METHANEX UNDER PRESSURE

Last week in Houston, Texas at the 2005 Methanol Forum, Bruce Aitken, president and chief executive of Vancouver, British Columbia-based Methanex, said that rising world natural gas prices have the global methanol industry under economic pressure. Delivering an assessment on the industry, Aitken said methanol projects have a niche in the market: they are based on remote gas fields that are too small to support large liquefied natural gas (LNG) export projects, which also are more profitable than methanol projects.

Higher gas prices could mean more LNG and less methanol projects. About 33 percent of current methanol projects are based on "market price" gas feed-stocks but higher global gas prices will drop that to about 23 percent in 2010, he indicated.

Aitken said a sharp drop in methanol prices is unlikely; higher natural gas prices will only force the marginal methanol production off the market.

Further, Aiken said high energy prices may create an economic incentive for the use of methanol as a fuel. Methanex will also permanently cease production of methanol and ammonia at its British Columbia Kitimat site on November 1, approximately two months earlier than the previously announced closure date because of high natural gas prices prevailing in North America.

A statement from Methanex’s website said customers will be supplied with methanol from the company’s facilities in Chile and Trinidad, where low-cost natural gas is purchased under long-term supply agreements.