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METHANOL HOLDINGS (TRINIDAD) LIMITED

METHANOL HOLDINGS (TRINIDAD) LIMITED. Domestic Private Sector Challenges for the Development of a Mega Methanol Plant in Trinidad A MHTL Perspective July 23 , 2002. OUTLINE. MHTL PROFILE NATURAL GAS AND THE METHANOL INDUSTRY M5000 MEGA PLANT DOMESTIC PRIVATE SECTOR CHALLENGES

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METHANOL HOLDINGS (TRINIDAD) LIMITED

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  1. 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. OUTLINE • MHTL PROFILE • NATURAL GAS AND THE METHANOL INDUSTRY • M5000 MEGA PLANT • DOMESTIC PRIVATE SECTOR CHALLENGES • CLOSING REMARKS

  3. MHTL PROFILE

  4. Caribbean Methanol Co. Ltd. T & T Methanol Co. Ltd. Methanol IV Co. Ltd. METHANOL HOLDINGS (TRINIDAD) LIMITED

  5. M IV TTMC II MHTL’s METHANOL COMPLEX TTMC I CMC

  6. ROLE OF MHTL Finance Corporate Governance Manufacturing Marketing/ Shipping

  7. MHTL BUSINESS ENVIRONMENT • HIGH CAPITAL INVESTMENTS • COMMODITY TYPE PRODUCT • GLOBAL MARKETPLACE • INTENSE COMPETITION • BUSINESS CYCLES AND PRICING VOLATILITY

  8. 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

  9. MHTL MARKETING MHTL MARKETING HUB AT PT. LISAS RESPONSIBLE FOR: • GLOBAL MARKETING STRATEGY • MARKET INTELLIGENCE • CONTRACT NEGOTIATIONS AND ADMINISTRATION • GLOBAL MARKETING OPERATIONS

  10. PRODUCT DISTRIBUTION

  11. MHTL METHANOL PRODUCTION AND WORLD MARKET

  12. 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

  13. 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

  14. SHIPPING & LOGISTICS

  15. POINT LISAS LOADING FACILITIES Savonetta Pier II Savonetta Pier I

  16. MHTL TANKER FLEET

  17. STORAGE FACILITIES

  18. NATURAL GAS AND THE METHANOL INDUSTRY

  19. THE METHANOL BUSINESS • A PRIMARY PETROCHEMICAL BASED ON NATURAL GAS CONVERSION • NATURAL GAS AVAILABILITY AND PRICING STRUCTURE KEY TO METHANOL INDUSTRY

  20. CHANGING STRUCTURE OF THE METHANOL INDUSTRY • US METHANOL INDUSTRY NO LONGER CONSIDERED BENCHMARK; OFFSHORE PRODUCERS NOW REPLACING TRADITIONAL PRODUCTION IN THE MAJOR MARKET CENTERS

  21. TRINIDAD AS METHANOL PRODUCTION HUB TRINIDAD HAS BEEN A VIABLE LOCATION FOR METHANOL PLANTS BASED ON: • READILY AVAILABLE NATURAL GAS SUPPLY • COMPETITIVE GAS PRICING STRUCTURE • PROXIMITY TO MAIN MARKETS

  22. TRINIDAD AS METHANOL PRODUCTION HUB • ESTABLISHED INFRASTUCTURE • FACILITATING BUSINESS ENVIRONMENT • STABLE POLITICAL CLIMATE • PROGRESSIVE NATURAL GAS VISION (GORTT / NGC)

  23. M5000 MEGA PLANT

  24. 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

  25. 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

  26. OTHER CONSIDERATIONS • GROWTH 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

  27. M5000 PLANT • Owner: MHTL • Process ICI Low Pressure • Design Davy Process Tech. • EPC Contractor Ferrostaal/Proman • Operator IPSL • Plant Start-up Quarter 4, 2004 • Annual Capacity 1.8 million MT

  28. M5000 PLANT PLANNED LOCATION N TTMC I M5000 Site CMC ATLANTIC AVENUE

  29. 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 4.0MM Prod. (‘000 MTPY) ISO 9002 1995 2001 1998 2001 Certification Plant Design ICI Low Pressure Process Technology

  30. DOMESTIC PRIVATE SECTOR CHALLENGES

  31. CHALLENGES MAIN AREAS: • PROJECT CHALLENGES – M5000 • GAS SUPPLY • DOMESTIC PRIVATE SECTOR ISSUES

  32. PROJECT CHALLENGES

  33. PROJECT CHALLENGES • FINANCING • MARKET • AVAILABILITY AND PRICING OF RAW MATERIALS

  34. PROJECT CHALLENGES • SHIPPING AND LOGISTICS • AVAILABILITY OF TRAINED EXPERIENCED OPERATING AND MAINTENANCE PERSONNEL • GOVERNMENTAL APPROVALS (TOWN AND COUNTRY APPROVAL, ENVIRONMENTAL CONSIDERATIONS)

  35. GAS SUPPLY

  36. CHANGES IN GAS USAGE • PETROCHEMICALS NO LONGER THE DOMINANT GAS USERS • NEW AND GROWING EMPHASIS ON LNG

  37. T&T GAS USE PROFILE 1999

  38. T&T GAS USE PROFILE 2002

  39. T&T GAS USE PROFILE 2006

  40. 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

  41. 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

  43. 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

  44. OPPORTUNITIES FROM FURTHER METHANOL EXPANSION • POTENTIAL FOR FURTHER INVESTMENT ALONG THE VALUE CHAIN: SHIPPING, BUNKERING, STORAGE • OPPORTUNITY FOR FURTHER DOWNSTREAM DEVELOPMENT: • MELAMINE • ACETIC ACID • FORMALDEHYDE

  45. DOMESTIC PRIVATE SECTOR ISSUES

  46. 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

  47. 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

  48. 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

  49. NEW INVESTMENTS BY MHTL AND SHAREHOLDERS • M5000 METHANOL PLANT P • CNC AMMONIA PLANT P • N2000 AMMONIA PLANT P • PLANNED UREA PLANT • PLANNED MELAMINE PLANT • PROPOSED FORMALDEHYDE PLANT • PROPOSED ACETIC ACID PLANT

  50. 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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