To­day's Ed­i­to­r­i­al

Prime Min­is­ter Patrick Man­ning owes the pop­u­la­tion of this coun­try a much fuller and more co­her­ent ex­pla­na­tion for his an­nounce­ment last week that he had des­ig­nat­ed the "sup­ply of LNG to Ja­maica for the stim­u­la­tion of in­vest­ments in the alu­mi­na sec­tor to be a mat­ter of na­tion­al pri­or­i­ty." In plac­ing the is­sue of this coun­try sup­ply­ing LNG to Ja­maica back on the front­burn­er, Mr Man­ning would have had in mind the fact that the nat­ur­al gas price sit­u­a­tion in the US has forced T&T to seek al­ter­nate mar­kets.

Falling prices in the US mar­ket have meant that 39 per cent of LNG ship­ments have gone to the US this year com­pared with 69 per cent in 2008, but ex­ports to Eu­rope have grown by 50 per cent in the first quar­ter from a year ear­li­er. In analysing whether there is nat­ur­al gas avail­able to sell to Ja­maica, Mr Man­ning may have con­tem­plat­ed us­ing ei­ther the nat­ur­al gas that is avail­able to Petrotrin from its 19.5 per cent stake in the North Coast Ma­rine Area (NC­MA) op­er­at­ed by British Gas or the tranche of nat­ur­al gas that is avail­able to the Gov­ern­ment from bpTT in lieu of that com­pa­ny pay­ing a high­er roy­al­ty rate. While state-owned Petrotrin owns al­most one-fifth of the NC­MA, the nat­ur­al gas from the field is tight­ly linked to spe­cif­ic re­quire­ments to sup­ply con­tract­ed amounts of gas to Trains II, III and IV. NC­MA, for ex­am­ple, is con­tract­ed to sup­ply 240 mil­lion stan­dard cu­bic feet per day (MM­cfd) of gas to Train II for up to 20 years and about 80 MM­cfd to Train IV. It would be very cost­ly, time-con­sum­ing and dam­ag­ing to T&T's rep­u­ta­tion as a good place for en­er­gy com­pa­nies to do busi­ness to break these con­tracts.

The bpTT tranche of "roy­al­ty" nat­ur­al gas, on the oth­er hand, cur­rent­ly amounts to 135 MM­cfd and will even­tu­al­ly peak at 180 MM­cfd. This gas is avail­able to the Gov­ern­ment to do pret­ty much as it wish­es–with­in the bounds of what is le­gal and what makes good busi­ness sense. A fea­si­bil­i­ty study con­duct­ed by the Ja­maican com­pa­ny Petro­jam in 2002 iden­ti­fied to­tal po­ten­tial LNG de­mand of 220 MM­cfd and es­ti­mat­ed that the alu­mi­na com­pa­nies would ac­count for 62 per cent of the to­tal de­mand–or 136 MM­cfd. The fact that the 2002 es­ti­mate of the de­mand for LNG by Ja­maica's alu­mi­na in­dus­try is al­most iden­ti­cal to the quan­ti­ty of "roy­al­ty" nat­ur­al gas that is now avail­able to T&T must have seemed very for­tu­itous, even tempt­ing, to Mr Man­ning when the num­bers were brought to his at­ten­tion.

In oth­er words, if Prime Min­is­ter Man­ning and his Cab­i­net were so mind­ed, they could arrange for T&T's "roy­al­ty" nat­ur­al gas to be processed through Train IV (which al­lows for that type of arrange­ment) and made avail­able to Ja­maica's alu­mi­na re­finer­ies. Giv­en suf­fi­cient po­lit­i­cal will, this can be done very quick­ly. This is es­pe­cial­ly so if there is a meet­ing of the minds on what LNG price would be com­mer­cial­ly ac­cept­able to both T&T and Ja­maica's alu­mi­na pro­duc­ers. If the Cab­i­net de­cid­ed to go in that di­rec­tion, it would al­most cer­tain­ly mean a sharp re­duc­tion in the cost of pro­duc­tion at Ja­maica's four alu­mi­na re­finer­ies and would stim­u­late sig­nif­i­cant new in­vest­ment in the ex­pan­sion of one of that is­land's ma­jor for­eign ex­change earn­ers. What's more, such a de­ci­sion by a T&T Cab­i­net would mean the re­turn to work of thou­sands of Ja­maican work­ers who have been laid off as a re­sult of the clo­sure of three of the four alu­mi­na re­finer­ies.

But the ques­tions re­main: should this "roy­al­ty" nat­ur­al gas be di­vert­ed from its use in pro­duc­ing elec­tric­i­ty in Trinidad to pro­duc­ing elec­tric­i­ty in Ja­maica–at any price? Would di­vert­ing the gas from Point Lisas to Kingston mean that T&T cit­i­zens and man­u­fac­tur­ing com­pa­nies will even­tu­al­ly have to pay more for elec­tric­i­ty, while Ja­maican cit­i­zens and com­pa­nies have to pay less? And, in the con­text of a re­source that is de­plet­ing quick­ly, would it be sen­si­ble for the Cab­i­net here to es­chew the con­tin­ued mon­eti­sa­tion of nat­ur­al gas for the ben­e­fit of T&T tax­pay­ers to as­sist an alu­mi­na in­dus­try in Ja­maica, which is owned by for­eign multi­na­tion­als in­clud­ing a Russ­ian bil­lion­aire? Help­ing our Caribbean broth­ers is one thing. But Prime Min­is­ter Man­ning would have to con­cep­tu­alise and de­liv­er an ex­treme­ly com­pelling case in or­der to per­suade us that sell­ing "roy­al­ty" gas to Ja­maica makes much sense.