The collapsed paradigm of T&T’s LNG

I addition to the illicit trades of the Caribbean I monitor on a daily basis the geopolitics of LNG in T&T and Venezuela. Years of work resulted in my publication titled: “The geo-politics of LNG in T&T and Venezuela in the 21st century” available online in dinosaur book form and e-book formats. Under the UNC administration 1995-2000 the permission to build Trains 1 to 3 of Atlantic LNG was granted. where non-associated gas would be turned into liquid for export. The major player in this venture was the globalised transantional energy giant BP Plc. The paradigm driving the investment to create the LNG production trains at Point Fortin, Trinidad insisted that well into the 21st century the US will experience an energy deficit forcing the US to became ever more dependant on imported energy thereby creating a booming energy market in the US for imported energy. This ever expanding US energy deficit will yield to the companies super profits as the business model called for squeezing costs on the production side especially taxes and royalties due to nations owning the gas feedstock whilst heightening the dependence of the energy deficit nation on imported energy sources. Financing to erect the trains of T&T was done using the tolling method where long term supply contracts covered the total production capacity of each train for a specific period of time were the security for the funding. By 2008 it became glaringly apparent that the US political agenda had in fact destroyed the paradigm forever that underpins the T&T LNG order. The shale gas revolution of the US unleashed cheap natural gas in ever increasing volumes at low prices that ended the US energy deficit and therefore the importation of LNG in volumes that will now make the four trains loss leaders. New markets had the then to be created but the only viable markets are in Asia and Latin America with the Latin American markets way smaller than the Asian markets. Both markets do not offer long term contracts as you must win competitive bids for the supply of defined loads within a time frame. T&T LNG has then to leave T&T and go all the way to Asia which resulted in the focus on the Latin American market as there is no other choice as the operator’s of LNG T&T have to live with this new reality. The US energy market is changing rapidly and the fact that LNG import terminals are now being turned into LNG export terminals to serve US LNG trains using shale gas as feedstock reveals the threat to the Latin American market from US shale gas LNG. What is most revealing is that BG a player in the T&T LNG sector is a major investor in the LNG export sector of the US and BP is not far behind. This is called hedging your bets as a globalised transnational but T&T hedged its bets on a failed, collapsed, paradigm. The next reality that must be understood is the technological revolution that is sweeping the LNG production sector in the US as a result of the need to monetise abundant shale gas supplies selling at prices on or about 4 USD. LNG can now be produced profitably in trains and transported in ships etc that are much smaller in scale as the technology used in T&T. LNG markets that are too small for plants as those in T&T are now viable prospects for this technology using US shale gas. The first target is every small market in Latin America and the Caribbean. Another revolution in train is the re-investment in America especially in the Gulf states as Louisiana towards the creation of industries using gas as feedstock. Industries which fled the US because of the US energy deficit producing offshore for export to the US are now returning to the US and investors with no footprint in the US are announcing their intentions to invest in industrial complexes. Any investor coming to T&T say to invest today in a methanol plant raises the questions : why not in the US? do you expect us to match the US gas price and give much more concessions than say the state of Louisiana in order to win this investment. What is in it for the people of T&T are we giving away our gas to allow politicians to beat their rotund chest? Never forget in the negotiations for the first three trains of LNG the then UNC government gave away the family jewels and T&T’s patrimony. We can therefore expect that the present government is under extreme pressure by the gas producers and the users of gas as feedstock to make the cost of gas more competitive read as: we want a bligh. BP has publicly stated that a new reality obtains for the gas sector in T&T and it wants new terms of endearment/engagement. But the salient question remains: has successive governments of T&T up to the present collected all the taxes etc due to T&T under our existing legislation? The evidence says no!

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