Curtis Williams
OGJ Correspondent
PORT OF SPAIN, Nov. 21 -- Atlantic LNG partners are considering the construction of a fifth LNG train in Trinidad and Tobago although construction began less than 3 months ago on the 800 MMcfd fourth train. Major partners are BP PLC unit BP Trinidad & Tobago LLC and wholly owned subsidiaries of BG Group PLC and Repsol-YPF SA.
The partners told OGJ that the consortium is eager to see further LNG expansion in the Caribbean island nation, which already is the largest supplier of LNG to the US market.
This comes despite failure by the consortium thus far to agree on terms of the Train 4 deal, which has delayed the signing of a final investment decision for its construction. Negotiations among the partners are continuing, but in the interim they have started plant construction, having already obtained Trinidad and Tobago government approval in August.
"We are comfortable with how things are progressing," said Donna Ramsammy, BP's vice-president of government and public affairs. The customary individual agreements (between partners and the government) still have to be concluded relative to sales, processing, transport etc., and this takes time."
Government's position
BG and Trinidad's state-owned National Gas Co. Ltd. (NGC) said they are considering a fifth train, while BP, which has the largest shareholding in each of the four Atlantic LNG trains, wants more than a single train expansion, saying it hopes the Trinidad and Tobago government would agree to a two-train expansion resulting in six LNG trains total.
"[BP] has made no secret of its interest in a fifth or even a possible sixth train," said Donna Ramsammy, BP's vice-president of government and public affairs. "We are relying on the government of Trinidad and Tobago to determine its own plans for gas expansion relative to LNG or GTL or plastics," she said.
NGC's Pres. Frank Look Kin also acknowledged: "It is known that everybody would like to see further LNG expansion but that has to do with a lot of things and that will significantly depend on the government's position."
Certain members of the Trinidad and Tobago government of Prime Minister Patrick Manning in fact have cautioned about committing more of the country's gas reserves to LNG, which by the start-up of Train 4 will be more than 2 bcfd, and have suggested that the country should pursue other options, including gas-to-liquids and even a natural gas refinery rather than further LNG expansion.
OGJ also was informed that the government believes that with the construction of Train 4 it will have enough ethane in the system to build an ethylene plant and it might not need to further expand its LNG industry.
The country's Energy Minister Eric Williams said that while Trinidad and Tobago did not in principle have a problem with further LNG expansion, it would be done on the island's terms and conditions.
Meanwhile, BP is continuing its efforts to convince the government that there will be more economic reward for the country to pursue further LNG expansion since it has transformed the US LNG market and with all the projections for increased use of LNG in the US, long-term contracts, and relatively high prices at the Henry Hub, it was better to produce LNG rather than GTLs, which BP has suggested is for countries that have stranded gas.
"We have said that we have no problem with LNG expansion but it must be in keeping with the government's strategic goals and that may involve expansion which includes our partners, namely Venezuela," Williams said.
Venezuela participation
Although Trinidad and Tobago beat Venezuela to the race in developing LNG and has dominated the Atlantic Basin market, it has for some time been pressing Venezuela to have its gas in the Deltana region processed into LNG in the Caribbean Island.
The two countries, which are separated by a mere 6 miles of ocean, share several massive cross-border reserves and recently signed a Memorandum of Understanding to develop those reserves jointly.
Williams acknowledged that Trinidad and Tobago was keen on using Venezuela's reserves as the basis for further expansion but was quick to add that the island was not short of its own reserves, as it is sitting on a basin that Houston engineering consultant Ryder Scott Co. estimates at 98 tcf (OGJ Online, Feb. 3, 2003).
However with multinational companies owning most of the shares in Atlantic LNG, Williams acknowledged that bringing Venezuela abroad could mean a change in the ownership structure. He said: "We know what the ownership structure is now but there is always room to negotiate and there can always be changes."
The energy minister said the two countries would within a couple of weeks name their technical teams to negotiate a final deal on how the cross-border reserves will be exploited.
BG planning ahead
Meanwhile, British Gas already has ordered construction of additional LNG carriers should it be able to convince the Trinidad and Tobago government that further LNG expansion is in the country's interest.
Three 145,000 cu m LNG vessels, ordered from Samsung Heavy Industries Ltd. of Korea, are expected to be delivered in time for Atlantic LNG's Train 4 start-up in second half 2006 and to service the British energy giant's other LNG ambitions (OGJ Online, Oct. 21, 2003).
"The new tankers. . .reflect the successful development of our long-term Atlantic Basin LNG strategy, and complement our existing assets on both sides of the Atlantic Basin—for example in Egypt, Italy, Trinidad, and the USA," said BG communication officer Christopher Carter. "By the same measure, we do expect further growth opportunities in Atlantic LNG. Train 5 is a possibility, and it's in the early stages of consideration," he added.
BG's Executive Vice-Pres. and Managing Director North America and the Caribbean Martin Houston said of the purchase of the tankers: "It . . . secures shipping capacity in 2006 and beyond. There is significant potential within the whole Atlantic Basin region to accelerate further our LNG business," he added.