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<P align=left>By Anthony T Bryan <P align=left>The announcement earlier this month by the Government that it will not be able to provide LNG to Jamaica by 2009, because of its own domestic demands, produced heated exchanges carried in the major newspapers of both countries. <P align=left>Questions were raised by various commentators in Port-of-Spain about T&T’s real natural gas reserves picture, its overly optimistic promises to Jamaica by way of an MOU whose details are not publicly known, and suspicion about the extent to which the provision of cheap or discounted LNG to Jamaica would rebound to the disadvantage of T&T manufacturers who now enjoy a heavy trade surplus advantage with Jamaica. <P align=left>In Kingston, the hostility toward T&T—particularly at the level of the manufacturers association and the chambers of commerce, the threats of a “trade war” to correct the Jamaican trade disadvantage, portrayals of Jamaica as the wounded party being cut adrift by its principal trading partner in Caricom and accusations about the “jingoism” and “economic myopia” of the T&T press—only dirtied the waters even more. <P align=left>But behind all of this passion there are some hard realities about pricing, availability of product, the unreliability of Memoranda of Understanding (MOUs) and the continuing politics of energy. <P align=left>A reality check <P align=left>First, the provision of T&T LNG to Jamaica is a subject of continuing dialogue. Since 2003, Jamaica has been exploring the feasibility of importing natural gas from T&T either in small LNG carriers or via pipeline. The politics surrounding the project were problematic from the beginning. <P align=left>The Jamaicans have insisted that under the imminent CSME, Jamaica is entitled to “national treatment” in the purchase of LNG, (ie LNG should not be treated as a separate product from natural gas and that, except for transportation and other specific costs, it should purchase the commodity at the same price at which National Gas Company purchases natural gas.) <P align=left>When in Port-of-Spain in April 2006 Prime Minister Manning announced that a long-term supply of natural gas would be made available to Jamaica starting in 2009 at a negotiated pricing arrangement that would be mutually acceptable, he stressed that in arriving at a price, “we are recognising that Jamaica is a Caricom partner and therefore different from all the other countries that we now supply with (natural gas), and giving effect to a long standing policy of the government of T&T to have virtually most-favoured-nation arrangements with respect to Caricom countries.” <P align=left>Jamaica still contends that a domestic pricing mechanism should apply rather than T&T’s insistence that there has to be a Caribbean gas price that bears relation to Henry Hub (the US benchmark for natural gas). <P align=left>In reality, to move away from the Henry Hub benchmark (as opposed to a negotiated preferential price structure) would amount to a virtual subsidy for Jamaica. <P align=left>In a competitive world, such a remarkable subsidy for a highly marketable, extremely valuable and fungible commodity (even to a Caricom neighbour) would be a serious regional geopolitical action with global consequences.
