Chemical products derived from petroleum :
Background/History
Significant discoveries of crude oil off the south-east coast of Trinidad were made in the late sixties and early seventies which enabled Trinidad to benefit from the windfall of this period. Oil production peaks during this period stimulated further exploration activities, which led to significant discoveries of natural gas in the face of declining crude oil reserves.
The local petroleum industry profile was changing; from a focus on crude oil production up to the mid/late 1970’s, natural gas was gaining increasing economic significance during the late 1970’s and the 1980′s. By far, the most significant downstream investments at that time were the manufacture of petrochemical manufacturing plants and complexes, with the output mainly targeting export markets.
The hub of the country’s petrochemical industry activities is located at the Point Lisas Industrial Estate, which is governed by the Point Lisas Industrial Port Development Corporation Limited (PLIPDECO).
In tracing the development of the local petrochemical industry a distinguishing feature is the very critical role played by foreign private capital. This has been a deliberate government strategy mainly in response to the need for huge capital injection and access to international markets. Over time it involved a number of joint venture arrangements with varying levels of state participation.
W.R.Grace was the first multinational on the local scene producing fertilizers, and in 1959, commissioned a 250,000 tonne/annum (tpa) ammonia plant — Federation Chemicals Limited (Fedchem). In a joint venture arrangement with the Government of Trinidad and Tobago, the company commissioned two additional ammonia production facilities, Tringen I in 1977 and Tringen II in 1988, with Government owning 51% of the shareholding. In 1981, Fertilizers of Trinidad and Tobago Limited (Fertrin), a joint venture between the Government (51%) and Amoco International Oil Company (49%), commissioned two ammonia plants each with a rated capacity of 344,500 tpa. Until 1990, Fertrin was also responsible for the operation and management of the Trinidad and Tobago Urea Company’s (TTUC’s) plant, which was commissioned in 1984.
Methanol production commenced at Point Lisas in 1983 with the commissioning of the Trinidad and Tobago Methanol Company’s (TTMC’s) first plant, with a capacity of 450,000 tpa, with 100% government ownership. Government later divested 31% of its holdings in the plant to a German consortium, Ferrostaal/Helm. An expansion project, TTMC II (550,000 tpa) came onstream in 1996 with government and Ferrostaal/Helm owning 69% and 31% of the shareholding respectively.
Unlike ammonia, however, early developments in methanol also involved a strong element of local private sector participation. This occurred with the establishment of the Caribbean Methanol Company’s plant at Point Lisas in 1993 with the local insurance company, CLICO, accounting for 64.9% of the shareholding, and the remaining partners, Ferrostaal and Methanex owning 25.1% and 10% respectively.
State’s involvement has been on the decline since the early 1990′s. In 1992 the Government announced its intention, as part of a debt restructuring exercise, to divest its share of the Fertrin ammonia plant and the TTUC urea plant. The actual transaction occurred in 1993 when Arcadian Partners LP acquired 100% shareholding in Fertrin. The divestment process continued and in April 1997, the Government of Trinidad and Tobago sold its 69% shareholding in TTMC to a consortium comprising CLICO Energy, Ferrostaal AG and Helm AG.
Another feature of local development relates directly to the openness of local industry. The local ownership structure, as a consequence, has been greatly influenced by a number of mergers and acquisitions that took place among foreign companies. In 1991 Norsk Hydro acquired the assets of W.R. Grace and Company holdings and, as a consequence, its interests in the fertilizer industry in Trinidad and Tobago. Today, Norsk Hydro (renamed Yara) has 100% ownership in the former Fedchem plant and 49% ownership in Tringen I and Tringen II. In March 1997, Potash Corporation of Saskatchewan (PCS) acquired the interests of Arcadian at that time, there were three ammonia plants and the urea plant).