Methanex more optimistic about NZ gas – may operate two plants

Following a recent agreement on a natural gas supply arrangement one of Methanex’s idled 900,000 tonne per year units at its Motunui methanol plant will be restarted this quarter and run at least until the end of 2009.

Methanex president and CEO Bruce Aitken, says in the company’s second quarter report: “We believe there is potential to operate our Motunui plant longer and potentially restart our Waitara Valley plant again.”

The 530,000 tonne capacity Waitara Valley facility is currently scheduled to be idled when the Motunui plant starts up.

Mr Aitken said the company has become more optimistic about the longer term future of its operations in New Zealand.

“The continued operations of the flexible New Zealand facilities are dependant upon industry supply and demand and the availability of natural gas on commercially acceptable terms,” he said.

Methanex, which is the world’s largest methanol producer, has benefited from a strong methanol price environment with the company’s average realised price of US$412 per tonne up about 10% over last quarter.

"With the shift to our larger plant in New Zealand in the third quarter, we will be in a better position to benefit from strong industry conditions,” Mr Aitken said.

The continued operations of the flexible New Zealand facilities are dependant upon industry supply and demand and the availability of natural gas on commercially acceptable terms, he said.

Methanex believes methanol demand in China will continue to grow at high rates as a result of strong traditional demand driven by high industrial production growth rates and strong demand related to alternative fuel uses such as gasoline blending.

Due to the high cost position of many of the Chinese producers, Methanex believes that substantially all domestic methanol production in China will be consumed within the local market and that imports of methanol into China will grow over time.