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Energy Minister Kevin RamnarineA once in a lifetime chance for T&T LNG
By David Renwick
Story Created: Jan 7, 2014 at 9:51 PM ECT
Story Updated: Jan 7, 2014 at 9:51 PM ECT
Energy and Energy Affairs Minister Kevin Christian Ramnarine was extraordinarily laconic, according to the report in another newspaper, when he said at the National Gas Co’s (NGC) Christmas dinner that the State-owned gas producer/aggregator/trader/investor would “continue to explore opportunities on small scale LNG in the Caribbean” in 2014.
Well, that’s just not good enough. The feasibility study, conducted by NGC’s subsidiary National Energy (NEC), in conjunction with the promoter of the project for small scale LNG in the Caribbean, Roland Fisher’s Luxembourg-registered Gasfin Development SA, has already given it the green light, and the first two markets, Martinique and Guadeloupe, are waiting to be signed up. There is precious little room left for continuing to “explore” the idea.
Its firm decision-making time now, which is why I put the “right-sized” Caribbean LNG matter at the top of the list of items in the energy sector requiring prompt action as we enter the year 2014.
The minister has already ensured his place in energy industry history by inspiring the changes in the fiscal system that make it more attractive for companies to explore for and produce, hydrocarbons, by instituting yearly block offerings and getting major activity going in the deep water. The icing on that cake would be positioning Trinidad and Tobago firmly in place as the supplier of LNG to the emerging niche Caribbean market as the replacement for oil in power generation and the “bridge” fuel for the cautious transition to renewable energy (RE).
If some regional markets prefer compressed natural gas (CNG) or pipeline gas, so be it. But the point is that Trinidad and Tobago, which pioneered the production of LNG in Latin America and the Caribbean, must be the source from which all this gas is obtained.
We have rivals who have recognised the value of this small but potentially profitable market and are not twiddling their thumbs over the opportunity.
The most immediately important of these is Colombia.
I presume both MEEA and NGC are aware that Pacific Rubiales has signed a deal with the world’s biggest gas company, Russia’s Gazprom, for the latter to purchase all the 500,000 tonnes a year of LNG that will be produced in the floating liquefied natural gas (FLNG) vessel that Belgium’s Exmar is having built for stationing on Colombia’s Caribbean coastline from the second quarter of 2015.
Where Gazprom intends to dispose of the LNG is not yet known but, for such a relatively small amount, the nearby Caribbean territories are the obvious places. Gazprom is, no doubt, already scouting around the region for customers.
Gearing up in the wings is the US’s Crowley Maritime Corp which bought over a small US firm, Carib Energy, last year, primarily because the latter was already in possession of a small-scale LNG export licence from the US Department of Energy (DOE) to sell LNG in free trade agreement (FTA) countries. It may well by now, have had this extended to non-FTA states too, which would give it the whole of the region as a potential market. Since its gas supply would be low-cost shale gas, it could be a fierce competitor in the Caribbean.
Then, of course, there is good old Cheniere Energy, which is sewing up markets all over the world for LNG from its Sabine Pass, Louisiana, export complex, which could be online by 2015. The latest candidate is Indonesia, of all places, which now prefers to export its own gas at higher prices while importing gas for domestic usage at lower prices.
The 800,000 tonnes a year Cheniere has agreed to supply Indonesia will not come from Sabine Pass, however, but the Corpus Christi, Texas LNG plant the company is also building. This is likely to start in 2018 and is the location from which Cheniere had said it intended to service the Caribbean market (it has already received permission to sell to both FTA and non-FTA countries).
Cheniere has already cornered one Caribbean market – the Dominican Republic. It has agreed to ship 600,000 tonnes of LNG to a power company there, called Basic Energy, presumably from Corpus Christi.
I have already said it would be a criminal offence on someone’s part were Trinidad and Tobago to lose this once-in-a lifetime chance of sewing up a niche LNG market for itself, and forgoing the opportunity to have a local company, NGC or National Energy, become a participant all along the LNG value chain (an ambition of all past governments) plus allowing Trinidad and Tobago to become a supplier of LNG as marine fuel (a growing business, internationally) for all the vessels that will be calling in at La Brea, where Gasfin/National Energy/NGC’s Caribbean LNG operation will be based.
Minister Ramnarine must instruct all concerned to get their fingers out and move forward on this matter, preferably fast enough for him to make a grand announcement at the Energy Chamber’s 2014 conference on February 3.
Now, what else should be made to happen in 2014?
MORE BLOCK ROUNDS, of course. The current onshore and offshore deep water block auctions close on January 31 and the minister has pledged that a “shallow and average water” acreage auction will be held in the course of the year. He should stick to that promise.
ENSURING THAT AS MUCH DEVELOPMENT drilling, as opposed to exploratory drilling which is well underway, takes place in 2014, in order to achieve an immediate reversal of the declining crude oil production situation. The minister may have more up-to-date figures than I do but the fact remains, as at September, 2013, an average of 67,660 b/d of crude was being lifted, as opposed to the average of 69,062 b/d in 2012 as a whole.
The key to any turnaround is the independents – the small and medium-sized companies that are showing most eagerness to develop their known oil reserves, which include Trinity Exploration and Production, Range Resources, Touchstone Exploration, Leni Gas and Oil and KPA and Associates. State-owned Petrotrin is in a much larger category and it, too, should step its development activity.
A DECISION ON TAR SANDS RETRIEVAL must be made, one way or another, in 2014. This very heavy oil resource is spread widely throughout south Trinidad, amounting, on MEEA estimates, to 300 million tons. The most vocal advocate for tar sands development, mining engineer Herbert Sukhu, has failed so far to attract any support from Minister Ramnarine. He has received backing from the minister of trade, industry and investment, Vasant Bharath, but, since its an energy matter, Ramnarine is the one who counts here, so has an obligation to tell Sukhu a straight “yes” or “no” and early in the new year to boot.
THE OPERATOR for the Manatee/Loran unitised natural gas development must also be named as early as possible in 2014. Cross-border gas resources have remained fallow for too long – definitely time to get them out of the seabed and turned into money.
David Renwick was awarded the Hummingbird Medal (Gold) in 2008 for the development of energy journalism in Trinidad and Tobago.