In recognition of the vital role played by Methanex Corporation worldwide as the world’s major producer and supplier of methanol, Egypt Oil & Gas seized the opportunity of his visit to Egypt and conducted an interview with John Floren, President and CEO at Methanex Corporation.
What is Methanex’s strategy to maintain its position as the world’s largest producer and supplier of methanol?
Our strategy is simple and clearly defined – global leadership, operational excellence, and low cost. We are focused on maintaining and enhancing our position as the major producer and supplier in the global methanol industry, improving our ability to cost-effectively deliver methanol to customers, and supporting both traditional and energy-related global methanol demand growth. As we strive towards this vision, our ability to attract, retain, and develop a global team of talented and engaged leaders is critical to our success.
We strive to achieve operational excellence in all aspects of our business, from manufacturing and supply chain processes to corporate governance practices and financial management. Our goal is to be the preferred supplier to every one of our customers, which we achieve by safely and reliably delivering the methanol they need. Our strategically positioned production sites and extensive global supply chain enable us to achieve this. The Power of Agility® is our key differentiator. It is how our global team of over 1,400 employees safely and reliably delivers on our brand promise every day by quickly adapting and responding to our customers’ needs and creating and capitalizing on opportunities in the marketplace.
A low-cost structure is an important competitive advantage in a commodity industry and is a key part of our strategy. Our approach to major business decisions is guided by a drive to improve our cost structure, expand margins and create value for our customers and shareholders.
Methanol is considered an essential feedstock for many industries. What is Methanex doing to enable a more solid future for methanol globally?
As the world leader in methanol, we are dedicated to exploring new and exciting applications for methanol to provide solutions for the world’s energy needs. Methanol is a clean-burning, bio-degradable fuel that is increasingly used as an environmentally-friendly and economic alternative fuel to power vehicles, ships, and other industrial applications. We are working closely with industry stakeholders to identify, develop, and support potential emerging applications for methanol including automotive fuel blending, marine fuel, and methanol-to-power.
We have been working with partners in China to pilot the use of high-level blends of methanol as an automotive fuel, and we are pleased to see significant interest as seven cities have added taxis to their fleet that operate on 100% methanol fuel; we estimate that there are over 19,000 taxis capable of operating on 100% methanol that are running today.
Our shipping fleet has ten time-chartered vessels that can run on methanol and by the end of the year, 40% of our fleet will be capable of running on methanol.
As well, there is growing interest in clean-burning fuels in China to replace coal and we are excited to see growing demand for methanol as a fuel for industrial boilers and kilns.
We expect that as the shift to clean-burning fuel continues, these and other emerging energy applications for methanol will become more widespread.
I am aware that Methanex follows the best environmental and safety practices in all aspects of methanol production and distribution. What does this mean to you personally?
It means that I am part of an organization that cares for the community it works in, its employees, customers, stakeholders, and the environment. We are committed to making a positive impact on the communities and environments in which we live and work and to acting responsibly in everything we do. It means that safety is not just a slogan that we associate our brand with but rather a strong commitment that is inherent within our processes and day-to-day practices.
How viable is methanol as an alternative fuel?
Across the world, methanol is emerging as a clean, sustainable, and attractive alternative fuel for powering vehicles and ships, cooking food, and heating homes. As a clean-burning fuel, methanol can be blended directly into gasoline to produce a high-octane and efficient fuel with lower gas emissions than conventional gasoline. It can be blended with gasoline in low-quantities and used in existing road vehicles, or it can be used in high-proportion blends such as M85-M100 in flex-fuel or dedicated methanol-fueled vehicles. Technology is also being commercialized to use methanol as a diesel substitute. Methanex is working with partners worldwide to promote methanol as a clean, sustainable road fuel.
In China, methanol-gasoline blending has grown rapidly due to methanol’s favorable economics, clean-burning benefits and energy security benefits. China’s federal and provincial governments have implemented programs and fuel-blending standards in many provinces to promote methanol as a fuel. Some countries in Europe are also using gasoline blended with small quantities of methanol. Other countries, including Australia and Israel, have completed commercialization activities to support the commercialization of methanol fuels.
With an eye on the regulations on marine fuel, why is Methanol considered the solution for the shipping industry?
Methanol is a safe, clean-burning marine fuel that cost-effectively meets the shipping industry’s increasingly stringent emissions regulations. New environmental regulations from the International Maritime Organization (IMO) and other governing bodies are requiring ships to decrease emissions of sulphur oxides (SOx) and nitrogen oxides (NOx) by January 1, 2020.
With its clean-burning qualities, methanol reduces and eliminates smog-contributing emissions, helping improve air quality and reducing related human health issues. Interest in methanol as an alternative marine fuel is growing globally and methanol-powered dual fuel engine technology has been successfully used in a number of vessels around the world, including 11 tankers chartered by Methanex’s wholly-owned subsidiary Waterfront Shipping by the end of 2019.
The Damietta facility is a joint venture of Methanex together with Egyptian government partners. Please share with us some insights about the experience of partnering with the Egyptian energy sector.
We are very proud of our successful partnership with the Egyptian Ministry of Petroleum and Mineral Resources. Methanex Corporation owns a 50% stake in our joint venture, with a 17% stake for APICORP while the remaining 33% is owned by Egyptian Ministry of Petroleum companies: the Egyptian Petrochemicals Holding Company (ECHEM) owns 12 %, the Egyptian Natural Gas Holding Company (EGAS) holds 12%, and the Egyptian natural Gas Company (Gasco) owns 9%.
As the only methanol production business in the country, this means that our joint venture substantially provides most of the country’s methanol needs. In addition, last year we signed an agreement with the Suez Methanol Derivates Company, an ECHEM affiliate. Their plant will be built next to our plant in Damietta, and through this partnership we will be providing them with methanol feedstock and utilities for the production of formaldehyde products. All of this helps us to support H.E. the Minister of Petroleum’s vision to maximize the value of the country’s oil and gas resources, through setting up a chain of synergetic petrochemicals industries that further contribute to Egypt’s economic growth.
Of equal importance is our exports – about 85% of our production is exported via ships to various destinations around the world, mainly in Europe – providing USD revenues that further contribute to the country’s economy.
Can you comment on the significance of Methanex’s location in terms of access to markets?
Methanex in Egypt operates a state-of-the-art methanol production facility located in Damietta, Egypt, on the Mediterranean Sea that is among the most energy efficient methanol plants in the world with a production capacity of 1.3 million tons of methanol per year. Our position within the Damietta Port enables easy access for our methanol transportation vessels carrying our product to various locations around the world, and particularly Europe, and to the fleet of methanol transportation trucks carrying our production to domestic customers.
Congratulations on winning the International Council for Small Business (ICSB) Humane Entrepreneurship Award for the company’s contributions to the enrichment of Micro-, Small-, and Medium-sized Enterprise (MSME) culture in Damietta. Please tell us about your experience receiving the award at the United Nations (UN).
Earlier this year, I traveled to New York to attend the MSMEs Day at the UN, upon the invitation of the ICSB. The invitation came in recognition of Methanex Egypt’s contributions to the development of MSMEs in Damietta, as part of our two-year partnership with the International Labour Organization (ILO). I was extremely proud to receive the ICSB’s award for Humane Entrepreneurship, an award given to companies that successfully attain business excellence, while also making a positive impact on their communities through addressing economic growth and social inclusion while meeting at least one of the 17 UN Sustainable Development Goals (SDGs). Our Social Responsibility project in Damietta enables Methanex Egypt to support the UN SDG agenda through addressing SDG #8 on economic growth and decent work. Through our partnership with the ILO in Egypt, we aim to create decent employment opportunities for youth in Damietta, focusing on employment creation through promoting entrepreneurship and facilitating job matching processes.
Can you share some highlights of your social responsibility program?
We care deeply about people and the environment in which we live, work, and play, and we believe our business must have a positive impact on people’s lives. This is the driver behind our commitment to acting responsibly in everything we do.
Since the start of our operations, we have invested in various health and education projects. In delivering these projects, we work closely with community leaders and grassroots NGOs to ensure our community investment projects address the real needs of our neighboring communities. As I mentioned before, we are aligned with Egypt’s Vision 2030 and the UN’s SDGs 2030 and these form the framing structure of our social responsibility work in Damietta. In addition, we support education through a partnership with Misr El Kheir foundation that enables us to support the educational expenses of 10 top thanawiya amma (National Egyptian High School Diploma) students. To date, we have 53 students enrolled in this program. In the past, our social responsibility work included significant donations to Damietta hospitals, including Kafr El battikh general hospital and the National Cancer Institute in Damietta.
How important is Responsible Care® in implementing the company’s strategy?
Our Responsible Care Program is founded on the Responsible Care Ethic and Principles for Sustainability, a sustainability initiative recognized by the UN and adopted by the global chemical industry. Our commitment to Responsible Care and sustainability compels us to work for the improvement of people’s lives and the environment, while striving to do no harm. It also compels us to be accountable and responsive to the public, especially our local communities, who have the right to understand the risks and benefits of what we do and to take preventative action to protect health and the environment. We constantly innovate for safer products and processes that conserve resources and provide enhanced value. And in doing so, we engage with our business partners to ensure the stewardship and security of our products, services, and raw materials throughout their life cycles.
We also work with our partners and all stakeholders to promote awareness of Responsible Care and inspire others to commit to these principles. As a reflection of this commitment, last year we championed, along with our partner ECHEM the petrochemicals holding company, the first Process Safety Management (PSM) workshop to share the company’s own journey towards safer processes, assets, and operations, as part of our commitment to Responsible Care, and to safety within the petrochemicals sector in Egypt. PSM is a set of interrelated approaches to managing hazards associated with the process industries and is intended to reduce the frequency and severity of incidents resulting from releases of chemicals and other energy sources. These approaches are composed of organizational and operational procedures, design guidance, audit programs, and a host of other methods that prevent accidents that can cause serious harm to people and the environment. The second conference was held in September of this year and was attended by over 300 of the top leaders of the oil, gas, and petrochemicals sector in Egypt.