the next two years the Government plans a surge in activity
in the downstream energy sector on an unprecedented scale.
Information presented by the National Energy Corporation indicates
that the eleven major projects under their purview represent
some US$12 billion in investment.
According to the plans, these projects will create 29,500
new construction jobs and 4,000 permanent jobs. All eleven
projects are expected to begin in the 18-month window Q2 2006
to Q4 2007. Work has already begun on the first of these projects,
the MHTL AUM complex. (See Table)
Other projects that have been discussed in the past, but are
not listed in table, include the gas to liquids project (Petrotrin),
a gas pipeline to Tobago, the Eastern Caribbean Gas pipeline,
Phoenix Park Train III Development and a new LNG Train.
Eight of the eleven new plants will be located in the South
West peninsula of Trinidad in new industrial estates at Cap-de-Ville,
Union Estate and Oropouche Bank (reclaimed land).
The Point Lisas industrial estate will also be expanded eastward
to accommodate new industries. This expansion in industrial
activity has increased the demand for land along the west
coast from Point Lisas to Point Fortin.
These new developments will no doubt place a strain on existing
resources particularly in the south-west peninsula where the
infrastructure remains woefully inadequate to support the
level of planned activity.
These plants will also require water. At present the water
supply for Point Lisas comes from the desalination plant.
It is not sure whether WASA plans to increase its capacity
to deal with the plethora of new industrial plants.
The success of gas-based development in T&T is a result
of a number of economic drivers such as substitution for higher
cost production in the USA, growth in the demand for products,
the competitive cost of natural gas in T&T (as compared
to the USA) and a shorter distance to major markets (as compared
to a number of other gas producing countries); in addition
to the advantages presented by an open investment climate,
a stable democracy and trust in the rule of law.
The 2006-2007 wave of gas based development supersedes the
gas-based development that took place in the period 1975 to
1982 when Point Lisas was developed.
This initial thrust into gas based development encountered
problems such as access to markets as was the case with steel.
Back then the co-ordinating task force under Prof Julien considered
some 16 projects of which six were implemented.
These included: iron and steel, Tringen ammonia, Fertrin Ammonia,
methanol, urea and the expansion of TCL.
Those that remained in the conceptual stage included a polyolefins
complex and an aluminium smelter.
The early Point Lisas experience must, however, be appreciated
in the context of the steep part of the learning curve that
essentially laid the foundation for the successful gas economy
we enjoy today.
One of the main differences this time around is the depth
of the projects with respect to the products that the plants
The downstream sector has been primarily a producer of intermediate
products (methanol, ammonia, urea).
In 2004 Government instituted a new policy which required
investments in the downstream sector to have a value added
component. This means that the days of building a plant for
the sole purpose of producing and exporting an intermediate
product are over.
The other major difference is that whereas Point Lisas was
based mainly on methane (C-1) the new phase of gas based development
will include methane as well as ethane (C-2) and propane (C-3).
Another fundamental difference is the ownership structure.
Whereas the State was the majority shareholder in the Point
Lisas projects, in these new projects the State is a minority
shareholderin most cases.
Some of the projects are also owned by local conglomerates
such as CL Financial and Ansa McAl.
Local private sector ownership in downstream energy projects
was almost unthinkable in the 1970s. (See Table)
Perhaps the most important and interesting element in these
the new projects is the opportunity for backward and forward
linkages between the energy sector and the manufacturing sectors.
For example the T&T energy sector is a large consumer
of steel, which is used in almost everything from platform
fabrication to pipelines. However, most of the steel produced
in T&T is never used in the energy sector.
Speaking in the 2005 budget debate, the Prime Minister noted
that the Essar steel plant would have the capacity to produce
steel plates that can be used to make tubes which have a myriad
of applications in the energy sector.
However, it is important to recognise that these linkages
are not going to always take part spontaneously.
Deliberate Government interventions, for example through the
Permanent Local Content Committee, and considerable work from
intermediary organisations such as the STCIC and TTMA will
be required to make these linkages a reality.
The provision of comprehensive information and business support,
from organisations such as E-Tek and BDC, is going to be required
if T&T is to truly benefit from these linkages. The STCIC
is committed to play its part.
start date for
MHTL AUM Q2 2006
Alutrint Q4 2006
Essar Steel Q4 2006
First UAN Q4 2006
Alcoa Q4 2006
GTPP Q1 2007
Union Estate Fertilizer Q1 2007
La Brea Nitrogen Q2 2007
TEIL Ammonia Q2 2007
Acetic Acid Q3 2007
Ethylene Q4 2007
Source: National Energy Corporation
of gas-based development in T&T
Point Lisas Gas based development
1970s-early 1980s 2006-2008
Ownership Majority State: (100% Majority foreign private equity,
ISCOTT, 100% Methanol State holding minority interest
Company of T&T, 51% in some projects. Local private
Fertrin, 51% Tringen) equity: CL Financial, Ansa
Feedstock Methane (C 1) Methane, Ethane, Propane
(C1- C 3)
Location Point Lisas Point Lisas, Union Estate,
Products Intermediates Intermediates and Tertiary
Products Methanol, Ammonia, Melamine, Acetic Acid,
Urea, Steel Polyetylene, Aluminum
Drivers Need to utilize flare gas Globalisation and
and to diversify away deregulation of gas
from oil markets in the US have
made it economically
feasible to establish
downstream plants in Trinidad.
Further information: www.southchamber.org