Methanex says it plans to restart the second methanol plant at its Motunui site in New Zealand.
The plant is expected to commence production in mid-2012 and will add up to 650,000 tpy of incremental capacity.
Methanex has signed a 10-year agreement with New Zealand-based Todd Energy to supply natural gas for up to half of the 1.5 million tpy of capacity at the Motunui site, the company said.
The plant has been idle since 2004 and the estimated future capital cost to restart is $60 million.
Bruce Aitken, CEO of Methanex, said: "Based on the improved natural gas supply position that has developed in New Zealand over the past several years, we are delighted to announce the restart of a second plant in New Zealand.
Furthermore, we are very pleased to have entered into a long-term gas supply agreement with Todd Energy, a leading oil and gas producer in New Zealand. This agreement underpins higher production and provides for a long-term gas supply to our operations in New Zealand."
Mr. Aitken continued: "The quantity of gas supply under this contract potentially allows us to produce about 7.5 million tonnes of methanol over the next 10 years, representing multi-billion dollars of revenues.
The incremental capacity in New Zealand is an important new supply source for our customers in an environment where little new capacity is being added to the industry.
And, based on the modest capital expenditure required to restart the plant, this project is expected to create significant value for shareholders."