CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JULY 2014
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CARIBBEAN Petroleum Update A Publication of the Caribbean Energy Information System (CEIS)
JULY 2014 ISSUE
Factors that may impact the Viable Use of Natural Gas in the Caribbean
Electricity, one of the most vital energy source in the
Caribbean is produced primarily from imported petroleum energy sources (Diesel and Heavy Fuel Oil). This current dependence on imported fossil fuels has led to high electricity generation costs and consequently higher electricity prices in most Caribbean Countries except Trinidad & Tobago which produces approximately 99% electricity from Natural Gas (Diesel accounting for less than 1%). At present, expansion plans are being pursued by Caribbean governments at all operations including the Electricity sector and the Bauxite sector which burns expensive Fuel Oil for Alumina production. There is strong optimism
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for the future regarding the introduction of Natural Gas as a cheaper and cleaner fuel to power Electricity and Bauxite plants. The introduction of natural gas would decrease both the cost of generation and price of electricity to the consumer. In this issue of the Petroleum Update, we seek to highlight possible factors that could impact the viability of Natural Gas as an alternative fuel source in the Caribbean states. The current situation in most Caribbean countries is that they import fuel oil and diesel to generate electricity. Any increase in fuel costs incurred by utility companies would mean higher electricity rates for consumers as the increase in the cost of producing
electricity is passed on to customers in the tariffs. In addition to this fact, utility companies in the Caribbean mostly utilize diesel fired plants despite the inclusion of renewable energy technology. Jamaica is one of the largest importers of petroleum fuels in the Caribbean and for over a decade has been looking at the possible use of Liquefied Natural Gas – LNG as fuel to be used in the Electricity and the Bauxite/Alumina sectors. Since the current price of natural gas is lower than the price of fuel oil, the introduction of natural gas would
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CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JULY 2014
Fac tors that may impac t the Viable Use of Natural G as in the Caribbean continued from page 1/ seek to decrease both the cost and price of electricity. The cost of generating electricity is high, not only for the consumers but the utility companies as well. Fuel costs in 2013 for the Jamaica Public Service (JPSCo), Jamaica’s sole utility company stood at three quarters of operating expenses. In 2013, fuel costs at Barbados Light and Power accounted for 73% of total operating expenses while in Dominica, fuel costs in 2013 totaled EC$43.4 million and accounted for 52% of all direct expenses in that year. Countries in the Caribbean that use fuel oil for electricity generation have higher tariffs relative to countries that utilize natural gas in the electricity sector. The average retail tariff for domestic customers in 2013 in countries like Dominica, St. Lucia and Jamaica were US$0.42/Kwh, US$0.36/Kwh and US$0.38/ Kwh respectively while for Trinidad and Tobago the average retail tariff for a domestic customer was US$0.05/Kwh. With this continued crisis, natural gas may prove to be a viable fuel alternative to lessen the pressures on both suppliers and consumers of energy in all sectors of the economy, but this is easier said than done as both internal and external factors could impact the possible outcomes. Among these factors are; market structure disparities, infrastructure development to store, transport and utilize Natural Gas, the cost and time involved in establishing and upgrading Gas pipeline from Tobago to Barbados, and then to the rest of the Eastern the infrastructure, and last Caribbean, is the most environmentally friendly option for island nations seeking but deďŹ nitely not least, utility to reduce the cost of electricity for their citizens. Image source: http://news.co.tt/
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CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JULY 2014
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PETROLEUM NEWS & HAPPENINGS Power bid winner to be announced [...]...Read more Law to be changed to allow only certified electricians [...]...Read more Trinidad & Tobago production declining but crude oil exports increasing [...]...Read more Latin America plays take on added importance [...]...Read more
Caribbean Energy Trinidadian oil exploration heats up [...]... Read more IMF urges higher energy taxes to fight climate change [...]...Read more Exmar Floating Liquefaction Regasification and Storage Unit [...]...Read more
Drilling equipment lands on Temash National Park [...]...Read more New Thermal Plant to increase LNG Demand in Brazil [...]...Read more Rusal Exploring Ethane For Alpart Plant [...]...Read more Education Ministry Puts Limit On Electricity Bills For Public Schools [...]...Read more Lights For MoBay’s Elegant Corridor [...]...Read more
August 31 Deadline Agreed For Path To Bec Restructure [...]...Read more Depressed Rare Earth Market Puts Jamaica’s Project On Hold [...]...Read more Colombia, Panama Presidents Hold Talks [...]...Read more Martelly sets up Trinidad for oil exploration rights in Haiti [...]...Read more Panel warns of Central America’s increasing dependence on Petrocaribe [...]...Read more PDVSA offers to buy four 500,000 barrel cargoes of heavy naphtha [...]...Read more Maya Leaders Alliance still waiting for oil consultation [...]...Read more
Electricity Enterprise Team Moving Full Speed Ahead [...]...Read more Babcock & Wilcox wins boiler contract for Dominican coal plant [...]...Read more Leni Oil & Gas to acquire Trinidad oilfield [...]...Read more Oil Prices Rise as US Stockpiles Drop [...]...Read more Petrotrin blames US shale gas revolution for reduced refinery runs [...]...Read more Rubis ‘Absolutely Confident’ 30,000 Gallon Gas Leak Cured [...]...Read more Massy Eyes Jamaican Energy Segment For Investment [...]...Read more
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CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JULY 2014
PETROLEUM NEWS & HAPPENINGS continued from page 3/ NYMEX crude oil drops below $100/bbl on higher Libyan production [...]...Read more
Putin revives old Cuban flame and eyes Latin American minerals [...]...Read more
US should be ready if Petro Caribe tightens credit terms, study says [...]...Read more
JPS Still Targeting LNG For Replacement Capacity [...]...Read more
Another Company To Prospect For Rare Metals – Jampro Weighing US$500m Proposal – NipponJBI Pilot Report To Be Released In Parliament [...]...Read more
Gov’t, JPS Agree To Change Licence [...]...Read more
World Bank backs $300M floating natural gas plant in Colombia [...]...Read more
Image source: http://drybonesblog.blogspot.com/
Jamaica: Agreement signed to stop electricity theft [...]...Read more
Cabinet takes charge of power generation procurement [...]...Read more Major Oil Discovery in Trinidad [...]..Read more
CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JULY 2014
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Fac tors that may impac t the Viable Use of Natural G as in the Caribbean continued from page 2/
companies may still need to utilize diesel and gas fired plants (realistically it would be difficult to convert all plants to accommodate natural gas in one go). In July 2012 it was officially announced in Jamaica that a LNG regasification facility was to be established to facilitate the introduction of LNG to the energy mix. It was also highlighted that in order for the project to be successful there were three major components that must be addressed: the purchase of LNG by entering into a contract with a supplier, the contracting of floating storage and regasification services from a provider and the running of pipelines from the regasification facility to the power plant. All of these three components were said to be the responsibility of the Government and involves the coordination of, and commitment from, multiple stakeholders (fuel supplier, JPSCo, floating storage and regasification unit provider, etc.); each pursuing its own interest. These did not materialize and as such Jamaica is still exploring the feasibility of natural gas utilization. Apart from Trinidad and Tobago, Cuba utilizes an estimated 91% of its natural gas for electricity generation. Barbados produces small quantities of natural gas locally, but not enough for power generation. It imports LNG by barge and based on reports, aims to benefit from a new gas pipeline from Tobago that should be completed by late 2015. The pipeline offers a less expensive and better option than deliveries by barge and may be extended to other Caribbean islands such as St Lucia and Dominica. It cannot be overemphasized enough that if all countries in the region are to benefit from natural gas as the fuel choice for power generation, all governments would have to be fully onboard. Despite reasonable renewable energy resources such as solar power, hydropower, geothermal energy,
and wind in the Caribbean, the limited hydrocarbon resources in most countries force them to import fuel oil and diesel for power generation. The high prices for these products significantly affect the competitiveness of the region’s firms and adversely influence private sector development as a whole. The recent Shale Gas revolution in the United States, have greatly reduced its cost of producing natural gas. With such rapid growth in the shale resource, natural gas prices are at its lowest. If the Caribbean states were to put in place the necessary infrastructure and grab unto the opportunity of importing low cost natural gas, this would definitely reduce the need for petroleum imports thus reducing electricity generation costs and in turn fuelling economic growth. Natural gas not only has the potential of reducing generation costs and electricity rates, it has the potential to transform theses small states economies to function at optimal levels. However, separate and apart from the infrastructural deficiencies of Caribbean countries where natural gas is concerned, Caribbean governments must pay special attention to additional variables that may inhibit the utilization of natural gas. These include the availability of natural gas supply and the status of export supporting infrastructure (natural gas liquefaction and compression facilities or pipelines), the possible access points of natural gas to enter the Caribbean and how each point will be beneficial to the individual markets in the Caribbean basin, the cost of delivery and last but not least the possible sources of natural gas. The current dependence on fuel oil in the countries in the Caribbean has led to high electricity generation costs and high electricity tariffs. Introducing natural gas would decrease both
the cost and price of electricity. Additionally, natural gas plants emit less carbon dioxide (CO2) per ton than fuel oil plants. Therefore, the net benefits of natural gas would be seen in lower financial and economic (environmental) costs. It is important to note that even if Caribbean states were to successfully establish the necessary infrastructure for natural gas, not all renewable energy (RE) and energy efficiency (EE) technologies that are viable now may still be viable. The viability is also attributed to the lower price of natural gas relative to fuel oil, but while one can speculate and hope, there is no guarantee that this will always be the case. Furthermore, Caribbean governments must pay keen attention to the factors that may affect the viability of introducing natural gas in the Caribbean before plans go into full force.
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CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JULY 2014
Prices at the Pump
JULY 2014
Retail prices for Regular Unleaded Gasoline in the thirteen Caribbean countries reviewed at the end of July 2014 showed increases in prices for Barbados, Belize, Dominica and Grenada between 0.8% and 6.1%. Dominica experienced the highest increase of 6.1% while Jamaica had a decrease in price of 0.8%. The other countries remained stable.The average retail price at the end of July 2014 was 1.1% higher than the average of the previous month. Regular Unleaded Gasoline: Average Retail Price (US$/Litre) 2014 COUNTRIES
JAN
FEB
MAR
APR
MAY
JUN
JUL
AVG
ANTIGUA/ BARBUDA
1.23
1.23
1.23
1.23
1.23
1.23
1.23
1.23
BAHAMAS [91 OCT]
1.36
1.36
1.38
1.38
1.43
1.43
1.43
1.39
BARBADOS
1.54
1.57
1.59
1.66
1.76
1.76
1.81
1.67
BELIZE [87 OCT]
1.41
1.43
1.47
1.49
1.51
1.48
1.54
1.48
B.V.I. [87 OCT]
1.21
1.21
1.21
1.21
1.21
1.21
1.21
1.21
DOMINICA
1.15
1.16
1.18
1.19
1.19
1.22
1.30
1.20
GRENADA (95 OCT)
1.26
1.26
1.28
1.31
1.31
1.31
1.32
1.29
JAMAICA 87 Octane[E10]
1.23
1.24
1.26
1.28
1.26
1.28
1.27
1.26
ST. LUCIA
1.32
1.31
1.31
1.31
1.31
1.31
1.31
1.31
ST. VINCENT/ GRENADINES
1.08
1.07
1.09
1.09
1.09
1.09
1.09
1.08
SURINAME [95 OCT]
1.39
1.39
1.43
1.43
1.46
1.46
1.46
1.43
TRINIDAD/ TOBAGO [92 OCT]
0.42
0.42
0.42
0.42
0.42
0.42
0.42
0.42
TURKS/ CAICOS
1.52
1.52
1.52
1.52
1.52
1.52
1.52
1.52
NOTE: *US Gallon = 3.785 L *Imperial Gallon = 4.546 L *As at November 1, 2009 MTBE was phased out from all gasoline blends in Jamaica and replaced with 10% Ethanol.
Comparative Retail Pump Prices Regular Unleaded Gasoline 2.00
JULY Avg vs 7 Mths Avg (Jan - July 2014)
1.80
US$/Litre
1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00
13 Caribbean Countries
See prices for all products at www.cippet.org
International OIL PRICES
CALL: 1-876-927-1779 | CARIBBEAN PETROLEUM UPDATE : JULY 2014
Average Weekly & Monthly Crude Oil Prices (May July 2014)
108.00 106.00
US$/BBL
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105.52
107.23
104.00
103.82
102.00 100.00
May
98.00
Jun
Jul
96.00
Period
WK1
WK2
WK3
WK4
MTH AVG
Analysis of the International Crude Oil Prices for the period May to July 2014 ended with an average price per bbl of US$103.87. This reflected a 1.8% decrease in price from the previous month, but a 2.2% increase in average prices when compared to May 2014. The highest weekly price seen in July for the commodity was US$105.52/bbl-reflected in week one while week three accounted for the lowest price of US$102.37/bbl. The overall lowest and highest prices for the three months period respectively were US$100.29 seen in May 2014 and US$107.23 seen in week three of June 2014. The overall average price for the period was US$103.76.
FEATURED OFFERS: P E TS TATS - t h e Ca r i b b e a n E n e rg y I n fo r m at i o n System (CEIS) primary report of historical annual petroleum energy statistics provided for 18 Caribbean Countries. Included are data on total energy production, consumption, and trade; overviews of petroleum, natural gas, electricity, as well as financial and environmental indicators for over twenty years.
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