Warner gives background on newest planned petrochemical plant
Thursday, April 11 2013 @ 12:30 AM AST
Contributed by: michaelariston
Good Morning Ladies and Gentlemen,
All protocols duly observed
It is an honour and my pleasure to address you this morning on an occasion, which marks a significant milestone for not only the companies involved, but for our country – Trinidad and Tobago.
I would like to take this opportunity to just quickly trace the genesis of this journey. In 2010 Neal & Massy was introduced to Texas-based Energy Allied Group (later became Integrated Chemicals Company Limited), which expressed an interest in a Trinidad project. ICCL, represented by Rod Ragan and Dick Litzeau, came to us with an interesting proposal and we listened. The proposal initially consisted of a Phase 1 integrated petrochemical complex that would use a syngas reformer to produce Ammonia, Urea, UAN and Methanol. The proposal also contemplated further downstream expansion from Methanol to Urea Formaldehyde, Melamine Resins and Acetic Acid.
Shortly after coming to office in 2010, the Minister of Finance, then Winston Dookeran, had a timely roundtable discussion on how to generate investment and diversify the economy. At this dinner, Mike Nassar described the same idea for an integrated petrochemical project, and I strongly endorsed the idea, having a strong resemblance to the Hubco project in which Neal & Massy was involved from as far back as 2003. From 2003 to 2006, Neal & Massy and its partners, bpTT, Yara, Methanex and Air Products made successive proposals for the HubCo project, which proposed to produce the exact same suite of products as the original Phase 1 Energy Allied proposal. However, we never got the green light for that project, so when we were asked to join forces in this revitalised proposal, we could not walk away from the opportunity. Even more exciting for Neal & Massy was the opportunity for further downstream manufacturing businesses that were contemplated in further phases of the project from Energy Allied.
After a series of different meetings with the MoEEA, NGC, NEC and relevant cabinet members, in July 2011, the MoEEA issued invitations to tender for Methanol to Petrochemicals and Methanol to Olefins projects. In January 2012, a JV between SABIC and SINOPEC were announced as the winners of both tenders. Our consortium was not selected. However, as we all know, persistence pays. The Consortium, now firmly led by the Mitsubishi Corporation, regrouped and reconfigured our proposal and eventually got support from the Minister of Energy, Honorable Kevin Ramnarine and the Prime Minister, the Honorable Kamla Persad-Bissessar to submit an unsolicited proposal. Our revised proposal differed from the first in some of the proposed products and in its emphasis on local content and further downstream developments. Mitsubishi’s leadership and Neal & Massy’s prominence were critical components of our recent success that built on all the groundwork laid by Energy Allied (now ICCL). Our project now brings a new set of petrochemicals to Trinidad and Tobago that provides real diversification from our strengths in the Energy sector.
The project will initially efficiently use 100mmscf/d of Natural Gas to produce 860,000 tpy of Methanol and 100,000 tpy of Di-Methyl-Ether (DME). Shortly thereafter, the project intends to convert Ethane Gas to Ethylene to Mono-Ethyl-Glycol (MEG). In addition, the project is also intends to convert Propane to AcryloNitrile (AN), and to produce additional MEG and Acetic Acid from Methanol. I must credit Mitsubishi Corporation and Mitsubishi Gas Chemical Company Inc. for being creative and innovative in understanding our current plant configurations and developing a realistic set of diversification opportunities for our consortium.
As a resident company in Trinidad and Tobago, Neal & Massy is very proud to be a part of this consortium. This project and its subsequent phases will rekindle the growth in the downstream petrochemicals industry that has been missing for quite some time. These projects will generate much needed employment in the South Western corner of Trinidad. We expect peak employment during the construction of the two plants in Phase 1 to be ~3,000 people. During operations, we expect 180 people to be permanently employed by the project with a similar number indirectly employed. In addition, these projects will bring additional revenue to the Trinidad and Tobago government, inspire international confidence in investing in Trinidad and Tobago and spur the growth of new manufacturing and export sectors. These projects will also create opportunities for local content from our local engineering, construction and contracting sectors. Furthermore, Neal & Massy’s involvement, as the local investor, guarantees that some of the retained earnings will remain in the Trinidad and Tobago economy.
I am personally very excited about DME, MEG, AN and Acetic Acid as new products. DME can be used as a diesel substitute and can help Trinidad and Tobago to clean up diesel emissions and to reduce the expensive fuel subsidy on diesel. DME can also be used to fuel power generators and could be a part of the energy solution for the region with a lower cost, cleaner burning fuel that can be easily exported (DME has similar physical properties to LPG). MEG is used to produce PET Resins and you know how much PET bottles and receptacles are produced in Trinidad and the region. MEG can also be used to manufacture coolants for motor vehicles. AN has several plastics applications including acrylic fiber, car parts, electronic casings, gloves, water treatment agent and EOR. With the introduction of these new petrochemicals into Trinidad and Tobago, Neal & Massy is looking forward to investing in some of the new manufacturing industries that will be made possible by the introduction of these new products.
We are truly proud of the progress we have made to date and today we celebrate the collaborative effort it has taken to get to this point. This project ends a long drought in major downstream investments. This project would not have been possible without the extremely collaborative engagement with the MoEEA, NEC and NGC. I think it really helped to be negotiating with a group with a local partner, which was as keenly interested in the benefits to country as the it is interested in the benefits to investors. We were able to establish trust between the project sponsors and the government agencies in the negotiation process that led to wise compromises as we all attempted to optimise to best meet our overlapping as well as divergent interests. I must thank our Prime Minister, the Honorable Kamla Persad-Bissessar she very early recognized the benefits of this project and has been very supportive throughout the process. I must thank the Minister of Energy, the Honorable Kevin Ramnarine for his leadership and stewardship without which we would not be here. I thank Mr. Frank Look Kin, Advisor to the Minister of Energy. Frank was instrumental in generating clever alternatives to help us negotiate commercial arrangement. Frank’s experience in the sector and these kinds of negotiations and his technical and business acumen are unique. I must thank the team from NGC led by Anand Ragbir and supported by their CEO Mr. Indar Maharaj, this team has also been very clever about finding structures and solutions to satisfy NGC’s need to ensure that the country gets a good price for Natural Gas and the investors need for a fair return. I must also thank the team from NEC who sat through several hours of negotiation making sure that our Project Development Agreement addressed the need for further diversification and fulfillment against the other opportunities that were identified. Merlyn Rennie-Browne, Aribeca Cazaubon and Camille Blackman have all been great guardians of the country’s resources. It would be remiss of me to not also thank the Boards of the NEC and NGC, the Permanent Secretary in the MoEEA (Mr. Vishnu Dhanpaul) and Acting Permanent Secretary in the MoEEA (Mr. Selwyn Lashley), as well as the cabinet of the GORTT for your support and timely approvals along the way.
I am most grateful as well to our Japanese partners, Mitsubishi Corporation and Mitsubishi Gas Chemical Company Inc., for their commitment in this investment and their alignment with our vision to create a successful project, which also benefits the national and local communities.
Ladies and gentlemen, we are at the beginning of an exciting journey. As we often say, “the journey now start”. We have a lot of work ahead of us. The key deliverables in the next year include obtaining the Certificate of Environmental Clearance (CEC), Front End Engineering and Design (FEED), a fully termed gas contract, an engineering, procurement and construction contract (EPC), utility contracts and project financing. We are committed to working with all stakeholders, including our Mitsubishi partners in Japan, the Government of Trinidad and Tobago and the La Brea community to achieve these deliverables and get started with the construction of our initial two plants.
I want you to rest assured that while the investors in this project need to meet required investment hurdle rates, you have a team that is just as committed to the development and growth of Trinidad and Tobago as any citizen of this country. We look forward to a safe and successful project and to engaging with all key stakeholders, especially the communities in the La Brea/Pt. Fortin environs.
Ladies and Gentlemen, thank you.