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EDITORIAL - That Venezuelan 'LNG' deal
published: Friday | March 16, 2007
If it is liquefied natural gas (LNG) that President Hugo Chavez has undertaken to supply Jamaica in the memorandum of understanding signed this week, Venezuela would most likely have to obtain the fuel from a third party. Venezuela does not now have excess LNG, and will not have it by 2009 when Jamaica needs it. This does not make the agreement with Jamaica invalid.
It does, however, raise questions about the seeming certitude with which the Jamaican Government has up to now publicly presented the agreement, when what is on the table, and privately discussed, is beyond LNG. In fact, it is known that the Venezuelans have talked, too, about the possibility of supplying compressed natural gas (CNG), and that this option is rising in favour among some Jamaican officials.
CNG comes from a cheaper and more readily available technology. Unlike LNG, it eliminates the expensive liquefaction process that involves cooling natural gas in cryogenic tanks. However, CNG requires a much larger volume to store the same mass of natural gas and the use of very high pressures.
In this regard, we believe that it is important, as Energy Minister Phillip Paulwell has suggested will soon happen, for technocrats on both sides to discuss urgently what it is Venezuela will be best able to supply, and within what time frame. It is also important for the Jamaican Government to encourage a debate on the options.
There are important reasons for this to happen quickly, not least of which is the importance to the Jamaican economy of finding a new, cheaper energy source. The US$1.6 billion Alcoa expansion project and meeting the growing demand for electricity depend on it, especially since Trinidad and Tobago reneged on a supply agreement it signed with Jamaica.
The Trinidadians, in undertaking to supply LNG by 2009, did not take into account the demands of their own heavy industrial programme, and the administration is clearly unwilling to take the kind of political decision that would be required to meet its obligation to a single market partner with which it enjoys a US$500 million trade surplus. So the private supplier, Atlantic LNG, in which the government has a small stake, prefers to meet contractual obligations in the United States and Europe.
Mr. Chavez has declared his good intentions and we have little doubt that he is willing to take the political decisions to translate this into practical action. A move by Jamaica to CNG rather than LNG would likely facilitate this.
Venezuelahas gas - a lot of it. The country has the largest reserves in Latin America. What it does not have are the facilities for converting this to LNG. PdV, Venezuela's state-owned energy company, has been struggling to develop its ambitious Marsical Sucre gas field that it has earmarked for LNG production. President Chavez's administration has already determined that all LNG produced will be for domestic use, and not for export.
CNG, on the face of it, would be a more viable route in the short term, and there are Jamaican investors who have long signalled their willingness to invest in capacity for its delivery and storage.
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The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.
published: Friday | March 16, 2007
If it is liquefied natural gas (LNG) that President Hugo Chavez has undertaken to supply Jamaica in the memorandum of understanding signed this week, Venezuela would most likely have to obtain the fuel from a third party. Venezuela does not now have excess LNG, and will not have it by 2009 when Jamaica needs it. This does not make the agreement with Jamaica invalid.
It does, however, raise questions about the seeming certitude with which the Jamaican Government has up to now publicly presented the agreement, when what is on the table, and privately discussed, is beyond LNG. In fact, it is known that the Venezuelans have talked, too, about the possibility of supplying compressed natural gas (CNG), and that this option is rising in favour among some Jamaican officials.
CNG comes from a cheaper and more readily available technology. Unlike LNG, it eliminates the expensive liquefaction process that involves cooling natural gas in cryogenic tanks. However, CNG requires a much larger volume to store the same mass of natural gas and the use of very high pressures.
In this regard, we believe that it is important, as Energy Minister Phillip Paulwell has suggested will soon happen, for technocrats on both sides to discuss urgently what it is Venezuela will be best able to supply, and within what time frame. It is also important for the Jamaican Government to encourage a debate on the options.
There are important reasons for this to happen quickly, not least of which is the importance to the Jamaican economy of finding a new, cheaper energy source. The US$1.6 billion Alcoa expansion project and meeting the growing demand for electricity depend on it, especially since Trinidad and Tobago reneged on a supply agreement it signed with Jamaica.
The Trinidadians, in undertaking to supply LNG by 2009, did not take into account the demands of their own heavy industrial programme, and the administration is clearly unwilling to take the kind of political decision that would be required to meet its obligation to a single market partner with which it enjoys a US$500 million trade surplus. So the private supplier, Atlantic LNG, in which the government has a small stake, prefers to meet contractual obligations in the United States and Europe.
Mr. Chavez has declared his good intentions and we have little doubt that he is willing to take the political decisions to translate this into practical action. A move by Jamaica to CNG rather than LNG would likely facilitate this.
Venezuelahas gas - a lot of it. The country has the largest reserves in Latin America. What it does not have are the facilities for converting this to LNG. PdV, Venezuela's state-owned energy company, has been struggling to develop its ambitious Marsical Sucre gas field that it has earmarked for LNG production. President Chavez's administration has already determined that all LNG produced will be for domestic use, and not for export.
CNG, on the face of it, would be a more viable route in the short term, and there are Jamaican investors who have long signalled their willingness to invest in capacity for its delivery and storage.
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The opinions on this page, except for the above, do not necessarily reflect the views of The Gleaner. To respond to a Gleaner editorial, email us: editor@gleanerjm.com or fax: 922-6223. Responses should be no longer than 400 words. Not all responses will be published.