METHANEX expects final board approval on a 1,000,000 tonne a year Burrup Peninsula methanol plant by mid-year.
METHANEX expects final board approval on a 1,000,000 tonne a year Burrup Peninsula methanol plant by mid-year.
Construction of the facility would then commence immediately, Methanex senior vice-president for Asia Pacific Bruce Aitken told WA Business News this week.
Methanex put on hold a planned 2,000,000t/year Burrup project just three weeks ago, saying costs had become prohibitive. But with 50 per cent of the Japanese methanol market, 60 per cent of the South Korean market, and gas supply issues in New Zealand, Methanex had a “real sense of urgency” about future production, Mr Aitken said.
“We have spent a lot of time and effort on the Burrup project,” Mr Aitken said.
“So this remains our first option to supply our Asian customers.”
Methanex can fund the 1,000,000t/year plant from its own balance sheet, Mr Aitken said.
“But we just need to reconfirm levels of government infrastructure support, renegotiate a smaller gas contract, and firm up on construction costs for a smaller plant,” he said.
The facility would commence production in early 2006, as originally planned, Mr Aitken said, with production funding a second plant of similar size.
“Capital costs on the original plan just got too large for the company, but now we can get the same result in two steps,” he said.
Mr Aitken described the project gas supply agreement with the North West Shelf joint venture as “unconditional”, and said the company was not anticipating any problem there. However, the construction agreement still had a few loose ends. Methanex is dismantling a New Zealand methanol plant, due to insufficient gas supply, but expects to be able to produce 1,000,000t from its two plants there this year.
The company has a 63 per cent interest in a Trinidad plant due to commence production next year and is expecting increased output by 2005 from a Chile expansion project.
The Toronto-based company has been operating methanol plants and supplying the Asia Pacific region for 20 years.
Methanex considered relocating some of the dismantled NZ facility to the Burrup, Mr Aitken said, but has now shelved this option.
The company knew of a possible shortfall in its NZ gas supply in late 2001.
The NWS venture has extended its agreement with Methanex until May 30.
Mr Aitken said the only condition to the contract was a final investment decision by Methanex.
“Nothing has changed to the gas contract other than the extension.”
