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Zacca moving ahead with new LNG team

Published:Wednesday | June 8, 2011 | 12:00 AM

Steven Jackson,
Business Writer

Christopher Zacca, chairman of the LNG Steering Committee, defended his plan on Tuesday to hang on to liquefied natural gas (LNG) project manager Ernest Megginson at a proposed annual salary of US$426,000 (J$36 million), even as sources say Cabinet has delayed approving the contract.

"This is definitely value for money," said Zacca in an mailed response to Wednesday Business queries. Megginson's hourly rate at US$130 would be, according to Zacca, "half of the cost of previous consultants".

Megginson referred Wednesday Business to Zacca for comment when contacted.

His contract has passed the scrutiny of the National Contracts Commission (NCC), but Cabinet has not yet approved the proposal.

"Cabinet postponed the decision," said one informed source.

"It's probably tied up with the delay of the LNG project."

Zacca said Megginson will work on "a month-to-month contract" in the interim.

Megginson was already the consulting project manager on the LNG project before the contractor general recommended that the project be retendered.

Wednesday Business was unable, up to press time, to ascertain when, or even if, Government will invite new bids.

Earlier in the year, Megginson secured a three-month contract valued at US$105,000 (J$8.9 million), according to Office of the Contractor General's December postings.

Contract criticised

That contract was reportedly criticised by Opposition Spokesman on Mining Philip Paulwell, who requested full disclosure.

"The proposed contract value includes consulting fees, normal living expenses - apartment, car rental and per diem - and the required Jamaican withholding taxes," said Zacca on the US$426,000 contract.

"The LNG project manager is responsible for the overall co-ordination of all of the various aspects of the Jamaica LNG project, including local and international project activities. This includes managing project schedule, budget and ensuring that all aspects of the project are fully coordinated on technical, commercial and economic perspectives."

As the founder of Megginson & Associates, a United States-based energy and business planning firm, Megginson developed the business plan for a Colorado oil and gas technology company start-up; developed project execution for a US$4-billion international sand project; and completed peer review and project execution plans for a Chinese gasification project, according to his résumé obtained by Wednesday Business.

Added Zacca: "Mr Megginson has over 30 years of energy and project management experience. He successfully managed the development, construction and start-up operations of large-scale natural gas-fired projects in Thailand and Indonesia for two of the energy majors - Texaco and Chevron. These projects were initiated and completed under severe political and financial difficulties during the Asian financial crisis in the mid-1990s. After leaving ChevronTexaco in 2003, Mr Megginson has worked as an independent energy and project management consultant. In this role, he has managed the front-end evaluation and development activities for major energy projects - both in the US and internationally - for several large clients."

Zacca also said the "LNG project is alive and well", despite its most recent setback.

He said the LNG Steering Committee has engaged several internationally qualified advisers, including Ernie Megginson, project manager; Taylor-DeJongh, financial adviser; Featherwood Capital, commercial adviser; and WorleyParsons, technical adviser .

WorleyParsons' contract for technical services is valued at US$300,000, according to NCC's April endorsements.

In May, the NCC endorsed a US$630,000 (J$54.1 million) contract to "re-engage" the services of international-based investment bankers Taylor DeJongh for the LNG project.

Natural gas growth projected

The latest setback comes at a time when the cost of shipping liquefied natural gas is projected to grow as much as 67 per cent to a five-year high, based on expected demand from Japan in replacing its nuclear industry with power plants burning fossil fuels, according to media reports.

In January, then Minister of Energy James Robertson rejected concerns by the opposition People's National Party, which cited a leaked LNG report as evidence that drastic savings to the nation were not certain as there were still concerns over LNG price and supply.

In early 2010, Government announced its intention to reduce the island's high energy cost through the establishment of a floating regasification unit to process imported liquefied gas.

Robertson reportedly said saving would amount to some US$350 million on the country's annual oil bill.

A consortium comprising local consultant company Caribbean LNG Jamaica, Belgian company Exmar and Colombian gas-distribution firm, Promigas, was given the nod to implement the million-dollar project.

The contractor general has recommended that the project be retendered, citing a conflict of interest in the selection of the Exmar consortium as preferred bidder.

Exmar has said it did nothing wrong.

Late last year, Prime Minister Bruce Golding stripped Robertson of sole responsibility for the LNG project and named two management teams to lead the country's push towards LNG by December 2012.