Portia's
plight and the MOU deal with Venezuela
By Energy Correspondent
Trinidad Express
Port
Spain
Petroleumworldtt.com
03 25 07
Two
weeks after Prime Minister Patrick Manning's deferment
of the likely date for delivery of LNG to Kingston,
the Jamaican Government has signed an MOU with Caracas
for a supply of LNG to Jamaica by 2009.
How
realistic is this? Can Canada win the Cricket World
Cup?
The
answer to both questions is an unequivocal negative.
The MOU signed between Jamaica and Venezuela on
March 12th 2007 is little more than a political
ploy on the part of both signatories.
The
point was made in an earlier column that selling
LNG is not the same as selling mangoes. An LNG trading
arrangement is a long complexed process, which makes
the timeframe envisaged by the latest Caracas -Kingston
deal unrealistic at best.
On
the sellers side, the LNG development process involves
construction and setting up of production facilities
onshore or offshore, drilling of production wells,
building of pipelines from field to plant, building
of LNG plant including power station and storage
tanks, building marine facilities for berthing and
loading of LNG tankers, acquiring LNG tankers, long-term
charters or newly built.
Portia Simpson Miller
On
the buyer's side, the project requires marine facilities
for the berthing and unloading of LNG tankers, storage
tanks, regasification facilities and a pipeline
system from the regas plant to the customers.
The
typical gestation period for a greenfield LNG project
from conceptualisation to first production is about
10 years. For example, Atlantic LNG commenced discussion
of the idea in 1992 and loaded its first cargo in
1999. Atlantic is recognised as one of the fastest
projects to be developed in the LNG business.
Currently,
Venezuela has no LNG plant, after at least three
failed attempts over the last 20 years. News out
of Jamaica suggests that a Front End Engineering
Study on a regas facility is nearing completion.
There is however, the recognition that the permanent
regas facility would take longer than the 2009 time
frame. As a result, Jamaica is said to be considering
leasing a floating LNG re-gasification facility,
which is expected to be available in 18 months.
Given
the reality of the situation particularly on the
Venezuelan side, why would these two leaders go
through this charade? Is it to fulfill their narrow
political interests?
Hugo
Chavez' rationale is very transparent. Chavez views
himself as the new Simon Bolivar. His mission is
to use his vast energy resources to "liberate"
the region from the imperialist north. He would
do anything that can undermine the influence of
the USA and George Bush in the hemisphere. Moreover,
he would view Jamaica's ruling People's National
Party (PNP) as a natural ally since the opposition
Jamaica Labour Party (JLP), always has been perceived
as being right wing and US aligned.
Two
interrelated motives can be ascribed to the Jamaica's
anxiety about LNG and the signing of the MOU with
Venezuela. The first is the timing of Alcoa's proposed
expansion of Bauxite/Alumina capacity in Jamaica.
Alcoa has promised to undertake the US$1.6 billion
expansion project contingent on the availability
of a competitively price supply of natural gas by
2009. The project promises huge benefits for Jamaica
in terms of output, jobs, government revenue and
exports.
Alcoa
charged the Government of Jamaica with the responsibility
to get cheap natural gas from Trinidad. At the same
time, Alcoa itself was negotiating a supply of cheap
natural gas for its proposed aluminum plant in Trinidad.
In the wake of Manning's deferment, Alcoa announced
that it was prepared to invest elsewhere. The Government
hurriedly sought a new supply source in order to
keep hopes alive. The fact that such threats are
being made by Alcoa at a time when its downstream
aluminum plant in T&T remains uncertain, may
have significant implications for plans to establish
aluminum plants in Trinidad. But that story is for
another occasion.
The
second driver is that general elections are constitutionally
due in Jamaica within the next 12 months. Relief
from a high energy import bill and high electricity
rates are long standing promises of the PNP government.
LNG was identified as a preferred solution to the
problem. Therefore, Manning's announcement was very
bad news. The Jamaican Government felt obligated
to find an alternative to keep up the expectations
that better days were coming. In Chavez, they have
found a very willing ally. Will the electorate be
duped?
Feedback:
energyczartt@yahoo.com
Trinidad
Express
Wednesday, March 21st 2007
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