More Pain For Trinidad’s Gas Sector

(Trinidad Express, 2.Apr.2021) — A new wave of natural gas pain hit Trinidad and Tobago yesterday.

The pain came when the country’s largest producer of methanol, the Switzerland-headquartered Proman group, announced it was idling its M4 and M5000 methanol plants on the Point Lisas Industrial Estate effective immediately.

In a message to staff, Proman’s local CEO, Claus Cronberger, said the decision to idle two of its five methanol plants was based on Proman’s inability “to secure an economically viable short-term gas supply contract for the month of April.” Proman has been operating the plants on short-term natural gas sales contracts for at least two years, pending the completion of negotiations for a longer-term contract with the wholly State-owned National Gas Company (NGC). The Proman group is the largest single player at Point Lisas, owning 14 of the petrochemical plants on the industrial estate, including Methanol Holdings (Trinidad) Ltd (MHTL), the company that owns its five methanol plants in Trinidad.

Cronberger told Proman staff: “In February, we agreed to NGC terms for a short-term gas contract extension for March to facilitate continued operation of plants, while discussions were ongoing. Unfortunately, a significant increase in the NGC gas pricing for the month of April made the continued operation of our M4 and M5,000 plants economically unsustainable.”

Combined, the M4 and M5000 operations have the capacity to produce 2,470,000 metric tonnes of methanol a year, according to information on the Ministry of Energy’s website.

Cronberger told Proman’s local staff that two of the company’s other plants at Point Lisas, called M2 and M3, will continue to operate based on natural gas from DeNovo only. DeNovo is a Proman-owned natural gas producer, which “consistently delivers 80 million standard cubic feet of gas per day to the Point Lisas Industrial Estate” from the Iguana Field in the Gulf of Paria, according to Proman’s website.

In May 2020, Proman idled its M3 methanol plant, which has an annual production capacity of 570,000 metric tonnes. The Swiss company idled its M2 facility, with an annual production capacity of 550,000 metric tonnes in April 2020. Proman’s fifth methanol plant on the estate, called M1, has been shuttered since November 2016.

The petrochemical company operated four of its five methanol plants at Point Lisas from the third quarter of 2020 to March 31, 2021.

Cronberger also told the Proman staff that his number one priority at this time is to sustain MHTL’s operations and secure the livelihoods of its employees.

“I do not foresee any negative impact on employee headcount. However, if we are forced to take steps to shut down any of our plants over a longer period, we will need to revisit the impact on our entire operations,” Cronberger said in the staff memorandum.

NGC regrets

In a statement early yesterday morning, NGC said that effective April 1, one of its gas sales contracts with MHTL had expired.

“Regrettably, and despite NGC’s best efforts, no agreement was reached with MHTL on the terms for the continued supply of gas. NGC will continue to exert all reasonable efforts to try to secure a mutually acceptable agreement with MHTL. NGC will continue to honour its contractual obligations for the supply of gas to MHTL under its other gas sales contract,” the NGC statement said.

The company added that it has been and will continue to work with stakeholders across the gas value chain “to protect business interests in the current environment and gives assurances of its unwavering commitment to discharge its duty to customers and country.”

Khan: Complex negotiation

In January 2018, Proman-owned ammonia producer, Caribbean Nitrogen Company (CNC), announced it would be closing down the ammonia plant after a decision was taken by the NGC to stop supplying natural gas. In April 2018 CNC and NGC negotiated a new agreement ensuring a long-term gas supply for the company’s operations.

Asked yesterday to comment on the decision by Proman to idle two of its five methanol plants, Energy Minister Franklin Khan said: “Both Proman and NGC are involved in a complex commercial negotiation for a long term gas sales contract. Both being sophisticated energy companies of long standing, I am confident that they will reach an amicable settlement in the shortest order and that this situation will be short lived.”

Deep concern

The Energy Chamber said yesterday it has noted the media statements on the inability of NGC and MHTL/Proman to successfully conclude negotiations on a new gas supply contract and expressed “deep concern about the future of the gas industry in T&T and the utmost importance of the current consultation process under way between players in the gas value chain and the Government of Trinidad and Tobago and facilitated by Gas Strategies. It is important that this project leads to a clear policy and a clear strategy to encourage the continued investments needed across the value chain”.

The Chamber noted that the gas industry has brought huge benefits to the people of T&T and created significant wealth and good livelihoods for many citizens.

“Over the past half-century Trinidad & Tobago has successfully built a gas value chain that allowed us to monetise our gas resources where many other countries have failed.

“It is vital to the future of our country that we collectively find mechanisms to reshape the gas industry to make it robust and sustainable for the next fifty years, while we navigate the energy transition to a lower carbon future,” it added.

The Confederation of Regional Business Chambers also said it is looking at the current negotiations pertaining to the supply of natural gas to the Proman Group with deep concerns and anxieties.

“The Confederation urges that the spirit and prevalence of goodwill, mutual understanding and compromise will be the context for how these negotiations will be continually managed and conducted,” it said.