Idle Trinidad methanol plant may be restarted

Keith Rowley
Keith Rowley

By Curtis Williams

(Trinidad Guardian) With high global prices for petrochemicals and government urgently needing money from the energy sector the Keith Rowley administration has told one of the world’s largest methanol producers it wants all the downstream plants up and running and there is now hope that the idle Titan plant could restart later this year.

Chief Executive Officer of Methanex John Floren told an earnings call in Canada that Methanex saw the restart of its idled plant in Trinidad as one area of growth in production for the company and was hopeful that it could be restarted.

He said the company wanted to ensure it would get gas at a price that it can sustain throughout the cycle and was in discussions with the government to finally restart operations.

Floren revealed that the government has told Methanex that it wanted to see all of the downstream production and was hopeful that it could get a gas deal once negotiations were concluded between the National Gas Company and the upstream suppliers.

He said, “Our focus will be on getting our idle plants in New Zealand and Trinidad restarted. So that will be our growth because they are idle today….Right now the upstream and the government are negotiating, their contracts are coming up this year and you know until that negotiation gets finalised I would say it is unlikely that Titan will secure a gas contract to allow that to restart, but those contracts will be negotiated this year and the government has told us they want to keep all the downstream alive and they just need to have their contracts negotiated with the upstream and that is ongoing. We are continuing to dialogue with the government and the task is to get gas at an economic price that allows us to operate Titan through the cycle and that’s what we are focused on.”

In what must be news to the ears of Finance Minister Colm Imbert, Floren is predicting continued strong prices for methanol for the next two quarters.

Floren was asked what is the real value of methanol at the moment and said , “I think there are a number we always watch one is the MTO (Methanol to olefin) that’s the one on the affordability curve, the one that get’s impacted first… In the High priced energy environment that we are seeing today, that is also very good for olefin prices because they are obviously paying more for naphtha today than they would have been this time last year, so that slipped into the cost curve nicely, so the MTO producers are running like 95 percent today so unless you saw a huge correction in olefin prices then that would mean energy prices falling quite a lot from where they are today I think we are going to be fine on the demand side.”

He acknowledged that there is a lot of negative sentiment in the market with the current lockdown in China and the inflationary pressure but said when Methanex looks at its supply/demand balance it feels demand is holding up.

“MTOs are running well, high energy prices make the other energy applications very very attractive for methanol, so we expect demand to continue to grow and we are watching it very closely and we have visibility throughout the globe…and we are not seeing any impact on demand.”

He said there are likely to be a number of planned outages and pointed to the fact that there was already a plant in T&T that is down. He noted this will lead to a continued favourable supply/demand balance for Methanex.

Prices have been beyond the cost curve and part of that is due to constrained global Methanex supply.

Floren said he does expect some more supply out of Iran as the country emerges from winter.

“As of today we are not seeing any impact on demand. There are obviously head winds and we are watching and certainly the lockdowns are not as severe as they were in the spring of 2020 but it is something we are watching. On the supply side most of the plants are outside the lock down areas, so we are not seeing our customers or even our competitors having to shut down at this time. Having said that if you look at pricing in China its about $365 equivalent US dollar per tonne, that’s below the cost curve in China as we see coal and natural gas. If they were to shut down it would be more about cost curve than covid at this point.” Floren posited.