Methanex confirms Motunui restart

METHANEX Corporation today confirmed it is restarting in August one of the twin trains at its inactive Motunui complex in Taranaki, New Zealand at a cost of about $NZ70 million ($A57 million). The company plans to run the plant until at least the end of 2009.
Methanex confirms Motunui restart Methanex confirms Motunui restart Methanex confirms Motunui restart Methanex confirms Motunui restart Methanex confirms Motunui restart

"We are pleased that we have been able to secure additional natural gas to restart one of our larger plants in New Zealand," managing director Harvey Weake said.

"The high energy price environment has led to continuing strong demand for methanol and upward pressure on methanol prices - currently about $US450 ($A475) per tonne in the Asia-Pacific region - and the industry cost structure, which has allowed our assets in New Zealand to be competitive."

He added that Methanex would continue to operate the smaller 500,000-tonne Waitara Valley plant until Motunui was at its full capacity of 900,000 tonnes per year.

When in full production, Motunui will use up to 35 petajoules of gas per year.

"With the re-opening of our Motunui plant, we will have 1.4 million tonnes of flexible capacity, which we will be able to utilise in the future dependent on market conditions and our ability to secure additional economically priced natural gas," Weake said.

Methanex has been hiring temporary staff for the restart of the Motunui plant, which has been idle since December 2004.

Once Methanex is satisfied with the Motunui operation, it will shut down the valley plant and shift all permanent staff to the Motunui complex.

However, Methanex will not mothball the valley plant and may restart it if required in the future.

"As a flexible operator, there is every possibility we may have to adjust our operations again in the future, based on gas availability and market demand," Weake said.

"This could mean starting up the valley plant in the future, and possibly closing Motunui again."

The news coincides with Contact Energy chief executive David Baldwin saying on Friday afternoon that the latest firming of Maui gas reserves supports the New Zealand utility's view that it would have sufficient gas for its own gas-fired power stations and for its external industrial, commercial and domestic customers through to about 2015.

The Maui partners had last week firmed another 62PJ of Maui gas from the P50 to the P85 confidence level. This follows a similar move in May last year when the partners made available an extra 60.8PJ.

Contact's share of the additional gas is 61.6%, with Vector subsidiary NGC entitled to 38.4%.

Delivery agreements provide for the Maui partners to review right of first refusal (ROFR) reserves annually. When additional gas is confirmed as P85 reserves, it is converted to contracted gas. The total amount of potential ROFR gas remains at 275PJ, available through to 2014.

Both Contact and NGC can on-sell ROFR surplus gas and industry sources say this is helping Methanex Corporation keep its New Zealand methanol manufacturing facilities operating.

The Maui partners are Shell Exploration New Zealand (83.75%), Austrian firm OMV (10%) and Todd Energy (6.25%).