Rich Sumner, the new president and chief executive officer of Methanex Corporation believes the environment in Trinidad and Tobago is more conducive now to reaching an agreement on a new natural gas contract for both its Atlas and the mothballed Titan methanol plants.

Speaking recently at an earnings call to discuss the company’s 2022 financial permanence, Sumner, who only in December took over from Methanex’s long-time CEO, John Floren, was asked for an update on the Trinidad and Tobago situation.

He explained, “We certainly want to be talking to the National Gas Company (NGC) for both Titan and Atlas. NGC is really in a number of different discussions right now. One is with the upstream and so they are in discussions with the major players in the upstream there. But they have also been working towards getting a standardised interest across all the LNG trains, and then they will start discussions with the downstream. So positive progress on some fronts.”

Sumner added, “We understand they have done one upstream contract with BP. We also understand they have reached an agreement on the unitisation of the LNG plants and that is set to be done in the first quarter and completed.

I think both these things are creating a better environment for us getting into commercial discussions this year. “

In 2021, then chief executive officer of Methanex John Floren put the company on notice that he did not think the Titan plant at the Point Lisas Industrial Estate would return to production anytime soon.

“We continue to negotiate with the NGC. But I think we’ve been pretty clear we’re not going to restart the plant on a month-by-month gas situation,” Floren stated during the 2021 Earnings Call.

“So, our strategy was that our five-year contract ended at the end of 2019 and we had been negotiating obviously for some time before the expiry of our contract to get something with the NGC and the government that allowed us to stay profitable throughout the cycle. We were able to achieve that. So, we agreed with them to go month by month and no take or pay and we had the ability to shut down, as we thought, if we wanted to,” Floren stated.

“As we came into the negotiations, we didn’t make the progress that we had hoped. And with the pandemic starting up, it was tight and it was one of the only plants that we had the flexibility to turn off as well as Chile IV. So, we made the decision to turn it off,” he added.

Floren said then that the month-to-month gas contracts being offered then by the NGC were not feasible.

“We have to have something more certain because we’d have to hire people and spend some tens of millions of dollars to restart the plant. So, I’m not sure what our competitor has as far as the month by month. And obviously, it makes sense for them to start off. But for us, we’re thinking more medium to longer term and we’re still negotiating and we’re hopeful we’ll get something to allow us to restart that plant,” Floren stated.

The plant has remained shut up to today even though there have been high methanol prices.

Sumner appears a little more optimistic, pointing to the recent decision of the Biden administration to grant a license to Trinidad to develop the Dragon gas field in Venezuela as another example of how T&T’s gas shortage could be ameliorated.

“That is positive news because there are even larger fields that border Trinidad and Venezuela and open up the possibility for that to happen as well,” Sumner explained.

He predicted a continued strong methanol pricing environment this year with slightly higher production in the first quarter of 2023 compared to the fourth quarter of 2022.

Methanex operates two methanol plants at the Point Lisas Industrial Estate.

Titan has the capacity to produce 875,000 metric tonnes of methanol a year.

Methanex owns 100 per cent of Titan and 63.1 per cent of Atlas.