UpdateCanada’s Methanex to move Cabo Negro methanol unit to US

18 January 2012 08:13  [Source: ICIS news]

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SINGAPORE (ICIS)--Methanex is planning to relocate one of its idled methanol plants at its Cabo Negro complex in Chile to Louisiana in the US to capitalise on the low natural gas prices available in the region, the Canadian producer said late on Tuesday.

The firm is likely to move a 1m tonne/year unit from the Cabo Negro complex to the new site at Geismar in Louisiana, a company source told ICIS.

Methanex operates three 1m tonne/year units and another 800,000 tonne/year plant at the Cabo Negro site, according to the source.

Site-specific engineering has begun and the plant is expected to be operational in the second half of 2014, the company said in a statement.

“The outlook for low North American natural gas prices makes Louisiana an attractive location in which to produce methanol,” said Bruce Aitken, president and CEO of Methanex.

“We have a number of parallel work paths ongoing and expect to make a final investment decision on this project in the third quarter of this year,” Aitken added.

The relocation project will allow the firm to add capacity at a lower capital cost and in about half the time taken to start up a greenfield methanol plant, according to Aitken.

“We continue to pursue more natural gas from other suppliers in Chile,” a company source said.

“However, the board decided it was faster to relocate one of the plants to the US. It takes just 2.5 years to start it up, and we think it will take longer than this [if we were to seek gas within Chile],” the source added.

 “The timing of this project is excellent: there is strong demand growth for methanol globally and there is little new production capacity being added to the industry over the next several years,” Aitken said.

The plant’s output will mainly be allocated to the company’s distribution chain. The company source added that the volume may be sold to the Methanex’s Mississippi customers, while freeing up existing volumes for other customers.

Methanex has four methanol plants with a combined capacity of 3.8m tonnes/year at the Cabo Negro complex in Chile.

The financial details of the project were not disclosed in the statement.

With initial reporting by Nurluqman Suratman

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By: Heng Hui
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