Trinidad and Tobago’s State-owned natural gas company NGC and Switzerland-based petrochemical producer Proman are working towards a long-term gas sales agreement to ensure Proman’s reopened plants continue production, the country’s energy minister and both companies said.
The Government is hoping to conclude an agreement that will form the basis of negotiations with other companies that have recently closed plants, causing severe production cuts in the country’s petrochemical exports.
The idling of the plants was a further setback to Trinidad and Tobago’s midstream and downstream industries, which have been hobbled by a gas shortage, protracted sales agreement negotiations, and weak global demand caused by the coronavirus pandemic.
The reduction in natural gas output has been caused by “a lack of investment in recent years”, NGC said.
NGC and Proman have reached an interim gas supply agreement that will allow the reopening of two Proman methanol plants in south-west Trinidad that have a combined nameplate capacity of 2.47mn tons/yr, representing just over a third of the country’s methanol production capacity.
Proman Trinidad idled the plants last month, saying it had failed “to secure an economically viable short-term gas supply contract for the month of April”.
NGC and Proman will continue to negotiate for a long-term gas supply agreement and the energy ministry will continue to monitor the talks, Energy Minister Stuart Young said.
“[NGC] is focused for longer-term collaboration, which will ultimately bring value to all stakeholders,” the company’s president, Mark Loquan, said.
“Restarting the plants will bring immediate benefits to the gas value chain and the national economy,” Proman Trinidad Managing Director Claus Cronberger said.
“We remain focused on working with NGC to achieve a mutually agreed, sustainable long-term gas supply contract in the shortest possible timeframe,” Cronberger said.
Proman Trinidad had continued to operate its M2 and M3 methanol plants that are being fed by its natural gas-producing subsidiary DeNovo. These plants have combined nameplate capacity of 1.12mn tons/yr.
The country’s methanol exports of 4.35 mn tons in 2020 were 24 per cent less than 2019, according to government data.
The natural gas curtailment has also depressed the country’s ammonia exports that totalled 3.9mn tons in 2020, 14 per cent below 2019.
Liquefied natural gas exports last year fell 17 per cent below 2019 to 23.8mn cubic metres, according to the energy ministry.
The gas shortage led to the closure of steel producer ArcelorMittal in 2016, and to ammonia exporters Yara in 2019 and Nutrien in 2020.
The country’s natural gas production is below levels of eleven years ago, but former Energy Minister Franklin Khan forecast in March that there will be adequate volumes by 2025, with major producers initiating several projects.
But the country’s central bank is cautious on the more immediate outlook for the energy sector,
The coronavirus pandemic caused “significant disruptions” in the economy in 2020, “particularly in an already stressed energy sector”, the bank said.
The energy sector contracted by 13.8 per cent, contributing to the economy sliding by 7.9 per cenr, the bank reported.
“The global pandemic will continue to affect all facets of the Trinidad and Tobago economy.”