Ecuador in methanol talks with Southern Chemical

OREANDA-NEWS. May 14, 2015. Ecuador is considering a long-term contract with Houston-based Southern Chemical to import methanol from the firm's production facilities in Trinidad and Tobago.

Under the proposed supply deal, Southern Chemical would build methanol storage tanks at the 75,000-tonne Monteverde LPG shipping terminal, a Southern Chemical executive and a government official told Argus.

The company would build three 5000 t tanks by 2016. It could add two more in 2017 and three in 2018, for a total of eight tanks with a combined capacity of 40,000 t.

The tank farm would require Southern Chemical to invest \\$40mn at Monteverde, in addition to a terminal use fee, according to Gustavo Vallarino, the company's representative in Ecuador.

State-owned downstream firm PetroEcuador could use the methanol to blend into a new biofuel fuel called Ecopais, consisting of a mix of 87-octane extra gasoline and sugar cane-based ethanol.

PetroEcuador has already completed a pilot plan covering 145 retail stations in the coastal province of Guayas, where some 11,110 b/d of the E5 Ecopais fuel are currently sold.

But Ecuador's ethanol production is falling behind Quito's plans to distribute Ecopais nationwide by 2017 and to reach an E10 standard in a second phase starting in 2018.

Complying with the 5pc mandate nationwide will require Ecuador to expand domestic ethanol production from a current 35mn liters/yr to 180mn l/yr. This in turn will demand rapidly expanding cane cultivation from a current 70,000 hectares to 104,000 hectares, according to a strategic sectors ministry official.

It will also require the expansion of the country's three privately owned ethanol plants, which have a combined capacity to produce just 40mn l/yr, and to build new facilities.

To overcome the ethanol bottleneck, Southern Chemical is proposing that Ecuador produce an Ecopais blend with an EM15 standard, consisting of a mix of 5pc ethanol and 10pc methanol.

The EM15 standard would require Ecuador to produce some 21.6mn l of ethanol and to import 189.6mn l of methanol in 2016. By 2020, the EM15 Ecopais blend would require 56mn l of ethanol and 617mn l of methanol, according to Vallarino.

Southern Chemical would meet Ecuador's methanol demand to produce Ecopais in the next five to seven years. After that, the company envisions Monteverde as a distribution hub to export methanol to Colombia, Peru and Chile.

An executive team of the Houston-based company met in April with Ecuador's vice president Jorge Glas to discuss the proposal. The firm has delivered a small volume of methanol to PetroEcuador to run laboratory tests and will provide 11,300 liters for pilot tests, Vallarino said.

The roll-out of Ecopais is aimed at reducing Ecuador?s growing high-octane gasoline imports which it blends with locally produced low-octane gasoline to make 87-octane and 93-octane gasoline.

High-octane gasoline imports averaged 55,126 b/d in 2014, up by 25.2pc from 2013, according to PetroEcuador figures.