Petrochemicals: Methanex CEO dismisses Trinidad methanol project plans

07 May 2012 00:00  [Source: ICB]

CEO Bruce Aitken says that the country's natural gas supply problems will scupper proposals for a new plant

Methanex CEO Bruce Aitken has discounted the chances of a huge methanol project starting in Trinidad because of the country's natural gas supply problems.

Aitken said Trinidad cannot even provide enough gas now for existing methanol producers there, let alone find more for a $5.3bn (€4bn) project proposed by SABIC and China's state-owned Sinopec.

"So it's hard to imagine that project gaining any traction," Aitken said in an earnings conference call.

CURTAILED OPERATIONS
Canada's Methanex and other methanol and ammonia producers at the Point Lisas Industrial Estate in Trinidad have curtailed their operations by low double-digit percentages from last year because of the country's natural gas shortage. The curtailments also influenced the 9% drop in Trinidad's methanol exports to the US in February.

Another methanol supplier agreed with Aitken's opinion. "That project's going nowhere," a source said.

Trinidad's talks with SABIC and Sinopec on the project provoked a hot political debate earlier this year in the country's parliament over gas subsidies being sought by the two companies. But Aitken said the tiny country's gas supply problem would seem to undercut the project's chances.

"The two promoters there are probably casting around the world looking for opportunities, and maybe they've had some undertakings from Trinidad," Aitken said, referring to SABIC and Sinopec.

"But what we've experienced in Trinidad is that the country today struggles to meet all of its gas commitments."

The country just off the coast of Venezuela began a new bidding round this week on offshore oil and gas exploration. Aitken said the new blocks for bid were in deep water and thus would make any new natural gas finds more expensive.

Aitken added that the US would seem to be a more attractive target country now for a methanol project than Trinidad, with natural gas in the US selling just above $2/MMBtu.

The US natural gas price advantage is the main reason Methanex is making plans to move a methanol plant from Chile to Louisiana in 2014.

NO INTEREST IN ATLAS
Aitken also mentioned that buying the remaining share of the Atlas methanol plant in Trinidad has declined in priority for Methanex because so much time has elapsed since it was put up for sale.

"There are no synergies for us in buying that plant," Aitken said. Methanex owns 63.1% of Atlas, and UK-headquartered BP owns 36.9%. Analysts have estimated BP's share of the plant to be worth anywhere from $125m-175m (€95m-133m).


By: Lane Kelley
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