January 23, 2010
Investing in alternative energy sources
The Chairman of the Scientific Research Council (SRC) James Moss-Solomon called on the Jamaican private sector to use its financial and creative might to invest in alternative energy sources. This approach, according to Moss-Solomon, would help the island wean itself of its oil dependency while creating scores of jobs.
Moss-Solomon , who was speaking at a Rotary Club Kingston luncheon at the Jamaica Pegasus hotel on Thursday, believes that the private sector of Jamaica could look into areas such as solar energy, liquid natural gas, bio-fuels, hydro and wind energy. According to figures presented by Moss-Solomon, in 2008, Jamaica's oil-import bill was $2.7 billion, fell to $1.2 billion in 2009, and is projected to reach $2.49 billion in 2010.
Fallout In Bauxite
The significant reduction in the oil import bill in 2009 occurred as a result of the major fallout in the bauxite sector due to the global recession.
Looking at the major users of oil in the island, such as the transport sector, the Utilities and bauxite, Moss-Solomon said that Jamaicans could invest in alternative energy to supply those sectors.
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December 01, 2009
Sugar Industry Prospects Look Positive, Jamaica
General Manager of Jamaica Cane Products Sales Limited, Mr. Karl James, met with a number of entities relating to the sector, including the International Sugar Organization, and pointed out that sugar prices on the European market are now better than was projected, and this was good news for Jamaica.
If Jamaica could produce 280,000 tonnes of sugar, this would meet the domestic requirement and fulfill international demands.
The possibility of producing renewable energy, using the bagasse for the energy needs of the industry, as well as providing ethanol was also mentioned.
The new regime which also provides access for the African, Caribbean and Pacific (ACP) countries and the Least Developed Countries (LDCs) to the European Union, would be reviewed in 2012.
An upside of ending the EU sugar protocol was that while previously Jamaica could only export raw sugar for refining, the new arrangements meant that the country could now access and supply any kind of sugar to the European market.
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November 25, 2009
NWC and JPS form partnership to reduce electricity use
The National Water Commission (NWC) has partnered with the Jamaica Public Service Company in an attempt to reduce the amount of money it spends on electricity. The NWC is also looking at alternatives to deep well water pumping which uses significant amounts of electricity. The ministry is also seriously considering rainwater harvesting for domestic use especially in the highland areas.
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September 09, 2009
Trinidad boosts drilling as gas reserves drop
Trinidad and Tobago will need as many as nine exploration wells to be drilled annually to maintain the country's gas reserve base, which according to an independent audit, dropped to 15.4 trillion cubic feet (tcf) in 2008 from 17 tcf in 2007.
US-based petroleum consulting outfit, Ryder Scott, which carried out the December 2008 audit for the government, said proved reserves stood at 15.4 tcf, probable at 8.5 tcf and possible at 6.3 tcf.
In 2000, proved gas reserves were 19.67 tcf and peaked in 2002 to 20.75 tcf.
Tremendous pressure
The volume of gas produced during 2008 was 1.5 tcf at an average rate of 4.1 bcf of gas per day.
An analysis of the gas results indicate that gas reserves were being used at an optimum level.
In the government's most recent efforts to encourage exploration, the ministry of energy signed several new production sharing contracts for blocks.
New exploration provinces
Government also plans to attract companies to new exploration provinces through the 2009/2010 competitive bid round and a revised petroleum fiscal regime, which seeks to create an environment to encourage and promote exploration and development activities and offer a more equitable sharing of the economic rent.
Six blocks in shallow water will be offered in a bid round during the first quarter of 2010.
The blocks which comprise 870,000 hectares that are primarily gas prone with 8 tcf of unrisked identified exploration resources.
A deep water bid round is also planned for the second quarter of 2010.
Helena Inniss-King, director of resource management at the energy ministry said a study which was recently completed on the deep water areas indicates large volumes of oil and gas.
Meanwhile the energy minister said the country also continues to have large volumes of uncommitted gas because several projects have not yet come on stream.
Responding to a question about whether there is a market for any substantial gas discovery, Enill said the answer lies in the continuous expansion of the downstream industrial base which includes 10 ammonia and seven methanol plants which feeds the demand.
Global downturn
A central bank April 2009 monetary policy showed that the global downturn had impacted on the volume of oil and petrochemical exports over the preceding five months, declining by 11.6 per cent compared with the corresponding period of the previous year.
The plunge in external demand for petrochemical exports in particular has negatively impacted the domestic energy industry. Natural gas utilization also fell by 2.1 per cent and is likely to remain low until there is some recovery in demand in the major markets.
The volume decline has been accompanied by a dramatic fall in prices - 49.2 per cent for methanol and 17.2 per cent for ammonia.
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September 09, 2009
State advisers urge quick replacement of old generators
Government's energy technocrats are calling for the acceleration of the schedule for retiring Jamaica Public Service Company's (JPS) existing power-generating plants, which they contend are outdated and are contributing to the high cost of energy, one of the factors said to be hobbling the local productive sector.
But the monopoly electricity distributor has shot back, deflecting to the utilities regulator, the Office of Utilities Regulation (OUR), responsibility for any speeding up of the phasing out of existing power-generating methodologies and stepping up energy-efficient generating capacity.
Cost to country
The JPS has not made public any timeline for changing existing mainly diesel generators at its power plants.
Meanwhile, energy consultant at the state owned Petroleum Corporation of Jamaica (PCJ), Dr Raymond Wright, is among those gunning for drastic changes to pull down energy costs. He believes the changeover should begin as early as 2011.
But nobody appears to have a fix on the savings that might accrue from a switch to cleaner energy or more efficient power generation.
In its defense the JPS, which has some 594,000 customers, of which a mere one per cent or 6,000 are manufacturers, says its not to be blamed solely for any delay in upgrading its power generation infrastructure.
The JPS contends that there has to be a parallel plan in tandem with the retirement of the units. It did not elaborate on the required parallel plan.
Neither is the JPS willing to accept blame for the demise of the country's productive sector, said to be reeling from high electricity costs set at $8.93 per kilowatt hour.
Productive sector malaise
But this has not prevented the government technocrats from insisting that electricity costs are contributing significantly to the malaise in the local productive sector.
While quick to point out that a mix of reasons precipitated the near total closure of the bauxite industry which constitutes 49 per cent of the country's almost US$3 billion oil bill, was a key factor.
Darmand describes the energy bill as the manufacturer's biggest albatross.
The light and power company currently has an application for a 23 per cent rate increase before the OUR and links the approval of the price hike requests with its ability to invest further in its generation and distribution infrastructure.
Even as it awaits a decision, last weekend the JPS announced it was investing US$9.5 million to add approximately 11 megawatts of new generating capacity at its Bogue Power Station in Montego Bay and spending another US$1 million to rehabilitate its Constant Spring hydro station in St Andrew.
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September 09, 2009
Global crisis hits Trinidad economy - First quarter GDP declines 3%
Trinidad and Tobago is expected to record negative growth for the last financial year as the oil-rich twin-island republic seeks to deal with the slowdown occasioned by the global economic and financial crisis.
Delivering the TT$44.3 billion (US$7.38 billion) budget to parliament would be challenging.
Real gross domestic product (GDP) is estimated to have declined by one per cent in the last quarter of 2008, and this decline continued in the first quarter of 2009, when real GDP fell by three per cent.
Decline continues
The International Monetary Fund (IMF) projected that real GDP would decline by 2.8 per cent in the United States in 2009; over four per cent in the United Kingdom and Euro Area and over six per cent in Japan.
The unemployment rate for the first quarter of 2009 stood at five per cent, up from 3.9 per cent in the last quarter of 2008, but still within the definition of full employment.
The decline in energy exports combined with the rise in foreign-exchange demand for current and capital transactions has led to a significant increase in Central Bank foreign-exchange sales.
But official reserves remain robust at US$ 8.6 billion, the equivalent of 11 months' import cover, well above the international benchmark of three months
.
Estimated debt
The country's total debt stock, which stood at 60 per cent of GDP at the end of 2001, declined to 37 per cent of GDP at the end of 2008 and is estimated to rise to 39 per cent at the end of 2009.
In her presentation, the finance minister said that the 2009 budget had been based on an oil price of US$70 per barrel and a gas price of US$4.00 per million cubic feet. But by December 2008, oil prices had plunged to US$35 per barrel and gas prices declined to US$3.25 per million cubic feet.
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August 26, 2009
JPS posts net profit for June quarter
Electricity provider Jamaica Public Service (JPS) made $1.4 billion, or US$16 million, net profit for its June quarter, reversing the loss it made due to high oil prices in the corresponding period last year.
In its latest quarter, the cost of fuel fell at a faster rate than its total revenues. This allowed JPS to post an improved gross profit of US$60 million, or US$2.1 million, more than last year's June quarter.
JPS fuel costs of US$105 million dropped by 45 per cent over the same quarter last year from US$191 million, while revenues declined 31 per cent to $186.2 million from last year's US$270 million for the quarter.
The company has seen its creditors reduce their outstanding balances dramatically. This as accounts receivables listed in its cash flow dropped from US$35.7 million to US$61,000 in the June quarter. The company also reduced its investing and financing activities in the quarter, allowing it to post US$26.9 million in cash flow, versus US$17.5 million a year prior.
The company is still awaiting judgement on its five-year tariff rate hike proposal from the Office of Utilities Regulation (OUR). The OUR told the Business Observer yesterday it would soon set a date for the announcement of the tariff due since mid 2009.
JPS is presently seeking to increase the real return on equity to 21.6 per cent in its current tariff review submission.
JPS hopes to increase its non-fuel revenue by 60 per cent in an effort to secure a $7-billion return on equity for 2009, and plans to get it by increasing energy rates to customers by as high as 97 per cent. In 2008, the company made $23.8 billion from non-fuel revenues, while making $47.66 billion from fuel revenues.
The utility plans to construct projects over the next eight years costing US$1.3 billion, including: a 300 Megawatt (MW) coal-fired generating facility in Old Harbour at an estimated cost of US$950 million; a petroleum coke plant in Hunts Bay, Kingston worth some US$280 million; 6.4 MW expansion of its existing hydro plant at Maggotty, St Elizabeth for US$26 million; and a three MW wind farm at Munro, St Elizabeth at a cost of US$10.7 million.
JPS currently has an installed capacity of approximately 621 MW, complemented by almost 200 MW of firm capacity purchased from independent power producers under long-term power purchase agreements.
This gives the company a total installed system capacity of 821 MW.
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August 14, 2009
Investors pull out of Trinidad & Tobago
Trinidad and Tobago's energy sector has lost three investors who were to pump an estimated US$185 million combined in energy projects that include drilling programmes spread over a four-year period.
The International Energy Agency (IEA) reports that the global upstream oil and gas investment budgets, through cutbacks in spending, project delays or cancellations have been cut by 21 per cent or US$100 billion during 2008.
Energy companies operating in Trinidad are also reporting declines in their profitability during the second quarter while the outlook for rig activity for the rest of the year remains uncertain, according to a recent industry survey.
Trinidad's biggest loss is OMEL Energy, a subsidiary of ONGC Mittal Energy which along with state-owned oil company, Petrotrin signed a production sharing contract last December to carry out exploration on the North Coast Marine Area (NCMA), Block 2 which comprises 98,669 hectares.
The NCMA Block 2 is within a prolific dry gas province in which a productive hydrocarbon system has been established and is on trend with the Northern Venezuelan Dragon gas field and gas discoveries made in 2008. The block will now be included in the country's next bid round.
Energy blocks awarded
The Trinidad Exploration and Development Company (TED) which was awarded two energy blocks from an earlier 2005/2006 bid round also withdrew earlier this year, followed by London-based Tullow.
Tullow pulled out from a consortium involving another UK company, Centrica Energy, and Petrotrin, which was granted approval for the award of a production sharing contract to explore and develop Block 2(ab) located off Trinidad's east coast.
In July, Centrica Energy signed an agreement with the government for the exploration of the offshore energy block which Upstream Business Director Richard Mew described as highly prospective.
The company also plans to establish a partnership with Canada-based NIKO Resources Limited which would hold a 26 per cent stake in the block and another Canadian company, Voyager, with 9.75 per cent.
Centrica said it will spend US$48 million on the 1,600 square kilometre block which will include the drilling of three wells.
Also last month, Canadian company Voyager Energy and its joint venture partner Petrotrin signed a production sharing contract with the government to carry out onshore and offshore exploration in the Guayaguayare Blocks in the south-eastern region over the next four years, costing US$40 million.
Joint-venture agreement
In September 2008, Voyager also secured the exploration rights for two central range blocks onshore and has since entered into a joint venture agreement with Petro Andina Resources to explore the acreage.
But while the government continues to sign energy contracts, a number of service companies in the sector complain that business is slow.
The South Trinidad Chamber of Industry and Commerce which monitors the energy sector said 85 per cent of respondents reported a drop in their overall profitability, compared to over 80 per cent of respondents during the first quarter survey.
Rig activity, one indicator of economic buoyancy, has declined relative to 2008, it added.
Little or no growth is expected in the energy sector in 2009 following on a marginal 0.4 per cent growth last year.
Trinidad whose economy is pegged to the performance of energy, experienced a 3.3 per cent decline in GDP in the first quarter of this year as activity in the oil and gas sub-sectors contracted by 2.0 per cent, according to the central bank's latest report.
GDP growth
Real GDP grew by an annual 3.5 per cent in 2008, but is expected to show zero to one per cent growth at the end of this year.
Despite the downturns, new bid rounds are scheduled for 2010 for acreages located in shallow and average water depths and comprising at least five offshore blocks - two in the East Coast Marine Area (ECMA), and three in the North Coast Marine Area (NCMA).
And Trinidad has reportedly resumed talks with Venezuela over the shared Loran-Manatee gas fields whose 10 trillion cubic feet of reserves are shared 74:26 in favour of Venezuela.
Another bid round comprising acreages in the deep water depths will follow.
Enill defined deep water exploration as "the new frontier".
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August 07, 2009
Caribbean counts on PetroCaribe
Caricom countries are hoping for a sympathetic ear from Venezuelan leader Hugo Chavez when they present their case for a delay or alteration to proposed changes to the PetroCaribe agreement. Under the current terms and conditions of the agreement, signatories can purchase oil on market value, with 60 per cent of the cost to be paid up front. The remainder can be paid over 25 years at one per cent interest. PetroCaribe, which was launched by Mr. Chavez in 2005, also allows Caribbean countries to buy up to 185,000 barrels of oil per day. Additionally, countries can pay part of the cost with goods and services. But the Venezuelan government is now considering increasing the amount to be paid up front - from 60 to 80 per cent. Caribbean Community (Caricom) member states, already grappling with fallout from the global financial crisis, fear they will not be able take advantage of the Hugo Chavez initiative if the existing programme is amended. Economies hard hit Caribbean economies have been hard-hit by the financial downturn, with many recording a significant drop in tourism revenue and remittances. Caricom is the trade and economic grouping pulling together 15 Caribbean countries, including the English-speaking independent territories, Haiti and Suriname. President Jagdeo, who is also the current Caricom chairman, pointed to Antigua, which he said has lost 35 per cent of its revenue. Venezuela depends on revenue from oil exports to finance half the government's budget. But the fall in global fuel prices has threatened the government's high spending social programmes that made President Chavez popular with the poor majority. In March of this year, President Chavez announced spending cuts and revised the reference price for oil (from the US$60-a-barrel forecast to us$40) to balance his country's budget. Thirteen of the 15 Caricom members, and Cuba and the Dominican Republic, have signed up to PetroCaribe.
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January 23, 2010
Investing in alternative energy sources
The Chairman of the Scientific Research Council (SRC) James Moss-Solomon called on the Jamaican private sector to use its financial and creative might to invest in alternative energy sources. This approach, according to Moss-Solomon, would help the island wean itself of its oil dependency while creating scores of jobs. Moss-Solomon , who was speaking at a Rotary Club Kingston luncheon at the Jamaica Pegasus hotel on Thursday, believes that the private sector of Jamaica could look into areas such as solar energy, liquid natural gas, bio-fuels, hydro and wind energy. According to figures presented by Moss-Solomon, in 2008, Jamaica's oil-import bill was $2.7 billion, fell to $1.2 billion in 2009, and is projected to reach $2.49 billion in 2010.
Fallout In Bauxite
The significant reduction in the oil import bill in 2009 occurred as a result of the major fallout in the bauxite sector due to the global recession. Looking at the major users of oil in the island, such as the transport sector, the Utilities and bauxite, Moss-Solomon said that Jamaicans could invest in alternative energy to supply those sectors. |
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