Our client, an energy project developer, was evaluating the development of a circa 1.2 Mtpa e-methanol project in the Middle East. The project aimed to combine captured CO₂ from a local industrial facility with green hydrogen from a major regional hydrogen project, creating low-carbon methanol for use by international shipping companies as a marine fuel.
As the shipping sector looks to reduce emissions, e-methanol has emerged as a potential route to lower-carbon bunkering. However, the commercial viability of projects remains highly dependent on capital costs, feedstock pricing, power costs, carbon intensity, and the premium customers are willing to pay for lower-carbon fuel.
Gas Strategies was retained to assess whether the project could be commercially viable and bankable, and to support the client in understanding the key value drivers, risks, and marketing options.
Testing the economics of a complex e-methanol project
We built a comprehensive techno-economic model to assess the long-term project economics and expected return on investment. The model captured the full project value chain, including methanol plant capex, carbon capture technology, hydrogen pipeline infrastructure, storage requirements, feedstock costs, and power supply options.
Further to this, we developed multiple e-methanol pricing scenarios based on assumed carbon footprint, market positioning, and the potential value of lower-carbon marine fuels.
Alongside the economic assessment, we supported the client’s marketing strategy by identifying priority customer segments and companies to approach for potential offtake discussions, with a focus on international shipping and marine fuel markets.
Supporting disciplined investment decision-making
Our analysis highlighted the key sensitivities that would determine project viability. In particular, the methanol sales price emerged as the decisive factor in whether the project could generate acceptable long-term returns. While certain upside scenarios showed potential – particularly where e-methanol prices were favourable and feedstock costs were low – these relied on assumptions that appeared challenging in the wider market context.
Gas Strategies concluded that the project did not demonstrate sufficient economic viability under base case assumptions. This gave the client a clear, evidence-based view of the commercial hurdles facing the project, the conditions required for it to become viable, and the risks associated with proceeding.
By providing a robust economic assessment and clear view of market requirements, Gas Strategies helped the client make a more informed investment decision and avoid committing capital to a project whose commercial fundamentals did not yet stack up.