Pres­i­dent and chief ex­ec­u­tive of­fi­cer of Methanex Cor­po­ra­tion, John Flo­ren, has told an in­vestor con­fer­ence in Louisiana, USA that his com­pa­ny is pre­pared to pay high­er prices for nat­ur­al gas in an ef­fort to restart its Ti­tan methanol plant in T&T, but not so much that it makes loss­es when prices are low.

Flo­ren told the con­fer­ence last week: “The eco­nom­ics of the gas will be dif­fer­ent from the eco­nom­ics we have tra­di­tion­al­ly en­joyed with Ti­tan. So we will pay a lit­tle bit more for the gas, but we want to sign a take or pay con­tract to in­vest the tens of mil­lions of dol­lars we have to, to get the plant restart­ed, we would want to be cash pos­i­tive through the cy­cle, so that’s our goal, and we won’t sign a con­tract that as­sures loss­es dur­ing the bot­tom end of the cy­cle and that’s part of the chal­lenge that we are hav­ing with the Gov­ern­ment, as the Gov­ern­ment rene­go­ti­ates with the up­stream, they cer­tain­ly know the down­stream’s po­si­tion. It is not on­ly ours but our com­peti­tors, the am­mo­nia guys and LNG.”

The Ti­tan methanol plant has been down for al­most two years as Methanex could not reach agree­ment with the Na­tion­al Gas Com­pa­ny (NGC) over the is­sue of price. It has led to sev­er­al work­ers los­ing their jobs.

Ian Cameron, Methanex se­nior vice pres­i­dent, fi­nance and chief fi­nan­cial of­fi­cer of the com­pa­ny who al­so has re­spon­si­bil­i­ty for its T&T as­set, told the con­fer­ence that there is com­mit­ment by all those in the val­ue chain to get the Ti­tan plant up and run­ning. He ad­mit­ted that the chal­lenge had to do with the price and avail­abil­i­ty of nat­ur­al gas as this coun­try con­tin­ues to suf­fer from short­ages.

He ex­plained: “So the chal­lenge in Trinidad is gas, so I was down in Trinidad 12 days ago, there was a big en­er­gy con­fer­ence in Trinidad, and it was all about the fu­ture, and just as back­ground Trinidad is a coun­try fair­ly re­liant on oil, gas and petro­chem­i­cals, and LNG and it’s a big part of the econ­o­my, and as a big pic­ture con­cept, the gov­ern­ment is very in­cen­tivised to make sure all these op­er­a­tions are sus­tain­able over the num­ber of years and you can re­al­ly feel that en­er­gy.”

Cameron added: “When I was in Trinidad I met the se­nior peo­ple in gov­ern­ment, NGC and al­so some of the CEOs of up­stream and all of them are very com­mit­ted to en­sure the in­vest­ment and to con­tin­ue to en­sure all the as­sets in Trinidad and op­er­at­ing. That’s the goal, the chal­lenge is tim­ing, there are a lot of con­trac­tu­al re­la­tion­ships that are con­verg­ing about the same time, so the up­stream con­tracts are ex­pir­ing in the next year or two, and the con­tracts with the LNG pro­duc­ers are ex­pir­ing in the next year or two, the same with many of the petro­chem­i­cal op­er­a­tions as well.

“There are a lot of things that need to hap­pen as well in or­der for the gas con­trac­tu­al regime to work quick­ly, so that’s the chal­lenge, but as I say, the Gov­ern­ment and the up­stream are very in­cen­tivised to some­how fig­ure out how we find a way to share the eco­nom­ic rent that we think is avail­able, be­tween the up­stream, NGC, the gov­ern­ment, and down­stream.”

In the cir­cum­stances Cameron said he was “cau­tious­ly op­ti­mistic” that Methanex will be suc­cess­ful in get­ting Ti­tan up and run­ning. Flo­ren and the rest of the Methanex ex­ec­u­tive are pre­dict­ing strong methanol de­mand and con­strained sup­ply sce­nar­ios that are like­ly to lead to con­tin­ued strong prices for the com­mod­i­ty. Good news no doubt for T&T.

He said; “The methanol in­dus­try is ex­pect­ed to ex­pe­ri­ence de­mand growth, lim­it­ed ad­di­tion in sup­plies in the next five years which dri­ve a favourable in­dus­try out­look. This sup­ply de­mand dy­nam­ic should sup­port pric­ing. We al­so have the po­ten­tial to fur­ther in­crease that ca­pa­bil­i­ty with im­proved gas avail­abil­i­ty in Trinidad, New Zealand and Chile.”

Flo­ren re­vealed that Methanex con­trols 13 per­cent of the glob­al mar­ket-twice the size of its next clos­est com­peti­tor.

He said the com­pa­ny has a glob­al pres­ence across all key mar­kets and has in the last 10 years re­turned US $2 bil­lion to in­vestors and in­vest­ed US $3 bil­lion to grow the busi­ness.

Rich Sum­mer, Methanex glob­al head of mar­ket­ing said the com­pa­ny es­ti­mates the glob­al methanol mar­ket at be­tween 85 and 90 mil­lion tonnes with three broad ar­eas of us­es for the prod­uct.

1) ↓Tra­di­tion­al chem­i­cal ap­pli­ca­tions (50 per cent of de­mand)

2) ↓Methanol to Olefin (15-20 per cent)

3) ↓En­er­gy re­lat­ed ap­pli­ca­tions (30 to 35 per cent) MTB and bio diesel as ex­am­ples.

He said Methanex was see­ing strong de­mand in chem­i­cal ap­pli­ca­tions and this usu­al­ly mir­rors growth in GDP rates. Sum­mer not­ed that as the world has had strong GDP growth, so too has the de­mand for methanol for chem­i­cal ap­pli­ca­tions.

There has al­so been strong trans­porta­tion de­mand growth in the last two years with the need for clean­er ap­pli­ca­tions, which has been help­ing methanol de­mand growth.

Sum­mer told the con­fer­ence, “So over­all we are see­ing strong de­mand and ob­vi­ous­ly we are con­tin­u­ing to mon­i­tor a lot of the glob­al eco­nom­ic head­winds that are out there to see what im­pact that can have on for­ward de­mand growth.”

“Over a five-year pe­ri­od, tak­ing a 3 per cent growth rate, we would see that the in­dus­try needs about 14 mil­lion tonnes of new sup­ply to bal­ance the mar­ket.”

Sum­mer ex­plained that Chi­na’s ef­fort to re­duce green house gas emis­sions meant more methanol be­ing used in ap­pli­ca­tions like cook­ing and trans­porta­tion fu­els.

Sum­mer said the ship­ping in­dus­try was like­ly to play a ma­jor role in in­creas­ing de­mand for methanol as a clean burn­ing fu­el.

“We ex­pect this to con­tin­ue to gain in­ter­est and mo­men­tum, so we say there are 65 dual fu­el ves­sels, with­in 2025/26, these are ves­sels, in­clud­ing our own 19 ves­sels, that are ac­tu­al­ly on or­der and will be in the wa­ter by those dates.

“You will see the big name here is Maer­sk and Maer­sk has 13 con­tain­er ships on or­der and we are start­ing to see a lot of in­ter­est across dif­fer­ent seg­ments in the ma­rine space, con­tain­er ships, dry bulk, fer­ry, cruise lines, tug and barge, are all look­ing at that.”

Sum­mer told the in­vest­ment con­fer­ence.

He ex­plained that the out­look for sup­ply is not very good in the short term with some new sup­ply to come from Malaysia and Iran, but not­ed that Iran is very un­cer­tain be­cause of plant tech­nol­o­gy is­sues and lim­it­ed gas avail­abil­i­ty.

“Firm new sup­plies are like­ly to be in­suf­fi­cient to meet grow­ing de­mand and the in­dus­try will need to op­er­ate at high­er rates to close the mar­ket.

“There are a num­ber of oth­er projects in the Mid­dle East, Africa and Rus­sia but we feel a lot of those are at very ear­ly stages...When we see the in­dus­try bal­ance go­ing for­ward we look at it as a re­al­ly tight mar­ket,” Sum­mer posit­ed.

He said to meet the in­creased de­mand you will have to get more sup­plies out of mar­kets like Trinidad , but there are gas sup­ply chal­lenges in do­ing that.

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Drummers from the Egbe Omo Oni Isese Traditional African Association.

Drummers from the Egbe Omo Oni Isese Traditional African Association.

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