Industrial gas in the world
Industrial gases are a class of gaseous chemical compounds which are produced in large volume and used in different industries including oil and gas, petrochemicals, power, environmental protection, mining, steelmaking, chemicals, metals, medicine, nuclear power, electronics, biotechnology, food, water, pharmaceuticals, fertilizers, and aerospace. A part of these gases like oxygen and nitrogen are found much in air and can be make from air separation. The other parts of them are generated from natural gas, gas output of oil wells or processed in particular units.
The main industrial gases can be classified into two categories as below:
In the above table, Hydrogen has the largest share of production comparing to others. According to EIA’s (Energy Information Administration) forecast, growth in ownership of vehicles per capita in developing countries will lead to growth of hydrogen demand for fuels. On the other side, demand of refinery products has risen and that is because of importance of environmental issues. In other words, countries are trying to reduce the usage of fuels which can harm the nature and instead switch to less harmful fuels. Due to the using of hydrogen to remove sulfur from crude oil in refineries in the countries like China and India, governments allocate a large budget for producing hydrogen.
Industrial gases are delivered to consumers through pipeline and packaging. Different ways of selling them are usually use of cylinders, containers and trucks. Mainly, these gases can be supplied in cylinders to avoid the need for local gas generation but for large customers such as steelworks or oil refineries, a large gas production plant may be built nearby (typically called an “on-site” facility) to avoid using large numbers of cylinders.
Market value of industrial gases in 2015 was around 47,200 million Dollars and it is expected to grow at a compound annual growth rate(CAGR) of 6.2% during 2016-2022.
Geographic regions where produce industrial gases are: North America, United States of America, Europe, Asia, China, India and Japan. In 2015, Asia- Pacific has the largest market share of industrial gases by 38.9% and it is anticipated to witness CAGR of 6.6% for the 2016-2022 period. In mentioned region, China has the largest market, however, it is expected that India’s market share will experience high CAGR in the near future too. Among the most important reasons of this growth, we can point to increase in:
- The demand of environment-friendly energy carriers
- Disposable income by economic boost along with industrialization which causes to rise vehicles’ ownership
- Refinery products’ demand because of China’s rules of environmental Standards
The Largest active companies in producing industrial gases are Linde, Air Liquide, Air Products and Praxair. They are trying to extend their market share in recent year through connecting with more regions. The table below shows the companies share in 2015:
Industrial gases industry has changed during the recent century. Generally, the main reason of this jump is because of rapid industrialization in developing countries specially in their power plant, healthcare and production sectors. The aforesaid industry has bright worldwide vision in the future because of the following reasons:
- Growth in development plans of industrial gases in food, healthcare and power industries
- Growing concern in environmental protection and clean energy fields
- Growing demand in end-use industries like oil, gas, energy, chemical and petrochemical which use the industrial gases in order to improve their performance
- Growing demand of renewable energy sources which use large volumes of oxygen
- Growing demand of photovoltaic
- Progress in technology for production of industrial gases and large demand in emerging economies
- Infrastructural development in Asia and necessity of industrial gases for metal production
In addition to the industry’s advantages, there are some challenges that this industry is deal with. High capital required for production and purification and also high cost associated with storage and transportation are the main challenges of this sector.
Industrial gas in Iran
According to Gas World Business Intelligence, industrial gases market in Iran reached revenues of 270 million Dollars in 2014, up from around 95 million Dollars in 2005. The main reason of this growth is changing in facilities from traditional to modern form. Germany, France and China were involved in terms of importing technology. Around 100 manufacturers are active in Iran’s market that if they update their facilities, Iran’s industrial gases market will generate over 1 billion Dollars. These facilities are located in different cities in Iran including: Mashhad, Esfahan, Tehran, Kermanshah and Tabriz. Based on the given figure below, the ratio of total industrial gas production in Iran to worldwide production is about 0.45%:
Source: Scope estimates, Eurostat
Due to the potential of growth in Iran’s industrial gases, specifically after JCPOA, top companies in this sector started some researches about this market in Iran and Linde as one of the biggest companies in this field was pioneer in order to enter Iran’s market. Recently, Linde has signed a contract with Delvar Afzar to establish a joint venture company in Iran.
The Linde Group is a German multinational chemical company founded in 1879. It is the world’s largest industrial gas company by market share as well as revenue.
Delvar Afzar Industrial Group Company as a pioneer in the construction of Air Separation Units (ASU) and LNG Units in Iran has started its activity in the field of design, goods supply, manufacturing, execution, installation and operation of these units since 2002. The group owned one of the largest ASU in the private sector in Iran.
Delvar Afzar in two general parts uses the knowledge and experience of the other countries:
- Engineering procurement and construction
- Production of industrial gases
Linde-Delvar Afzar joint venture (JV) was few-first JV establishment in Iran’s energy sector. The most important subjects in the contract are:
- Become the leading supplier of industrial merchant gases and healthcare gases
- Develop new sales for molecules including both liquids and gases
- Develop competency in industrial gas and creating new road maps for sale
- Long-term strategy of creating a culture of merchant businesses
- Bring know-how and develop technology for existing and potential applications
This joint-venture increases the quality, knowledge and safety of the company’s products. As a result of this agreement, LDAIG will become a leading supplier of industrial gases in the Middle Eastern countries in the near future.
At the end, considering the necessity of consumption of clear energies by countries all around the world, the vital role of industrial gas can be highlighted. It should be considered that with various potentials available in this industry in Iran, it can be attractive for foreign investors to enter this market. On the other side, one of the most important way to develop the companies active in this field is through financing via Iran’s Capital Market. Mostly, Iranian companies in this industry need investment in infrastructure and technology. Therefore, Linde and other big companies can provide these requirements to Iranian companies and develop this market in Iran.