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Methanol, ammonia prices to remain flat - Trinidad & Tobago's Energy Ministry

 

 

 

By TT Guardian

PORT SPAIN
Petroleumworld 06 29 2018

The Ministry of Energy and Energy Industries is predicting that over the next five years methanol prices will average US$375 per metric tonne, while ammonia prices will be closer to US$310 per metric tonne.

The projections are contained in report on the energy sector which estimates growth in demand for both products on the global market and prices are in keeping with what is being witnessed globally.

It states: “The demand for methanol is expected to continue to grow at an average annual rate of approximately seven per cent over the next four years. This increased demand will be driven by an increase in methanol to olefins (MTO) production facilities, with MTO set to become the second largest methanol derivative. The MTO process is the precursor to the manufacturing of plastics.”

The report further states that global demand for ammonia will increase but at a slower rate than methanol.

“Global demand for ammonia for agriculture use, outside of the cyclic variations, is expected to grow moderately at a rate of 1.2 per cent per annum up to 2020. Global demand capacity is expected to expand to 230 million tonnes by 2020, representing a 10 per cent increase from 2015,” it said.

T&T is the largest exporter of ammonia in the world and the second largest exporter of methanol. However, the downstream sector has faced significant challenges over the last seven years as gas shortages have led to lower production. In turn, that reduction has led to hundreds of millions of US dollars in losses for the government and the producers.

Even with some improvement in the gas supply, the downstream sector is faced with higher costs for natural gas, which when added to the challenges from cheap shale gas in the US is threatening their very survival.

In fact, the Ministry of Energy's report noted this threat: “Given their demands, recent gas contracts with upstream companies have been at significantly higher prices. These prices pose a challenge to both the NGC and the downstream companies.

“The situation is compounded by the preference of the upstream companies to provide gas for LNG rather than downstream industries. As a consequence the future of our downstream industry is being jeopardised. The Government is currently reviewing our options that may include a gas allocation policy to ensure the sustainability of our downstream industries.”

The report said upstream companies have made it clear that unless their rewards matched the risks they are taking, they will not be prepared to reinvest in searching, finding and producing more oil and gas.

The report continued: “Notwithstanding the super profits achieved by the upstream companies, they maintain the following views:

1. That they share a disproportionate share of the rewards for the level of risk they take.

2. The maturity of T&T as a hydrocarbon province has been occasioned by greater sub-surface and geological risks without the commensurate reward

3. NGC and downstream companies have benefitted disproportionately in the returns accruing to the sector.

“Based on the current natural gas production forecast, it is expected that the current natural gas supply shortage will be minimised or even eliminated as upstream investment activities take place over the next five years. This will positively impact the downstream industries as they will be able to return to producing at higher capacities.

“A gas allocation policy is being explored to ensure that the future of the downstream industries is not jeopardised or made unsustainable by expiry of contracts or increased natural gas prices, due to renegotiated contracts with upstream companies.”

While the gas shortage has led to only one major downstream investment in the energy sector in the last decade, National Energy is working on a number of projects, including an MTO complex. However, the central issue will remain gas supply and price.

_________________________

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