Vancouver-based methanol producer Methanex said on March 16, 2020 it idled its Titan plant in Trinidad on that day and will idle its Chile IV plant on April 1, both indefinitely, due to weak demand, as reported by Petrochemical Update.
Methanex plant in Chile. Photo courtesy of Methanex.
“Demand could be impacted in second quarter 2020 as there has been a substantial reduction in manufacturing” in countries impacted by Covid-19, said John Floren, CEO of Methanex.
“As a result, we are reducing production at our methanol facilities where we have flexibility in our gas agreements,” he added.
In addition, Methanex is “evaluating all capital and operating spending, including our advantaged Geismar 3 project,” it added.
Methanex had announced on July 19, 2019 a final investment decision to build a 1.8-million-tonne methanol plant in Geismar, Louisiana. The estimated project cost for this plant to be located next to Geismar 1 and 2 is about $1.4 billion.
“Given the uncertainty in the global economy and challenging commodity price environment, we are taking steps to strengthen our balance sheet,” Floren said.
Methanex is the world’s biggest methanol producer. It supplies to markets in North America, Asia Pacific, Europe and South America from six production sites around the globe.
Methanol is largely used as fuel but also has other applications including as a component in coatings and plasma televisions.
Methanex currently has significant liquidity of approximately $700 million, including cash on hand and a revolving credit facility.
The company also has $800 million undrawn that was set aside for the Geismar 3 construction, it said.
Ethanol producers “implore” U.S. government for help amid plunging prices
Producers of ethanol and other renewable fuels in the United States asked on March 16, 2020 the United States of America government for help citing demand contractions attributed to weaker oil, trade wars and the coronavirus.
“With many ethanol plants on the verge of shutting down, we implore the (U.S. President Donald) Trump administration to take action,” said Renewable Fuels Association President and CEO Geoff Cooper.
“As an industry that employs 350,000 Americans across the heartland, we’re carefully watching the government’s response,” Cooper added.
The request includes addressing the impact on ethanol producers of small refinery waivers that exempt them from adding oxygenates, such as biofuels, to their fuel mix.
In August 2019 the Trump administration allowed the Environmental Protection Agency (EPA) to grant waivers to 31 small refineries, fewer than the previous year. The waivers eliminate a requirement to blend biofuels like ethanol into gasoline meant to achieve a cleaner combustion and help the environment.
“We urge the Administration to recognize that biofuel and agricultural commodity markets are suffering as well,” Cooper said.
“We urge the President to (…) announce that his EPA will not appeal the recent 10th Circuit court decision on small refinery waivers and that EPA will implement the 500-million-gallon remand as ordered by the D.C. Circuit Court in 2017,” he added.
Ethanol futures prices hit a record low in recent days, as the coronavirus is expected to negatively impact domestic and international fuel demand in the near term, the RFA said.
Ethanol futures traded at about $1.40 per gallon at the closing of 2019, but prices have declined to under $1.00 per gallon by March 20, 2020.
Braskem announces end of mandated external anti-corruption monitoring
Latin America’s biggest petrochemical company, Brazil-based Braskem, reported on March 11, 2020 the end of an external independent anti-corruption monitoring.
The auditing program had been ordered by Brazilian authorities to prevent new corruption and was part of a leniency accord in place since December 2016, the company said in information provided to Brazilian stock exchange authorities.
“During the independent monitoring process the company put in place controls destined to meet anticorruption legislation and mechanisms to assure adequacy and effectivity of integrity practices, preventing the occurrence of new illicit activities,” Braskem said.
“The company still awaits for a certificate of effectivity of the program of conformity also from the (United States) Department of Justice and from the Securities and Exchange Commission,” it added.
In December 2016 Odebrecht and Braskem pleaded guilty and agreed to pay $3.5 billion in global penalties to solve what was described at the time as the largest foreign bribery case in history, according to a press release on Dec. 21, 2016 by the U.S. Department of Justice, Office of Public Affairs.
Brazilian construction company Odebrecht has a 38% stake and is the biggest partner in Braskem. Brazilian state oil company Petrobras owns a 32% participation.
“Odebrecht and Braskem used a hidden but fully functioning Odebrecht business unit, a ‘Department of Bribery,’ so to speak, that systematically paid hundreds of millions of dollars to corrupt government officials in countries on three continents,” said Deputy Assistant Attorney General Suh, according to the Dec. 2016 press release.
On Nov. 20, 2019 the former CEO of Braskem, Jose Carlos Grubisich, was arrested in New York and charged with conspiracy to violate U.S. foreign corruption law as well as money laundering.
There are multiple ongoing corruption processes involving Odebrecht in several other countries and potential new investigations. Former company executives are testifying in exchange for reduced penalties against former government officials that received illegal funding in exchange for awarding contracts.
