Caribbean Business Reports

The crisis at the Point Lisas In­dus­tri­al Es­tate in Trinidad is wors­en­ing with the planned shut­down at the end of the month of the Ti­tan Methanol plant.

However, the shutdown can be averted if the plant is ­able to reach an agree­ment with the National Gas Company (NGC) of Trinidad and Tobago for the sup­ply of nat­ur­al gas. The Ti­tan plant is 20 years old and is considered a young plant by in­ter­na­tion­al stan­dards.

The Trinidad Sun­day Guardian reported yesterday that it has learnt that things are in place for the plant’s clo­sure and moth­balling. This has come about be­cause af­ter a year of ne­go­ti­a­tions with the NGC and hav­ing spent more than a quar­ter bil­lion dol­lars last year in an up­grade, Titan can­not reach an agree­ment with the NCG.

“The En­er­gy Cham­ber con­tin­ues to be con­cerned about the fu­ture of Point Lisas and there are is­sues which need to be re­solved in or­der to ensure the con­tin­ued com­pet­i­tive­ness and sus­tain­abil­i­ty of the in­dus­try.”

– CEO of Trinidad and Tobago’s En­er­gy Cham­ber, Dr Dax Dri­ver

If the plant clos­es 100 high paid per­ma­nent em­ploy­ees will be put out of a job with an­oth­er 40 con­tract work­ers al­so get­ting their pink slips. It will also mean a loss of tens of mil­lions of US dol­lars for the trea­sury should the plant close down.

The Trinidad Sun­day Guardian has been told that there are last-minute efforts by the Dr Kei­th Row­ley ad­min­is­tra­tion, the NGC and Titan to avert the sit­u­a­tion but the situation doesn’t look promising. If the plant closes, it would be the sec­ond plant to fold in two months, as on­ly last month Yara shut down its plant send­ing work­ers home be­cause it could not pay the price the NGC has been de­mand­ing for its gas.

In the last four years, thou­sands of work­ers in the en­er­gy sec­tor have lost their jobs.

Energy Minister responds

When contacted, En­er­gy Min­is­ter Franklin Khan in­sist­ed ne­go­ti­a­tions are still on­go­ing and it is not a done deal. Khan reported, “it is in­ap­pro­pri­ate to com­ment on Ti­tan’s ac­tion when we are still in ac­tive ne­go­ti­a­tions up to yes­ter­day (Fri­day) with Methanex (Titan). This will be spec­u­la­tion at the mo­ment.”

He added, “Titan has made a pub­lic state­ment that there is an in­ter­im agree­ment in place to al­low the par­ties to con­tin­ue ne­go­ti­a­tions. This is ob­vi­ous­ly with a view to arriv­ing at an agree­ment and for the par­ties to con­tin­ue to work dili­gent­ly to­wards that re­sult.”

Source of content high price for nat­ur­al gas

At the heart of the prob­lem is the price that the NGC wants to charge the down­stream com­pa­nies for gas. The petro­chem­i­cal com­pa­nies have been say­ing that the high­er prices will mean they op­er­ate at a loss with glob­al prices for both methanol and am­mo­nia weak.

It is al­so a po­si­tion that was pre­dict­ed in a study done by econ­o­mist Dr Ter­rence Far­rell who found that the sus­tain­abil­i­ty of the down­stream petro­chem­i­cal sec­tor is un­der threat be­cause of un­com­pet­i­tive nat­ur­al gas prices. The econ­o­mist said nat­ur­al gas short­ages and high prices led to a re­duc­tion in methanol and am­mo­nia pro­duc­tion and loss of jobs in the sec­tor.

He pre­dict­ed that un­less there is a change in pol­i­cy, the sec­tor will get to a point of no re­turn and there will be a col­lapse of the Point Lisas In­dus­tri­al Es­tate.

NGC Chair­man level blame on Ti­tan’s business mod­el

For his part NGC Chair­man, Con­rad Enill levelled blame on the business model of Titan and Yara while in­sisting that the ne­go­ti­a­tions are on­go­ing.

He posited that  com­pa­nies need­ed to ask them­selves how some can sur­vive at the high­er prices and oth­ers can’t in reference to Titan and Yara as op­posed to the Nu­trien plant, which reached an agree­ment last year on new prices with the NGC.

According to Enill, “we have con­tracts that we have signed with in­di­vid­u­als out­side of Yara, and they are able to do what some oth­ers are not do­ing, so the ques­tion is what are com­pa­nies do­ing and how are com­pa­nies po­si­tion­ing in the same en­vi­ron­ment that some can sur­vive and some can­not. Those are ques­tions that they need to an­swer.”

Continuing, Enill contended, “the is­sue with the Ti­tan plant is the mod­el and they have to ex­plain that to you,” noting that the NGC is a busi­ness that buys and sells gas and can on­ly sell at a prof­it. Enill not­ed that the coun­try is in a po­si­tion where the en­er­gy sec­tor and cir­cum­stances in the en­er­gy busi­ness have changed.

He was quick to point out that the NGC was earn­ing bil­lions of dol­lars in the past and now it’s down to hun­dreds of mil­lions.

En­er­gy Cham­ber con­cerned about imminent threat at Point Lisas

CEO of Trinidad and Tobago’s En­er­gy Cham­ber, Dr Dax Dri­ver had added his voice to the growing threat at Point Lisas, stating that the cham­ber is con­cerned that Point Lisas is un­der threat. “The En­er­gy Cham­ber con­tin­ues to be con­cerned about the fu­ture of Point Lisas and there are is­sues which need to be re­solved in or­der to en­sure the con­tin­ued com­pet­i­tive­ness and sus­tain­abil­i­ty of the in­dus­try,” he stated.