It is well known that natural gas production in Trinidad & Tobago has been on a downward trend for over a decade. This obviously means that the volume of natural gas consumed or processed has also declined. In 2015, the country utilized natural gas at a rate of just over 3.5 bcf/d but in 2024 this reduced to just 2.4bcf/d.
This decline in consumption has involved some facilities being taken out of operation (for example Atlantic Train 1) and other plants operating below capacity. The declines in consumption have not been uniform across sub-sectors, with the largest declines being in the LNG sector, while the utilization of natural gas for electricity has shown the lowest decrease over the time (and has actually increased over past few years).
The largest user of natural gas in T&T is the LNG industry, where natural gas is super cooled to be loaded onto LNG tankers for export. In 2015, LNG used approximately 2 bcf/d but by 2024 this had been cut in half.
The natural gas utilization of the petrochemical sector has also declined, but not as much as the LNG sector. Usage of natural gas in the ammonia and ammonia derivates industries declined by 20% between 2015 and 2024. Methanol production had lower rates of decline, falling by 5% between 2015 and 2024. Natural gas used for iron and steel, which is included in the “other” category in the graph, also fell by half, with the Arcelor Mittal plant being closed.
These commodities are all exported and this is what earns the majority of foreign exchange for the country. So as the country produces less natural gas, there is less production of LNG, petrochemicals, LPG and iron and steel for export, which has led to the crunch in forex availability.
The use of natural gas for electricity does not directly generate foreign exchange, though in some cases electricity used in the manufacturing sector to produce products for export can generate forex. One of the reasons that Trinidad is able to dominate the CARICOM light manufacturing sector, is the availability of cheap electricity.
Natural gas usage for electricity has shown an interesting trend over the past decade. Over the period 2015 to 2018, natural gas usage for electricity trended downwards, with the advent of newer highly efficient combined-cycle plants at TGU in La Brea and the fall in demand from some large industrial customers (most significantly the Arcelor Mittal steel complex). However, from 2019 onwards there has been increased demand for power from consumers, especially residential consumers, which has led to growth in demand for natural gas in the power sector.
Typically, though not always, natural gas being used for LNG generates the highest wellhead gas prices for producers (and hence this flows through to the highest returns to the State from taxes and royalties). There have been times when ammonia or methanol can generate the highest returns, depending on specific market conditions. Natural gas used in power generation generates the lowest direct returns for the upstream gas producers, and hence tax dollars for the State. This is why at a national level, the introduction of renewable energy and energy efficiency measures to reduce gas usage in power generation make good economic sense and should be actively pursued.