My Thoughts on Technology and Jamaica: Phillip Paulwell wants as bigger stake in the LNG Plant - Mr. Vegas Bruk it Down as Jamaica Courts Trinidad and Tobago for LNG

Saturday, May 12, 2012

Phillip Paulwell wants as bigger stake in the LNG Plant - Mr. Vegas Bruk it Down as Jamaica Courts Trinidad and Tobago for LNG

LNG (Liquid Natural Gas) remains the best option for Jamaica as argued by Managing Director of South Jamaica Power Company on Monday Valentine Fagan on Monday May 7th 2012 at the Weekly Jamaica Observer Monday Exchange as stated in the article “JPS: LNG still the best option to oil”, published Tuesday, May 08, 2012 BY CONRAD HAMILTON Observer senior reporter, The Jamaica Observer .

His words express the same sentiments expounded in my blog article entitled “Senator Phillip Paulwell chooses LNG over Coal - Power Engineers in Steven King's Graveyard Shift”, quote:  “There is really not much difference in terms of coal versus LNG, just that it is possible to bring on the LNG plant much faster. Coal plants take five years for construction, in addition to the many environmental issues. If we don't add capacity, and if we assume modest growth in the economy, we would have breached the 25 per cent reserve margin, and would find it difficult to supply peak demand. This would result in widespread outages.”

The Minister of Energy and Mining has decidedly placed some emphasis on LNG with Cabinet giving approval to the formation of the Jamaica Gas Trust Company as mentioned in the article “Government gives green light to Jamaica Gas Trust company”, published Friday, April 27, 2012 by CAMILO THAME Business co-ordinator, The Jamaica Observer . Bids related to their procurement of LNG and the construction of the Floating Regasification Plant closed on Friday, April 27, 2012AD.

Apparently the LNG Plants ownership is to be split as follows:

1.      20% to JPS
2.      40% to Marubeni
3.      40% Korean Partner EWP (East West Power)

With only a 19.9% stake in JPS Co as explained in my blog article entitled “Minister Clive Mullings retrogade step on Energy Sector Liberalization - JPS Co's Monopoly An Inconvenient Truth” the GOJ would own only 3.98% of the fully constructed plant.

It would thus explain why Phillip Paulwell is so eager to control as much of the LNG Project as possible, as the Government of Jamaica, via its stake in JPS Co, only owns 4% of the project as stated in the article “Paulwell wants a bigger stake in 360MW plant”, published Wednesday April 25, 2012, The Jamaica Gleaner.

This Trust is expected to be capitalized with US$100 million of cash and US$100 million of credit from the Trusts potential customers. Already the Ministry of Energy and Mining has been seeking these Private Equity Investors, as they clearly are aiming at a Private Sector Run Jamaica Gas Trust. The Jamaica Gas Trust is to handle the day-to-day financial operations involved in supply of LNG to customers as well as the maintenance of Pipelines and the LNG Infrastructure.

Demand for LNG is estimated at 0.8 million tonnes of LNG per year with some 2.5 million tonnes per year by 2012AD. The contractors to build the Floating Storage and Regasification
Terminals are already shortlisted by the LNG committee headed by Chris Zacca:

1.      Exmar Marine of Belgium
2.      Samsung C&T Corporation of Korea
3.      Sener Ingenieria y Sisternas, SA of Spain

Already, the Minister of Energy and Mining Phillip Paulwell has begun the search for these Equity Partners to pony up the US$100 million to make their ownership stake in the project solid as stated in the article “Jamaica seeking equity investors in LNG company” Published Wednesday May 2, 2012, The Jamaica Gleaner.

His words to the Wednesday Business Observer express this sentiment best, quote: “Government is going to [capitalize] what it has already spent, which was some US$5 million. But I can't say whether that will work out to be five per cent or 10 per cent at this time. It is to be a private sector-led company, not government-led. Government is going to the market and selling equity in the business.”

And who are these customers of the Jamaica Gas Trust, you ask?

The bulk of the LNG is to supply the 360MW LNG Power Station to be built jointly by the JPS Co and the Ministry of Energy and Mining in Old Harbour as stated in my Geezam blog article entitled “JPS Co to build Jamaica’s first Gas Turbine Power Plant in St. Catherine”.  The rest of the LNG will be supplied to potential customer including JPS Co, JEP (Jamaica energy Partners) and JAMALCO as opined in my blog article entitle  “PM Portia Simpson Milller ALCOA Talks hint at LNG - Lady Gaga's Paparazzi in Jamaica's Bauxite Sector” .

LNG is clearly aimed as a growth engine from Manufacturing and Mining Interests in St. Catherine and Clarendon, as Phillip Paulwell points out, quote: “"It is expected that the importation of LNG will serve to spur economic growth in industries across the island that would benefit from the availability of natural gas and lower energy prices”.

But these sentiments will not bring LNG to Jamaica, which Phillip Paulwell has to procure before JPS Co (Jamaica Public Service Company Limited) will invest their half of US$616 million (J$53 billion) towards the completion of the plant in 2015AD as stated in my blog article entitled “Phillip Paulwell wants Full Energy Sector Liberalization – JPS Co’s Dan Theoc holding on to his Hard End”.

More so the 1,200 jobs it may create in the process, most likely for skilled Power Engineers and Generator Technicians as stated in my Geezam blog article entitled “JPS Co to build Jamaica’s first Gas Turbine Power Plant in St. Catherine”. Already JPS Co has begun an aggressive Analog to Digital Meter Upgrade as noted in my Geezam blog article entitled “JPS Co Analog Meter upgrade heralds Remote Billing Revolution”.

So it’s not surprising that talks have begun afresh with the People’s Republic of Trinidad and Tobago for the procurement of LNG since April 2012AD as stated in the article “Ja-T'dad LNG talks at 'ground zero'”, published Monday April 23, 2012, The Jamaica Gleaner.

This time around, we hopefully have caught the Trinis in a good mood, after Prime Minister Kamla Persad-Bissessar have thankfully declared that “God is indeed a Trini”. The People’s Republic of Trinidad and Tobago had gotten lucky and discovered an estimated 48 million barrels of crude in 60m of shallow water by State-owned Oil company, PETROTRIN in the Gulf of Paria four (4) miles west of Point Fortin as described in my blog article entitled “Trinidad and Tobago Discover new reserves of Oil in shallow water - God is indeed a Trini and Jamaica courts them for LNG again”.

This after having been faced with the spectre of not having enough Oil reserves to finance their Vision 2020 push towards Developed Nation Status as opined in my blog article entitled “Alternative Energy and Trinidad and Tobago - Strange encounters of the Third Kind”, which is akin to the GOJ (Government of Jamaica) Vision 2030AD.

Back then  in 2009AD, a promise was made under the Patrick Manning administration as stated in the article “LNG for Jamaica a national priority - Manning”, Published Friday June 26, 2009 by Linda Hutchinson-Jafar, Business Writer, The Sunday Gleaner, saying, and I quote “In those circumstances, the Government of Trinidad and Tobago now considers that a supply of LNG to Jamaica for the stimulation of investments in the alumina sector, to be a matter of national priority”.

It mainly had to do with increased competition from the US who had begun to exploit their own Shale Gas Reserves and the Asians and Chinese who had begun to cap Natural Gas at their Oil Wells and sell, thereby resulting in a drop in Natural Gas prices worldwide as noted in the article “Rivalry sends Trinidad in search of new LNG markets”, published Saturday, July 4, 2009, The Saturday Gleaner, by Linda Hutchinson-Jafar, Business Writer, The Jamaica Gleaner.

More competition from LNG suppliers in China, the Middle East and Far East countries means that market for LNG has since changed for Republic of Trinidad and Tobago LNG since 2006, as stated by Robert Riley, Chairman and CEO (Chief Executive Officer) of BP Republic of Trinidad and Tobago. No central body or cartel that controls the price of LNG worldwide, much in the same way that OPEC (Organization of Petroleum Exporting Countries) controls the price of oil worldwide.

These producers, for who LNG is merely a by-product as they produce more valuable chemicals such as methanol and ammonia, are now flooding the LNG Market with large and cheaper volumes of LNG.

The United States of America is Republic of Trinidad and Tobago’s largest buyer of LNG and thus the possibility exists that these cheaper suppliers of LNG can effectively compete with Republic of Trinidad and Tobago for supply to the United States of America, presently the largest current and future user of LNG, as the United States of America, under an initiative spearheaded by President George W. Bush, is looking to Renewable Energy as a means of reducing the United States of America’s dependence on Foreign Oil.

As such, LNG is part of the Renewable Energy for the United States of America for its Domestic Supply of Fuels along with Bio-Diesel and E80 to be used for Electrical Power Generation and Motor Vehicle Fuels respectively. Already in Jamaica, LPG (Liquid Petroleum Gas), the portable variant of LNG, can be sequestered and used to power automobiles as explained in my Geezam blog article entitled “Auto LPG as a Motor Vehicle Fuel”.

Thus LNG is poised to Bruk it Down, Mr. Vegas Style, as the Energy Mix would be reduced from several fuels for Electricity Generation as well as Motor Vehicles to one fuel, significant savings for the GOJ in the next five (5) years.


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