Venezuelan President Hugo Chavez (right) and Trinidad and Tobago's Prime Minister Patrick Manning attend a welcome ceremony for Manning at Miraflores Palace in Caracas March 20. - Reuters

Linda Hutchinson-Jafar, Business Writer

PATRICK MANNING has proposed that oil capitals Caracas and Port-of-Spain collaborate on building a new oil refinery in Trinidad, capable of processing 250,000 barrels of crude per day, but also wants to deepen their relationship on energy despite fears his country's traditional role as dominant oil force in Caribbean Community (CARICOM) is about to be usurped.

Manning has also raised with his counterpart Hugo Chvez the possibility of Venezuela taking an interest in the development of 'Train X', a natural gas line that Port-of-Spain is still defending as a viable project.

Chavez is expected to visit Port-of-Spain this month, Manning said, at which time, armed with technical advice, he is expected to give a more precise reading of whether Caracas will partner with Trinidad on its energy development plans.

That meeting follows bilateral talks between the two leaders March 20 when Manning visited Chvez to sign the energy accord on the sharing of the 10 trillion cubic feet of natural gas reserves in the Loran Fields located on their shared maritime border - split 75:25 in favour of Venezuela.

Discussing broader issues

Manning had signalled ahead of the visit that he planned to discuss broader issues relating to energy security for CARICOM, even then contemplating his country's likely displacement as the dominant oil force in the 15-member bloc.

"What we have advanced is a comprehensive Memorandum of Understanding (MoU) to the Venezuelan government for collaboration between Venezuela and Trinidad and Tobago in energy development," said Manning.

"They have agreed to study it and President Chvez has agreed to come to Trinidad about mid-April to sign, whatever arises out of the technical discussions that will now follow the submission of that MoU."

End of chilly relationship

The bilateral meeting between Chvez and Manning brought an end to a chilly relationship that developed two years ago when Trinidad and Tobago opted not to sign the PetroCaribe oil initiative which was supported by 13 members of the CARICOM.

Barbados also did not sign the agreement, saying later that it put Trinidad, the regional oil supplier, at a disadvantage and that it was worried about the accumulation of long-term debt under PetroCaribe.

The signing of the unitisation agreement, Manning suggests, gives his country a source of supply for the Train X.

Manning also proposed to Chvez that the Loran-Manatee Train X, as he called it, should be landed in Trinidad, saying that a 56-inch pipeline which was recently laid in his country is designed to take another 800 million cubic feet of gas.

"Because of the location of that gas field, the economics of bringing gas to shore favours Trinidad and Tobago as opposed to Venezuela itself," he said.

Caracas, in the meantime, despite its plans to become a net exporter of natural gas this year, is still lagging behind with its US$2.7 billion LNG export plant in Giria, from which gas from the Mariscal Sucre project and the Deltana Platform would feed to produce 4.7 million tonnes of LNG annually.

On the proposal to Venezuela to partner on the oil refinery, Manning said his country already processes crude at its state-owned Petrotrin refinery from Venezuela and Brazil.

"Our first proposal was collaboration with Venezuela on the petroleum aspects of PetroCaribe. That has become necessary because a number of countries in the region have themselves signed on to the PetroCaribe arrange-ment which, as you know, threatens to displace Trinidad and Tobago as the dominant supplier of petroleum products to the region," said the Trinidad PM.

Threatened displacement of t&t

"With the position of dominant supplier comes the responsibility to guarantee energy security. And if Trinidad and Tobago is displaced as the dominant supplier, then Trinidad and Tobago cannot accept responsibility for guaranteeing energy security to CARICOM countries. It is as plain as that."

With such a reality facing the Government, Trinidad has taken a decision to upgrade the existing refinery at a cost of US$850 million. That plan includes a gasolene optimisation programme which will raise the octane number of the gasolene pool sold to the east coast of the United States.

Another aspect is gas/oil optimisation, part of which is the construction of a gas to liquids plant, whose output will be sold to the higher-end markets.

"One of the big flaws of that approach is that it still needs the refinery and that about 35 per cent of its output is fuel oil. None of the refineries in the United States or elsewhere does that. To be able to deal with that will require an investment of about US$2 billion," said Manning.

"We have taken a conscious decision in Trinidad and Tobago that we will not move to step three."

Th is developing a second refinery which will have the capacity to treat the fuel oil coming out of the Petrotrin refinery. Trinidad is also having discussions with Brazil on the project, which has sent a team to Port-of-Spain for discussions.

business@gleanerjm.com