Malaysia's PETRONAS on track to restart methanol plant in July

30 June 2011 10:10  [Source: ICIS news]

SINGAPORE (ICIS)--Malaysia’s state-owned oil giant PETRONAS intends to restart its 1.7m tonne/year No 2 methanol plant at Labuan in Sabah this weekend, sources close to the company said on Thursday.

The sources added that the Japan earthquake had caused sea plates to move up by about 24m and had caused stress to pipelines as far away as Labuan. The pipelines transport feedstock natural gas to the plant.

“They told us the plant may be able to run at a maximum operating rate of 40%,” a source close to the company said.

Another source said that the company had asked fellow producers to supply them as much as 50,000 tonnes in May and June, and another 15,000 tonnes in July in order to cover their contractual obligations.

A producer said it was not technically feasible for a plant to operate at below 40%, while another producer that ICIS contacted said this would not be economically viable.

Market participants in South Korea said that PETRONAS will not be supplying contract cargoes for the month of July.

A distributer based in South Korea said PETRONAS is thinking about building new pipelines, but this is not expected to be completed before the end of the year.

A number of market participants were not optimistic on the resumption of supply from PETRONAS before the end of the year.

The company could not be reached for comment.

Plant operations were halted in the second week of June as supply of feedstock natural gas was disrupted because of maintenance at some gas fields in Sabah, a source from the company’s marketing arm, PETRONAS Chemicals Marketing (PCM) has said.

PCM has also said that it deferred its Korean and Taiwan contracts and reduced its obligations to southeast Asia to the minimal contractual quantities, the company source said last week.

Meanwhile, the company’s 660,000 tonne/year No 1 methanol plant at the same site in Labuan, is running at full capacity, a source from PCM said last week.

The shutdown of the PETRONAS megaplant has significantly reduced spot methanol supply in northeast and southeast Asia as it came amid an outage at Brunei Methanol’s 850,000 tonne/year plant, buyers and sellers said.

A trader said he was willing to pay $380/tonne (€262/tonne) CFR (cost & freight) southeast Asia for July or August cargoes.

Methanol is used to make formaldehyde, methyl tertiary butyl ether (MTBE), methylamines, methyl methacrylate (MMA) and acetic acid.

PCM, previously known as MITCO, is the marketing, trading and procurement arm of PETRONAS, the national petroleum corporation of Malaysia.

Other regional methanol producers include Indonesia’s Kaltim and Brunei Methanol Company.

($1 = €0.69)

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By: Heng Hui
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