Chemanol cuts cost impact after Aramco holds gas price till June

Methanol Chemical Co. (Chemanol) has lowered the expected financial impact of higher feed gas price in 2016 to SAR 25 million from the SAR 30 million projected earlier.

Chemanol said in a statement to the Saudi bourse, Tadawul, on Monday that the revision comes after it received a notification from Saudi Arabian Oil Co. (Aramco) that it will be supplied methane at the old price of $0.75 per million British Thermal Units (MMBTU) for a period of seven years and 90 days, starting from the actual supply date.

Chemanol calculated the grace period will end on June 4, 2016 and the new price of $1.25 MMBTU will take effect from the next day.

In December, Chemanol said it expects to incur an extra SAR 30 million in yearly costs beginning from 2016 following the Saudi cabinet’s decision to raise feedstock gas and energy prices to narrow the government’s budgetary deficit.