Methanex pins hopes on new Chile gas capacity

24 January 2008 19:15  [Source: ICIS news]

HOUSTON (ICIS news)--Methanex expects a modest 10% increase in domestic natural gas deliveries to its Chile methanol complex in 2008 and additional domestic supplies will allow the site to resume full operations as early as 2010-2011, a company official said on Thursday.

Methanex’s methanol complex in southern Chile has been severely hampered by the cut-off of natural gas from Argentina.

“We expect more than $600m [€408m] to be spent in the next three years exploring and developing natural gas in Chile,” said Methanex chief executive Bruce Aitken during a conference call with analysts. “I expect Chile [methanol] plants could be operating at full capacity over the next few years with gas from Chile.”

Methanex has said its 3.8m tonne/year methanol complex in southern Chile relied on Argentine gas imports for about 60% of its feedstock requirements.

The Chile site has not received any imports since June, Aitken said, even though south-to-north pipeline capacity in Argentina is full and excess gas production in the south has been shut in or is being re-injected.

Fourth-quarter production was 288,000 tonnes at the site, up from 233,000 tonnes in the third quarter but still only 30% of total capacity, according to Methanex’s fourth-quarter report.

“We’ve been left in a very poor position by the actions of the Argentinian government and by gas suppliers,” Aitken said. “That said, we are putting most of our efforts now into Chile - that’s where we see our future.”

Assuming that Argentine gas supplies continued to be cut off, Aitken said 1.2m-1.5m tonnes was a realistic expectation of 2008 production at the Chile site.

He cautioned that seasonally higher domestic gas demand would deplete Methanex’s allocation during the winter in southern Chile.

($1.00 = €0.68)

By: David Barry
+1 713 525 2653

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