Gas Shortage Forces Canada’s Methanex To Shut Down Processing Unit in Chile

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Researched by Industrial Info Resources (Sugar Land, Texas)--Canada’s Methanex Corporation, the world’s leading methanol producer, which has a large plant in Punta Arena, Chile, hopes to break its natural gas dependency on Argentina within the next three years and concentrate on Chilean supplies. Methanex Corporation (NYSE:MEOH ) (Vancouver, British Columbia) CEO Bruce Aitken said the provision of Argentinean natural gas for the firm’s methanol plants in southern Chile remains limited, even though the technical problems claimed by suppliers have been solved.

Methanex operates four units in the southern extreme of Chile, whose main resource is natural gas provided by Argentina (62%). Chile’s government-owned oil company ENAP supplies the rest. Methanex’s methanol-production facilities are located in Cabo Negro, near the city of Punta Arenas in the heart of Chile’s petroleum-and-gas-producing region. The facilities give Methanex its largest low-cost production hub. Its four plants have a production capacity of 3.8 million tones of methanol per year and produce approximately 12% of the world market.

The methanol company was recently forced to shut down one of its four processing modules in Punta Arenas because of an insufficient gas supply. Company officials said they are holding conversations with suppliers. Aitken recently announced the discovery of natural gas deposits close to the company, as well as its plans to invest $320 million in 2007-08 to help cut dependency on Argentina.

Aitken further declared that the company’s target is to depend entirely on Chilean natural gas within the next three years. ENAP is exploring wells in the area of Lake Mercedes in the Magallanes Region, which has shown signs of natural gas and oil in commercial volumes while it continues with seismic trials and further exploration.

Argentina is Chile’s only natural gas provider but in recent years has privileged domestic demand over exports because of Argentina’s severe cold and below-zero temperatures last winter.

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