LNG exporter Atlantic is predicting that 2017 will be the worst year yet of this country's prolonged natural gas deficit, and is raising concerns about the risk of operating with diminishing supply.
The Atlantic liquefaction complex in Point Fortin "has suffered on average an over 30 per cent gas supply shortage and there is no significant improvement in the foreseeable future," CEO Nigel Darlow said. "In fact, 2017 is predicted to be worse still with an overall gas shortage close to 35 per cent."
The shortage "is very serious for us, equating to something like 75 LNG cargoes lost each year," he said. "Atlantic is suffering the vast majority of the gas supply shortage in the country."
Darlow, who was speaking at the opening ceremony of the Amcham HSSE Conference, which was title-sponsored by Atlantic for the second consecutive year.
The supply gap poses operational risks, he said, adding that the current combination of low gas supply and low global commodity prices present "challenges to how the company manages safety."
He said Atlantic is one of the lowest cost producers of LNG globally, with a freight on board (FOB) cost about 50 per cent less than the FOB cost for some of the new US LNG producers.
"Atlantic can deliver LNG at significantly less cost than the much talked about new US and Australian plants. So yes, Atlantic and Trinidad will always be able to compete globally in LNG. That said, we have a responsibility to ensure we continue to spend money so that our operations are always as safe as they reasonably can be."
The four-train Atlantic complex is owned by BP, Shell, China's sovereign wealth fund CHIC unit Summer Soca and the National Gas Company (NGC). However, different shareholding structures in each train complicates the allocation of feedstock restrictions.
The deficit in local gas supply depressed LNG production by 17.7 per cent to 18.2mn m� in January-September compared with the corresponding period of 2016, data from the Energy Ministry shows.
Gas production fell by 13.8pc to 3.338bn ft�/d (93.5mn m�/d) in the nine-month period.
LNG production consumed 1.662bn ft�/d of this country's gas in January-September, 13.8 per cent less than a year earlier. The gas shortage is the result of limited upstream investment.
South American markets currently account for 62 per cent of T&T;s LNG exports, with 12 per cent going to Europe, six per cent to the Middle East and four per cent to Asia-Pacific.
Government hopes to ease the curtailments by purchasing gas from Venezuela's offshore Dragon field, and has a tentative agreement with Caracas to establish a commercial venture to exploit gas deposits that straddle the maritime border between the two countries.
Increased gas will be delivered in 2017 from projects operated by bpTT, BHP Billiton and EOG Resources.