In the face of more stringent environmental rules on shipping fuel, Trinidad and Tobago is moving to position itself as a regional centre for liquefied natural gas (LNG) bunkering.
On January 1, 2020 new International Maritime Organisation rules will come into effect, designed to reduce sulphur oxide emissions.
The regulations will prohibit ships travelling outside designated emission control areas from burning fuel with more than 0.5% sulphur content in terms of mass, compared to the current level of 3.5%.
Furthermore, for smaller ships already using low-sulphur fuels, the new rules will restrict sulphur levels to 0.1% in the world’s four emission-controlled areas: the Baltic Sea, the North Sea, and the west and east coasts of North America.
Ahead of the implementation of the new regulations, a report released in August by investment firm First Citizens Research & Analytics outlined how T&T is well placed to capitalise on the changes and position itself as a regional hub for bunkering.
First, the country’s strategic location at the meeting points of shipping lanes between North, Central and South America, as well as the Caribbean, gives it a natural geographic advantage to meet new demand from the shipping industry.
Second, LNG is widely cited as a potential alternative to sulphur-based fuels, and could serve as a replacement for shipping companies looking to meet the new regulations.
Given the considerable cumulative usage of high-sulphur fuel – the shipping industry burned through an estimated 3.5m barrels per day last year – the move could have the dual effect of galvanising T&T’s LNG output and boosting the development of its port infrastructure.
The country has the only liquefaction gas facility on the Atlantic coast of South America, making it attractive as a bunkering location for ships passing through the region.
According to the International Gas Union’s “2018 World LNG Report”, the country has the eighth-highest nominal liquefaction capacity globally, and the highest in Latin America and the Caribbean.
See also: The Report – Trinidad & Tobago 2018
Gulf of Paria
The Gulf of Paria, located between Venezuela’s east coast and Trinidad’s west coast, has been identified as an ideal location for ship-to-ship fuel transfers. The stretch of water is also strategically placed to serve as an offshore trans-shipment hub for goods transiting between Europe, the US, South America and Asia.
The limited port infrastructure and unpredictable river currents in neighbouring Guyana and Venezuela are also an advantage for T&T, which can handle Supramax and Panamax ships in its ports and bays, as well as lower-capacity vessels designed for river transport.
“The Gulf of Paria is the ideal area to be used as a hub for ship-to-ship bulk transfers,” Ashley Taylor, president of the Point Lisas Industrial Port Development Corporation, told OBG. “This is due to its proximity to the Panama Canal and major shipping lanes, as well as relatively calm sheltered waters, making it well suited to connect vessels and goods moving through the region for destinations in Europe, Asia and the Americas.”
In 2012 German dry bulk shipping company Oldendorff established its Americas hub in the Gulf of Paria, handling commodities such as iron ore, coal and bauxite. The hub connects with ports in South America, the US east coast and Gulf Coast, and the Middle East.
Notwithstanding the firm’s decision to reduce the size of its operations last year on the back of falling trade, business leaders are underscoring the potential benefits of T&T acting as a regional trade centre in the gulf.
Further infrastructure investment
While the potential for the country to act as a hub for both bunkering and trans-shipment is widely recognised, further infrastructure investment will be needed to ensure the full benefits of future growth.
A 2009 UN report characterised the country’s maritime industry as being secondary to its energy sector, stating that “[T]he focus on energy commodities and the exploration of these products has left maritime services and port development behind.”
In the intervening decade, T&T’s infrastructure development has been limited by lower energy revenues. However, port expansion has continued. Indicative of this is the sustained and increasing activity in Point Lisas, as well as the number of cruise ships that pass through Port of Spain.
Elsewhere, T&T has also signed up to China’s Belt and Road Initiative to boost infrastructure investment from abroad.
After the country became a signatory in March last year it was announced that the National Infrastructure Development Company and China Harbour Engineering Company would develop a dry dock facility in La Brea; associated works will include deepwater channel excavation, offshore reclamation and terminal land construction.