Ticking off Train ‘X’ ?
By
Linda Hutchinson-Jafar
TT Newsday
Port Spain
Petroleumworldtt.com
02 18 07
After
years of talking about setting up another Liquefied
Natural Gas (LNG) plant — Train X —
Trinidad and Tobago, already the leading exporter
to the US, moves are afoot into conducting a feasibility
study on the project.
But
given the continuing concerns about the unavailability
of gas supplies to meet the growing domestic demand,
the country may have to turn to Venezuela, if there
is to be any expansion of the LNG industry.
Professor
Anthony Bryan, Senior Associate in the Americas
Programme at the Washington-based Centre for Strategic
and International Studies, said gas from Venezuela’s
Plataforma Deltana may be critical to making “Train
X” happen.
“Looking
ahead at market dynamics, given Venezuela’s
proximity to a well-established LNG infrastructure
in Trinidad and Tobago, it may one day make sense
for gas from the Plataforma Deltana area to be monetised
in Trinidad and Tobago.”
Venezuela
is at least a decade behind this country in the
monetisation of its natural gas, Professor Bryan
told an energy conference last week hosted by the
South Chamber of Industry and Commerce.
But
Gregory McGuire, Energy Economics Lecturer at the
St Augustine Campus of the University of the West
Indies threw a spanner into the debate about another
LNG train when he asked whether a Train X was really
necessary.
Noting
that there were several pre-conditions for a new
LNG train, McGuire said the most fundamental pre-condition
was the gas reserve question. “There are serious
concerns about the level of reserves and whether
there are reserves to support anything called Train
X.”
“I’m
asking the question, ‘Is cross border gas
the answer?’ We’re not sure,”
he said. The other question that one needs to ask
is, “Do we need Train X at all?” he
said, while addressing the energy conference.
During
a 2003 official visit to Trinidad, Venezuela’s
President Hugo Chavez said he hoped gas from the
Plataforma Deltana, located close to Trinidad, will
be processed in Port-of-Spain for export markets
since the South American country does not yet have
an LNG plant, although plans have been on the drawing
board for a while.
Professor
Bryan, however, warned that there is a very long
distance between a government-to-government MOU
and actual contractual terms to supply gas across
a border to an LNG project.
“As
the Venezuelan LNG experience indicates, government-government
negotiations can become protracted and agreements
can be years in the making.” In this case,
the details of the MOU (on unifying cross border
reserves) have been completed.
But,
he said if strained relations between US companies
and Venezuela continue, “Will Venezuelan politics
once more trump economics even in this instance?
Perhaps it will.”
Bryan,
who’s currently writing on Regional Energy
Cooperation and Energy Security in the Caribbean
as part of a wider hemispheric project, added that
Venezuela for nationalistic reasons may not be willing
to process its natural gas at the LNG plants because
of American shareholders.
“And
in the current climate, Venezuela is not likely
to send it to LNG plants in the US,” he said.
Last
week Energy Minister Dr Lenny Saith said Government
is about to take the first steps towards deciding
whether the country could accommodate Train X by
having a feasibility study, expected to conclude
by year’s end.
“Our
LNG expansion is likely to see new entrants and
partnerships on the liquefaction side of the business
as well as increased Government participation in
shipping, regasification and marketing, while at
the same time allocating a portion of the gas for
domestic use,” Dr Saith said.
Government
has said in the past that it was looking at Train
X which would involve new upstream players who do
not hold equity in Atlantic LNG. Atlantic LNG shareholders
are BP, BG, Repsol, National Gas Company (NGC) of
Trinidad and Tobago and Suez.
Noting
that Trinidad and Tobago has done very well so far
in the global energy geopolitical game, Professor
Bryan said with just 0.3 percent of the world’s
proven natural gas reserves, the country has emerged
at the head of the LNG export industry to the US
and is poised to play an even greater role in the
global natural gas industry in the coming years.
However, recent data suggests that US LNG prices
are very sensitive to large volume imports and that
a position of strength today may become one of weakness
tomorrow.
“
In order to ensure continued success in this new
world of petropolitics, Trinidad and Tobago should
embark on a structured regional, hemispheric and
global energy diplomacy that reflects constantly
changing geopolitical realities,” said Professor
Bryan.
The
three immediate concerns, he said, for the country’s
energy diplomacy are: the PetroCaribe agreement
and Trinidad and Tobago’s relationship with
its Caricom neighbours; cross border co-operation
with Venezuela; and the changing energy landscape
in the United States.
“There
are road-maps but no easy solutions, “ he
said.
Trinidad
& Tobago NewsDay
Thursday,
February 15 2007
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