Curtis Williams
OGJ Correspondent
PORT OF SPAIN, May 30 -- Trinidad and Tobago's Prime Minister Patrick Manning said the island nation could not afford to sell Jamaica LNG at reduced prices.
At a recent meeting with Jamaica's Prime Minister P. J. Patterson, Manning said it was agreed that LNG would be landed in Jamaica on commercial terms.
"Our position was that the Caribbean Single Market and Economy did not properly form part of the LNG negotiations and would have to be taken up elsewhere and at another level. Therefore we have agreed that the LNG negotiations will proceed on a purely commercial basis." Manning told OGJ online.
Jamaica plans terminals
Jamaica has been considering the construction of two LNG receiving terminals to import gas from Trinidad and Tobago.
According to Raymond Wright, the managing director of Petroleum Corp. of Jamaica, one terminal would be a conventional land-based storage and regasification facility on the south coast and the other, possibly an unconventional floating facility at Montego Bay.
"El Paso (Corp.) and (Royal Dutch/) Shell, among others, are developing a concept for regasification facilities aboard a vessel and we are looking at this kind of technology for the North Coast" Wright explained.
The northwestern Caribbean island is anxious to develop LNG because it will result in a significant reduction in energy costs, benefiting its Bauxite-Alumina industries and would reduce electricity costs for domestic consumers.
Jamaica's location would exclude it from benefiting from the proposed intra-Caribbean natural gas pipeline from Trinidad and Tobago and possibly Venezuela to several Caribbean islands (OGJ Online, Oct. 18, 2002).
There are three options under the proposed intraregional pipeline, with a French West Indies pipeline terminus being the most popular.
Sources in the Trinidad and Tobago government said that even if a decision was made for a larger project to pipe gas to the northernmost Caribbean islands, it was likely to end in Miami thereby bypassing Jamaica.
Jamaica had argued that Trinidad and Tobago has a huge trade imbalance with Jamaica and that could have been partially redressed by special pricing for LNG.
In addition, the Patterson administration has suggested that Trinidad and Tobago is obligated by virtue of the Caricom Single Market and Economy (CSME) to try to maintain parity in costs throughout the region and, in effect, treat SME territories as one integrated market.
Gas conversion sought
Anthony Hilton, former Jamaican minister of energy and mining and now adviser to the Patterson administration on energy with special reference to LNG, said it was necessary that LNG be landed in Jamaica at attractive prices to encourage consumers to convert to natural gas from diesel fuel.
Hilton said it was particularly important to land LNG at a competitive price to woo away the bauxite-Alumina industries from the use of fuel oil with its high sulfur content.
"With a competitive price on a heating-value basis . . . even though it is higher (in cost) than fuel oil, (natural gas) will provide benefits in terms of both efficiency and the environment," Hilton said.
He said Jamaica's contention was: "There should not be a multiplicity of prices or a discriminatory pricing mechanism within the CSME because that would have the undesirable effect of ensuring a structural advantage for Trinidad and Tobago and a structural disadvantage for the rest of the region in energy."
This was disputed by Trinidad and Tobago, which argued that in its energy mix there were several natural gas prices for different industries and industries used piped natural gas and not LNG.
Manning said Jamaica has now come around to Trinidad and Tobago's point of view.
Trinidad and Tobago's Energy Minister Eric Williams said the island's National Gas Co., which owns 10% of the Atlantic LNG plant, will work with the Jamaicans on the LNG project.
NGC President Frank Look Kin said he expected Jamaica's eventual LNG price to be tied to the Henry Hub price.
He said this would not make it uncompetitive to land LNG in Jamaica, because on the evidence of the Dominican Republic, which has a smaller demand, it has been shown that LNG could be competitive if the market is greater than 100 MMcfd of gas. In Jamaica's case, it is expected to be closer to 200 MMcfd.
Meanwhile Manning also announced that within the next 3 weeks a decision was likely on the construction of train four, from which LNG could be allocated for the Jamaican market.