Jamaica and Trinidad and Tobago have agreed on the broad outlines of a treaty under which Port of Spain will supply Kingston with LNG on a "competitive, predictable" basis - a development that will give impetus to Jamaica's plan for a major energy conversion project for its major industries and the establishment of a liquefied natural gas plant here.
Jamaica and Trinidad and Tobago have been discussing the issue for more than a year and Patterson disclosed the breakthrough last night during a radio and television broadcast, as part of new energy initiatives to deal with the increasing price of oil and potentially crippling impact on the island's economy.Patterson leaves for Port of Spain today to attend a special summit of Caribbean leaders to discuss a raft of issues, including Haiti, but the Jamaican leader said he and his Trinidadian counterpart, Patrick Manning, will sign the heads of agreement for the supply of LNG in the margins of the summit.
"This agreement is expected to lead to a competitive, predictable and assured long-term supply arrangement for LNG on an agreed base pricing and escalation basis," Patterson said. "This is to be seen as just one of the great benefits that will flow from the integration of regional economies when the CSME (Caribbean Single Market and Economy) comes into being."
Anthony Hylton, the former trade and energy minister who Patterson named as a special ambassador, has been pursuing the idea of an energy conversion programme under which the island's bauxite plants, the light and power company, the national bus company and some other big firms would convert from the use of oil to natural gas.
Hylton's plan proposed the establishment of a 1.1-million-tonne LNG storage and regasification facility here and he has in the past spoken of being able to raise the estimated US$200 million in private money required for the project.
A sticking point has been on sourcing the natural gas, and at what price Jamaica would buy if it came from Trinidad and Tobago.
Kingston had argued that under the CSME, which aims at creating a single economic space among Caribbean Community (Caricom) members, Jamaica would have to get "national treatment" - that the Trinidadians could sell on terms no worse than they did to firms at home.
A legal opinion by the Caricom Secretariat late last year largely agreed with Jamaica, but it was sent back for additional work.
However, since September Manning has made two trips to Jamaica, including one last week, during which he is believed to have ironed out differences on the issue with Patterson.
"LNG brings considerable advantage," said Patterson last night. "It will allow the introduction of electricity generation plants at vastly increased levels of efficiency, and is more environmentally friendly, compared with the oil-fired plants that we now utilise."
He also highlighted its possible application in other areas of industry, which would bring advantage to the Jamaican economy.
An LNG pact with Trinidad and Tobago is coming at the same time that Jamaica is optimistic that it could also find oil and natural gas off its south coast and few areas on land.
The island will, in January, formally begin accepting bids for up to 22 petroleum exploration blocks in the Walton Basin, which consultants say could hold up to 2.8 billion barrels of oil and 10.6 trillion cubic feet of gas.
This new interest in oil exploration, as well as an attention to alternative energy projects, comes at a time when Jamaica, which imports 90 per cent of energy requirements, is feeling the burden of the bill.
In 1998 it cost Jamaica US$316 million to import its oil needs. Last year, the bill reached US$809 million for 27 million barrels of oil. The bill will be over US$1 billion this year.
Patterson warned last night that Jamaica had to introduce strategies to cut the bill and to use energy more efficiently.
Among the incentives being considered are:
- A tax reform programme to encourage a shift from gasoline to diesel and hybrid electricity vehicles.
- The diversification of the fuel mix to include the displacement of between five and 10 per cent of gasoline with ethanol. Officials have been working on such a project, seeing it also as an opportunity to compensate for the likely loss, over the next several years, of Jamaica's preferential market for sugar in Europe. The European Union plans to cut the price the island receives for its sugar by a third over the next three years.
- Better traffic management. Patterson said an improved road system, which is now well advanced, will make a major saving in petrol use.
- Jamaica was also looking at solar and wind energy. One wind farm, expected to produce as much as 20 megawatts of power is already in operation here.
