Methanex Moves to Consolidate Methanol Market Buying OCI’s Unit for $2B

 

Methanex, already a major supplier of methanol, is moving to consolidate its position in the market as well as gain a foothold in the emerging ammonia market through the acquisition of OCI Global’s methanol business. The Dutch green fuel company had billed itself as the largest global green methanol producer as well as the only methanol producer with production plants in the U.S. and Europe.

OCI Global has been pursuing a strategic divestment plan with the sale of the methanol unit the fourth major transaction in a year. Under the terms of the agreement, OCI will receive $1.15 billion in cash as well as shares which will make it the second-largest shareholder in Methanex. OCI’s Executive Chairman Nassef Sawiris called the deal part of the group’s overall strategy with it being an “outstanding strategic fit” for Methanex. He said Methanex was a natural owner for the OCI’s methanol business. 

“This is a unique opportunity to create value by acquiring two highly attractive North American methanol assets that will further strengthen our global production base,” said Rich Sumner, President and CEO of Methanex. He cited the company’s strategic objectives of industry leadership along with the strong opportunities to achieve cost savings due to synergies from lowering logistics costs. He notes Methanex and OCI have similar operating models.

The transaction permits Methanex to consolidate the market at a time when strong demand is anticipated. The shipping industry has already moved toward methanol as an alternative fuel while at the same time expressing concerns about the supply. OCI has already supplied methanol to the shipping industry including X-Press Feeders and has supply agreements for both Maersk and X-Press Feeders. OCI was also actively pursuing e-methanol and synthetic fuels for the future of the industry.

Methanex acquires a methanol facility in Beaumont, Texas with an annual production capacity of 910,000 tones of methanol. The plant was restarted in 2011 and OCI upgraded it with $800 million of capital. The transaction also includes a 50 percent interest in a second Texas facility with Natgasoline. Methanex hopes to resolve a dispute with the company and it would have an 850,000 tonnes share of its production. In Europe, OCI Hyfuels markets methanol to a strong customer base and the company has a production plant in Delfzil, Netherlands that can produce 1 million tonnes of methanol. The plant is not currently in production due to unfavorable pricing for natural gas feedstock.

In addition to methanol, the Texas plant has a production capacity of 340,000 tonnes of ammonia. While recognizing it is a modest capacity, Methanex says it still provides a low-risk entry into a new and synergistic commodity. They look at it as a possible route toward diversification noting that ammonia is expected to see strong demand for power generation and as a marine fuel.

The total transaction is valued at just over $2 billion. Methanex expects to close the acquisition in the first half of 2025.

OCI recently also sold its ammonia project based in Texas. Australia’s Woodside Energy agreed to pay $2.35 billion for the ammonia project as it moves to also diversify its operations. OCI’s divestments were driven by dissident shareholders who were seeking increased shareholder value.