Alternative Energy And Feedstock

Sources In The Current Chemical

Landscape:

The Methanol Perspective

GPCA, Dubai, November 2016

John FlorenPresident and CEO

Information contained in these materials or presented orally, either in prepared remarks or in response to questions, contains forward-looking statements. Actual outcomes could differ materially from those outcomes contemplated by the forward-looking statements. For more information, we direct you to our 2015 Annual MD&A and our third quarter 2016 MD&A.

Forward-looking Statements & Non-GAAP Measures

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• Essential ingredient used in countless industrial and consumer products

• Innovative marine fuel of today and the future

• Clean-burning, biodegradable transportation fuel

• Emerging power source

• Can be made from renewable sources

An essential ingredient of modern life

Methanol

Transportation fuel

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Methanol End Uses

5 Source: Methanex – last twelve months ended September 30, 2016

• ~64 million tonnes global demand in four quarters ended Q3-161

• Methanex is the global leader

• ~14% market share2

• Unique global position with sales in all major regions

• Top producers ~ half of global sales

• Largest competitors are not materially expanding methanol investments in the near term

1 Excluding integrated methanol to olefins (MTO) demand.

2 Includes Methanex’s share of total methanol sales excludingmethanol consumed by integrated MTO producers.

Industry Overview

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0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E

Chemical MTBE/TAME Fuel DME MTO/MTP (Merchant)

• Projected 6% CAGR to 2020, led by MTO

(000s tonnes)2007 – 2016 CAGR: 7%

2017 – 2020 CAGR: 6%

Source: IHS Chemical, Chemical Supply and Demand Balance 2016.

Excludes integrated methanol demand for methanol to olefins and propylene.

Strong Demand Growth

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Source: Historical annual data and forecast from IHS Chemical, October, 2016

• Methanol is primarily made from natural gas, and is a liquid fuel and oil product alternative

• High priced oil versus natural gas creates substitution incentive

• Energy applications emerged post 2008 when the ratio of oil $/bbl and natural gas $/mmbtuprices exceeded 15:1

Methanol as Energy

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• MTO an alternative process to Naptha cracking for olefins production (plastics)

• Two main pathways

• Upstream Integrated (CTO) – olefins produced directly from coal, methanol an intermediate step

• Merchant (MTO) – methanol purchased from external suppliers

• China merchant MTO capacity well established, still growing strongly

Ethylene Oxides (EO)

MEG

Acrylic Acid (AA)

ACN

Propylene Oxide

PE

SynthesisGas

Production

MethanolProduction

Methanol toOlefins

Natural Gas CoalPetroleum Residues

High PurityEthylene

High PurityPropylene

Ningbo Skyford’s 1.8 MMT merchant methanol to 0.6 MMT olefins plant

Methanol-to-Olefins (MTO)

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MTO Leading Methanol Demand Growth

• Upside demand potential based on current installed capacity

• Two new plants under construction expected to start up in coming months, third plant later in 2017

• Incremental demand potential over 4.5 million tonnes at 90% operating rates

* Potential demand based on 90% operating rate. Excludes demand and capacity for methanol-to-propylene plants (“MTP”)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16

Actual Potential*

tho

usa

nd

s o

f to

nn

es o

f m

eth

ano

l

MTO Methanol Demand (Annualized)

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The Benefits of Methanol as a Vehicle Fuel

It’s a low-emission fuel

It’s high-octane –improving performance and efficiency

It’s an economical option

It can be made from renewable sources

It’s accessible around the world

It’s used in vehicles worldwide

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* Net of 17% VAT. Sources: Oil and Gas China, US Department of Energy, Methanex

Methanol as a Vehicle Fuel

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A clean-burning, affordable and efficient gasoline substitute

China (Nanjing) Wholesale Gasoline Price: *$2.41/gallon September 30, 2016USGC Conventional Regular Gasoline Price: $1.41/gallon September 30, 2016

ProvinceLocal Methanol Fuel Blending Standards*

Implemented Since

Shaanxi M15 & M25 2004

Sichuan M10 2004

Heilongjiang M15 2005

LiaoningM15, M20 (methanol-blendeddiesel)

2006

Qinghai M5, M10 & M15 2006

Shanxi M5, M15, M85 & M100 2008

FujianM15 (methanol-blended diesel)

2009

Gansu M15 & M30 2009

Jiangsu M45 2009

Zhejiang M15, M30 & M50 2009

Guizhou M15 2010

Hebei M15 2010

Hunan M15, M25 & M30 2012

Shanghai M100 2012

Shandong M15 2013

Ningxia M15 & M30 2014

* Most of these standards are for methanol-blended gasoline, unless specified otherwise

HN

Xinjiang

Qinghai

Tibet

Gansu

Yunnan Guangxi

Fujian

Henan

Jiangxi

Inner Mongolia

Hebei

Shanxi

BJ

Hunan

Hubei

Guizhou

TJ

Guangdong

Heilongjiang

Jilin

Zhejiang

Shandong

Jiangsu

Anhui

Liaoning

Shaanxi

NX

MACHK

Sichuan

SH

CQ

Local standards for low level methanol-blended gasoline are available

Local standards for High level methanol-blended gasoline (M85 & M100) are available

Local standards for methanol-blended diesel are available

Methanol Fuel Blending in ChinaChina fuel demand growth expected to continue

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Methanol Fuel Blending Outside of ChinaSeveral countries in assessment or near-commercial stage for methanol fuel blending

Egypt

China

Commercial / near-commercial

Assessment stage

Australia

New Zealand

Trinidad & Tobago

U.K.

Netherlands

Denmark

Iran

Uzbekistan

Turkmenistan

Iceland

Switzerland

Azerbaijan

Alaska

Russia

U.S.

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• DME can be blended directly with LPG (propane) up to approximately 20% for cooking and heating applications.

• Future promising application for DME is as a diesel replacement:

• Oberon Fuels Produces DME in the U.S.

• ASTM Standard issued, California approval, qualified under U.S. Renewable Fuel Standard.

• Volvo developing DME trucks.

• Ford projects underway in Europe and Canada to test DME in light duty cars and trucks

Volvo DME Truck

DME as propane substitute

Di-Methyl Ether (DME) Market

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• Environmental compliance

• Low emissions

• Fuel flexibility

• Cost competitiveness

• Wide availability

• Innovative technology

• In use today

Methanol is an innovative alternative fuel solution with many benefits

Methanol for Marine

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• 100,000+ commercial vessels in the world operating on high Sulphur Heavy Fuel Oil (HFO). Methanol is Sulphur free.

• N. Europe and N. America reduced allowable Sulphur emissions to 0.1% in January 2015 - precludes HFO.

• IMO to implement 0.5% sulphur cap for all marine fuels globally by 2020

• 40 MMTPA methanol equivalent market in N. Europe Sulphur Emissions Control Area alone.

Existing Emissions Control Area

Potential future Emissions Control Area

Source: FCBI Energy Report on ‘Methanol as a Marine Fuel’ See http://www.methanol.org/Marine.aspx

Emerging Market – Marine Fuel

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Methanol fuel enables shippers to operate cost effectively and diversify fuel options

Fuel Flexibility and Emissions Reductions

Methanol is among the lowest emission fuels for marine engines

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Methanol is an economically viable alternative marine fuel over the cycle

Cost Competitiveness: Fuel

Source: Platts and IHS Chemical

Methanol converted to MGO energy equivalent at factor of 2.16

$200

$300

$400

$500

$600

$700

$800

$900

$1,000

$1,100

$1,200

Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15

$ /

to

nn

e

North America (West Coast) MGO Europe MGO

China (Shanghai) MGO Middle East MGO

Methanol (Energy Equivalent)

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Costs are low to convert and operate methanol-fueled vessels

Incremental Operating and Conversion Costs

Source: Effship Project Summary Report, 2013 * Costs do not include infrastructure development. Fuel cost based on market price 2012. Conversion based on 5 year pay-back and 6% interest

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

HFO + Scrubber(closed loop)

MGO Methanol LNG

€/k

Wh

–m

ech

anic

al p

ow

er

Incremental OperatingCosts

Conversion Costs

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Methanol infrastructure is well positioned to supply the global marine industry

Wide Availability

Methanol terminal locations based on available information; not a complete list 21

• Waterfront Shipping: in 2016 launched seven new 50,000 dwt vessels with methanol dual-fuel MAN 2-stroke engines

Stena Line’s first methanol powered ferry

One of Waterfront’s first methanol powered vessels

• Stena Line converted Germanica ferry to run on

methanol in 2015.

• Germanica uses Wartsila 4 stroke engines

A number of commercial/near commercial projects are underway

Methanol in Use Today

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Other Emerging Energy Uses

Methanol for Power Generation Industrial Boilers (China)

Methanol Fuel Cells23

Methanol as Renewable Energy• Methanol and DME is produced from fossil fuels and renewables

LNG = Liquefied Natural Gas; DME = Di-Methyl Ether; OBATE = On Board Alcohol to Ether (i.e. methanol converted to DME on board ships)

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Methanex is Committed to Responsible Care®

• At Methanex, Responsible Care® is the foundation of everything we do and a key element of our global culture:

» community safety

» employee health and safety

» environmental protection

» product stewardship

» social responsibility

• As an industry, we must continue to embrace and promote Responsible Care®

https://www.methanex.com/responsible-care/responsible-care-social-responsibility-reports

Key Takeaways

• A unique phase of growth for methanol demand driven by

• Increasing public pressure to protect the environment

• Evolving more strict emission restrictions

• Requiring cleaner burning fuels

• New technology for fuels and chemical feedstocks

• Shifts in global energy and feedstock markets

• New energy applications could lead to double GDP growth for methanol demand over the next 5 years

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Key Takeaways

• New uses of methanol

• Unique opportunity

• Bring a positive industry outlook

• Will benefit all of us

• Sustainable growth needs support

• From methanol producers to provide supply security to support new demand growth

• From service providers to debottleneck transport routes and invest in infrastructure

• From all of us to promote safe handling practices through Responsible Care®

• From all of us to advocate the future growth of methanol

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Thank You

www.methanex.com

linkedin.com/company/methanex-corporation

@Methanex