By Peter Alagos
Qatar’s methanol industry would continue to remain competitive even as low-priced natural gas from the US is attracting China to establish new methanol plants in North America, Methanol Institute (MI) CEO Gregory Dolan said yesterday.
“Certainly, we’ve seen some interests from Chinese enterprises on building methanol plants in the US for an export market back in China for MTO (methanol to olefins) production,” Dolan told Gulf Times on the sidelines of the inaugural Middle East Methanol Forum at the Sharq Village and Spa here.
But Dolan was quick to say that “There’s probably enough thirst for methanol in China whether it’s being sourced from the US, Qatar, or other GCC states and there’s probably enough demand to go around for everybody to be satisfied.”
This was reinforced by MI chairman Dennis Patrick, who said global markets, likewise, need additional supply for methanol despite China’s huge demand growth for the primary feedstock, which was derived from natural gas.
“China has a huge demand growth for methanol and I think the world needs additional supply. It’s just that there are new projects in the US because of the shale gas boom but the Gulf region continues to become a competitive source of supply globally. So, I don’t think that would affect the Gulf’s production of methanol,” Patrick said.
As a key component of hundreds of chemicals, methanol was used as a primary feedstock in the manufacture of thousands of common products. It was also used on its own in a number of applications such as transportation fuel, waste water denitrification, as hydrogen carrier in fuel cells, biodiesel transesterification, and electricity generation.
In his message, HE the Minister of Energy and Industry, Dr Mohamed bin Saleh al-Sada noted that the global methanol market has seen a number of changes in the recent years.
“There has been explosive growth in demand and capacity in China, while forecasts say North America will be transformed from an importer to a net exporter,” the minister said.
According to Dolan, the MI was expecting to see US methanol production capacity to reach nearly 26mn tonnes by 2018 against its current chemical demand of about 7mn tonnes per year (tpy).
“So, clearly there’s a lot of methanol that would be looking for a market and a good bit of that would be going to China,” he said.
Similarly, he said MI was expecting the US to be self-sufficient by 2016 or 2017 and later as an exporter of methanol.
While North America is yet to export methanol, once new production plants become operational in the country, investors there will look at exporting the liquid alcohol to China, Patrick said.
He added, “But all those exports will meet a growing demand from China and that demand has to be met by other, non-US methanol producers, particularly those based in the GCC region.”
Khalid Mubarak Rashid al-Hitmi, chief operating officer for Qatar Fuel Additives Company (Qafac), said China ranks as the world’s largest consumer of methanol but, at the same time, was “pushing very hard” to develop methanol from its coal reserves.
“It doesn’t necessarily follow that they are only looking at the US as a methanol source. China imports methanol from everywhere,” he stressed.
Qafac, which hosted and organised the event, currently produces 1mn tpy of methanol and more than 600,000 tpy of MTBE (methyl tertiary butyl ether).
A majority of methanol Qafac produced is exported to markets within Asia, the Far East, and Europe and 20% is used internally in the production of MTBE.
Al-Hitmi said Qafac’s mission was to recover 500 tonnes per day of CO2 from its methanol reformer stack and inject it in its existing methanol plant to enhance production capacity.
“The amount of CO2 recovered in the plant was equivalent to CO2 absorbed by 4.2mn trees in 10 years or CO2 emitted by 32,000 vehicles per year,” he stressed.
Qatar, UAE have least demanding tax regimes in Mideast, says PwC
Qatar, along with the UAE, was found to have least demanding tax regime for the medium-sized companies, according to the latest report from the World Bank Group and PricewaterhouseCoopers (PwC).
“Qatar and UAE share an equal first place in the overall tax ranking, with a total tax rate of 11.3%, 41 hours and 4 payments for Qatar and a total tax rate of 14.8%, 12 hours and 4 payments for the UAE,” said the report ‘Paying Taxes 2015’.
Paying Taxes 2015 measures all mandatory taxes and contributions a medium-size company must pay in a given year. Taxes and contributions measured include the profit or corporate income tax, social contributions and labour taxes paid by the employer, property taxes, property transfer taxes, dividend tax, capital gains tax, financial transactions tax, waste collection taxes, vehicle and road taxes, and other small taxes or fees.
Among the other Gulf countries, Saudi Arabia was in the third place, Bahrain in the eighth, Oman in the tenth and Kuwait in eleventh.
The Middle East continues to be the least demanding tax framework, with an average total tax rate of 24%, 16.8 average number of payments and an average time to comply of 160 hours.
“This (attaining the first position) aligns with the government strategy and the policies they have implemented in making tax compliance easier for business. The recent electronic filing initiative is again a further demonstration of the continuing programme of improvement and modernisation that the Qatar government is committed to in further improving its interaction with business,” Neil O’Brien, tax leader in PwC Qatar, said.
However, the report found that only 15% of the economies in the Middle East region have implemented electronic systems for filing and payment of taxes for at least one type of tax that are used by the majority of companies, which is second lowest result across all the regions.
Although the Middle East tax environment remains the least demanding, it also highlights an important area that the region needs to improve the use of electronic filing and payment mechanisms, according to Jeanine Daou, partner and Middle East Leader for Indirect Taxes and Fiscal Policy.
“As we have seen with the recent and substantial tax reforms in different countries in the region, governments in the Middle East are very much engaged in deliberations concerning tax reform, not just in terms of fiscal balances, but also with broader policy objectives such as encouraging economic growth,” he said.
The Paying Taxes 2015 report finds that on average, the standard company studied has a total tax rate (as defined under the Doing Business methodology) of 40.9% of commercial profits. It makes 25.9 tax payments per year and takes 264 hours to comply with its tax requirements. Over the ten years of the study, 78% of the 189 economies covered in the report have made significant changes to their tax regimes at least once.
