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Trinidad and Tobago Shifts to Gas

July 27, 1999

PORT OF SPAIN, Trinidad (AP) _ When the big international oil companies were drilling off the coasts of Trinidad and Tobago decades ago, they cursed whenever they struck natural gas.

Back then, gas was the unloved stepchild to black gold.

``You can’t see it, nor can you feel it,″ said Doug Quillen, senior vice president of Texaco Global Gas in Houston. ``You can’t put it in a bucket and carry it around to sell it.″

Most companies left the stuff under the seabed. Natural gas was expensive to transport by ship, and no market had developed. But one company, Amoco, developed a gasfield in Trinidadian waters on a modest scale, signing a 20-year agreement to supply the country’s new state National Gas Co. in the 1960s.

Thus was born Trinidad and Tobago’s natural gas industry _ and it has grown into the linchpin of a burgeoning economy in the Caribbean nation of 1.3 million people.

The country’s oil reserves are expected to run out in 15 years, but it has proven natural gas reserves of 21.3 million cubic feet and probable reserves of an additional 9.4 million cubic feet.

``You’re talking at least another 60 years,″ said Frank Look Kin, president of National Gas Co.

Back in the 1970s, Trinidad recognized the potential of its gas reserves. The government, awash with cash from oil sales during the era of high-priced petroleum, encouraged gas-based industries like petrochemicals and steel, providing subsidies when necessary.

The Electricity Commission was an early convert to gas-fired power stations and the National Gas Co. started selling to other users, mainly industries needing cheap fuel. A gas-based industrial complex sprang up around Point Lisas on the southwestern coast.

Energy Minister Finbar Gangar said at a recent energy conference in Trinidad that gas surpassed oil as the prime mover of Trinidad’s economy in 1996.

In addition to encouraging gas-using industries, Trinidad has become a leading supplier of ammonia and methanol, natural gas byproducts that are used in the production of a variety of goods, such as plastic bottles, paint and compact discs.

Now it is joining the ranks of the world’s exporters of liquified natural gas, after luring investment to build the expensive treatment facilities.

Supported by tax breaks and pre-sold supply contracts in the United States and Spain, a partnership was formed a few years ago by Amoco Trinidad, British Gas Trinidad, Repsol of Spain, Cabot LNG of Boston and Trinidad’s state gas company to build a $1 billion processing plant.

The Atlantic LNG plant was built in record time and under budget and made its first shipment this April to the United States.

Company officials said it made Trinidad the world’s 11th liquefied natural gas-producing nation, joining such countries as the United States, Qatar and Nigeria.

Trinidad’s government granted generous incentives, giving Atlantic LNG a 10-year tax holiday, although the plant is still expected to generate $4 billion to $6 billion in tax revenues over the next 20 years.

The country is encouraging other industrial development tied to its gas supplies. Among them:

_Norsk Hydro of Norway plans to build a $1.6 billion aluminum smelter that will eclipse Atlantic LNG as the largest investment in the Caribbean.

_Phoenix Park, at Point Lisas, recently finished a $155 million expansion, making it one of the hemisphere’s largest gas-processing plants.

_Titan Methanol’s second plant is scheduled to begin operations soon, making Trinidad the world’s largest methanol exporter.

_One of the world’s largest iron producers, Companhia Vale do Rio Doce of Brazil, wants to build a multi-facility ``steel district″ that reportedly would include an ethylene plant.

``Our mission is to become the most investment-friendly country in the Western Hemisphere,″ Prime Minister Basdeo Panday said at a recent energy conference in Trinidad.

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