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Pressure on Point Lisas

Thursday, July 5, 2018

Over the last week there have been two very important developments that could have long lasting impact on the local energy sector and, by extension, the economy of T&T.

The first was a major announcement by chairman of the National Gas Company, Gerry Brooks, that the present natural gas curtailment will continue past 2020 and that some inefficient plants will have to close down as gas is sent to the more efficient ones. He also indicated that even with the gas curtailment issues the NGC intends to have significant growth in its profits over the next five years.

The second major issue was the announcement by a subsidiary of the Proman group of the start up of the largest methanol plant in the United States. The Proman release read that Consolidated Energy Ltd (CEL), OCI NV, and Natgasoline LLC have started commercial methanol production at their 5,000-metric tonne per day methanol plant in Beaumont, Texas.

Industrial Plant Services Ltd (IPSL), a leading provider of plant management services based on the Point Lisas Industrial Estate, provided extensive technical expertise in the construction and commissioning of the facility, including training staff who will be responsible for its operations and maintenance.

“The plant, which was completed in April, will be the United States’ largest methanol production facility. It is the only new capacity expected in the Americas to come online in 2018, and will continue its ramp-up in the coming weeks while under-going normal fine-tuning of equipment,” the release read.

CEL, a global leader in methanol, is a subsidiary of Proman Holding AG (Proman) and Helm AG (Helm).

David Cassidy, chief executive of Proman and chairman of both IPSL and CEL, said: “I am delighted to see the Natgasoline facility come online. Its considerable production capacity will be instrumental in meeting customer demand for methanol.

It is an important operational milestone for us, allowing us to diversify our operations and grow our production capacity in the US market. The involvement of the IPSL team has been instrumental in delivering this project, and has been an outstanding example of bringing the talent and skills from across the Proman business together to deliver results as a team.

“The successful start of production at Natgasoline is a significant step forward in our capacity expansion programme and marks the completion of OCI’s second major greenfield facility in the United States within as many years,” said Nassef Sawiris, chief executive officer of OCI NV.

“Natgasoline helps to position OCI as one of the largest merchant methanol producers globally, thus providing an enhanced platform to serve our customers better, while generating attractive returns for our shareholders.”

To put it into context, plants at the Point Lisas Industrial estate bring in billions of dollars in revenue to the country. They do so by their payment of taxes on profits, they are the largest customers of both T&TEC and WASA, they employ thousands of citizens in high paying, high skilled jobs and through their purchase of goods and services are significant players in the welfare of T&T.

Those companies have for the last six years faced an increasing natural gas shortage that has significantly impacted their operations, their profitability and cost the Treasury billions of dollars.

For the chairman of the NGC, the company that supplies gas to the downstream operations, to project continued gas shortage and to further threaten that some of these companies may have to be shut down because of inefficiency, will no doubt lead to further insecurity and have the effect of companies seeking to simply cream whatever profits they can get now rather than being here for an uncertain future.

It must be noted that the line Minister Franklin Khan quickly sought to rubbish Brooks’ assertion that plants will be closed down but he did talk about the need for plants to be more efficient.

Further, the announcement by Brooks of increased profits must beg the questions how and where?

Perhaps the NGC might continue its cost containment efforts, maybe it is based on the projected increased gas supply, or greater margins on higher negotiated prices. But when you take the uncertainty of gas supply and the higher gas prices, one sees why the Proman announcement is important.

For those who don’t know, Proman is a major player in this country’s energy sector, with massive investments in methanol, melamine, ammonia and urea and now upstream in natural gas exploration and production.

It has pursued in the past a growth strategy based on continued investment in T&T, but with no additional gas available, higher costs, and an uncertain investment environment it has apparently sought new opportunities in the United States.

Proman is just one of the companies operating in T&T that are now either building of exploring the possibility of new plants in the United States, the country where we export most of our petrochemicals.

Cheap shale gas is partly driving them but so too is the uncertainty surrounding gas prices and production. Government has made good on its promise to increase production but, if Brooks is correct, it is not enough and the question is: how much longer will companies be prepared to be patient, or are we at risk of there being gas but no takers?


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