Methanex to shutter Titan because of covid19

Canadian petrochemical giant, Methanex, will shutter one of its two TT plants – Titan –  as a direct result of current international market conditions brought on by covid19, the Prime Minister said Monday.

“Methanex, taking a decision from outside of TT has taken the decision to – temporarily, I hope – close one of their two plants in Trinidad and one in Chile as a direct result of the international market having no space for what is being produced by these plants. The market is saturated. This is the kind of effect,” Dr Rowley said at a media briefing on Monday following an emergency Cabinet meeting about the government’s response to covid19 at the Diplomatic Centre, St Ann’s.

The closure would mean another major player in the Point Lisas Industrial Estate is pulling out. Yara last November shuttered its wholly-owned ammonia plant, and in 2016, Arcelor Mittal shuttered its steel mill.

“That would mean, I don’t know, the jobs are at stake. It will also mean the support services are not going to be there, earnings aren’t going to be there, (there will be no tax revenue) because nothing is being produced at that plant. These are the kinds of knock on effects. This is the time we are in,” Rowley said.

In a statement on its website Monday, Methanex president and CEO, John Floren, said the company anticipated that methanol demand could be impacted in the second quarter of 2020 as there has been a substantial reduction in manufacturing activity in countries that have had significant outbreaks of covid19. “As a result, we are reducing production at our methanol facilities, where we have flexibility in our gas agreements, to prepare for lower demand for methanol. We do not expect this production change to have a significant impact on our cash flows in the current price environment.”

The company had been in negotiations with the National Gas Company for a gas agreement. In a statement on December 18, the company had noted it entered into an interim agreement with the NGC for the supply of natural gas to Titan from January 1, 2020, for one month. The agreement would have allowed the company to continue operating while negotiations continued for a longer-term agreement. In February, Floren was reported in the TT Guardian to have said in an investor relations call, "Where we can’t earn profits from that plant, we rather shut it down than to run it for no profit."

Commenting on the decision, the TT Energy Chamber said in a statement that covid19 pandemic is creating unprecedented turmoil in the world economy and commodity prices have declined sharply as demand is eroded. “Companies around the world are having to adjust their plans to be able to survive in these difficult times. One of the options being taken by companies is to decrease the production of commodities for which there is falling demand. Companies will look across their portfolio and make decisions about which facilities make the most sense for them to idle.” One of the issues that will be considered by a downstream petrochemical company, the chamber said, will be the contractual obligations for purchasing raw materials, such as natural gas. “This is the case that we are seeing with Methanex and the Titan plant in Trinidad. The idling of the Titan plant highlights the significance of the national crisis that we are facing.  In these difficult times, it is important that all stakeholders continue to work closely together to find solutions.” The global crisis created by this pandemic will pass, the chamber said, and the country would need to work together to both navigate and rebound from the immediate crisis period.

Methanex is the world’s largest producer of methanol and has plants in TT, New Zealand, Egypt, Canada, the US and Chile. In Trinidad, Titan is 100 per cent owned by the company and has a production capacity of 875,000 metric tonnes per year. The second plant, Atlas, is 63.1 per cent owned by Methanex and 36.9 per cent owned by BPTT, with a production capacity of 1.7 million tonnes per year. Methanol is used as a fuel, a solvent or as anti-freeze.