Labour,
gas uncertainty for new Methanex boss
By
Sherwin
Long
Trinidad
Guardian
Port
Spain
Petroleumworld.com
08 14 06
Charles
Percy, new managing director of Methanex Trinidad
Ltd, has been on the job for only three months.
But
already, he is prepared for upheaval at the country’s
number one exporter of methanol, which is a subsidiary
of Canadian petrochemical giant Methanex.
Whether
it comes in the form of losing key staff to competitor
and majority locally-owned Methanol Holdings Ltd
(MTHL), in coming months, or dealing with uncertainty
over gas supply from the National Gas Company (NGC),
Percy has a full plate.
In
an interview, last Wednesday, at Methanex’s
Maracaibo Drive, Point Lisas Industrial Estate headquarters,
Percy outlined his transition to the job and his
changing responsibilities.
As
the former vice-president of corporate operations
for bpTT, Percy was in charge of human resources
and even safety and health operations.
At
Methanex, Percy, a UWI-electrical engineering graduate,
is in charge of everything from plant to support
services.
He
said his reason for leaving bpTT was the responsibility
and opportunity of running Methanex’s local
operations.
“I
started off as an electrical engineer and became
engineering and maintenance manager (at Fedchem)
then went across to human resources (at bpTT),”
Percy, 49, said. “This position brings together
both my soft skills and technical skills, added
to which you have full responsibility, so it could
put some grey hair on my head.”
In
line with the grey hair and added responsibility,
currently, the Tobago-born Percy noted that there
has been less than the required supply of natural
gas from NGC to Methanex’s Titan and Atlas
plants.
He
said this issue will affect Methanex’s projected
income and reliability as plants performed best
with a stable gas supply.
“We
have limitations in supply given the demand that
is in the system right now. With Atlantic LNG Train
IV and M5000 coming on board, the supply demand
balance is tight and all the downstream companies
are feeling the effect of it,” Percy observed.
He
said variable gas supply caused “upsets in
the system” as plants could not always handle
this fluctuation.
In
spite of the gas supply shortcomings, from a production
point of view, Percy noted that Methanex has not
been left reeling from the blow.
On
its Atlas plant, Methanex’s average production
is 5000 tonnes a day and at its Titan plant average
production is 2500 tonnes a day, Percy said.
Annually,
Methanex produces 2.6 million metric tonnes per
year.
BPTT
is a 40 per cent shareholder in the Atlas plant
and Percy represented bpTT on the Atlas plant board
in 2005.
He
said Methanex made up for the limited gas supply
with more efficiency in its plant operations.
“If
we had budgeted for 95 per cent gas availability
and 100 per cent ‘up time’, even if
we lost five per cent on the supply side, the overall
production that we expected to make at this time
of the year is still on target,” he said.
He
said ‘up time’ at Atlas was 100 per
cent and Titan was 98 per cent.
As
a result, both plants have performed above expectations
even though Percy refused to give the total production
for the year thus far.
However,
he revealed two weekends ago the Titan plant went
down because of a problem in the water treatment.
Competition
With
MTHL, Methanex’s main competitor in the methanol
market, set to spread its wings with a urea, ammonia
nitrate and melamine complex, Percy anticipated
a grab for labour talent on the horizon.
He
said T&T currently has an increasingly competitive
market for scarce skills.
Percy
also referred to Government’s drive to go
further downstream in the energy sector as adding
to the shallowness in T&T’s labour pool.
But
most of his attention was focused on MTHL.
“We
estimate they (the new plants coming on stream in
next three (MTHL) will need around 300 skilled workers
over the next three years. One third of the people
will come from existing plants and another two third
will be brand new people who they train,”
Percy predicted. “So we expect there is going
to be a lot of heating up in local petrochemical
market for scarce skills in the next two to three
years.”
To
counter any labour fluctuations, he said Methanex
had to be competitive in base pay and rewards for
its employees plus provide training and development
opportunities.
While
MTHL recently donated US $5 million to the University
of T&T, Percy said Methanex had also contributed
to the university’s technician training programmes
but did not make “a big splash” about
it.
Percy
also said Methanex provided a buffer system through
its training programmes to bring on more workers
than they needed.
This
allowed the company to backfill staff when there
was a shortage and to offer the wider market place
additional human resources, he added.
Swimming
up the downstream
For
the Government and the private sector, there is
a current rush for downstream development in the
energy sector.
As
T&T is the number one exporter of both methanol
and ammonia world-wide, Government has made it clear
that any further investment in producing these petrochemicals
could saturate the market.
Percy
did not rule out the possibility of Methanex going
further down the value chain with methanol derivatives.
He
said the company was considering converting methanol
to polypropylene and dimethyl ether (DME).
DME
can be used as fuel or a fuel additive.
Plus,
its shipping and handling would be cheaper than
liquefied natural gas.
On
the other hand, according to research by energy
consultants Nexant, polypropylene’s global
demand is expected to increase by seven per cent
each year until 2010.
However,
Percy said Methanex’s venture into any downstream
market was dependent on a host of factors.
“Capital
costs are very high to get into these industries
and it is too early to say whether these business
ventures are worthy of injecting capital,”
he added. “But good alliances are key.”
Percy
said Methanex would have to team up with an established
player in the downstream business to enter the market.
He
said, due to the demand for methanol in China, there
is currently not enough methanol supply to meet
demand in the world market.
The
market’s buoyancy is one of the main reasons
Methanex did not expand into different downstream
projects.
Methanol
prices have been holding stable at over $300 per
metric tonne and Percy said Methanex did not anticipate
any price dip in the near future.
The
picture could change as he also noted other methanol
plants were coming onstream in Iran and MTHL’s
Oman plant.
These
could affect the price of methanol world-wide, he
said.
While
Methanex’s plant in Canada was sold and its
operations in New Zealand were downsized, Percy
said a new methanol plant in Egypt would be opening
soon.
He
noted that the market place could not tolerate the
high cost associated with the manufacturing sites
in Canada and New Zealand.
And
the cutback had impacted on Methanex.
“Yes
it has affected us but we have been able to keep
our markets based on our ability to purchase and
distribute product all around,” he said.
He
predicted the Egyptian plant would be Methanex’s
conduit to European and Asian markets plus rebuild
lost production capability.
Percy
said for Methanex to remain the leader in methanol
it had to stay as reliable in production as possible
and keep a low cost structure.
He
paused to gather his thoughts, looking upwards to
the ceiling.
“In
this commodity-type business, we tend to manage
margins very tightly. You know what your break-even
costs are, you try to ensure that you are always
conscious of cost management. So that if the price
falls you lose on the margin but you won’t
lose money,” he said.
Trinidad Guardian
Thursday
10th August 2006
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©2006 Trinidad Guardian. All Rights Reserved.
