Identifier
Created
Classification
Origin
08PORTOFSPAIN574
2008-12-18 10:57:00
UNCLASSIFIED
Embassy Port Of Spain
Cable title:  

TRINIDAD GASBAG - ENERGY SECTOR NEWS (#2-08)

Tags:  ENGR EPET EIND TD 
pdf how-to read a cable
VZCZCXRO9585
RR RUEHDE RUEHGR
DE RUEHSP #0574/01 3531057
ZNR UUUUU ZZH
R 181057Z DEC 08
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 9586
INFO RUEHHH/OPEC COLLECTIVE
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCNCOM/EC CARICOM COLLECTIVE
RUEHSJ/AMEMBASSY SAN JOSE 0503
UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000574 

SIPDIS

STATE FOR EEB/IEC, WHA/EPSC, WHA/CAR
ENERGY FOR POLICY/INTERNATIONAL - GWARD, SBROWNE
SAN JOSE FOR REGIONAL ENVIRONMENTAL HUB

E.O. 12958: N/A
TAGS: ENGR EPET EIND TD
SUBJECT: TRINIDAD GASBAG - ENERGY SECTOR NEWS (#2-08)

In this edition, we report on the following developments in the
Trinidad and Tobago (T&T) energy sector during October/November
2008:

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000574

SIPDIS

STATE FOR EEB/IEC, WHA/EPSC, WHA/CAR
ENERGY FOR POLICY/INTERNATIONAL - GWARD, SBROWNE
SAN JOSE FOR REGIONAL ENVIRONMENTAL HUB

E.O. 12958: N/A
TAGS: ENGR EPET EIND TD
SUBJECT: TRINIDAD GASBAG - ENERGY SECTOR NEWS (#2-08)

In this edition, we report on the following developments in the
Trinidad and Tobago (T&T) energy sector during October/November
2008:


1. Plants Hurt by Falling Commodity Prices

2. Energy revenue projections down, spending cut

3. Budget cuts spare projects, CARICOM fund

4. New Refinery still on track

5. Alutrint Smelter Underway ... Trinis Train in China

6. TT LNG for Canadian Plant

7. GOTT Looking Down the LNG Value Chain

8. Updated timetable for offshore bid rounds

9. CNG In, Gas Subsidy Out!

10. CNG Task Force in the Works

11. No Plan to Grow Sugar for Ethanol Production

12. Energy Services Trade Mission to Cuba


1. Plants Hurt by Falling Commodity Prices
--------------
With world commodity prices continuing to fall, four major plants at
the Point Lisas Industrial Estate decided to close for maintenance.
The four plants represent a combined production capacity of over two
million tons of ammonia per year, and the shutdown will considerably
impact on TT exports, as well as leaving the state-owned National
Gas Company with no buyer for 15% of the gas it has purchased for
the domestic market.


2. Energy revenue projections down, spending cut
-------------- --------------
Prime Minister Manning announced the GOTT would cut its fiscal year
2009 budget by US$850 million in the face of a revenue shortfall
resulting from falling prices for T&T's exports of oil, gas, and
petrochemicals. The GOTT's original revenue projection for FY-09
was TT$50 billion (US$8 billion),based on oil at US$70 per barrel
and natural gas at US$4 per MMBTU netback. The revised projection
of TT$44 billion is based on oil at US$55 per barrel and natural gas
at $3.25 to $3.50 per MMBTU netback. For details and analysis, see
Port of Spain 552.


3. Budget cuts spare projects, CARICOM fund
--------------
Prime Minister Patrick Manning and Energy Minister Enill affirmed
that energy sector projects would continue in spite of falling
revenues and GOTT budget cuts. Specifically, they said the
Petrotrin refinery upgrade, plans to build a new $3-4 billion oil
refinery, the Alutrint aluminum smelter, Essar's new steel mill, and

the propylene/polypropylene and ethylene/polyethylene projects,
along with several others, will not be affected by budget cuts.
Speaking at the December 7-8 CARICOM-Cuba summit meeting, Manning
also sought to reassure CARICOM counterparts that T&T's CARICOM
Petroleum Stabilization Fund would remain available to fund projects
in the region.


4. New Refinery still on track
--------------
During a recent post cabinet news conference, Energy Minister Conrad
Enill said that the proposed new US$3- $4 billion oil refinery will
not be delayed or abandoned because of present market conditions.
According to Enill "the project will continue." He anticipates that
global oil prices will eventually settle and stabilize somewhere
between US$85 to US$110 per barrel. Enill said that continuing with
the refinery made sense especially looking at China where he said
there will be a dramatic increase in demand for fuel within the next
eight years, to support its increase in population.


5. Alutrint Smelter Underway; Trinis to Train in China
-------------- --------------
Construction of the first phase of the 125,000-ton per year Alutrint
aluminum smelter plant is set to being in January 2009, and is
scheduled for completion by the second quarter of 2011, with
production to start in the third quarter of 2011. In October,
Alutrint - 60 percent owned by the GOTT and 40 percent by Sural of
Venezuela - signed a US$400 million engineering procurement and
construction contract with China Machining Import Export Company
(CMEC). Seventy Chinese workers are expected to arrive in Trinidad
by January 15. Some 800 to 900 workers will be employed on the
project.

Faced with protests that it has not hired enough workers from the
surrounding communities in La Brea, Trinidad, Alutrint offered
assurances that it would send 200 local hires to China for training
at a similar smelter plant. Suitable candidates will be identified
for training and development in this technology over the next three
years.


6. TT LNG for Canadian Plant

PORT OF SP 00000574 002 OF 003


--------------
Energy Minister Conrad Enill announced that Trinidad and Tobago will
begin shipment of liquefied natural gas (LNG) supplies from Atlantic
LNG to Canadian company Canaport LNG's new terminal and
regasification plant in St. John, New Brunswick, within the first
quarter of 2009. This arrangement is in keeping with the GOTT's
ongoing effort to secure new markets for this product. Earlier this
year, TT supplied Brazil with shipments of LNG. Repsol YPF, a
shareholder in all four Atlantic LNG trains, owns 75 percent of
Canaport LNG.


7. GOTT Looking Down the LNG Value Chain
--------------
Minister of Energy Conrad Enill recently stated that for Trinidad
and Tobago to have more direct control in the LNG industry, it must
first shift from a revenue earner from taxes. As such, the
Government is exploring investments in the shipping of LNG and
regasification or gasification terminals. Enill said it is
Government's intention to increase its ownership of assets along the
value chain, and the Trinidad and Tobago LNG Company (TTLNG) will
play a key role in this process. TTLNG is a subsidiary of the
State-owned National Gas Company. He also mentioned the possibility
of a fifth LNG train, since the other four trains are already under
contractual arrangements.


8. Updated timetable for offshore bid rounds
--------------
The GOTT will solicit bids on five offshore blocks in shallow water
off Trinidad's north and east coasts in early 2009, Energy Minister
Conrad Enill announced at the opening of an energy conference in
Port of Spain on December 10. Up for bid are North Coast Marine
Area (NCMA) blocks 3, 4 and 5 and East Coast blocks 4(a) and 5(a).
Enill also reaffirmed the GOTT's intention to launch a bid round for
blocks in the Deep Atlantic Area later in 2009. Eight deep water
blocks were previously offered in 2006 but attracted only a single
bid, reportedly due to poor seismic data and unattractive fiscal
terms.


9. CNG In, Gas Subsidy Out!
--------------
Prime Minister Patrick Manning recently announced in parliament that
motorists would be able to fully access Compressed Natural Gas (CNG)
within two year. According to Manning, current projections are that
it will take until 2010 to have enough gas stations converted for
the distribution of CNG, and once this system is in place, the
Government intends to end the gas subsidy, which cost the GOTT
US$317.4 million in fiscal year 2008. Manning said that his
Government's vision is to have a majority of the vehicles on the
nation's roads fuelled by CNG instead of the liquid-based fuels.
Junior Finance Minister Mariano Browne tabled a motion in Parliament
to revoke the 1999 Order which set an Excise Duty of 20.41
cents/liter on CNG, and to impose a new duty of five cent/liter.
Browne said the GOTT intends to maintain a retail price for CNG
equivalent to US$0.17 per liter.


10. CNG Task Force in the Works
--------------
Energy Minister Conrad Enill announced that a task force will be set
up to promote the use of compressed natural gas (CNG). The task
force would formulate incentives for motorists to switch to CNG, new
regulations, safety measures and public education. It would also
work with the University of Trinidad and Tobago (UTT) to develop
training programs in CNG conversion and maintenance technology.
Existing gasoline stations are to be converted to serve CNG, and new
dedicated CNG stations will be built.


11. No Plan to Grow Sugar for Ethanol Production
-------------- ---
Responding to a question from the Opposition during parliamentary
debate, Prime Minister Patrick Manning stated that sugar-cane based
ethanol was not an economically viable fuel alternative for Trinidad
and Tobago. He said that the country does not have enough land
space to grow the amount of sugar cane required for ethanol
production. Opposition Member of Parliament Kamla Persad-Bissessar
argued that a move to ethanol fuel would have been more in keeping
with 21st Century thinking as opposed to Compressed Natural Gas
(CNG) which this Administration is seeking as an alternative to
gasoline and diesel.


12. Energy Services Trade Mission to Cuba
--------------
Eight T&T-based energy services firms participated in a trade
mission to Cuba, November 24-28. The mission was organized by the
South Trinidad Chamber of Industry and Commerce and the GOTT Trade
Facilitation Office in Havana. Participants met with state-owned
energy sector companies as well as Canadian and Spanish companies

PORT OF SP 00000574 003 OF 003


operating joint ventures in Cuba.


AUSTIN