TOGY talks to
Gas shortage impacts and solutionsAugust 2, 2017
Jimmy Mphelane, Air Liquide Trinidad & Tobago managing director, talks to TOGY about ongoing natural gas shortages, National Gas Company’s (NGC) role as aggregator, and ongoing solutions related to curtailments. Air Liquide entered Trinidad and Tobago in 2002. The company operates as a supplier of industrial gasses to various industries.
Air Liquide Trinidad and Tobago is a producer of industrial gases and related technologies; providing oxygen, nitrogen, hydrogen, argon, mixtures, rare gases and gases for laboratorial and analysis applications. Parent-company Air Liquide entered Trinidad and Tobago through its purchase of Messer Trinidad. While gas shortages have negatively affected Trinidad and Tobago’s hydrocarbons market, a bevy of upcoming developments such as Juniper, Angelin and the Trinidad Regional Onshore Compression project are set to ease curtailments in the short term.
• ON INNOVATION: Curtailments over the past few years have negatively impacted many users, which has had a direct impact on justifying additional investments by existing users and major investments by newcomers. Interestingly, the shortages have inspired innovation and the possible introduction of new technologies that will increase yield without an increase in natural gas demand.
• ON FORWARD MOMENTUM: [Change] is about how much the country is willing to give in the short-term for long-term gains. The National Energy Policy will be published shortly. It should include how the government is planning to incentivise exploration, and how they will price gas for NGC with upstream and downstream operators and how they are going to manage allocations between Atlantic LNG and NGC in case of further shortages.
Mphelane also discussed the advent of renewables in Trinidad and Tobago and steps the Caribbean nation is taking to reach its goal of 10% renewables in its energy matrix by 2021. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Jimmy Mphelane below.
How is the government progressing with Venezuela negotiations about the cross-border fields?
What has been published related to the agreements being signed between NGC and PDVSA (National Oil Company of Venezuela) has been very positive and negotiations seem to be progressing very well with commercialisation and technical solutions. Hopefully the agreements will be finalised in a short time and implemented to alleviate some of the natural gas curtailments.
Do you see challenges related to talent development being addressed by the industry players?
In terms of talent development, the industry players are doing their part. The companies have their own in-house programmes working with universities offering students’ internship programmes during vacations. Air Liquide also runs its own programme with the aim to contribute towards positive talent development.
You have done some projects installing hydrogen fuel stations in the USA; do you plan on doing that in Trinidad and Tobago?
In the USA, Air Liquide is developing sustainable energy solutions by dealing with clean or renewable energy and we are waiting to see how Trinidad develops the Low Emission Capacity Building (LECB) Project, which seeks to improve the legislative environment to reduce contribution to the climate change phenomenon. We have participated in some engagements, and it’s clear that there is a need for some form of incentivisation and a clear government policy. Air Liquide is ready and willing to support this strategy and will also use its global expertise and network to develop it further once the conditions are right and suitable.
What are the strengths and challenges associated with the Trinidadian energy market?
The location, competent workforce and current energy prices make Trinidad and Tobago a great place for investment, especially compared to other countries. However, there is great pressure on the energy prices [regarding] sustainability. If the government is forced to increase prices, it could erode the country’s competitive advantage. There is also the issue of uncertainty surrounding the supply of natural gas. Curtailments over the past few years have negatively impacted many users, which has had a direct impact on justifying additional investments by existing users and major investments by newcomers.
Interestingly, the shortages have inspired innovation and the possible introduction of new technologies that will increase yield without an increase in natural gas demand. The challenge is in securing the balance between demand and supply that will give investors the confidence to move forward. Right now, the government seems to be on the right track. If this momentum is maintained over a long period, that balance will be found and Trinidad’s future will be more secure.
Considering Trinidad and Tobago’s ongoing upstream expansion, what is your short-term vision for operations in the country?
If the Juniper project delivers as it’s expected, it should reduce some of the shortfalls, stabilise supply and the fluctuations that have been occurring will be reduced significantly. The next two years will not be easy for natural gas supply unless we manage to quickly build on the success of Juniper.
Air Liquide’s view is mainly longer term, four or five years. As long as there are gas curtailments, the industrial gas business will always have challenges. As soon as the natural gas supply is able to meet demand, then we believe opportunities will come. For example, with the government talking about a diversification plan to look at secondary and tertiary chemicals, we expect more opportunities to arise.
NGC has recently been confirmed as the natural gas aggregator for Trinidad and Tobago. In your opinion is this a positive development?
For me, this depends how the country views value creation. There are positives linked with NGC as an aggregator, but there are also negatives. It is difficult to say which one is more advantageous as the impact is greater to our customers, the natural gas users. With NGC, the onus is on them to manage the natural gas consumers, with the upstreamers having one main responsibility – to deliver 100% of the time. Here, the government benefits as the supplier and through taxes. Whereas without NGC, the government’s revenue stream will only be through taxes with the sale of natural gas at the mercy of the natural forces of demand and supply. It can work both ways.
Do you think this will slow things down?
If the Ministry of Energy publishes the Energy Policy, and the Energy Standing Committee in parliament is retained for a longer term regardless of changes in government, then there should only be continuous improvement. The biggest challenge is not the role of NGC as an aggregator but how it is managed. It’s ultimately about continuity for a long period of time, say the next 10 to 20 years.
Considering the role of NGC, do you expect a positive change for Trinidad in the next two years?
[Change] is about how much the country is willing to give in the short-term for long-term gains. The National Energy Policy will be published shortly. It should include how the government is planning to incentivise exploration, and how they will price gas for NGC with upstream and downstream operators and how they are going to manage allocations between Atlantic LNG and NGC in case of further shortages. Those are the three most important things that have to be [addressed] by the National Energy Policy and as soon as it is put in place by the Ministry of Energy and Energy Industries then NGC, as an aggregator or not, will have a platform to work for.
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