There are rumblings at the Point Lisas Industrial Estate as the petrochemical sector negotiates new gas agreements with the National Gas Company (NGC).
At the centre of the disquiet is the price being proposed by the NGC and whether that price can be absorbed by the downstream companies.
In addition, there are concerns about the NGC?s continued inability to supply all the gas required by the estate.
Charles Percy?who only recently retired as president of Methanex Trinidad?confirmed to Business and Money that there are ?rumblings in the downstream sector? over the ongoing negotiations.
He said it cannot be a situation where some in the gas value chain are profitable at the expense of others.
?This is a value chain and I have always adopted the position that all along that chain have to be profitable for it to work inclusive of those in the upstream, the aggregator, that is the NGC, and the downstream. If this does not happen then the government does not get corporation taxes, contractors and other companies do not get work and the entire chain is placed in jeopardy,? Percy told Business and Money.
Percy admitted that the NGC is faced with higher cost for its natural gas due to the agreements it recently signed with the upstream companies.
He told Business and Money,?There is no doubt that the NGC is facing higher costs for its gas. The fact is that the weighted average price that the NGC is paying to the upstream companies for gas has increased but the government will have to decide whether the NGC is about making maximum profits or if it is about doing what is best for the entire value chain and by extension the country.?
Percy said while he was no longer involved in the negotiations, the talk throughout the industry is of higher prices for natural gas that may lead to real challenges to profitability.
He said there appears to be a notion that because some companies have already paid off for their plants then they should be in a position to absorb significantly higher prices for their main feedstock, natural gas.
He said, ?That does not make any sense. Its economics that drive everything in this industry and to say you have paid off for your plants and therefore you can pay a certain price for gas just does not make sense.
?If a company decides to move its plant from point A to point B and that company does its studies and sees even with the capital cost of moving the plant it will be more profitable as shown by a positive net present value (NPV) then that is a decision that will be made to move.?
Senior sources in companies negotiating with the NGC say the prices on offer are closer to US$4 per mmbtu and that is up from less than US $2 per mmbtu that were signed twenty years ago but remained in effect up until recently.
Percy said all companies will have to consider their options. While he admits that some companies have better options than others, the former president of Methanex said T&T should not be fooled into believing that companies will leave plants here simply because they have in the past made profits and have already recouped their investments.
Percy argued that shale prices continue to be depressed and it will provide significant competition for the Point Lisas Industrial Estate.
He noted, however, that unlike Jamaica in which shale is competing with diesel for power generation, the importation of shale may not be an option for this country .
Percy also raised the continued gas curtailment as a major issue facing the sector saying with higher prices and an inability to produce at name plate capacity it?s a double blow to the downstream sector.
The government has promised that by 2020 the gas curtailment should come to an end with the coming on stream of gas from Venezuela.
Tags: Grupo Yammine, Familia Yammine, Sarkis Mohsen Yammine Leunkara, Sarkis Yammine
Con información de: The trinidad Guardian
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