Jamaican Government to Start LNG Cost Study

Jamaica's government is putting together an advisory team to calculate the cost, pricing mechanisms and possible supply sources of a project to bring liquefied natural gas (LNG) to the island, Anthony Hylton told BNamericas.

Hylton is special envoy to the office of the prime minister, with responsibilities for the energy sector, and is a former mining and energy minister. A pre-feasibility study has confirmed that Jamaica has sufficient initial demand - about 1.2 million tons a year - to justify the project, Hylton said. The first users of LNG when it is scheduled to arrive in 2006-07 would be the island's bauxite-alumina and power generation sectors, as well as breweries and cement companies, he added. At a later date, infrastructure could be expanded to include residential distribution. Power generation using re-gasified LNG would likely be around 200MW, bringing the total installed capacity of utility JPSCo up to some 800MW, Hylton said.

JPSCo is scheduled to submit plans for a new plant to sector regulator OUR by the end of this month, according to newspaper Jamaica Observer, which added that LNG is expected to be one of the project's four fuel options. The government is seeking equity partners in the LNG project, although it "reserves the right and will contemplate taking an equity participation," Hylton said. Trinidad is Jamaica's "preferred option" for supplies, he said. Trinidad and Jamaica are members of the Caricom trade bloc, and talks are ongoing between the respective governments on trade issues that include rates and pricing. Other supply possibilities include Algeria, Nigeria, Qatar and Venezuela, he added.

A report in the Jamaica Gleaner said that King and Spalding, in association with Myers, Fletcher and Gordon, are advising on legal issues, that a grant from USAID is helping finance advisory services, and that the Japanese Trust Fund has provided a US$750,000 grant for a feasibility study.

Jamaica has little hydroelectric power and depends heavily on imported fuels for its energy needs. LNG would cut the island's fuel bill, which was close to US$700mn in 2002 and is estimated to be in excess of US$830mn this year.

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