Ticking off Train ‘X’ ?

But given the continuing concerns about the unavailability of gas supplies to meet the growing domestic demand, the country may have to turn to Venezuela, if there is to be any expansion of the LNG industry.

Professor Anthony Bryan, Senior Associate in the Americas Programme at the Washington-based Centre for Strategic and International Studies, said gas from Venezuela’s Plataforma Deltana may be critical to making “Train X” happen.

“Looking ahead at market dynamics, given Venezuela’s proximity to a well-established LNG infrastructure in Trinidad and Tobago, it may one day make sense for gas from the Plataforma Deltana area to be monetised in Trinidad and Tobago.”

Venezuela is at least a decade behind this country in the monetisation of its natural gas, Professor Bryan told an energy conference last week hosted by the South Chamber of Industry and Commerce.

But Gregory McGuire, Energy Economics Lecturer at the St Augustine Campus of the University of the West Indies threw a spanner into the debate about another LNG train when he asked whether a Train X was really necessary.

Noting that there were several pre-conditions for a new LNG train, McGuire said the most fundamental pre-condition was the gas reserve question. “There are serious concerns about the level of reserves and whether there are reserves to support anything called Train X.”

“I’m asking the question, ‘Is cross border gas the answer?’ We’re not sure,” he said. The other question that one needs to ask is, “Do we need Train X at all?” he said, while addressing the energy conference.

During a 2003 official visit to Trinidad, Venezuela’s President Hugo Chavez said he hoped gas from the Plataforma Deltana, located close to Trinidad, will be processed in Port-of-Spain for export markets since the South American country does not yet have an LNG plant, although plans have been on the drawing board for a while.

Professor Bryan, however, warned that there is a very long distance between a government-to-government MOU and actual contractual terms to supply gas across a border to an LNG project.

“As the Venezuelan LNG experience indicates, government-government negotiations can become protracted and agreements can be years in the making.” In this case, the details of the MOU (on unifying cross border reserves) have been completed.

But, he said if strained relations between US companies and Venezuela continue, “Will Venezuelan politics once more trump economics even in this instance? Perhaps it will.”

Bryan, who’s currently writing on Regional Energy Cooperation and Energy Security in the Caribbean as part of a wider hemispheric project, added that Venezuela for nationalistic reasons may not be willing to process its natural gas at the LNG plants because of American shareholders.

“And in the current climate, Venezuela is not likely to send it to LNG plants in the US,” he said.

Last week Energy Minister Dr Lenny Saith said Government is about to take the first steps towards deciding whether the country could accommodate Train X by having a feasibility study, expected to conclude by year’s end.

“Our LNG expansion is likely to see new entrants and partnerships on the liquefaction side of the business as well as increased Government participation in shipping, regasification and marketing, while at the same time allocating a portion of the gas for domestic use,” Dr Saith said.

Government has said in the past that it was looking at Train X which would involve new upstream players who do not hold equity in Atlantic LNG. Atlantic LNG shareholders are BP, BG, Repsol, National Gas Company (NGC) of Trinidad and Tobago and Suez.

Noting that Trinidad and Tobago has done very well so far in the global energy geopolitical game, Professor Bryan said with just 0.3 percent of the world’s proven natural gas reserves, the country has emerged at the head of the LNG export industry to the US and is poised to play an even greater role in the global natural gas industry in the coming years. However, recent data suggests that US LNG prices are very sensitive to large volume imports and that a position of strength today may become one of weakness tomorrow.

“ In order to ensure continued success in this new world of petropolitics, Trinidad and Tobago should embark on a structured regional, hemispheric and global energy diplomacy that reflects constantly changing geopolitical realities,” said Professor Bryan.

The three immediate concerns, he said, for the country’s energy diplomacy are: the PetroCaribe agreement and Trinidad and Tobago’s relationship with its Caricom neighbours; cross border co-operation with Venezuela; and the changing energy landscape in the United States.

“There are road-maps but no easy solutions, “ he said.