Energy Minister Kevin Ramnarine has said a failure to agree on the price of natural gas for the proposed US$5.3 billion ($30 billlion) methanol complex was a key factor that led to the Government and Saudi Basic Industries Corporation (Sabic) not arriving at a deal for the project.
He said, however, the decision to end the negotiations was a "mutual" agreement between the parties involved. Sabic announced a year ago that it hoped to develop the methanol plant in Trinidad.
Ramnarine made the disclosure in a text message response to questions from TV6 News on Sabic's announcement yesterday that it is halting plans to develop the project.
The price of natural gas from the National Gas Company of Trinidad and Tobago (NGC) used to supply downstream energy sector projects like methanol plants is crucial to any deal to be arrived at for such projects.
The Associated Press reported yesterday that Sabic issued a statement in which it announced it decided not to continue with negotiations for the planned complex after the "relevant parties did not reach a deal on the fundamental conditions for this project."
Sabic did not reveal any further details.
AP reported the project was expected to be a partnership with Sinopec Corp, one of China's three major state-owned oil companies.
Ramnarine, who told TV6 News he is Austin, Texas, gave the following short explanation of the fundamental conditions that led to Sabic's decision to cancel its planned involvement in the methanol complex that was set to be one of this nation's largerst downstream energy projects.
"The Ministry, NGC, and Sabic\Sinopec mutually agreed to discontinue negotiations because agreement could not be reached on two critical issues—gas price and the term of supply," Ramnarine said in his text message.
He said the Energy Ministry will issue a formal statement on the matter today.
AP's story on Sabic's decision regarding the methanol complex was reported by several international media houses including the Wall Street Journal, Fox News, ABC News
This latest development in the energy sector follows the announcement by the Energy Minister in the Senate on Tuesday that Spanish energy giant Repsol has finalised the sale of its LNG assets in the Alantic LNG plant in Point Fortin to Shell.
In addition, President Professor George Maxwell Richards and the CEO of Methanex, Charles Percy, both said last week that the discovery of major shale oil and natural gas finds in the United States is posing a threat to this nation's energy revenues.
The President, in an address to the Heads of Missions at the Hilton Trinidad hotel last Wednesday, said the cheaper shale gas in particular was turning the US, once a major market for this nation's Liquefied Natural Gas (LNG) into a net exporter of the product.
During an energy leadership forum at the Arthur Lok Jack School of Business on Saturday, Percy said the shale oil and gas threatened this nation's revenues from its methanol and ammonia exports to the US.
"We have traded largely with North America in those two main industries and those two industries now, if cheap shale gas is available in the United States and there is capital to go after it we will be under some pressure in the short to medium term. So the issue for us is how do we stay competitive," Percy said.
He was still, however, cautiously optimistic.
"It doesn't mean that everything will fall apart and businesses will close up but we need as a whole value chain to better prepare ourselves for what is coming at us," Percy said.
There was no indication yesterday whether the issue of shale gas was a factor in Sabic's decision to end its negotiations with the Government on the proposed methanol complex.