Louisiana, here they come. Bloomberg reports:
Methanex Corp. (MX), the world’s biggest methanol maker, plans to dismantle an idled Chilean factory and ship it to Louisiana where it will be reassembled to capitalize on the lowest U.S. natural-gas prices in almost a decade.
The article fails to explain the back-story here. Argentina used to sell Chile lots of natural gas. Methanex built four plants in Tierra del Fuego to turn some of this fuel into chemicals. At the time, Argentina’s peso was pegged to the dollar and its price of natural gas was regulated.
Argentina eventually devalued its currency, making everything in that country more expensive. Except gas. It kept natural gas prices low, causing motorists to convert a big chunk of the vehicle fleet to the cheaper fuel. Soon, Argentina was suffering for lack of natural gas. People started freezing in their homes for lack of heating fuel. Power plants went into crisis mode. Predictably, Argentina cancelled its supply agreement with Chile.
Methanex had to shut down several methanol production lines. Over time, it has sought new natural gas supplies, including Chile’s own gas resources. But Southern Cone gas is still several times more expensive than the same fluid in Louisiana. So, off they go. It’s hard to analyze their cost-benefit situation because the company statement doesn’t reveal how much they plan to spend on the move.
Recall that Methanex took lots of rhetorical fire last year when southern Chile was facing higher gas prices.