Trinidad’s gas sector declines

Trinidad’s gas sector declines

June 08, 2010

By Michael Deibert

Foreign Direct Investment

(Read the original article here)

As supplies of liquefied natural gas dry up in Trinidad and Tobago, the industry’s future on the islands is in doubt.

Once the top supplier of liquefied natural gas (LNG) to the US, the Caribbean dual-island nation of Trinidad and Tobago has seen the growth in its production of this lucrative fuel decline sharply in recent years.

The lack of forward motion has led to speculation about possible future paths for developing the sector.

In the years following the country’s first LNG investment in 1996, Trinidad and Tobago’s export capacity grew substantially and reached some 14.7 million tonnes of LNG per year by 2005.

The Atlantic LNG Company of Trinidad and Tobago, owned by the state and the local subsidiaries of LNG giants BG Group, BP, Repsol YPF and Suez, operates an LNG plant at Point Fortin, in Trinidad’s south-west, and four liquefaction trains, including one currently measured as the largest in operation in the world. Plans to develop a fifth train have as yet not materialised.

The battle for Trinidad’s recent general election focused more attention on the government’s approach to developing this most lucrative of natural resources.

In the run-up to the May 24 election, incumbent prime minister Patrick Manning, a trained geologist, put an increased focus on industrial facilities in addition to LNG development.

The fate of the country’s reserves became a political football in Mr Manning’s electoral struggle against former attorney general Kamla Persad-Bissessar. Mr Manning’s People’s National Movement, which had governed the nation since 2001, lost the election to Mr Persad-Bissessar’s United National Congress party.

[Note: The UNC won the May 24 elections]

Since a peak in 2002, the country’s gas reserves have declined by more than a quarter, with a notice­able drop-off in exploration. Three years ago, Houston-based consulting firm Ryder Scott issued a report warning of declining natural gas reserves in the country.

A recent report from liquid flow measurement specialists Badger Meter Inc suggested that, while by 2014 Trinidad will only provide 0.49% of all oil demand in the Latin American region, its LNG output, which formed 19.83% of the region’s supply last year, will continue to contribute an impressive 19.12% by 2014.

There are, however, thought to be substantial undiscovered LNG reserves in the country’s shallow and deep waters. Mr Manning told a political rally in Trinidad in May that 62% of the nation’s reserves are still unexplored.