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The Government’s plan to introduce liquefied natural gas (LNG) has been engulfed in even more controversy in the wake of a damning November 2010 report by a World Bank-recommended team of consultants.
While the consultants acknowledged that LNG was the right choice for the nation over coal, they have suggested to the Bruce Golding administration that it should put its plan on hold until the middle of this year while the Office of Utilities Regulation (OUR) presents a new regulatory framework.
However, the local LNG team is adamant that it is on the correct course and the energy ministry yesterday argued that while some of the changes recommended by the consultants should be implemented, others are to be discarded as they were not sufficiently informed and did not capture all the information gained by the local officials.
With the LNG project now being driven from the Office of the Prime Minister, the team from the energy ministry has sought to convince Golding that it has so far been heading in the right direction.
“That (consultants) assessment report raised several valid questions of the project, for which comprehensive answers were provided,” Energy Minister James Robertson said in a release yesterday.
“Further yet; audits, operational reports and reviews from respected local and international consultants on a sustained basis, inclusive of taking on board the opinions of our independent development partners, continue to be undertaken,” Robertson added.
The energy minister did not release the report of the consultants but The Gleaner has obtained an extensive response provided by the local LNG team, which operated out of the Petroleum Corporation of Jamaica and the energy ministry.
While dealing extensively with many of the concerns raised by the consultants, the local team did not comment on fears about the financial viability of Exmar Consortium, which has already been selected for a lead role in the project.
Parallel moves a must
However, the local team was strident as it dismissed the consul-tants’ call for the project to be placed on hold.
The local team argued that the development of a regulatory framework and the implementation of final rules must be done in parallel with the ongoing efforts to identify the offtakers, develop the commercial framework and land LNG.
The team also scoffed at the claims by the consultants that there was ambiguity and uncertainties surrounding several aspects of the project which could make it a financial disaster for the Government.
According to the consultants, a focused economic and financial feasibility study must be completed quickly before a final design specification for the Floating Storage and Regasification Unit and pipeline system.
But the local team argued that the pipeline would be fully regulated by the OUR while the other areas are being addressed.
The local team was most dismissive of the consultants’ claim that the Government could be exposed to great financial risk for future gas purchase.
This the consultants linked to the failure of the Government to obtain a letter of intent to purchase from the bauxite company Jamalco and its inability to obtain a purchase commitment from the Jamaica Public Service Company.
“This statement is incorrect. The Government of Jamaica will have no financial responsibility for gas purchases,” stated the local LNG team in a retort.
According to the local team, while it remains optimistic that Jamalco will participate in phase one of the LNG project, even without Jamalco, the threshold volume would be sufficient to support the venture.
Christopher Zacca, the head of the government team leading the LNG project, has so far refused to comment on the individual concerns raised by the consultants.
