12-09-04 The proposed Eastern Caribbean gas pipeline project has accomplished a major milestone. The much anticipated economic feasibility study on the pipeline has been completed and it shows that the project is commercially viable.
This result is good news not only for the project developers but for the islands of the Eastern Caribbean currently smarting under the pressure of high fuel prices. The project is now poised to become the most significant economic co-operation venture in the history of the Caribbean. The final major hurdle will be the commercial negotiations with the prospective consumers, who, given the experience with fuel prices over the last year, should be willing to reach mutually acceptable terms and conditions.

The idea of a Caribbean Natural Gas pipeline was first mooted in 2002. When Prime Minister Patrick Manning went public at the Caricom Heads of Government meeting in August 2002, many sceptics described it as a pipedream. Undaunted by negative comments and buoyed by the results of a prefeasibility study, the project initiators, local firm Intra Caribbean Gas Pipeline Company (ICGPC) proceeded to seek more private sector partners for the project.
Earlier this year ICGPC, local insurance powerhouse Guardian Holdings Group and the newly formed AIC Financial Group formed the Eastern Caribbean Gas Pipeline Company Limited to perform the feasibility study and develop the project. The study was conducted by Doris Inc., a Houston based joint venture involving industry leaders Saipem and Doris Engineering of France.

Saipem is a 30-year-old Italian engineering firm engaged in offshore construction, onshore construction, LNG, and drilling. Saipem built the world's first jack-up rig in the USA in 1958. It also pioneered Europe's first offshore platform in 1960.
Within recent times, Saipem was the lead contractor on the famous Blue Stream project, the world largest under water pipeline. The Blue Stream runs 775 km from Southern Russia to Turkey across the Black Sea, reaching water depths of over 2,150 metres. The Caribbean Pipeline does not go beyond 2,000 metres at its maximum depth. Its partner Doris Engineering also has over 35 years of experience in offshore field development, floating structures, subsea engineering and marine operations.

The study covers a pipeline serving seven islands-Barbados, Grenada, St Vincent, St Lucia, Martinique, Guadeloupe and Dominica. These are expected to generate a total demand originally estimated at 100-140 mm cfpd. The study evaluated both technical and economic parameters. Some key technical considerations included the coral reef ecosystems, the volcanic and earthquake activity in the zone, and the possible impact of hurricane waves.
From the stand point of the consumers, the most important economic parameter would be the delivery of natural gas under a pricing regime that is competitive, predictable and non-volatile. On both technical and economic grounds the study indicates that the project is commercially viable.

The final hurdle-commercial and legal issues-is likely to be more challenging. The participation of the French islands and Barbados seems to be critical to project viability. Geopolitical issues, including our historic penchant for insular haggling within Caricom, has plagued other regional economic co-operation projects and casts a dark shadow over this one as well. Thankfully, the pipeline project is private sector driven from well head to burner tip, and is located in the commercial, not political arena.
The main consumers are the electric utilities in the various islands, most of whom are strong commercially viable entities. The ultimate beneficiaries are the people of the islands, a point which the politicians should not ignore.

The project developers are all private sector and so too is the likely gas supplier. Despite its recent problems, the National Gas Company is expected to be involved in the project as the possible gas seller and equity holder. The major responsibility of the Governments seems to be the legal framework that would govern the passage of the pipeline from one territory to another.
The pipeline project links the Caribbean in important ways and opens up new possibilities. Barbados for example, would perhaps be most anxious for a secure and competitively priced supply of natural gas.

The country already has a gas distribution system serving over 12,000 residential commercial and industrial customers. However, there is growing concern about the dwindling reserve base. The pipeline would open opportunities for local distribution in all the islands including Tobago which can be connected en-route.
The current political leaders have an excellent opportunity to etch their names in history by lending support to project. Hopefully, they would perceive its significance and seize the moment.