Methanex and China’s XinAo Group have entered into a long-term arrangement under which Methanex will, beginning in late 2007, supply an initial quantity of approximately 300,000 tonnes per annum of methanol to XinAo.
This methanol will be used in a new 200,000-tonne dimethyl ether (DME) production facility that XinAo is developing near Shanghai. The price for methanol under this supply arrangement will be linked to energy prices. Methanex also has an option to take an equity stake of up to 20% in this DME facility.
DME can be blended up to 20% with liquefied petroleum gas (LPG) and used for household cooking and heating. DME can also be used as a clean burning substitute for diesel in transportation and as a clean fuel for power generation.
The Chinese government is supporting the development of dimethyl ether (DME) as a possible alternative to diesel. (Earlier post.)
Earlier in August, the International Finance Corporation (IFC), the private sector arm of the World Bank Group, signed a financing package for the Xinao Group to support a coal-to-dimethyl ether (DME) project that will be one of the world’s largest. That project is expected to come online in 2009. (Earlier post.)
XinAo is developing DME as a clean energy source that has been identified by the Chinese government as a strategically important alternative to fuels such as coal or diesel. The outlook for DME demand in China’s fuel sector is promising and we are very pleased to be supported by Methanex, the global leader in methanol, as we establish and grow our DME business.—Wang Yusuo, XinAo Group Chairman
Methanex is a Vancouver based, publicly-traded company engaged in the worldwide production and marketing of methanol.
(A hat-tip to Andrey!)