Methanex willing to move plants globally to secure gas supplies

BUSINESSDESK: Methanex, the world's largest methanol producer, is increasingly willing to move its plants from one country to another to take advantage of natural gas supplies, and could one day choose to move its plant from New Zealand.

In remarks during a panel session at a petroleum conference in Wellington yesterday, New Zealand manager Harvey Weake said the dismantling of a Methanex plant in Chile and its transfer to a site in Louisiana was part of a plan where Methanex "will be taking a more flexible approach on equipment, to moving it around".

That could include New Zealand "if we have to", he said. However, there is no imminent likelihood of such a decision.

Methanex has been reinvesting heavily in its two methanol production chains at Motonui, as new supplies of competitively priced natural gas have come to market in New Zealand, after winding back local production in the early 2000s, when gas supplies tightened and prices rose.

It is also considering reopening its mothballed plant nearby at Waitara as the outlook for gas supplies in New Zealand suggests several years of low-cost gas are becoming available.

The conference session was chaired by Edison Research International's New Zealand head John Kidd, who described how natural gas had risen to as high as $9 a Gigajoule in the early 2000s, but had dropped to around $5 per GJ in recent times as electricity generators started switching out of gas to produce electricity and using coal, geothermal and wind energy.

Whereas electricity generators were using around 100 petajoules of gas annually a decade ago, that had fallen to 40 PJs in the last year, with Methanex taking up the slack as new gas fields were brought on stream.

Mr Weake told the conference that methanol, selling at around $US100 a tonne, was enjoying price parity with oil, with methanol increasingly used as a transport fuel feedstock.

It now accounted for 25% of transport fuel consumption in China.

"What we see in New Zealand is that there's clearly a liquid transport fuel opportunity," said Mr Weake, although there was currently no local capability to blend methanol with conventional petrol and diesel.

New Zealand presented a low-risk, stable operating environment, whose view conflicted with some other conference participants, who bemoaned New Zealand's regulatory environment as discouraging petro-chemical investment.

"The regulatory stuff looks second order to us unless something stops the activity occurring," Mr Weake said. "That bodes well for a long term future for us in New Zealand" as long as gas supplies remained available.

Methanex announced the Chilean move earlier this year, saying new natural gas discoveries were appearing more slowly than expected, leading to a decision to relocate plant in the South American nation to a site in Louisiana, where gas supply was plentiful.

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Methanex, please don't leave New Zealand.

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"..electricity generators started switching out of gas to produce electricity and using coal, geothermal and wind energy."

Now why would that happen? Gas is far cheaper than those alternatives, especially when the plants are already built.

The NZ Electricity Market doesn't work.

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