By Camilo Thame
Kingston
Petroleumworld.com
02 19 06
The
US$240-million (J$15.5 billion), 1.15-million tonne a year liquefied
natural gas (LNG) storage and regasification facility will likely
be pushed back by at least two years - with the completion date
for 2010. The project was initially scheduled to start this
year and completed in 2008, has ran into a hitch because the
financing arrangements are yet to be completed.
The
facility will allow the storage of the gas from Trinidad &
Tobago, in its cold liquid form at Port Esquivel, Old Harbour,
where it would be regasified by applying heat, and then distributed
through pipelines to end users.
Under the original proposal, the plant was to come on stream
in time for the memorandum of understanding (MOU) between the
Jamaican and T&T governments. T&T is to supply 1.15
million tonnes of LNG per annum to Jamaica at "competitive
prices" for 20 years.
A Liquefied Natural Gas facility in Cove Point, Maryland (Photo:AP)
However,
the front end engineering design (FEED) study is not expected
to finish before June 2006. This phase has to be completed before
financial arrangements can be put in place.
The process of putting to tender the engineering, procurement
and construction (EPC) contract is expected to be done towards
the end of the year, after which the main construction work
can begin.
Zia
Mian, energy advisor to Jamaica's prime minister, P J Patterson,
and financial advisor on the LNG project, told Sunday Finance
that the construction of the tank - the main storage facility
- could take up to three years. He did not rule out 2008 as
a possible completion date.
"The
tank is one of the most critical components, and is one of the
most expensive component," said Mian. "It could take
between 30 and 36 months to construct, and we are not able to
get the order out before the EPC contract is given. We would
have to place the order now to get the tank by the end of 2008,
although when we went to Korea and Japan all the manufacturers
of tanks were fully booked, which could cause a delay."
However,
Mian noted that 2008 was not being ruled out "because it
depends on what model is followed. If we can find a strategic
partner who also has control of erecting the tank, which could
cut the time of construction by six months, we could make the
end of 2008 date."
Currently,
Jamaica consumes 26 million barrels of oil a year - with bauxite,
power and transport accounting for well over 90 per cent - which
would be equivalent to approximately four million tonnes of
LNG. Mian estimates that half of domestic oil demand could be
substituted with the cheaper LNG.
The
plan calls for the creation of an industrial park, which would
be developed in parallel with the LNG terminal. Cryogenic energy
could be captured to promote small and medium sized businesses,
including food processing, cold storage, mineral processing,
petrochemical and high-end metal fabrication.
Companies
that would immediately benefit include JAMALCO, the Jamaica
Public Service Company (JPSCo) and Jamaica Energy Partners (JEP)
power plants at Old Harbour.
JPSCo's
plan is to substitute petroleum with LNG to produce more than
300 megawatts of its current production of 600 megawatts of
electricity. Eventually, JPSCo's Hunt's Bay facility would be
expanded by 120 megawatts, using LNG. The Old Harbour steam
units would be converted to LNG to produce some 200 megawatts
of electricity.
According
to Mian, the government is now "speaking to all the owners
of the land (surrounding the proposed site) to acquire sufficient
land to build the terminal plus the gas park...We would invite
investors to locate industrial and electrical plants there."
Based
on satellite and aerial imagery provided by the PCJ, there are
hundreds of acres of open land surrounding Port Esquivel - the
proposed site. The LNG plant is to be located to the east of
the existing shipping port, while the land stretching to the
west could accommodate the park. This land is currently owned
by various entities including Jamaica Broilers, Windalco, and
Old Harbour Estate.
The
financing of the project - 60 per cent by the Jamaican government
and 40 per cent, T&T - will also be dependent on the FEED
study, which is to be completed in June.
"Trinidad
wants to have firm numbers from the report before committing
their 40 per cent," Mian told Sunday Finance. "But
from Jamaica's perspective if it is not Trinidad, it will have
to be someone else. Financing is not a problem for this particular
project. We already have financial advisors on board Taylor-DeJongh."
CH-IV
International, a US-based company which provides LNG engineering
and consulting services, was contracted in August 2005 at a
cost of US$2.4 million ($156 million) for technical advisory
service to the LNG project. The Washington-based firm Taylor-DeJongh
(TDJ), a merchant banking firm that focuses on providing capital
solutions for financing LNG, oil and petrochemical projects,
has been engaged by the government as financial advisors.
