Tractebel boss on LNG: Think, TT, think

Country Manager of Tractebel Trinidad LNG Corporation, Luc Speele-veld, wants Trinidad and Tobago to think carefully about its LNG development. He said the globalisation of the international market leaves TT facing a number of challenges, which include competition from stranded reserves and new LNG resources. Noting that Trinidad placed a lot of emphasis on the United States as its largest importer of LNG,  he said that future developments may call for diversification of the LNG supplies to the US. He recently addressed the March monthly meeting of the American Chamber of Commerce (AMCHAM). The North American region, he said, was a major customer and buyer of LNG originating from Trinidad, through receiving terminals in Boston and Puerto Rico. At present, North America was pursuing two new receiving terminals in the Bahamas and off the East Coast of Mexico. “The LNG business is becoming more global and more integrated,” he said. “As of today there are 12 exporting countries and 13 importing countries for LNG, including Puerto Rico and the Dominican Republic.”

“The US is both an importer and exporter, as Alaska is exporting and the lower states are importing.” Speeleveld predicted that by the year 2010, the LNG industry will have grown to a new scale, with approximately 20 exporting countries and 18 importing countries, creating increased competition for present exporting markets. The LNG world, Speeleveld explained, was divided between the Atlantic Basin, which accounted for 30 percent of the global LNG trade, and the Pacific Basin, which held 70 percent of the LNG market.

LNG from the Atlantic Basin, which includes Algeria, Nigeria and Trinidad is destined mainly for Europe but more recently to the US. Supply in the US has shown tremendous growth in recent years, showing a jump to 11 million tonnes in 2003. However, he maintained, that although imports into the US have doubled within recent times, in actual terms the global LNG business was still relatively small, increasing from four percent in 2002 to nine percent in 2003. The opening of a number of new LNG terminals has led to the US having a regasification capacity of 2.3 billion cubic feet per day (BCU) or 18 million tonnes per annum of LNG.

He said, “thanks to the excess import capacity and the favourable market prices in the US, the US has attracted cargo from the original shipping routes, like Nigeria and Middle East, as well as from TT LNG originally destined for Spain.” “The commercial structure of Atlantic LNG,” he continued, “enables TT LNG to meet market demands in a flexible way.” He predicted that the growth of LNG on the international market would see a compounded annual growth rate of nine percent between 2002 and 2010. This could double to 224 million metric tonnes per annum by 2010, to as much as 400 million tonnes by the year 2020. “Although the forecast growth rate in Asia is lower than the Atlantic Basin, the growth rate is still a healthy seven percent per annum,” Speeleveld explained, adding that in volume terms, Asia/Pacific would account for half of the incremental LNG sales between 2002 and 2010.

“Both countries will be the traditional existing importers to Japan, South Korea and Taiwan, while developing LNG nations like China and India and the new LNG country of Latin America, serving the Pacific basin from the West Coast of Mexico, will emerge,” he said. “In percentage terms, the fastest growing markets are now the US and Europe, though admittedly from a much small base. While the LNG trade will globally increase by nine percent, the US will grow at a rate of 30 percent.”

However, he asserted, one must remain cognisant that LNG in the US market could only grow because it started from a small base. Although it was moving in the direction of balancing the LNG trade between the Pacific and Atlantic Basins, he continued, Asia would still account for 60 percent of the total LNG demand in the year 2010. These expansions in Middle East and the Pacific could have a significant impact on trade between the US and Trinidad. As a result, Speeleveld asserted, it was necessary to remain open to all the factors which could affect this trading relationship. “There might be potential for some impact, some interference or some competition that wants to capture what Trinidad wants to capture,” he said, adding, “Trinidad has some good advantages, one of them being that it is close to a market which everyone perceives to be attractive.”

He expressed the view that diversification was crucial to a country’s survival and noted that Trinidad had a healthy supply of gas reserves which could result in profitable downstream industries. “The choice has to be made,” he maintained, “between an opportunity that arises and strong gas prices that Trinidad can supply into and receive the highest possible netback, along with dollar amounts that can be reinvested and organised to drive the country forward.”