Trust To Execute Commercial Agreements under LNG Project

Cabinet has approved the formation of the Jamaica Gas Trust (JGT), which will be the Special Purpose Vehicle that executes the major commercial agreements under the Liquefied Natural Gas (LNG) Project.

These include the agreements for LNG Sale & Purchase, Terminal Use, Gas Sales, and Pipeline Transportation.

The Ministry of Science, Technology, Energy and Mining, in a press statement on May 1, explained that the JGT will be capitalized and managed by private sector interests.

Approval has been given for the engagement of a placement agent, which will be tasked with securing US$100 million in cash investments from private investors. This is in addition to a similar amount of credit support required from the End-Users of the imported LNG. An RFP has been issued for the engagement of the placement agent and can be accessed at www.mem.gov.jm. 

Friday, April 27, 2012 was the final day for submission of bids for the construction of the LNG Floating Storage and Regasification Terminal.

At the close of the bid period, three submissions were received from Exmar Marine of Belgium; Samsung C&T Corporation of Korea, and Sener Ingenieria y Sisternas, S.A. of Spain. These submissions will now be evaluated with an aim for Cabinet to approve a preferred bidder by the end of June 2012.

According to the Ministry, these developments constitute key milestones in the ongoing development of the Jamaica LNG Project.

To date, the project has received six submissions for the long-term supply of LNG from the first stage of the bid process, which ended in November 2011.

The Government of Jamaica plans to issue the final stage RFP for LNG Supply in mid-May, with firm bids due by end of June 2012.

The Government is also preparing a separate RFP for the ownership, construction and operation of the natural gas pipeline network required to interconnect the LNG Terminal to the gas customers throughout the island. This RFP will be issued in late May 2012.

The introduction of LNG is a fundamental element of the Government’s strategy to diversify its energy mix to meet the growing needs of the power generation and bauxite/alumina industries.

The initial demand for LNG is approximately 0.8 million tonnes of LNG per year, with future demand projected at 2.5 million tonnes per year by the end of the decade. It is expected that the importation of LNG will serve to spur economic growth in industries across the island that would benefit from the availability of natural gas and lower energy prices.