Address by Minister Kevin Ramnarine at the signing of the Agreement for the Methanol to Di methyl ether (DME) petrochemical plants
Good morning and “Ohayou” to our friends from Japan. Today we meet to sign the Project Development Agreement for the Methanol to Di methyl ether (DME) petrochemical plants, proposed to be cited in Union Industrial Estate, La Brea. The signing we are here to oversee is between the following seven organizations:
1) The Ministry of Energy and Energy Affairs of the Republic of Trinidad and Tobago (MEEA)
2) The National Gas Company of Trinidad and Tobago
3) The National Energy Corporation of Trinidad and Tobago
4) Mitsubishi Gas Chemical Company Incorporated
5) Mitsubishi Corporation
6) Neal and Massy
7) Caribbean Gas Chemical Limited – a Joint Venture formed for Phase one of this project
Ladies and gentlemen this is a major milestone for the MEEA and its State Enterprises. Today is the culmination of months of hard work and dedication that involved thousand of man hours between all parties involved.
As you may be aware Trinidad and Tobago became the first country to build an LNG plant in the Atlantic Basin in 1999. Trinidad and Tobago built the then largest LNG train….the 5 million tonnes per year Train IV in 2005. We also have built in this country world scale methanol plants. Trinidad and Tobago was again an innovator when NGC constructed 2 gas compression platforms in 1982 to collect and commercialize low pressure natural gas which would have otherwise been flared. This was at a time when global warming was not yet in the consciousness of the world. Trinidad and Tobago, ladies and gentlemen, is a world leader in natural gas based industrial innovation.
As I said a few weeks ago in the Parliament, the Trinidad and Tobago energy journey is far from over. Today we oversee the signing of the Project Development Agreement for a project that can have a far reaching impact on the national economy for decades to come.
Methanol to DME
This project presents several distinct but unique opportunities for Trinidad and Tobago with respect to the further diversification of the energy sector, growth of the economy, development of the South Western peninsula, regional energy security and local content. Let me add that we are extremely pleased with the involvement of Neal and Massy in this project. I want to personally commend Gervase Warner and Arthur Lok Jack for their vision and resolve which has seen us reach this advanced stage here today with this project.
Among the benefits to the economy of Trinidad and Tobago, the initial project proposes to expend foreign direct investment of $US850 million or $TT 5.4 billion. During the construction phase, the project will create about 3000 construction jobs and eventually lead to the creation of 180 permanent jobs in South West Trinidad. The project will serve as a catalyst for a resurgence of industrial development in the South Western peninsula.
The first stage of the Methanol to DME project will produce one million metric tonnes per year of Methanol and one hundred thousand tonnes per year of DME. During Phase two the Mitsubishi consortium will consider the production of Mono Ethylene Glycol (MEG) from Syngas and/or Ethane extraction. MEG could be used to develop additional downstream manufacturing operations, such as automotive coolants, Polyester fiber and PET resin. Other projects under consideration include the production of Acetic Acid and Acrylonitrile, which could lead to further downstream industries in plastics manufacturing.
DME is a green molecule. Basic chemistry tells me that 2 molecules of methanol give one molecule of DME and a molecule of water.
DME is described by France’s Total as having “knockout commercial potential”. DME has applications in transport as a replacement for diesel. It also has applications in power generation. DME is also significantly more environmentally friendly than diesel as it produces no particulates, little or no oxides of sulphur and low CO2 emissions. As such, vehicles running on DME have been introduced in China, Japan and Sweden.
Existing vehicles can also be retrofitted to achieve compatibility, providing another option for the local automotive market and a potential answer to the pressing question of how the fuel subsidy can be gradually removed without placing excessive financial strain on the motoring public.
Interestingly, DME was mentioned in the 2002 natural gas master plan that was written by consultants Gaffney Cline. The gas master plan described it as being physically similar to LPG and as having applications as an aerosol.
In one of their six recommendations for the downstream sector, Gaffney Cline wrote that:
“The Government should consider a major initiative for the expansion of natural gas use (or natural gas based fuels such as DME and fuel grade methanol) in the Caribbean.”
That was written 11 years ago and as you know, “there is nothing more powerful than an idea whose time has come.”
Neal and Massy / MC and MGC
Another major feature of the project is the participation of the Neal and Massy Group. The Ministry of Energy and Energy Affairs has identified local content as one of the key areas for strategic development in the future. Local content has never left the agenda of the Ministry of Energy. Neal and Massy, it is evident, has set out to deepen its participation in the energy sector. I commend them for having this ambition vision and I urge other companies to follow their lead.
The name Mitsubishi is well known in this country. The Mitsubishi vehicle brand is well known among people in Trinidad and Tobago. These vehicles are produced by Mitsubishi Motors of Japan. Less is known about Mitsubishi Corporation and Mitsubishi Gas Chemical both of which are involved in this project. Mitsubishi Gas Chemical cites its corporate philosophy as “creating value through Chemistry” and “contributing to social growth and harmony” while Mitsubishi Corporation’s philosophy entails “corporate social responsibility”, “integrity and fairness” and “global understanding through business”. These are laudable corporate philosophies and we welcome these reputable international companies to our country.
Vision for the South West peninsula
As I mentioned at the start of my speech, this project is proposed for the Union Industrial Estate and I pause to recognize the Member of Parliament for La Brea, the Honourable Fitzgerald Jeffery who is always passionate about the development of his constituency.
The South West peninsula, ladies and gentlemen, is the cradle of industrial Trinidad. It is the birthplace of the oil industry, of the refining industry and of the LNG industry. The Government has advanced that the South West peninsula is one of its growth poles. When we examine that against our energy policy a compelling vision for the South Western peninsula begins to emerge.
In the South West peninsula we already have the new TGU 720 mega watt power plant, the LABIDCO industrial estate, the Union Industrial Estate and associated port infrastructure. It is expected that the NEC would now have to upgrade the port capacity and infrastructure to cater for the needs of this new industrial estate. When you add to this the highway development the picture that begins to emerge is one of growth and development. In addition to this project the NEC and NGC are in different stages of negotiations for two other projects one of which involves Neal and Massy.
At the same time we are progressing apace with the construction of the Galeota port in the South East. This project, which was stalled for three years, was un-stalled in 2011 and started last year. What we envision is a port in the South East to serve as a logistics base for the oil and gas industry on the East coast of Trinidad where we produce almost 90% of our natural gas. This port could also serve as a logistics hub for our expansion into the deepwater and for oil exploration in Guyana, Suriname and French Guiana. This is yet another project of the NEC. Both Galeota and La Brea are therefore parts of a larger vision where we as a country prepare to compete for the industrial future. Ports and industrial estates are precursors to economic expansion and the development of cities.
Natural Gas Reserves
What about natural gas reserves? You may ask where the natural gas is coming from to supply this project. The MEEA and the NGC are already in dialogue with an established natural gas supplier in Trinidad and Tobago who has advised that they could have gas available by 2016. I want to also add that you would have noted too that last year the Ryder Scott audit for 2011 demonstrated that our proven reserves remained essentially flat. The MEEA is now engaged with Ryder Scott for the 2012 audit and we expect that the results for 2012 would be impacted in a positive way by BP’s discovery of one trillion cubic feet of natural gas in its Savonette 4 Well last year.
You would note too that BP, our main producer of natural gas, has significantly increased its activity levels in recent times. At present the company has two rigs drilling simultaneously – the Rowan XL 2 and the West Jaya. BP is also in the process of conducting another phase of its Ocean Bottom Cable 3D seismic over its acreage in this country and we are advised that the quality of seismic data being acquired using the OBC technology is vastly superior when compared to the older technology. I want to pause here to say that this 3D seismic survey currently taking place has the potential to be a major “game changer” for the natural gas industry in Trinidad and Tobago.
BP / BG planned shutdowns
With regard to the current gas supply situation, at Point Lisas we have seen some encouraging signs that the natural gas supply situation has stabilized. Since mid- December 2012 there has been minimum curtailment of natural gas supply to Point Lisas. While we are encouraged we are not out of the woods as yet. We continue to work with the NGC and Point Lisas Executives Association (PLEA) and we hold regular meetings with the leadership of the Upstream to coordinate supply.
In the third quarter of this year both BP and BG will be engaged in shutdowns of the Cassia B hub and Dolphin platform respectively. The MEEA has been working with both companies to optimize the impact of these shutdowns and has communicated this to the Ministry of Finance, the Central Bank and the IMF. It is expected that natural gas supply in Trinidad and Tobago will return to normalcy in 2014.
Natural gas policy
I want to speak about natural gas policy. We are currently formulating a policy paper on the natural gas sector and we are awaiting the submission of the Energy Chamber. Notwithstanding that there is a policy framework that already exists and its key elements include:
1) Reform of the fiscal regime for upstream natural gas development.
2) Energy efficiency.
3) Diversification by going further downstream.
4) Increased ownership of assets through Government equity or public listings.
5) Re-definition of the roles of the NGC and the NEC.
Ladies and Gentlemen, the MEEA, the NGC and the NEC are charged with a very significant responsibility. We are the custodians of the country’s natural gas assets. I want to assure you that at all times we act in the national interest. In the past there have been project negotiations that have not gone the way we wanted. In the end hard decisions have to be made in the national interest.
In fact in the last 10 years there have been nine projects around which discussions started and these projects never materialized. The last new petrochemical plant to be completed in this country was the AUM I which was completed in 2010 and the agreement for that project was signed in 2003 some 10 years ago.
Today’s signing is an achievement for the Government, its agencies, the local private sector through Neal and Massy and the Japanese companies involved. This is not the end of the work. A lot more remains to be done and we will be here to assist along the way. If all goes to plan we can expect that construction will commence by the second quarter of 2014.
In closing ladies and gentlemen, nothing worth achieving is easy. The road to today’s signing was one that required that many people dedicate months of their time. I thank all those involved in bringing the project to this point. We now move to the project to another phase and we will be seeing a lot more of our Japanese friends in Trinidad and Tobago as I am sure they will be looking for offices in this country.
I wish you all the best in advancing the project to start of construction. Thank you.