Cable: T&T lost interest in Jamaica LNG deal

THE UNITED States Embassy in Kingston was not convinced that Trinidad and Tobago (T&T) was unable to honour its commitment to supply Jamaica with liquefied natural gas (LNG).

Instead, the US believed that the Trinidadian government might have pulled out of the deal because of a desire to ensure its manufacturers maintained a competitive advantage in the region and because it was upset over Jamaica's role in negotiating the PetroCaribe deal with Venezuela.

In a March 2007 diplomatic cable, US Embassy officials opined that the twin-island republic might have been protecting its domestic firms.

"Ostensibly because of production constraints, Trinidad and Tobago reportedly will renege on its promise to supply liquefied natural gas to Jamaica, thus jeopardising a US$1.6-billion expansion of Alcoa's alumina operations in Port Esquivel," the cable said.

The cable noted that Jamaica was one of the highest per-capita consumers of oil among non-oil producing countries in the world and desperately needed the LNG deal.

This was intended to significantly improve the competitiveness of local producers while slashing the country's oil import bill which in 2006 stood at US$1.74 billion.

"Any extension of concessionary rates would have significant revenue implications for T&T. In addition, T&T firms enjoy significant competitive advantages in the region due to their low electricity costs," the cable said.

"Favourable terms for Jamaica would erode these benefits and eventually allow Jamaican firms to replace some of the goods now being imported from T&T, thereby narrowing T&T's US$500-million trade surplus," added the cable.

Jamaica, faced with increasing fuel prices, had approached Trinidad and Tobago to purchase LNG over the long term.

Then Energy Minister Anthony Hylton had commissioned a number of studies, one of which said the introduction of LNG could slash Jamaica's fuel bill by 30 per cent.

Following discussions with the P.J. Patterson-led Government of Jamaica, the government of Trinidad and Tobago, led by Patrick Manning, agreed to sell Jamaica LNG at reduced prices.

inadequate supplies

Trinidad and Tobago signed a memorandum of understanding (MOU) in 2004 to supply Jamaica with 1.1 million tonnes of LNG per year for 20 years, beginning in 2009, for use by the Jamalco refinery and the Jamaica Public Service Company's electric power plants. Trinidad later said it could not supply LNG to Jamaica because supplies were inadequate.

Despite the MOU, the final deal remained elusive and new Prime Minister Portia Simspon Miller journeyed to Port of Spain in May 2006 to get a firm commitment from the Trinidadians.

But by the end of 2006, the Trinidadians disclosed that the country would not have enough LNG to sell to Jamaica in the near future.

"The death knell was to be delivered shortly after that when Manning admitted that T&T might not be able to honour its commitment due to supply problems," said the cable.

According to the US Embassy: "There is speculation that T&T lost interest in supplying Jamaica with LNG after the issues of national treatment and PetroCaribe arose.

"The development helped induce the GOJ to turn to the Venezuelan government," added the cable.