Philip Paulwell, Minister of Commerce and Technology. - contributed

Jamaica and Venezuela are considering the use of propane gas, normally used here for cooking, to fire an expanded Alcoa alumina refinery in Clarendon, as an interim solution to Caracas' inability to deliver LNG by the end of the decade.

At the same time Venezuela is expected to take a stake in the proposed LNG (liquefied natural gas) regasification facility here now that a project between Jamaica and Trinidad and Tobago has collapsed.

"It will be a venture under PetroCaribe," the Energy Minister, Phillip Paulwell, said yesterday. "They will be a shareholder in the venture," he said, referring to the Venezuelan national oil company PDVSA.

Three years ago, Alcoa announced a US$1.6 billion project to more than double, to 2.8 million tonnes a year, the capacity the alumina refinery it owned equally with the Jamaican Government.

Increased capacity

But the bulk of that project - Alcoa has increased capacity by 150,000 tonnes a year to the current 1.275 million tonnes - was predicated on Trinidad and Tobago supplying Jamaica with 1.1 million tonnes of LNG a year to drive an 80 megawatt power plant at the facility, as well as for a broader energy conversion programme, by the time the Alcoa expansion was in full swing in two years time.

However, earlier this year, after months of dithering, Port-of- Spain finally told Kingston that it will have no LNG to supply by 2009 and has been unable to give a definitive time frame for when it might be able to deliver.

Faced with the likelihood of Alcoa shelving the expansion, Jamaica has been scouting alternative LNG or CNG (Compressed Natural Gas) suppliers, leading to a signing three months ago of a memorandum of understanding between Venezuela's President Hugo Chavez and Jamaica's Prime Minister Portia Simpson Miller for Caracas to supply the LNG.

However, Venezuela has no excess LNG, and plants it has on the drawing board for the cooling, for transportation, of natural gas to LNG will not be ready in time.

In recent weeks, technocrats from both countries have been considering interim alternatives, with the CNG and propane being on the agenda.

"We haven't come down on what it will be as yet," Paulwell said. "But the front-runner, the current preferred position, is for propane gas, once it can be delivered at a price to make the project feasible."

Jamaica is apparently banking on the proposed partnership in the project to deliver a competitive price for propane, which is normally benchmarked against crude in the market for the fact that it mainly competes with oil-derived fuels.

Safe fuel

Propane, or liquefied petroleum gas (LPG) is derived during the processing of oil or natural gas and is considered a relatively clean as well as safe fuel.

In the United States more than 19 billion gallons of propane - about two per cent of all energy used - are consumed annually, about 40 per cent of this in homes, mainly for heating.

A near similar amount is used in industrial plants, while some commercial vehicles, mostly delivery trucks, also use propane. Apparently, though, there is no widespread use of propane in commercial power plants in the United States or other countries.

"This is an interim solution," said Paulwell. "The supply of propane, if that is what is used, would be the equivalent of the LNG that would have been supplied."

business@gleanerjm.com