Trinidad no longer has cheap gas

Oct 29, 2010 12:00 AM

The days of cheap natural gas are gone, Trinidad's Minister of Energy and Energy Affairs Carolyn Seepersad-Bachan has said. The low-cost sources of gas were fast depleting and it will cost more to find and extract new reserves, she said.

Seepersad-Bachan's statement came in response to an appeal by Methanol Holdings Trinidad Ltd's (MHTL) CEO Motilal Rampersad for governmental support in keeping MHTL competitive in the downstream energy industry internationally. Rampersad spoke during the commissioning ceremony of AUM1 Complex at the Point Lisas Industrial Estate.

The Jamaican government is relying on Trinidad to supply it with cheap natural gas as it looks to rely more on the commodity. This news will come as yet another setback to its energy policy. Already there are allegations of rampant corruption at its Petroleum Corporation of Jamaica (PCJ) and controversy surrounds the awarding of a contract for a liquefied natural gas facility to the former head of the PCJ.

Former President Bill Clinton called on Jamaica to use its natural resources of solar and wind and focus more on renewable energy rather than imports that cost around 10 % of GDP. MHTL, one of the largest producers of methanol in the world, is a subsidiary of the CL Financial empire and is considered one of the most profitable entities in the financially troubled conglomerate. Finance Minister Winston Dookeran recently said MHTL may be divested and listed on the international stock market. Seepersad-Bachan said while Government "is committed to the expansion of the downstream sector, we need, however, to accept that there is no more cheap gas available". She said, "Most of the explored acreage, the available low-cost sources of gas are depleting very quickly and, as a result of that, we are on an exploration drive."

She said even in the current bid round just closed, Government expected the cost structures to go up and, as a result, production cost would rise. "In addition to that, as we move further out into deep-water area, you recognise the high capital-intensive, high-risk areas that we're dealing with and therefore, as result of that, gas prices will not be what [they] used to be." She said Government recognised the challenges gas-based projects face in terms of the cost structure and competitiveness and, as a result, Government will partner with the companies to identify creative and innovative strategies to address these challenges. This, she said, is also why the National Energy Corporation of Trinidad and Tobago Ltd (NEC) has been requested to conduct a study to establish a framework for the execution of energy audits for plants in the Pt Lisas area. "We want to encourage all of the industries based at Point Lisas to improve on their energy efficiencies because gas prices have been increasing significantly so it is a challenge that is faced by all."

The function was to celebrate the completion of the $ 1.7 bn project, the first for ammonia and urea plants that are integrated into a complex capable of producing third-stage downstream products of 60,000 tpy of melamine and 1.5 mm tpy of urea ammonium nitrate solution.

The AUM ammonia plant was started in March 2009 and fully commissioned by June of the same year. All other plants of the complex have been mechanically completed since March 2010.

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