VZCZCXRO9585
RR RUEHDE RUEHGR
DE RUEHSP #0574/01 3531057
ZNR UUUUU ZZH
R 181057Z DEC 08
FM AMEMBASSY PORT OF SPAIN
TO RUEHC/SECSTATE WASHDC 9586
INFO RUEHHH/OPEC COLLECTIVE
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUCNCOM/EC CARICOM COLLECTIVE
RUEHSJ/AMEMBASSY SAN JOSE 0503

UNCLAS SECTION 01 OF 03 PORT OF SPAIN 000574 
 
SIPDIS 
 
STATE FOR EEB/IEC, WHA/EPSC, WHA/CAR 
ENERGY FOR POLICY/INTERNATIONAL - GWARD, SBROWNE 
SAN JOSE FOR REGIONAL ENVIRONMENTAL HUB 
 
E.O. 12958: N/A 
TAGS: ENGR EPET EIND TD
SUBJECT: TRINIDAD GASBAG - ENERGY SECTOR NEWS (#2-08) 
 
In this edition, we report on the following developments in the 
Trinidad and Tobago (T&T) energy sector during October/November 
2008: 
 
¶1. Plants Hurt by Falling Commodity Prices 
¶2. Energy revenue projections down, spending cut 
¶3. Budget cuts spare projects, CARICOM fund 
¶4. New Refinery still on track 
¶5. Alutrint Smelter Underway ... Trinis Train in China 
¶6. TT LNG for Canadian Plant 
¶7. GOTT Looking Down the LNG Value Chain 
¶8. Updated timetable for offshore bid rounds 
¶9. CNG In, Gas Subsidy Out! 
¶10. CNG Task Force in the Works 
¶11. No Plan to Grow Sugar for Ethanol Production 
¶12. Energy Services Trade Mission to Cuba 
 
¶1.  Plants Hurt by Falling Commodity Prices 
------------------------------------------- 
With world commodity prices continuing to fall, four major plants at 
the Point Lisas Industrial Estate decided to close for maintenance. 
The four plants represent a combined production capacity of over two 
million tons of ammonia per year, and the shutdown will considerably 
impact on TT exports, as well as leaving the state-owned National 
Gas Company with no buyer for 15% of the gas it has purchased for 
the domestic market. 
 
¶2.  Energy revenue projections down, spending cut 
--------------------------------------------- ---- 
Prime Minister Manning announced the GOTT would cut its fiscal year 
2009 budget by US$850 million in the face of a revenue shortfall 
resulting from falling prices for T&T's exports of oil, gas, and 
petrochemicals.  The GOTT's original revenue projection for FY-09 
was TT$50 billion (US$8 billion), based on oil at US$70 per barrel 
and natural gas at US$4 per MMBTU netback.  The revised projection 
of TT$44 billion is based on oil at US$55 per barrel and natural gas 
at $3.25 to $3.50 per MMBTU netback.  For details and analysis, see 
Port of Spain 552. 
 
¶3.  Budget cuts spare projects, CARICOM fund 
--------------------------------------------- 
Prime Minister Patrick Manning and Energy Minister Enill affirmed 
that energy sector projects would continue in spite of falling 
revenues and GOTT budget cuts.  Specifically, they said the 
Petrotrin refinery upgrade, plans to build a new $3-4 billion oil 
refinery, the Alutrint aluminum smelter, Essar's new steel mill, and 
the propylene/polypropylene and ethylene/polyethylene projects, 
along with several others, will not be affected by budget cuts. 
Speaking at the December 7-8 CARICOM-Cuba summit meeting, Manning 
also sought to reassure CARICOM counterparts that T&T's CARICOM 
Petroleum Stabilization Fund would remain available to fund projects 
in the region. 
 
¶4.  New Refinery still on track 
------------------------------- 
During a recent post cabinet news conference, Energy Minister Conrad 
Enill said that the proposed new US$3- $4 billion oil refinery will 
not be delayed or abandoned because of present market conditions. 
According to Enill "the project will continue."  He anticipates that 
global oil prices will eventually settle and stabilize somewhere 
between US$85 to US$110 per barrel.  Enill said that continuing with 
the refinery made sense especially looking at China where he said 
there will be a dramatic increase in demand for fuel within the next 
eight years, to support its increase in population. 
 
¶5. Alutrint Smelter Underway; Trinis to Train in China 
--------------------------------------------- ------- 
Construction of the first phase of the 125,000-ton per year Alutrint 
aluminum smelter plant is set to being in January 2009, and is 
scheduled for completion by the second quarter of 2011, with 
production to start in the third quarter of 2011.  In October, 
Alutrint - 60 percent owned by the GOTT and 40 percent by Sural of 
Venezuela - signed a US$400 million engineering procurement and 
construction contract with China Machining Import Export Company 
(CMEC).  Seventy Chinese workers are expected to arrive in Trinidad 
by January 15.  Some 800 to 900 workers will be employed on the 
project. 
 
Faced with protests that it has not hired enough workers from the 
surrounding communities in La Brea, Trinidad, Alutrint offered 
assurances that it would send 200 local hires to China for training 
at a similar smelter plant. Suitable candidates will be identified 
for training and development in this technology over the next three 
years. 
 
¶6. TT LNG for Canadian Plant 
 
PORT OF SP 00000574  002 OF 003 
 
 
---------------------------- 
Energy Minister Conrad Enill announced that Trinidad and Tobago will 
begin shipment of liquefied natural gas (LNG) supplies from Atlantic 
LNG to Canadian company Canaport LNG's new terminal and 
regasification plant in St. John, New Brunswick, within the first 
quarter of 2009.  This arrangement is in keeping with the GOTT's 
ongoing effort to secure new markets for this product.  Earlier this 
year, TT supplied Brazil with shipments of LNG.  Repsol YPF, a 
shareholder in all four Atlantic LNG trains, owns 75 percent of 
Canaport LNG. 
 
¶7.  GOTT Looking Down the LNG Value Chain 
----------------------------------------- 
Minister of Energy Conrad Enill recently stated that for Trinidad 
and Tobago to have more direct control in the LNG industry, it must 
first shift from a revenue earner from taxes.  As such, the 
Government is exploring investments in the shipping of LNG and 
regasification or gasification terminals.  Enill said it is 
Government's intention to increase its ownership of assets along the 
value chain, and the Trinidad and Tobago LNG Company (TTLNG) will 
play a key role in this process.  TTLNG is a subsidiary of the 
State-owned National Gas Company.  He also mentioned the possibility 
of a fifth LNG train, since the other four trains are already under 
contractual arrangements. 
 
¶8. Updated timetable for offshore bid rounds 
-------------------------------------------- 
The GOTT will solicit bids on five offshore blocks in shallow water 
off Trinidad's north and east coasts in early 2009, Energy Minister 
Conrad Enill announced at the opening of an energy conference in 
Port of Spain on December 10.  Up for bid are North Coast Marine 
Area (NCMA) blocks 3, 4 and 5 and East Coast blocks 4(a) and 5(a). 
Enill also reaffirmed the GOTT's intention to launch a bid round for 
blocks in the Deep Atlantic Area later in 2009.  Eight deep water 
blocks were previously offered in 2006 but attracted only a single 
bid, reportedly due to poor seismic data and unattractive fiscal 
terms. 
 
¶9. CNG In, Gas Subsidy Out! 
--------------------------- 
Prime Minister Patrick Manning recently announced in parliament that 
motorists would be able to fully access Compressed Natural Gas (CNG) 
within two year.  According to Manning, current projections are that 
it will take until 2010 to have enough gas stations converted for 
the distribution of CNG, and once this system is in place, the 
Government intends to end the gas subsidy, which cost the GOTT 
US$317.4 million in fiscal year 2008. Manning said that his 
Government's vision is to have a majority of the vehicles on the 
nation's roads fuelled by CNG instead of the liquid-based fuels. 
Junior Finance Minister Mariano Browne tabled a motion in Parliament 
to revoke the 1999 Order which set an Excise Duty of 20.41 
cents/liter on CNG, and to impose a new duty of five cent/liter. 
Browne said the GOTT intends to maintain a retail price for CNG 
equivalent to US$0.17 per liter. 
 
¶10. CNG Task Force in the Works 
------------------------------- 
Energy Minister Conrad Enill announced that a task force will be set 
up to promote the use of compressed natural gas (CNG).  The task 
force would formulate incentives for motorists to switch to CNG, new 
regulations, safety measures and public education.  It would also 
work with the University of Trinidad and Tobago (UTT) to develop 
training programs in CNG conversion and maintenance technology. 
Existing gasoline stations are to be converted to serve CNG, and new 
dedicated CNG stations will be built. 
 
¶11. No Plan to Grow Sugar for Ethanol Production 
--------------------------------------------- --- 
Responding to a question from the Opposition during parliamentary 
debate, Prime Minister Patrick Manning stated that sugar-cane based 
ethanol was not an economically viable fuel alternative for Trinidad 
and Tobago.  He said that the country does not have enough land 
space to grow the amount of sugar cane required for ethanol 
production.  Opposition Member of Parliament Kamla Persad-Bissessar 
argued that a move to ethanol fuel would have been more in keeping 
with 21st Century thinking as opposed to Compressed Natural Gas 
(CNG) which this Administration is seeking as an alternative to 
gasoline and diesel. 
 
¶12. Energy Services Trade Mission to Cuba 
----------------------------------------- 
Eight T&T-based energy services firms participated in a trade 
mission to Cuba, November 24-28.  The mission was organized by the 
South Trinidad Chamber of Industry and Commerce and the GOTT Trade 
Facilitation Office in Havana.  Participants met with state-owned 
energy sector companies as well as Canadian and Spanish companies 
 
PORT OF SP 00000574  003 OF 003 
 
 
operating joint ventures in Cuba. 
 
 
AUSTIN