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METHANOL HOLDINGS (TRINIDAD) LIMITED
Domestic Private Sector Challenges for the Development of a Mega Methanol
Plant in Trinidad
A MHTL Perspective
July 23 , 2002
2
OUTLINEOUTLINEMHTL PROFILEMHTL PROFILENATURAL GAS AND THE NATURAL GAS AND THE METHANOL INDUSTRYMETHANOL INDUSTRYM5000 MEGA PLANTM5000 MEGA PLANTDOMESTIC PRIVATE SECTOR DOMESTIC PRIVATE SECTOR CHALLENGESCHALLENGESCLOSING REMARKSCLOSING REMARKS
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MHTL PROFILE
4
METHANOL HOLDINGS (TRINIDAD) LIMITED
T & T Methanol T & T Methanol Co. Ltd.Co. Ltd.
Caribbean Methanol Caribbean Methanol Co. Ltd.Co. Ltd.
Methanol IV Methanol IV Co. Ltd.Co. Ltd.
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MHTL’s MHTL’s METHANOL METHANOL COMPLEXCOMPLEX
CMCCMC
TTMC ITTMC I
TTMC IITTMC II M IVM IV
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ROLE OF MHTL
Finance
ManufacturingMarketing/Shipping
Corporate Governance
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MHTL BUSINESS ENVIRONMENT
HIGH CAPITAL INVESTMENTS
COMMODITY TYPE PRODUCT
GLOBAL MARKETPLACE
INTENSE COMPETITION
BUSINESS CYCLES AND PRICING VOLATILITY
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ASSET BASE
NO. OF PLANTS: 4
TOTAL CAPACITY: 2.2 MILLION MT/ANNUM
ASSET VALUE: US$ 1 BILLION
GAS CONSUMPTION (2002): 200 MMSCFD
GAS CONSUMPTION (2004) : 380 MMSCFD
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MHTL MARKETING
MHTL MARKETING HUB AT PT. LISAS RESPONSIBLE FOR:
GLOBAL MARKETING STRATEGY
MARKET INTELLIGENCE
CONTRACT NEGOTIATIONS AND ADMINISTRATION
GLOBAL MARKETING OPERATIONS
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PRODUCT DISTRIBUTION
EUROPE34%
NORTH AMERICA
65%
LOCAL1%
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MHTL METHANOL PRODUCTION AND WORLD
MARKET
1998 2002 2005Total MHTL Production (000’S MT) 1914 2170 4000
Total Trinidad Production (000’S MT) 1914 3020 6575
MHTL Production as % of World Capacity
5.6% 5.8% 10.4%
Trinidad Production as % of World Capacity
5.6% 8% 17.1%
MHTL Sales as % of World demand
8.3% 7.2% 13.6%
Trinidad Sales as % of World Demand
8.3% 9.9% 22.4%
MHTL Sales as % of Trade 19.2% 13.1% 19.6%
Trinidad Sales as % of Trade 19.2% 18.2% 32.2%
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MHTL’S EXPERIENCE
MHTL FACES THE FULL COMPETITIVE FORCES
OF THE GLOBAL MARKETPLACE ALONG ALL
ELEMENTS OF ITS BUSINESS OPERATIONS AND
MAINTAINS A FOCUS ON CONTINUOUS
IMPROVEMENT TO REMAIN COMPETITIVE
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MHTL’S EXPERIENCE
MHTL HAS BEEN ABLE TO DEVELOP A ROBUST
BUSINESS OPERATION RESULTING IN:
CONSOLIDATED LOW COST OPERATION
ATTRACTIVE RETURN ON EQUITY
SIGNIFICANT GROWTH IN ASSET BASE AND DEBT
CARRYING CAPACITY
SHIPPING & SHIPPING & LOGISTICSLOGISTICS
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POINT LISAS POINT LISAS LOADING FACILITIESLOADING FACILITIES
Savonetta Savonetta Pier IPier I
Savonetta Savonetta Pier IIPier II
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MHTL TANKER FLEET
VESSEL CAPACITY NO VESSELS TOTAL (DWT)
14,000 DWT 2 Goodrich Bay, Gulf of Paria
28,000
17,000 DWT 1 Ojars Vacietis 17,000
30,000 DWT 3 Naparima, Nariva, Maracas Bay
90,000
45,000 DWT 1 Las Cuevas 45,000
Total 180,000
Additional Cap.45,000 DWT 2 90,000
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STORAGE STORAGE FACILITIESFACILITIES
LOCATION CAPACITY
(MT)
POINT LISAS, TRINIDAD 200,000
WILMINGTON, NC, USA 23,750
HOUSTON, TX, USA 11,750
ST.ROSE, LA, USA 43,000
QUEBEC CITY, CANADA 19,259
ALTAMIRA, MEXICO 5,000
ADDITIONAL (M5000) 50,000
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NATURAL GAS AND THE METHANOL
INDUSTRY
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THE METHANOL BUSINESS
A PRIMARY PETROCHEMICAL BASED ON
NATURAL GAS CONVERSION
NATURAL GAS AVAILABILITY AND PRICING
STRUCTURE KEY TO METHANOL INDUSTRY
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CHANGING STRUCTURE OF THE METHANOL
INDUSTRY
US METHANOL INDUSTRY NO LONGER
CONSIDERED BENCHMARK; OFFSHORE
PRODUCERS NOW REPLACING
TRADITIONAL PRODUCTION IN THE
MAJOR MARKET CENTERS
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TRINIDAD AS METHANOL
PRODUCTION HUBTRINIDAD HAS BEEN A VIABLE LOCATION FOR
METHANOL PLANTS BASED ON:
READILY AVAILABLE NATURAL GAS SUPPLY
COMPETITIVE GAS PRICING STRUCTURE
PROXIMITY TO MAIN MARKETS
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TRINIDAD AS METHANOL
PRODUCTION HUBESTABLISHED INFRASTUCTURE
FACILITATING BUSINESS ENVIRONMENT
STABLE POLITICAL CLIMATE
PROGRESSIVE NATURAL GAS VISION (GORTT /
NGC)
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M5000 MEGA PLANT
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WHY M5000?
TO MAINTAIN COMPETITIVENESS AS A WORLD CLASS
PRODUCER
TO ACHIEVE GREATER SYNERGIES AND
ECONOMIES OF SCALE
TO CONSOLIDATE MHTL’S POSITION IN GLOBAL
MARKETPLACE
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OTHER CONSIDERATIONS
TECHNOLOGICAL ADVANCES ALLOW LARGER PRODUCTION
CAPACITY WITH IMPROVEMENTS IN EFFICIENCIES AND
ECONOMIES OF SCALE
5000 MTPD IS THE NEW WORLD SCALE BENCHMARK
M5000 WILL IMPROVE SHIPPING LOGISTICS AND DELIVERY
COSTS
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OTHER CONSIDERATIONSGROWTH OF BUSINESS IS BEST OPTION FOR ACHIEVING
SUSTAINED EFFICIENCY AND PROFITABILITY
NEW CAPACITY WILL BE BUILT IN ANY EVENT, EITHER BY MHTL
OR OTHERS
LOW COST PRODUCTION PLATFORM CAN LEAD TO NEW AREAS
OF DEMAND RESULTING IN FURTHER GROWTH IN THE INDUSTRY
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Owner: MHTLProcess ICI Low PressureDesign Davy Process Tech.
EPC ContractorFerrostaal/PromanOperator IPSLPlant Start-up Quarter 4, 2004Annual Capacity 1.8 million MT
M5000 PLANT
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ATLANTIC AVENUE
TTMC I CMCM5000Site
N
M5000 PLANT PLANNED LOCATION
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MHTL CAPACITY TO 2005
TTMC I CMC TTMC II MIV M5000 MHTL M1 M2 M3 M4
Start of Plant Prod. 1984 1993 1996 1998 2005 2005
Annual Avg. Plant 480 550 570 580 1,800 4.0MMProd. (‘000 MTPY)
ISO 9002 1995 2001 1998 2001Certification
Plant Design ICI Low Pressure ProcessTechnology
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DOMESTIC PRIVATE SECTOR CHALLENGES
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CHALLENGES
MAIN AREAS:
PROJECT CHALLENGES – M5000
GAS SUPPLY
DOMESTIC PRIVATE SECTOR ISSUES
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PROJECT CHALLENGES
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PROJECT CHALLENGES
FINANCING
MARKET
AVAILABILITY AND PRICING OF RAW
MATERIALS
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PROJECT CHALLENGES
SHIPPING AND LOGISTICS
AVAILABILITY OF TRAINED EXPERIENCED OPERATING
AND MAINTENANCE PERSONNEL
GOVERNMENTAL APPROVALS (TOWN AND COUNTRY
APPROVAL, ENVIRONMENTAL CONSIDERATIONS)
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GAS SUPPLY
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CHANGES IN GAS USAGE
PETROCHEMICALS NO LONGER THE
DOMINANT GAS USERS
NEW AND GROWING EMPHASIS ON LNG
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T&T GAS USE PROFILE 1999
Power Generation
15%
Methanol16%
LNG26%
Other Industrial & Commercial
12%
Ammonia31%
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T&T GAS USE PROFILE 2002
Ammonia21%
Other Commercial
and Industrial
11%
LNG43%
Methanol15%
Power Generation
10%
39
T&T GAS USE PROFILE 2006
Ammonia15%
Other Commercial & Industrial
9%
LNG56%
Methanol15%
Power Generation
5%
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IMPACT OF CHANGES IN GAS USAGE
POSSIBLE IMPACT ON PETROCHEMICAL PRODUCERS:
REDUCED AVAILABILITY OF NATURAL GAS FOR NEW
PETROCHEMICAL PRODUCTION
CHANGE FROM PRODUCT RELATED GAS PRICING
STRUCTURE FOR PETROCHEMICALS
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METHANOL AS A VIABLE OUTLET FOR NATURAL GAS
PRODUCT RELATED PRICING STRUCTURE FOR
PETROCHEMICALS HAS YIELDED ATTRACTIVE RETURNS TO
GAS SUPPLIER
PETROCHEMICAL RETURNS SHOULD COMPARE FAVOURABLY
WITH LNG NETBACK RETURNS WHEN LNG SUPPLY CHAIN
COSTS CONSIDERED
42
FUTURE PROSPECTS
METHANOL CONTINUES TO BE ATTRACTIVE AS A LONG TERM
INVESTMENT
BUSINESS CONTINUES TO BE CYCLICAL BUT AVERAGE RETURNS
MAKES BUSINESS A VIABLE OUTLET FOR NATURAL GAS USAGE
GROWTH PROSPECTS FOR THE INDUSTRY REMAIN ATTRACTIVE
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GROWTH EVEN WITH A WORST CASE SCENARIO OF THE TOTAL PHASE OUT OF MTBE IN THE US OVER THE
NEXT 2 TO 3 YEARS OVERALL POSITIVE GROWTH IN 2005 AND BEYOND IS PROJECTED
GOOD MEDIUM TO LONG TERM PROSPECTS FOR GROWTH IN NEW APPLICATIONS
METHANOL TO OLEFINS
POWER GENERATION
FUEL CELLS
DME
POWER GENERATION
FUEL CELLS
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OPPORTUNITIES FROM FURTHER METHANOL
EXPANSIONPOTENTIAL FOR FURTHER INVESTMENT ALONG THE VALUE
CHAIN: SHIPPING, BUNKERING, STORAGE
OPPORTUNITY FOR FURTHER DOWNSTREAM DEVELOPMENT:
MELAMINE
ACETIC ACID
FORMALDEHYDE
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DOMESTIC PRIVATE SECTOR ISSUES
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DOMESTIC PRIVATE SECTOR ISSUES
MHTL MAJORITY SHAREHOLDER IS A LOCAL HIGHLY
DIVERSIFIED CONGLOMERATE WITH EXTENSIVE
LINKAGES THROUGHOUT THE LOCAL ECONOMY
MHTL’S ENERGY INVESTMENTS CAN RESULT IN
BENEFITS TO A WIDE CROSS SECTION OF CITIZENS
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DOMESTIC PRIVATE SECTOR ISSUES
NEITHER MHTL NOR ANY OTHER DOMESTIC
PRIVATE SECTOR COMPANY ARE DIRECT
PRODUCERS OF NATURAL GAS IN T&T
MAJOR UPSTREAM PRODUCER ALSO HAS DIRECT
OWNERSHIP IN DOMESTIC METHANOL INDUSTRY
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DOMESTIC PRIVATE SECTOR ISSUES
A MAJOR CHALLENGE FACING THE DOMESTIC PRIVATE
SECTOR IS HOW TO ACHIEVE SUSTAINABLE GROWTH
AND DEVELOPMENT IN THE ENERGY SECTOR
ANOTHER CHALLENGE IS HOW TO ACHIEVE A
DIVERSIFIED PORTFOLIO OF PETROCHEMICAL PRODUCTS
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NEW INVESTMENTS BY MHTL AND
SHAREHOLDERS M5000 METHANOL PLANT
CNC AMMONIA PLANT
N2000 AMMONIA PLANT
PLANNED UREA PLANT
PLANNED MELAMINE PLANT
PROPOSED FORMALDEHYDE PLANT
PROPOSED ACETIC ACID PLANT
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CLOSING REMARKS
NEED FOR AN ENTITY SUCH AS NGC TO CONTINUE TO FACILITATE A
BALANCED PORTFOLIO OF NATURAL GAS USAGE AND TO MAINTAIN
SOME FORM OF REGULATORY OVERSIGHT
NEED FOR A BALANCE BETWEEN SHORT TERM RETURNS VS LONG
TERM SUSTAINABLE DEVELOPMENT
NEED FOR ENCOURAGEMENT OF DIVERSIFICATION INITIATIVES
WITHIN THE NATURAL GAS SUB SECTOR
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CLOSING REMARKS
THE NATIONAL GAS POLICY SHOULD PROVIDE FOR
CONTINUOUS REVIEW OF GAS UTILIZATION RATIOS ACROSS
INDUSTRIES TO OPTIMIZE VALUE TO TRINIDAD AND TOBAGO
SOME PORTION OF NEW GAS PRODUCTION SHOULD BE
RESERVED FOR PETROCHEMICAL INDUSTRIES TO CONTINUE
THEIR DEVELOPMENTAL AND DIVERSIFICATION PATHS
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THANK YOU
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