Yahoo Finance Methanex Helps to Ease New Zealand Power Squeeze by Idling Plant
(Bloomberg) -- Methanex Corp. will temporarily idle its New Zealand methanol plant, allowing it to sell natural gas to local generators to alleviate a squeeze on the electricity market.
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Contact Energy and Genesis Energy have agreed short-term contracts to take some of Methanex’s gas entitlements, saying that will allow them to run their plants in coming months if needed.
New Zealand wholesale power prices have more than doubled over the past month, according to data supplied by the Electricity Authority, partly because of low hydro lake storage levels. The country is also short of gas and the government has said it is considering options to import liquefied natural gas to ease the situation.
Methanex will idle its plant until October, the Vancouver-based company said Tuesday in Wellington.
“New Zealand’s energy balances are currently very strained due to seasonally high demand combined with low hydro levels and relatively lower gas supply,” President Rich Sumner said in a statement. “We have been working closely with energy providers, other gas users and the government of New Zealand on how we can be part of the solution. We believe these agreements will play an important role to support the energy sector.”
Methanex said the proceeds from the short-term gas contracts with Contact and Genesis will “meaningfully exceed the margin lost on New Zealand methanol production delivered to customers.”
Contact agreed to take about 3.5 petajoules of gas from Methanex, and said this would allow it to operate its Taranaki gas-fired plant throughout 2024, if needed by the market.
Genesis agreed to take 3.2 petajoules from Methanex, saying it would allow its Unit 5 plant at Huntly to return to full capacity. That unit is capable of generating 400 megawatts of electricity.
“This gas supply will support electricity generation through the remainder of winter and into spring,” said Chief Wholesale Officer Tracey Hickman.
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