UpdateMethanex secures gas supply to restart second NZ plant

18 January 2012 10:23  [Source: ICIS news]

(adds details, market expectations)

SINGAPORE (ICIS)--Canada’s Methanex plans to restart its second methanol plant at Motunui in New Zealand by the middle of the year, as it will have enough feedstock to run the facility that has been idled since 2004.

The company has signed a 10-year deal with New Zealand-based Todd Energy for the supply of feedstock natural gas, Methanex said in a statement late on Tuesday.

The plant has an actual nameplate capacity of 850,000 tonnes/year but can only produce 650,000 tonnes by the time it restarts, given a particular configuration that ties its production with another unit in Waitara, said a company source, who declined to be named.

Out of the three methanol facilities that Methanex has in New Zealand, only one with an 850,000 tonne/year capacity is currently running because of feedstock shortage. The unit in Waitara can produce 530,000 tonnes/year of methanol, he said.

“The distillation column [shared by the three plants] can produce 1.5m tonne/year of refined methanol, if only two of the three plants operate. We can only produce up to the full nameplate capacity of the two [Motunui] plants totalling 1.7 m tonnes/year, if all the three plants are running. It [production] is a bit limited at the moment,” the source said.

 “There might be some plans to debottlebeck in the future,” he said.

The gas supply contract price between Methanex and Todd Energy was not disclosed.

Some of the company’s gas supply contracts are on profit-sharing arrangement, in which the price of natural gas fluctuates depending on the profitability of methanol, said the source.

Prior to the deal signed with Todd Energy, Methanex’s natural gas contracts only ensure feedstock supply to operate one of its two 850,000 tonne/year methanol plant in Motunui for the period 2011-2012, the company source said.

“We hope to balance some long term gas contracts with some short-term buying [of natural gas] in order to run our plants,” he said.

The restart of the second 850,000 tonne/year plant by mid-year would be a welcome development for the global methanol market, which has been in tight supply given very few capacity additions in recent years, according to market participants.

Methanex’s second New Zealand plant could be the only additional capacity the market can look forward to this year, they said.

Initial reporting by Pearl Bantillo

By: Heng Hui
+65 6780 4359

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