Trinidad looks to LatAm, Caribbean for natural gas exports

By Linda Hutchinson-Jafar

PORT OF SPAIN, Trinidad, Feb 26 (Reuters) - Trinidad andTobago is turning to markets in Latin America and the Caribbeanfor sale of its natural gas as its exports to the United States,once its major customer, quickly decline in the face of theNorth American shale gas revolution.

Energy Minister Kevin Ramnarine said Trinidad and Tobago hasa lucrative role to play in regional energy security through theexport of its natural gas.

"Our Caribbean and Latin American neighbors are bucklingunder the weight of high oil prices that have impacted on theirbalance of payments and contributed to high prices forelectricity and transportation fuels," he told an energyconference in Port of Spain last month.

Gasfin, a U.K.-based company that develops mid-size LNGplants, signed a Memorandum of Understanding with the Trinidadand Tobago government last year to build a $400 million LNGplant producing 500,000 tons annually to supply Caribbeanmarkets.

Centrica, another British firm, plans to begindevelopment of its Block 22 acreage which is estimated tocontain up to 1.3 trillion cubic feet (37 million cubic meters)of gas, and the proposed option for the commercialization of thegas includes a compressed natural gas (CNG) plant.

Ramnarine said the CNG facility gives smaller markets in theCaribbean the option of moving out from diesel or fuel-oil basedpower generation.

Trinidad and Tobago's energy sector contributes more than 40percent of GDP and 70 percent of foreign exchange earnings,selling natural gas to the Dominican Republic, Puerto Rico andrecently to Argentina and Chile.

The twin island republic is also eyeing Panama and CostaRica which are both preparing to build re-gasification terminalsas they make the switch to LNG.

Trinidad and Tobago's LNG exports to the United States usedto account for 80 percent of its exports, but that is fallingfast.

LNG shipments to the United States accounted for only 19percent of total exports from October 2011 to May 2012,declining from the 22 percent in the corresponding period a yearearlier, according to the government's Review of the Economy2012.

Trinidad and Tobago, however, still provided 50 percent ofall U.S. LNG imports in the 2011/2012 period.

The decline in exports was blamed on the increasingextraction of shale gas in the United States, as well as theconsequent softening of the Henry Hub pricing point for naturalgas futures contracts traded on the New York Mercantile Exchange(NYMEX).

Trinidad and Tobago, which currently holds 6 percent of theLNG market and ranks sixth in the world for LNG exports, alsosells on the spot markets in Europe and Asia to diversifyits LNG export markets and benefit from higher prices in otherregions.

Dr. Anthony T. Bryan, a senior associate at theWashington-based Center for Strategic and International Studies(CSIS), said as U.S. access to its own natural gas resourcesincreases, there will be less need for LNG from Trinidad andTobago.

Once the United States has satisfied its domestic needs, itwill also be in a position to compete with Trinidad and Tobagoin the 21 countries across the E.U., Asia and Latin America thatthe Caribbean country now supplies.

"The only U.S. threat to Trinidad and Tobago in the shortterm is Cheniere Energy which is the only company thathas permission from the U.S. Department of Energy to build LNGtrains at Sabine Pass," he told Reuters, referring to the deepwater Gulf Coast terminal at Port Arthur, Texas.

Bryan said lower demand for U.S. LNG has turned out to be ablessing by allowing Trinidad and Tobago to seek deals and muchhigher prices from energy-hungry customers in Asia and SouthAmerica.

"The global gas market's increasing demand will be anotherblessing for Trinidad and Tobago. Natural gas is the fuel of thefuture," he said.

Global LNG production is growing significantly at 4.3percent per annum and is expected to account for 15.5 percent ofglobal gas consumption by 2030, according to Andy Hopwood, chiefoperating officer for Strategy and Regions for BP Plc.

Hopwood notes that there has been a trend of diversificationof LNG trading partners for both exporters and importers.

"This is good news for Trinidad and Tobago as diversifiedLNG markets reduces your dependence on any single market. Inhindsight, diversifying away from the U.S. was a very wise move,one that will give the country much greater stability for itsexport revenues going forward," he said at the energyconference.

"This country's importance in the world's energy markets hasnot been blown away by the 'shale gale' or any other change inthe global energy market," he added.