Methanex set to increase methanol exports
Production of methanol in New Zealand, 90% of which is exported to China, Japan and South Korea, is set to increase by around 30% following the announcement by Canadian-based methanol producer Methanex that it is restarting one of its two plants in the country and is investing to increase capacity at the other.
Methanol became a major industry in New Zealand as a result of the discovery of significant gas fields, production of which began in earnest in the early 1980s. New Zealand had no large domestic use for the gas, and at the time the construction of liquefied natural gas (LNG) export terminals was deemed not sufficiently profitable.
The first facility to convert natural gas into methanol was built in 1986 at Motunui, in the Taranaki region of the North Island, to transform natural gas into a product that was cheaper to export. A second plant, at nearby Waitara Valley, was built later but was mothballed in 2005 due to falling profitability. It is the latter facility that is now to be restarted.
According to Methanex, the expansion of the Motunui plant and the restart of the Waitara Valley facility will enable it to increase annual production in New Zealand from 1.5 million tons to 2.2 million tons. At Methanex’s current Asia-posted contract price for methanol of US$450 per ton, this would increase the value of the company’s exports from New Zealand by US$315 million a year, equivalent to around 0.7% of the current value of all the country’s exports.
However, it is not all positive news for New Zealand’s methanol industry. The shale gas boom in North America has drastically lowered natural-gas prices there and has thus increased the attraction of that region for methanol production. Methanex has also announced that it is dismantling a plant in Chile and reconstructing it in the U.S. to take advantage of this development. The long-term viability of the firm’s plants in New Zealand will be threatened if a possible shale-gas boom in Northeast Asia also materializes.
(March 27, 2013)
