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.