Sterling Bows Out of Methanol
Under a separate deal, Sterling granted Methanex exclusive rights to the output from its 450,000 mt/yr Texas City methanol plant. Methanex immediately opted to close the facility for at least six months due to high natural gas prices on the US Gulf.
"One of our key priorities in 2000 was to participate in the necessary restructuring of the methanol industry and this transaction represents significant progress in this regard," says Methanex president/CEO Pierre Choquette. The company sold an Alaskan methanol plant last year as part of a larger restructuring after it opened a large, modern plant in Chile last year.
The agreement gives both Sterling and BP Amoco access to low-cost methanol, which Methanex, the world's largest producer, can source from plants in Canada, Alaska, and South America. Sterling notes that US methanol producers have seen margins shrink because their natural gas feedstock prices are higher than those of foreign competitors.
In fiscal 1999, Sterling recorded a pretax noncash impairment charge on its methanol assets, following the US EPA's decision to seek legislation mandating a decrease of the use of MTBE in reformulated gasoline. MTBE is the largest single outlet for methanol.
Sterling's largest use of methanol is the production of acetic acid. The company also supplied BP Amoco with methanol for production of MTBE.
By Alan S. Brown