This country’s 11 ammonia (now 12) and seven methanol plants are back up to full production-or almost there.

But their revenues are down, profit margins lower, payments to the National Gas Company (NGC) for gas supplied a fraction of what they were in 2007/2008, and tax contributions to Government coffers are substantially below what were paid in the last fiscal year.

Arcelor Mittal’s steel plant currently produces direct reduced iron (DRI) based only on firm orders, which have dropped substantially.

And because of a depressed world market, the plant’s wire rod production is configured to meet only the needs of local downstream manufacturers.

These, too, are reduced to Centrin and Varma, with Caribbean Steel Mills having shut down operations a few months ago.

A well-placed source in the downstream energy sector told the Business Express that shutting down operations in the face of very depressed commodity prices was not an option for the methanol and fertilisers plants.

’The price of methanol currently hovers around US$250 per tonne, a significant increase from the lowest-ever price of around US$120 in February/March of this year,’ he said.

Methanol prices had rocketed to more than US$900 per tonne in October/November 2007, and stayed above US$400 between September 2007 and October 2008.

’What the 2007 price-spike and high prices for almost one year meant,’ the source added, ’was that methanol companies were making the proverbial ’killing’’.

What it meant, too, was that since the gas supply contracts between the NGC (100 per cent State-owned) and these companies are tied to product price, the NGC was also raking in huge revenues from gas sold.

’The current low-prices mean that the plants, most of which are relatively new, hence efficient, can and do make profits, albeit marginal. But depressed prices also mean much lower gas revenues for the NGC and much less tax revenues to Government. But in order for the plants to recover their capital investments and repay the substantial loans incurred in construction, they must produce-even at marginal profits. The alternative is to go belly-up, and that makes no business sense,’ the source added.

There is still strong demand for methanol, he added, and Trinidad’s plants are cashing in on the misfortunes of older, high-cost producers in countries like China, East Europe and even far-off New Zealand, some of which have folded.

In 2008, this country’s methanol production stood at 5.686 million tonnes, close to 15 per cent of global production.

’Expect lower production this year, partly because many plants chose latter 2008 and early 2009, when prices bottomed out at $100 per tonne, to halt production and focus on maintenance works,’ our source continued. ’But, like most other downstream energy commodities, we expect the price of methanol to move upwards as the global economy recovers from the recession, hopefully in 2010.’

For Methanol Holdings Trinidad Ltd (MHTL), a subsidiary of the CL Financial Group that owns five of the country’s seven plants, including the world’s largest plant (M5000), its foray into generating electricity using methanol as feedstock has not quite yielded the results it expected.

MHTL invested US$12 million in an 8MW plant.

But with natural gas still available in large quantities at relatively low prices, the methanol-fed generating plant is not an attractive alternative.

It does, however, provide power to at least two of MHTL’s methanol plants.

The status of another, similar initiative, a stand-alone methanol to power project announced in last year’s Budget presentation, is unknown.

It was intended to be a joint venture between the University of Trinidad and Tobago (UTT) and the Natural Gas Institute of the Americas.

The projected cost was said to be US$1.2 billion.

The new power plant under construction at Union Estate is a simple-cycle plant configured to use natural gas as its feedstock.

This, like other gas-fired power plants, can be upgraded to combined-cycle level that would add around 25 per cent more power generated.

At the Point Lisas Industrial Estate, too, there are 11 ammonia plants with a combined capacity of five million tonnes a year.

In late 2008 and early 2009, at least five of these plants went into the ’turnaround’ mode-meaning they shut down parts of their operations to conduct maintenance works.

These shutdowns meant a loss of production of close to 200,000 tonnes on ammonia.

Anhyhdrous ammonia prices, like other fertilisers, tend to move upwards early in the year and peak in spring when the planting season peaks in the North.

Prices also vary from region to region, with Europe and the Middle East fetching more than Africa or Latin America.

Increased demand in China has also impacted on prices over the past few years.

Ammonia prices reached a high of US$860/MT in July 2008, but bottomed out at just over US$100 by year-end. This year, prices ranged between US$180 and US$215/MT.

PCS Nitrogen is the main producer of urea, has an annual capacity of close to 700,000 tonnes. In 2007 and early 2008 the price of this fertiliser stood at US$700/MT. By March it had plunged to $200. Between May and June 2009, urea prices fluctuated between $225 and $250/MT.

While prices of fertilisers are far from their peaks in 2007-2008, local manufacturers can still realise profits because they are low-cost producers.

However, while the downstream energy plants stay profitable, if only marginal, Government’s revenues from the sector suffer.

Energy exports account for close to 90 per cent of the country’s export earnings.

Revenues from energy also account for 50 per cent of GDP. In the latter half of 2008, when commodities’ prices plunged, Government was forced to review its revenues downwards by more than $10 billion.

This fiscal year it has projected significantly lower revenues, clearly taking into account lower prices for the country’s main exports.

The NGC, which, with its subsidiary, the NEC, oversees all gas related projects and collects revenues for Government, has been a cash-cow for many years. In 2007, for the first time, NGC posted profits before tax of $4.9 billion. This would have increased in 2008. In 2009, however, both entities must brace for steep declines in earnings. Because of the way gas contracts with the downstream energy sector are structured (partly linked to product prices), NGC will see steep declines in revenues, hence profits.

There are other declines in business activities on the Point Lisas Estate. Atlantic Plaza, an offices-cum-shopping mall, has lost several tenants, the most recent of which was the supermarket.

Sales and general business activities among other businesses have seen dramatic declines. The Point Lisas Port has experienced mixed fortunes.

But the Savonetta Ports-several berths owned and operated by the NEC, dedicated to the needs of the methanol, fertilisers and iron and steel operators-have seen declines of close to 15 per cent in vessels handled when compared with 2008.

To top off the gloomy picture in the country’s most industrialised zone, the huge Point Lisas East Estate (PLEE) that falls under the NEC, has been at a standstill for almost three years.

John Jones, NEC’s superintendent of engineering, designs and construction, attributes this to the corporation not yet been awarded its CEC from the EMA for development of former sugar cane lands.

’We cannot go ahead with infrastructural works like roads, drainage and utilities until we get the green light from the EMA,’ he told the Business Express.