Huffing and puffing

The US currently imports some 77 percent of its LNG supplies from Atlantic LNG which started operations in 1999 and currently produces ten million metric tonnes per annum (mmtpa). The company’s fourth Train, the process where natural gas changes from a vapour to a liquid and re-gasified as needed, scheduled to come on stream this month will increase Atlantic’s annual total LNG capacity to almost 15 mmtpa.

Atlantic LNG’s Chairman John Andrews said the US continues to be the major market for LNG products from Trinidad and Tobago.

"Train 4 supplies will also be going to the US market, the most important market at this time," Andrews said in an interview.

He also doesn’t discount further expansion of the company into a fifth train. "The shareholders of Atlantic are in the business of processing gas into LNG and as long as there is an opportunity to do so, they would be interested in participating," Andrews said.

Atlantic LNG shareholders are BP, BG, Repsol, National Gas Company of Trinidad and Tobago and Tractebel. Spain-based Repsol, one of the largest oil and gas companies in the world is also expanding its operations in Trinidad and Tobago and credits this country’s leading role as a LNG exporter as a key element in their energy strategy.

"LNG is one of the key elements in our strategy for the Caribbean. Trinidad and Tobago is a key element in our strategy and a key element in the Atlantic Basin, " said Nemesio Fernandez Cuestra, Repsol’s Executive Director of Exploration and Production. "The company’s position of the LNG in Trinidad towards the gas market in the United States is also a key element. The United States will continue to be an important market for gas and LNG, " he added.

In 2004, 98 percent of LNG from Trains 1,11 and 111 were shipped to the US market; one percent to the Dominican Republic and the remaining one percent went to Japan on a spot basis.

Repsol has a 22.22 percent stake each in three production trains of the Atlantic LNG plant. It also has a 22.22 percent in Train 4.

Fernandez Cuestra said one of the great advantages of Trinidad and Tobago over other countries in the Western Hemisphere was getting involved in the business of LNG when the future of LNG was not clear in the world.

"Our investment in Trinidad is an important milestone in our growth strategy and will definitely consolidate and strengthen our already solid position both in the Caribbean and in Trinidad," he added.

The TT government is also looking at another LNG potential "Train X" with new upstream players who do not hold equity in Atlantic LNG.

Letters have already been sent to upstream producers such as EOG Resources, BHP Billiton and other energy companies operating in Trinidad to gauge their interest in becoming part of a new LNG entity.

"They’ve been encouraging. Everybody is interested and again we have to balance the portfolio, what do we use the gas for, whether domestic or export and to what extent cross border gas (with Venezuela) would be involved in that. So it’s still early days yet but the discussions are very interesting and on-going," Energy Minister Eric Williams said recently.

A committee has also been established to select strategic partners for possible joint venture arrangements with the Government in areas of new LNG investments including a new LNG Train, LNG shipping, re-gasification facilities, distribution and marketing to the final consumer.

Discussions on various aspects are being held with a number of companies including BP, BG, BHP Billiton and Chevron-Texaco.

State-owned foreign companies such as Sonatrac of Algeria and Malaysia-based Petronas and PDVSA of Venezuela are also being pursued.

Government said discussions will also be held with owners of US-based regasification terminals, in existence or in the advanced state of development. The committee also has a mandate to pursue the expansion of the LNG industry by looking at potential gas reserves from cross border fields in nearby Venezuela.

To ensure that more money remains here, government wants direct involvement in the LNG value train. One area that it is closely focusing on is the North American off-takers, who currently have contracts with Atlantic LNG to sell the products from the three trains to the United States.

"The off-takers have the benefit of extracting more value along the LNG chain in areas such as shipping and regasification terminals and even to the distribution end of the market to the exclusion of the government and people of Trinidad and Tobago," Williams said.

Trinidad and Tobago’s strategy to get more value out of LNG is also hinged to the US dependence on the Caribbean island for its LNG supplies.

"This dependence on imported LNG on the part of the US is a primary issue of energy security for them and a case for the astute management of supply," Williams said.

Trinidad’s closest neighbour, Venezuela, which holds the world’s eight largest reserves of natural gas is eager to monetise in an attempt to replicate the success of the massive Atlantic LNG export project.

Venezuela, the world’s No 5 crude exporter, hopes to tap into the growing demand in the expansive US gas markets through a quick start up of a US$2.7 billion LNG export project.