical complexes with high avoided production losses and favorable logistics.