The German technology group Lurgi is to build a demonstration plant for converting methanol into propylene, a raw material for plastics production, at Statoil's Tjeldbergodden plant in western Norway.
"The contract will enable us to gain first-hand experience of this technology and help us to develop a new market for methanol," says Sjur Haugen, manager for business development in Statoil's methanol unit.
Statoil produces more than 2,400 tonnes of methanol daily at Tjeldbergodden.
Mr Haugen believes that the test plant, which is planned to come on stream before the summer, will be useful if Statoil decides later to build a large-scale plant.
The demand for propylene is expected to increase by six per cent annually on a global basis.
Today, petroleum is used as feedstock in about 98 per cent of the world's propylene production. Lurgi considers its methanol-based production process to be more profitable and cost-effective than a petroleum-based process.
The Tjeldbergodden plant will put the group in a better position for commercialising the technology.
Statoil has a 50 per cent interest in the Borealis petrochemicals group, and producing propylene from methanol could help to integrate further Statoil's and Borealis' operations.