Tag Archives: LNG

Trinidad and Tobago: Do the Dragon Dance! Do the Maduro Dragon Gas dance!

Trinidad and Tobago: Do the Dragon Dance! Do the Maduro Dragon Gas dance!

It is noteworthy to effect a comparative analysis of the press releases of the governments of Venezuela and Trinidad and Tobago (T&T) on the sourcing of gas from the Dragon field, Sucre State, Venezuela for use in T&T. The latest instance is the negotiations that were held in Caracas, Venezuela in June 2018 which failed to produce a done deal. PDVSA’s press release on Thursday 28 June 2018 in Spanish simply stated in a single paragraph that this was simply another meeting held between both governments towards guaranteeing a supply of gas to the domestic market of T&T and “as well as the plans for gas trading in foreign markets.” What does that mean we the people of T&T simply don’t know! Apparently the Venezuelans are differentiating between gas for domestic consumption and Venezuelan gas turned into LNG and exported to foreign markets. Does this apply to methanol, urea and other products utilising gas as feedstock and exported to international markets? No answers! The press release of Thursday 28 June 2018 in English stated: “as well as the plans for gas trading in foreign markets.” That was all PDVSA’s releases stated simply the process is ongoing with no time frame for finality in sight.

In T&T the Daily Express of 28 July 2018 reported on a press statement from the Office of the Prime Minister (OPM) on the meeting in Caracas, Venezuela which stated that: “There remains a number of areas where further work is required.” The Newsday 29 June 2018 reported on the post cabinet meeting where Minister Young stated: “Right now we’re just stuck on price.” What we can surmise from the public statements made by both sides is that the Venezuelans are demanding a unit price for their gas which will be used as feedstock for export commodities sold on international markets as and especially LNG that T&T is unwilling to pay. Maduro has T&T by the short and curly magnified by the geopolitical reality impacting this gas supply deal. Maduro has everything to gain especially leverage over T&T and we have everything to lose which trumps what we delusionally believe we have to gain.

Can Maduro supply the gas? In light of the condition PDVSA is in as at July 2018 NO! After his electoral victory in May Maduro suddenly became very proactive after a first term of handwringing whilst austere neoliberalism is applied with a vengeance combined with prolific printing of paper money, intense State suppression of the poor and underclass and looting the State coffers on an industrial scale. The Maduro sorcerer’s apprentice model of survival at all costs political alchemy. One such proactive action was to meet with the leaders of the workers’ movement of PDVSA in a televised meeting to hear the workers’ position on why oil production in PDVSA had now collapsed to below 1.1 million barrels per day since April 2018 from 2.5 million barrels per day in late 2016 and how to raise production levels. Oil worker Ernesto Guerra stated: “We can recuperate up to 80% of lost production within six months to a year…if we are given the tools, materials, supplies and, minimal things which we need.” Guerra has therefore indicated that the dramatic fall in production is an expression of the systematic collapse of PDVSA as a wealth generating enterprise under the leadership of Maduro. Other workers indicated that the plant and equipment of PDVSA needs to be upgraded which illustrates the failure to invest in the necessary upgrades and the bureaucratic barriers erected must be dismantled. PDVSA is then a lumbering political dinosaur effectively neutered and plundered as a feeding trough to the point where what is necessary to breathe life into it is outside of the capacity of the politicians who contributed to its demise. PDVSA today simply does not command the resources to develop the Dragon and other gas fields of offshore Sucre state and much less to erect the infrastructure to connect to the infrastructure on the T&T side of the sea boundary. To do this they need an external source of funding in order to meet the start-up of supply date being bandied about in the media. The question is if this legal and permissible under the organic hydrocarbon law of Venezuela?

The immediate strategic imperative is to raise PDVSA’s daily oil production by 1 million barrels per day as follows: 360,000 barrels per day of light crude from 13, 345 category 11 wells in Western Venezuela and 700,000 barrels per day of heavy crude from 9,500 wells from the Orinoco Belt. This strategic imperative has to be implemented on the ground where PDVSA is in the grips of a severe cash flow crisis, is owing its service providers both locally and internationally, faced with debilitating US sanctions especially those which preclude the repatriation of CITGO’s profits to Venezuela and most importantly with a crushing USD debt load in 2018 and 2019. To this must be added the collapse of the infrastructure of PDVSA and in depth politicisation of the management of PDVSA where it is now paralysed from top to bottom exemplified in the assault on corruption where a general of the Guardia Nacional is now president of PDVSA and minister of energy. On the 4 July 2018 Correo del Orinoco carried a news report which indicated that China had agreed to a specific financing credit facility of USD 5 billion to fund the project to raise the production of oil in Venezuela especially in the Orinoco oil belt. The Development Bank of China has also agreed to a specific financing credit facility to PDVSA to increase oil production of USD 250 million. Trump’s war on China leaves little free space for China to secure a supply of oil free from the machinations of the US hence the dance with a collapsed PDVSA. Two press releases of PDVSA dated the 5 and 6 July 2018 indicated that the capital injection of China into oil production will be aimed at increasing oil production in China/Venezuela joint venture companies where the CNPC of China will take on the leading role for China in this China financed venture. China has no presence in the Dragon field and has yet to exhibit concern with Venezuelan offshore gas as an investable interest and the other fields adjoining Dragon are under a joint venture with Rosneft of Russia.

The Correo del Orinoco of 3 July 2018 reported that Gazprom was now working with PDVSA in Zulia State to restore a reliable supply of electricity and steam to the oilfields of Zulia necessary to increasing production via reliable secondary lift. China and Russia are then active in the effort to increase oil production in Venezuela today in the face of the collapse in oil production of PDVSA. An involvement that is a strategic imperative in response to the Trump end game that only Trump seems to know. A press release from PDVSA dated 4 July 2018 reported that 11 service agreements with nine service companies were signed for work on wells in the oilfields of Western Venezuela in Zulia and Trujillo States. The identity of the nine companies were not revealed in the press release but it is clearly apparent that the increase in oil production is the sole strategic aim of PDVSA right now and until it is accomplished.

Where does Dragon gas for T&T fit into this strategic imperative for a nation in economic meltdown and PDVSA in crisis to which Venezuela is addicted? PDVSA is now Venezuela’s pusher man in crisis as the pusher man cannot supply what the addict named Venezuela craves for hence the Maduro diet for all except the bolibourgeoisie and the Punto Fijo oligarchs.

Whilst we sing optimistic songs in public driving the Dragon dance the issue is not only if the gas materialises in spite of signing a contract but what price will we pay geopolitically to the parties on both sides of the divide? How costly will be the pounds of flesh extracted by parties on both sides of the divide? The propensity for grave damage is a likely possibility!

To hitch your wagon to this disaster waiting to happen thereby risking geopolitical blowback coupled with no gas deliveries indicates that all is not as portrayed in the reality of T&T on the ground. This is desperation in action, delusion or desperate delusion?










Geo-Politics of LNG 2017 T&T

The LNG Reality Impacting T&T in 2017

The inability to produce and supply the requisite amount of gas to Atlantic LNG necessary to maximise economic production levels is not the only reality impacting the contribution of this facility to the national coffers. The reorganisation of world energy markets as a result of US exports of shale gas LNG and the coming on-stream of especially the LNG plants in Australia have especially impacted the Asian market which is the largest market for LNG trades. The increased volume of supply has now allowed the Japanese importers with the support of the government to insist that the destination clauses of the long term contracts that forbid Japanese importers from re-selling their imported loads be amended to allow Japanese re-selling. Suppliers including those operating in T&T are applying the pressure for the Japanese importers to drop this request but US shale gas LNG producers as Cheniere are offering contracts linked to US Henry Hub prices unlike the present contracts which are linked to oil prices and allow re-selling of loads purchased from US suppliers. The lesson in this scenario to T&T is that under the contracts ratified by the then UNC government for trains 1 to 3 the LNG exporters of T&T can move product to various markets but they are taxed on US Henry Hub prices even though the prices at the importing market are higher and the operators also allow importers of T&T LNG to re-sell their loads as is the case with Gas Natural of Spain but these said operators insist that Japanese importers cannot re-sell loads sourced from these operators. Wonder why? Wonder who is a major shareholder of Gas Natural? The US producer is presently supplying loads governed by contracts signed with Japanese importers. US shale gas LNG has also entered Latin American markets and as production expands and new production facilities come online the competition posed to T&T LNG will intensify as it’s clear that US producers intend to win market share by any means necessary and with a facility in T&T faced with a heightening shortfall in gas supply in existence without relief for some 5 years hard decisions will have now to be made by the major shareholders especially Shell. The acquisition of BG at a most inopportune time in the energy industry has forced Shell to dispose of assets in order to reduce the debt on its balance sheet and this process commenced in 2016 and continues. Shell has repeatedly made it clear that it intends to continue to grow its LNG trading arm towards ensuring it is the premier LNG trader in world markets and in 2016 Shell indicated that this strategy is not premised on investment in LNG production facilities that it considers offering less than optimum return on investment in the life of facility. The report on Bloomberg in 2016 that Shell was rumoured to have marked its shareholding in Atlantic for disposal possibly arose from this strategy of Shell. But Shell in 2017 and thereafter has another strategy possible in T&T that will contribute to attaining its LNG trading strategy and maximising its take from the gas market from T&T by biting multiple times on the LNG cherry. You sell your shareholding in Atlantic but bind the purchaser of your share to long term LNG supply contracts to Shell’s trading arm which you then sell on world markets, you develop the gas fields acquired from BG in T&T and become an independent/non-shareholder supplier/seller of gas to Atlantic bypassing the NGC cut off the top and to facilitate all of this you dance with the Chavista government of the day to enable the supply of gas from Dragon to the designated end users then you enable the Loran/Manatee development and the flow of gas to T&T with you and Chevron as gas suppliers. A T&T government ever thankful, ever beholding to Shell has then to facilitate the multiple biting of the cherry and enabling the cherry to grow in size whilst being bitten. In the reality of this dreamland scenario I wonder what we the ordinary citizens profit from this. What profit in this for us? Remember diversification T&T style is foreign franchise merchandise, goods and services for sale on the local market burning up foreign exchange it does not and cannot earn but such is the model of Bogota, Panama City and Santo Domingo and others in the Caribbean Basin. New England, USA remains the most profitable US market for LNG from T&T as the pipeline system to move shale gas into this state especially during winter remains underdeveloped to satisfy demand for energy especially during harsh winters as the 2016/17 winter. Imported LNG via Everett, Massachusetts which is close to Boston is used to satisfy energy demand resulting in an explosion of prices per million BTU at Everett outstripping Henry Hub prices. In this scenario LNG produced in T&T is sucked into this market to exploit the high gas prices. But what is the benefit of exploiting this windfall price to the people of T&T given the terms of the contract governing especially Trains 1 to 3 of Atlantic? But this artificially produced shortfall in supply is under pressure from the energy supply companies and with Trump and his merry oil men in power brace for the end of this artificially created choke point as it’s not only Standing Rock will soon capitulate.







Longevity of LNG glut is the problem

The problem we face in T&T is not caused by the collapse in oil prices as our daily oil production is below 80,000 bpd. The problem is the glut of LNG seeking buyers by any means necessary and any rise in oil prices say to USD45 at best for WTI with the consequent rise in contract LNG prices triggers a rebellion of buyers on contract. Contract due for renewal in 2017 and 2019 are under pressure already by a buyers’ rebellion for those contract prices to reflect market reality. Qatar has already signalled to buyers its willingness to cut prices to retain market share increasing the pressure on LNG producers and Russia and Norway are flooding Europe with pipeline gas to maintain their market shares of the market. Some have insisted that in the next two to three years the market will sink into a bloodbath very similar to the oil market. Others have stated that the LNG market will attain balance possibly by 2025 until then glut is the reality. Why then must BP tap increasingly smaller pools of gas to supply LNG trains to market a product in a glutted market until possibly 2025? The issue is no longer incentives from the government to tap pools of gas but to change the business model that will allow the gas producer to maximise returns on investment on both the local and international gas markets. Then the gas producer must sell gas directly to the end users who use gas as an input in an export driven enterprise in T&T. The cost of gas to the LNG trains must be competitive in light of international market realities hence little or no rents charged. That is the advice you will get when you take your business to the purveyors of the Washington consensus. In this new revenue horizon you must then radically cut your state expenditure and deepen the neo-liberal order the politicians in T&T love. If you want to borrow because you are addicted to grand state projects that change little but the balances on offshore accounts you must have the assent of the Consensus and to get this assent you have to deepen your dance with neo-liberalism where less than 1% become even richer and the rest of us learn how poverty is the hottest part of hell. The present right wing neo-liberalism worshipping government of Norway dipped into the sovereign wealth fund and the dippings continue to escalate because neo-liberalism solves only the problems of the super rich whilst we the poor have no problems to be solved because the exploitation our problems make the super rich what they are. To address our poverty is then to render neo-liberalism irrelevant. Out politicians will never accept this and the death of the politics of race.




T&T’s national secret: the LNG business

The LNG business in T&T is wrapped in secrecy as if it’s a covert dark op. You learn more about the LNG business in T&T from sources external of T&T than from where the business operates from so much for transparency in a democracy. At this time in the history of T&T where the energy paradigm that fashioned our entire economy and consumption patterns is in its death throes as a new energy paradigm sweeps the world we continue to be inundated with propaganda and blissful silence. The business guardian of January 10, 2016 printed an article titled “Atlantic confident about LNG’s future” which again is another instance of the play on the people of T&T. Who says Atlantic’s future is our future? A globalised transnational seeks its own interests and when those interests and T&T’s collide will they supplant theirs for ours? Like duh neo-liberal capitalism is not a charity. What the article didn’t tell us even though Atlantic said it before is that Atlantic says it cannot speak for Train 4 as it’s governed by a different structure where Atlantic is just a processor of gas to LNG supplied by companies and the LNG belongs to the supplier of gas not Atlantic therefore Atlantic cannot sell it internationally. So when Atlantic chooses to speak locally we remain ignorant of what is going on with LNG exported from Train 4 because the gas suppliers simply disclose nothing. In the said article Atlantic says in fact the LNG from trains 1 to 3 are sold on long term contracts but as to expiry dates of these contracts silence. As to the impact of the present LNG market on these contracts silence since we know at least one contract for train 1 expired and LNG was sourced from Yemen replacing Atlantic. In the article Atlantic says that they have destination flexibility in their contracts for their LNG. What does this mean for T&T’s revenue collection and how do we as a nation in these guava times benefit from this. Does it mean that LNG is sent on a long term contract to Gas Natural of Spain of which Repsol is a major shareholder who then resells the gas and T&T does not share in the profit of this reselling play? In the article Atlantic says that 51% of its LNG is sold in South America but according to the trade journals the major buyers of LNG in this region buy subject to demand through tender bids and short term contracts based on fixed load amounts. When there is no demand there is no tender. Newsday of January 19, 2016 in an article titled “Energy Minister says use it or lose it” reported that the Minister of Energy indicated that the the arrangement where the profit earned from the sale of diverted LNG cargoes was shared on a 50/50 basis is now up in the air. The Minister asked the question if diverted cargoes to South America were being passed to arms of the shareholders of Atlantic via transfer pricing who then sold the diverted cargoes thereby evading paying to T&T our share of the profits earned via diversion. We all should call for an answer from Atlantic. Wait on it. We all must now understand that this not a specific aspect of the so-called commodity cycle T&T is in. A new energy paradigm with a new brand of geopolitics is battling a falsified energy/geopolitics paradigm for hegemony and T&T is on the losing side. This new paradigm is more than US shale gas and oil it’s also Chinese shale oil and gas, Argentinian shale oil and gas and the inclusion of the huge gas resources of Iran as the South Pars fields into the world energy markets. The dinosaurs of the old paradigm as the house of saud and the angry white dinosaurs of US politics will rant and rave and bay at the moon and end up as the Luddites of the first industrial revolution. T&T live with the reality and deal with it this one denial will not postpone.

T&T’s Energy Reality Today

The foreign exchange we love to spend in T&T is predominantly derived from the taxes etc that the energy sector pays to the state and the largest single source of foreign exchange is derived from companies involved in the production of gas to LNG and the export of LNG. T&T has been faced since 2010 with falling volumes of natural gas supplied to the sector that utilises gas as feedstock and a glut of LNG on world markets appeared in 2015. What then is the reality of LNG in 2016? Cheniere Energy at Sabine Pass in the US is presently producing LNG and the first shipment will be delivered to British Gas (BG). Three nuclear reactors shuttered in Japan since Fukushima have either been re-started or will be re-started negatively impacting Asian spot LNG prices which was below 7USD for February 2016 delivery. China and South Korea are not taking up the slack created by Japan’s noted lowering of its LNG purchases and Asian supply continues to expand. Qatar took the decision to protect market share in light of Asian realities for LNG by setting the precedent to drastically change the terms of the 25 year contract between RasGas and Petronet of  India by cutting the contract price of its LNG by half and ending the take or pay clause. It is reported that Petronet has already indicated to its Australian suppliers that it wants a similar deal the cascade effect. Qatar’s move is the equivalent for LNG of the House of Saud’s move in oil markets and it will run through LNG markets as castor oil and send T&T to the latrine. LNG from Asia and the US seeking markets will then end up in Europe and given the willingness to protect market share by any means necessary we can then expect blood letting and further price pressures downward. The gas producers of T&T can then continue to demand a brand new gas structure in T&T and hold out waiting for the government to surrender because politicians have a 5 year vision horizon at best. The last government did nothing hoping for the best and that inaction did not bear fruit. The present government is even more precariously placed and the global actors wait. The gas supply in 2015 actually worsened and the news is not good as the failure of BG’s Starfish project. The question arises if the fall in LNG production and exports justified by a shortfall in gas feedstock given the nature of the world LNG markets is in keeping with the global strategy of the gas/LNG producers of T&T?  Where are our LNG markets today as exports to the US and Spain shrink?The gas/LNG paradigm of T&T is then falsified by the evolution of gas and LNG markets of the world. Such is life deal with it.






The Price T&T must pay for Loran-Manatee gas

On the 6 November 2015 on the Spanish language  web site of PDVSA a report was posted titled “Presidente Maduro crea comision presidential para industrializacion del gas” In which President Maduro states that the model of spending billions of USD to erect LNG trains utilising Venezuela’s gas resources is not an acceptable use of Venezuela’s gas resources. Venezuela’s gas must be the feedstock for the creation of a new phase of the industrialisation of Venezuela and the generation of electricity. President Maduro insisted that Venezuela must learn from the Bolivia model of gas utilisation. The core of the Bolivia model is a former President of Bolivia literally gave away Bolivia’s gas to Brazil and Argentina thereby creating a gas fed industrial complex in Brazil where the natural gas liquids of Bolivian gas was extracted in Brazil and continues to feed Brazilian chemical industries without any return to Bolivia whilst the masses of Bolivia remain trapped in poverty. This is in addition to the use of the dry gas by Brazilian industries. President Evo Morales of Bolivia has engaged in an ongoing engagement with Brazil to change this exploitative gas contract but Brazil insists on the sanctity of the supply contract. The masses of Bolivia have then been robbed of equitable returns on their gas and moreso of a wasting natural resource capable of raising their standard of living. President Maduro in citing the lessons of the Bolivia model has sent a message to those in T&T long desirous of Loran gas being fed into Atlantic. The question is can the structures that govern the gas to LNG process in T&T afford Maduro the political capital he desperately needs in Venezuela? In the Business Express of 18 November 2015 an interview with the Ambassador of the Bolivarian Republic of Venezuela to T&T was printed. The Ambassador stated that Venezuela wants to be T&T’s best friend. That no Venezuelan gas will be sent to T&T for processing before production commences on the Loran-Manatee field and gas from other Venezuelan gas fields can follow but it is a matter of trust between Venezuela and T&T. And Venezuelan gas can be processed at Atlantic via the stake NGC has in Atlantic. But to-date no time frame for production from the Loran-Manatee field is forthcoming. Venezuela knowing the gas supply crisis T&T faces is now making it clear the terms of endearment in order to access Loran-Manatee gas. Can T&T dance cheek to cheek with Venezuela and maintain its  traditional role in the Southern Caribbean with the USA? Clearly Venezuela is now using the gas supply crisis to drive a wedge between hegemon and client state. Is the present government willing to pay the price? Clearly the previous government left the gas crisis intact rather than dance cheek to cheek. Did Venezuela want to dance cheek to cheek with the previous regime?

The latest buzz word on LNG: GLUT

In 2015 LNG supply and demand are out of balance on world markets. As of 2015 brand new trains have commenced coming on-line both in Australia and the US whilst demand has slacked off in Asia, Europe and Latin America to the extent where analysts are now speaking of a LNG glut on world markets. Asian and European spot prices now follow each other closely whilst brand new production enters the market without the boon in Asian prices to contribute to profit maximisation. At best margins are razor thin as seen in the cost structure of US shale gas LNG with a processing cost of USD 2 per MMBTU and a shipping cost of USD 3 per MMBTU to Asia and Asian spot prices below USD 7/8 per MMBTU. Japanese utility companies who bought LNG following the Fukushima disaster in larger quantities are now showing a preference for coal given the collapse in Asian commodity prices. The EU has not embraced LNG as was forecasted as they continue to utilise coal to generate electricity and have embraced Russian supplied  gas even tighter inspite of the sanctions against Russia. The message is then clear that in times of economic slowdown LNG buyers in Asia and Europe switch to alternate fuel even though they are not green or they forego politics and embrace the energy rich outcast. The relevant reality is the move by Asian buyers of LNG to now create in this glutted market an Asian spot market for LNG. Having adopted the position that the stream of new LNG trains placed in Asia and the long term oversupply of the market suppliers must now end their demand for long term contracts from buyers. Cheniere LNG of the US has responded to this market reality by allowing its contracted buyers especially those in Asia to sell onwards LNG purchased on long term contracts with no return on this to Cheniere thereby boosting the Asian spot market. US LNG is once again changing the order of the LNG business. The glut will disappear only when the level of demand outstrips supply and the LNG stored in tanks and tankers around the world disappear. The estimate for this re-balancing is in the 2020’s. The lesson for T&T again is the fact that the paradigm that informed the creation of LNG trains in T&T is no longer sustainable as it has been falsified. The gas reserves of T&T must now feed manufacturing plants that increase the added value of products manufactured in T&T. Yes we need smelters and plants that turn the outputs into high value products. That is where the well paying jobs will be generated. Hard decisions are now necessary. Haiti beckons!!!






Manufactured news/political spin on T&T’s LNG sector

The political response to the shortfall in gas supply to the local gas based manufacturing sector has been tall tales, manufactured news passing for political spin. With the collapse of oil prices and the consequent fall in LNG contract prices indexed to the market price of oil and the collapse in Asian spot prices primarily caused by increased and increasing supply and sluggish demand the manufactured news mill passing for political spin has now entered a new phase. This phase is now predicated on attacking the manner in which LNG produced in T&T is marketed internationally by the shareholders of Atlantic. This attack is without legal basis as it speaks as if the LNG industry of T&T is state owned and the shareholders have a legal duty to maximise the revenue T&T earns from the sale of LNG produced in T&T on the international markets. It is a UNC government that established the legal/contractual parameters for Trains 1to 3 of Atlantic LNG. A PNM government with the creation of Train 4 tried to vary this boundary of this parameter but the operational reality of Trains 1 to 3 were sacrosant/untouchable. But the fundamental reality remains: for all trains the final product is disposed of in keeping with the strategic imperatives of the transnational corporation which is a shareholder of Atlantic. Why then attack  the shareholders of Atlantic when their actions are lawful under the terms established by a UNC government? If the owners of the product of Atlantic choose to sell LNG to Chile where LNG prices are linked to US Henry Hub prices rather than to markets where the price of LNG is higher that is their legal right as determined by duly elected governments of T&T. You cannot eat your harkow and have it too these are the breaks. But this is not the fundamental issue raised in the manufactured news story and I have to ask questions because this is the era in T&T of pre-action protocol letters and being unemployed, poor and broken I have no court house clothes. These then are the salient questions that arise: this netback formula from which T&T revenue is calculated does this formula only apply to LNG produced at Train 4 of Atlantic whilst for Trains 1 to 3 netback does not apply? If yes what then is the formula applied to Trains 1 to 3 and how does this impact the revenue derived by T&T? These are the crucial questions in an era where the US shale gas revolution is now the gravest threat to the future revenue earning potential to T&T of Atlantic. This paltry attempt at attacking the shareholders in public then seeking to suck up in private is a dangerous play in the era of USD 40 and USD 50 oil, with profit warnings, falling stock prices and cost cutting driven by people losing their jobs. We don’t hold the trump cards in this world energy market they do. They are not driven by the desire to win a general election Play fake, denial hardball and we the people get burn. We the people need to be told the reality political spin cannot buy groceries!

LNG, Trinidad and Tobago and the NEW ORDER

Nothing has fundamentally changed since my last posting on LNG as Asian spot prices per MMbtu is still below 8 USD because of a flood of new supply faced with waning demand. But in the face of this reality the revolution created by the export of US shale gas LNG is being rolled out destined to deeply impact the LNG markets of the world as early as December 2015. US exporters especially Cheniere are selling LNG on contract not to consumers but to traders who have  indicated their intent to re-sell LNG sourced from US suppliers. The movement is already in play to end the influence of contract prices on spot prices as the US is destined to be the third largest exporter of LNG in the world by the end of the second decade of the 21st  century. US LNG producers can afford to sell their product to traders rather than consumers because of the supply side cost structures of the US shale gas revolution. The next paradigm collapse is the prediction that Europe today would have increased its demand for LNG appreciably to merit investment in offshore plants. This has failed to materialise. Which means that the two paradigms that created the investment in LNG trains in T&T have both failed. Whilst T&T is yet to solve the problem of gas feedstock shortfalls to industries in 2015 because of the failure of the present government to deal with the reality of a collapsed paradigms and the threat posed by US shale gas whilst they spend as if nothing has changed for the T&T gas economy. T&T LNG producers have already worked out their response to the shale gas revolution and this strategy impacts the revenue earned by T&T governments well into the future. Politicians must now dance with this reality and relate this to the general public. Spending bountifully to win re-election then what?





Hugo Chavez played Trinidad and Tobago on Loran-Manatee gas field

Details of this issue are presented in my book: “The Geo-politics of LNG in Trinidad and Tobago and Venezuela in the 21st century” The following questions are extremely relevant on this issue: Why did Chavez in the post-2002 attempted coup politics of Venezuela choose to pit up for bidding offshore blocks where there is no hinterland with the development to facilitate effective monetisation of these gas fields? Whilst blocks as Perla offshore Falcon state on the Caribbean coast were by-passed blocks with a near pristine hinterland were open to bidding. Perla subsequently developed has at minimum 15 tcf of gas with the hinterland to enable effective monetisation. By opening these blocks Chavez therefore enticed successive governments of T&T to salivate over the thought of Venezuealan gas being processed into LNG in T&T. And by salivating successive governments had to dance with Venezuela thereby walking the tightrope with the US. How has the US shale gas revolution impacted plans to raise LNG trains in Venezuela? Chavez indicated that given the US gas revolution LNG plants for export to the US were no longer feasible therefore the strategy calls for domestic use of Venezuelan gas resources and surplus gas then considered for LNG plants. This policy stated in “Sowing the oil” was applied to the Perla field where the first production platform was recently installed. Likewise the Dragon fields etc offshore Sucre state have had their production fed into the national gas network. Remember Venezuela with its huge gas resources has been forced to import natural gas from Colombia. Why spend billions of USD to develop the gas of Loran to send it to the terminal at Sucre state? Is Chevron set on erecting a LNG train with Loran gas? Is LNG based on Loran gas profitable in an environment of US shale gas LNG exports? Successive T&T governments are then hoping that Venezuela surrender and send Loran gas to T&T for processing to LNG. That is a wish deeply impacted by Venezuela’s internal politics leaving T&T politicians to belly gripe and complain with bouts of hand wringing. Chavez played them all to neutralise a threat on Venezuela’s Atlantic margins then came PetroCaribe as the instrument to increase Venezuelan influence in Caricom. 24 September 2015 On September 23, 2015 a story on the Spanish website of PDVSA stated that the supply of gas from the Perla field, Venezuela to Atlantic LNG for processing into LNG can happen nothing was said of Venezuelan gas from Loran-Manatee field making the same journey. Repsol and Eni have signed a contract selling all the gas produced to 2036 from the Perla field to PDVSA for use in the domestic market. The undertaking is whenever Venezuela’s domestic gas shortfall is addressed then Repsol and Eni can commence the production of LNG for export. Today, now, that stifling gas shortfall exists and the timeframe for ending this shortfall is pressured by the shortfall in electricity generated by hydro-electricity heightens given diminished rainfall over time. There is then need to rapidly erect gas fired electricity generating stations as a matter of urgency. Then the infrastructure to move gas from Perla to Sucre state does not exist at this time. There is a pipeline system that moves gas from Sucre to the gas hub that plugs it in to the national system. This then is not a solution to T&T’s immediate problem of an inadequate domestic level of gas production. Venezuela sending gas from Perla or its share of the Loran-Manatee field to be processed at Atlantic does not solve our problem of a  domestic gas shortfall. The question is: what will T&T have to give Venezuela in exchange for Venezuelan gas fed into Atlantic? And what is the benefit to T&T with third party gas processing which is supplied outside of T&T? To solve the domestic gas shortfall the government of T&T has to grasp the mettle and engage with BP and not evade the issues as the previous government to the detriment of T&T.