Opinion
- Editorial
Nigel Cumberbatch:
Looking at new energy markets
In today's energy world, Trinidad
and Tobago is known as the top supplier of Liquefied
Natural Gas (LNG) to the United States. Also, for
many years it has been a stable and reliable supplier
of crude oil and products to the Caribbean market.
However, in the future all that
might change if Prime Minister Patrick Manning makes
good on his recommendation to put in place a major
shift in his country's energy marketing policy aimed
at securing a better deal for Trinidad and Tobago's
oil and gas exports.
"A shift of markets will have
immediately for us a significant increase in revenues,"
Prime Minister Manning told a group of leading energy
sector executives last week.
Manning said his country could fetch
much better prices for its LNG exports on other
markets such as Mexico than in the United States
which currently purchases most of Trinidad and Tobago's
LNG.
Over the past 10 years, Trinidad
and Tobago has shaped a vibrant LNG industry involving
billions of dollars in investment and the participation
of several of international majors such as BP, BG,
and Repsol in four trains and a fifth expected in
the not-too-distant future. The country's proven
natural gas reserves stands at approximately 18.77
trillion cubic feet (tcf).
Hugo Chavez
Creating LNG involves cooling normal
natural gas to 260 degrees below zero Fahrenheit,
sending it to the markets in superinsulated ships
and then re-gasifying it at its destination.
"We are going to have to decide
whether we wish to place all our eggs in one basket,"
said Manning, adding that "too much of our
LNG goes to one destination (the United States),
and incidentally at prices that are not by any means
the best prices that are available on the market."
Over the first four months of this
year, Trinidad and Tobago supplied 73 per cent of
all US imports of LNG, 71 per cent of all US imports
of methanol and approximately 55 per cent of all
US imports of ammonia.
While Trinidad and Tobago, a key
ally of the United States in the Caribbean, very
likely can find different markets for its LNG, long-term
commitments established in supply contracts would
make it difficult, if not impossible to reduce LNG
exports to the United States on the short and medium-term.
Additionally, marketing decisions involving the
export of Trinidad and Toibago's LNG are in the
hands of the private foreign oil companies.
However, in the case of the Caribbean
market, Venezuela's generous oil initiative known
as Petrocaribe already has pushed Manning into taking
a new look at his country's energy relationship
with its neighbours in the region.
Labeling the Petrocaribe initiative
as "a most significant development at a time
when oil prices are high and continue to rise,"
he expressed his displeasure with the deal and pointed
to the negative impact it could have for Trinidad
and Tobago.
"The problem with Petrocaribe
is that initially it never acknowledged the existence
of a refining industry in Trinidad and Tobago. It
never did that," he said.
Approximately, 60,000 barrels a
day of crude oil and products from Trinidad find
its way to the Caribbean market, and from Manning's
perspective "we did not think that Trinidad
could afford a loss of that market."
But as most of the small energy
hungry Caribbean states were faced with skyrocketing
oil import bills, Venezuela quickly stepped forward
and offered its Petrocaribe oil facility programme.
"What Venezuela proposed was
that these (Caribbean) countries would have access
to products from Venezuela, transported in ships
controlled by Venezuela, in storage stored in their
own countries, owned and controlled in joint ventures
between Venezuela and a state entity," Manning
explained.
The immediate effect of that, he
said, is "the minute that you establish your
own storage, the storage controlled by the multinationals
will be of no value to them and they are likely
to leave. If the multinationals leave, then we are
left with a situation where Venezuela becomes the
dominant player."
"Secondly, the position of
market dominance imposes an obligation on the dominant
entity and that obligation is energy security. That
Trinidad and Tobago provides for the region now,
and if a situation develops where our position is
displaced, then surely ... the responsibility for
providing energy security to the Caribbean can no
longer rest on the shoulders of Trinidad and Tobago,"
he added.
As a result, Caricom countries "will
have to consider whether that is a happy position
in which to find oneself," he said.
Faced with the very real possibility
of losing the Caribbean market, Manning said upgrading
work is proceeding at the Pointe-a-Pierre refinery
involving an investment of some US$650 million to
produce "a quality of gasoline that can find
a ready market on the US East Coast."
Once that becomes a reality, long-term
contracts will be secured and "if an emergency
develops in the Caribbean, then we do not have the
flexibility to switch from our new markets to markets
that traditionally had been supplied by us, but
in which we have been displaced by the Venezuelans,"
he said.
Then, Manning added: "Is Venezuela
prepared to accept that responsibility? I am not
in a position to say. Are the Caricom countries
prepared to put themselves in that position? I am
in no position to say."
"What I can say is that Trinidad
and Tobago has had a stable Government. We are stable
politically. In so many other respects, we are committed
to Caribbean development and we had been up until
now very successful in giving the Caribbean the
level of security to which the Caribbean aspires,"
Manning said.
Manning's observations regarding
Petrocaribe and its impact on Trinidad's role as
an energy supplier in the Caribbean come as Venezuela
prepares to host the Third Summit of Petrocaribe.
The first was held in Puerto La Cruz, Venezuela
in June 2005 and the second was hosted by Jamaica
in September 2005.
Venezuelan President Hugo Chavez
said recently that the date and agenda for the forthcoming
summit currently is being discussed.
The meeting will evaluate Petrocaribe's
progress, as well as difficulties and delays in
some areas, said President Chavez underlining the
need to effectively guarantee and materialise oil
transportation, distribution and oil storage deposits
from Venezuela to the Caribbean countries.
Chávez noted that
there are many Caribbean countries that do not have
oil storage infrastructure, since in some cases
facilities have been privatised and belong to transnational
companies, which "stab and loot those peoples."
Based on an average price of approximately
US$60 a barrel, Venezuela expects to provide approximately
US$17 billion in financing over the next 10 years
for some 200,000 barrels a day of oil supplies to
Caribbean nations under its new Petrocaribe oil
facility programme.
Antigua y Barbuda, Bahamas, Barbados,
Belize, Cuba, Dominica, Grenada, Guyana, Jamaica,
St Lucia, St Kitts and Nevis, St Vincent and the
Grenadines, Suriname, Trinidad and Tobago and the
Dominican Republic attended the launching of Petrocaribe
on June 29, 2005. However, Trinidad and Tobago and
Barbados did not sign the Petrocaribe initiative.
Generally,
beneficiary countries under Petrocaribe are required
to pay 60 per cent of the oil bill, with Venezuela
financing the remaining 40 per cent over 25 years
at one per cent interest a year.
Trinidad
Express
Friday, September 15th 2006
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Trinidad Express.
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