T&T has lost its place as the largest exporter of ammonia in the world according to the latest industry figures.
This is the first time in decades that this country is not the premier exporter of the commodity. It reflects, among other things, geopolitical issues in Eastern Europe and the country’s continued gas curtailment.
For the first half of 2018, T&T exported 1820.2 thousand metric tonnes of ammonia. While this was a slight improvement of half of a percentage point on the 2017 figures, it was less than Russia’s 1874.1 thousand metric tonnes.
Russia’s exports increased by a whopping 45 per cent owing the challenges in Ukraine, while T&T continues to struggle to operate at full capacity because of continued gas shortages that have hurt producers who have not been able to maximise economies of scale.
Sources at the Point Lisas Industrial Estate indicate that on average, plants have been operating at between 80 and 85 per cent of their name plate capacity. Compare this to plants operating between 95 and 97 per cent of their name plate capacity when they have their full quota of natural gas.
T&T has suffered natural gas shortages since 2014 and the situation became progressively worse until the end of 2017 when bpTT’s Juniper project increased aggregate gas production.
However, the situation has not been solved, with Royal Dutch Shell still producing just over half the gas it was producing at time of full supplies and bpTT not having additional gas behind pipe to cater for any shortfall that may arise from other producers.
The reduced production of ammonia comes at a time when the prices have been good and therefore reflects a loss of revenue to the companies operating on the estate and to the government because of taxes on profits.
The Ministry of Energy’s monthly Cabinet Note for July 2018 demonstrates the challenge: “Ammonia prices continued its upward trend in July, with increases seen in most markets under review. This was attributable to tight ammonia supply along with high gas prices in Europe. Additionally, maintenance work and production outages from several ammonia producers contributed to higher ammonia prices.”
While there has been some improvement in natural gas production, only recently president of the National Gas Company Mark Loquan told the Annual General Meeting of the Energy Chamber that he sees gas curtailment continuing into the future.
Loquan said that is why the NGC is pursuing a strategy to identify and embark on production from the small pools of natural gas that larger players may consider uneconomic to go after. He said the NGC knows where the small accumulations are located and how close they are to existing infrastructure.
In a recent article in the company’s newspaper, Loquan described marginal fields as those that might be considered uneconomic or just marginally economically positive under current fiscal terms. The NGC’s President said the company undertook a feasibility study of small pools and marginal fields which was completed in the second quarter this year. The study was the first phase in the larger project of getting those fields into production.
“Based on the team’s preliminary analysis, it was estimated that some of these fields or small pools could be brought on stream as early as 2019/2020 if conditions favour their development. That is, with timely investment decisions and approvals, more thorough field evaluation and prompt mobilisation, T&T could start receiving gas from select small pools and marginal fields in the near term.”
According to Loquan, larger, multinational operators often relegate small pools and marginal fields on their priority list because the economics of developing a field are assessed relative to other opportunities in their international portfolio.
If more gas can be extracted at cheaper or comparable costs elsewhere and derive more value, investment attention will be so directed. He said despite these challenges, small pools and marginal fields in Trinidad’s offshore region located off the south east and east coasts have greater probability of being successfully developed because of their proximity to existing infrastructure.
Whatever the strategy, the downstream producers need the gas and they need it urgently.