Abstract: This paper presents a two-stage method for the optimal heat exchanger network synthesis.In the firststage based on the study of the pinch point properties,a network minimizing the utility consumption and thenumber of exchangers is developed.Usually,this network is close to the optimal.In the second stage,anonlinear programming formulation is developed,and its solution with features of minimum capital andannual operating costs provides an improvement on the network obtained in the first stage.An integratedsoftware package for heat exchanger network synthesis has been developed.This package consists of a sp-readsheet,a graphics program,a data base management system,a menu program,an application networksynthesis program,a network simulation program and a data base of standard size exchangers.The appli-cation of this method is illustrated with several examples which include a complex crude oil preheating heatexchanger network.