Changing the T&T business model?

An­drea Perez-Sobers

Se­nior Re­porter

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As the glob­al en­er­gy sec­tor ac­cel­er­ates its shift away from high-car­bon fu­els, T&T’s largest methanol pro­duc­er is repo­si­tion­ing one of its longest-stand­ing prod­ucts for a new role. Switzer­land-head­quar­tered Pro­man is ad­vanc­ing methanol as a low­er-emis­sion tran­si­tion fu­el that can be de­ployed be­yond chem­i­cals and man­u­fac­tur­ing, with ap­pli­ca­tions in trans­port and pow­er gen­er­a­tion that could ma­te­ri­al­ly re­shape en­er­gy se­cu­ri­ty across the Caribbean.

Cen­tral to that strat­e­gy is Pow­er32, a com­pa­ny found­ed by Pro­man to de­vel­op and com­mer­cialise methanol-to-pow­er so­lu­tions, tar­get­ing is­land states that re­main heav­i­ly de­pen­dent on im­port­ed diesel and heavy fu­el oil. The ap­proach com­bines fu­el sup­ply, lo­gis­tics, en­gi­neer­ing and long-term pric­ing struc­tures, with T&T po­si­tioned as the source of pro­duc­tion.

Deputy man­ag­ing di­rec­tor of Pro­man Trinidad, Giselle Thomp­son, in a sit-down in­ter­view with Sun­day Busi­ness Guardian last Thurs­day, framed the op­por­tu­ni­ty with­in the re­al­i­ties of the en­er­gy tran­si­tion. Methanol has tra­di­tion­al­ly been em­bed­ded in every­day prod­ucts such as chem­i­cals, sol­vents, paints and a range of house­hold items of­ten in­vis­i­bly. That fa­mil­iar­i­ty, she ex­plained, now in­ter­sects with grow­ing de­mand for fu­els that can de­liv­er low­er emis­sions with­out sac­ri­fic­ing af­ford­abil­i­ty or re­li­a­bil­i­ty.
“But as the world has moved more to­wards this en­er­gy tran­si­tion, and every­one is look­ing for af­ford­able, low­er car­bon, low­er emis­sion so­lu­tions or fu­els, there lies an op­por­tu­ni­ty for methanol,” Thomp­son said. “Be­ing quite a ver­sa­tile chem­i­cal, it can pro­vide low­er car­bon-in­ten­sive so­lu­tions for a mul­ti­tude of things.”

Be­yond chem­i­cals and paints

Pro­man’s strat­e­gy is an­chored in three spe­cif­ic fu­el ap­pli­ca­tions: ma­rine trans­port, heavy-du­ty land trans­port and pow­er gen­er­a­tion.

The first tan­gi­ble move came with the launch of six methanol-pow­ered tankers, now op­er­at­ing in­ter­na­tion­al­ly and trans­port­ing Pro­man’s prod­ucts across glob­al trade routes. The ves­sels rep­re­sent the com­pa­ny’s ini­tial step in­to de­vel­op­ing methanol as a fu­el rather than sole­ly as a feed­stock.

“That was our first step out of look­ing for new us­es and new mar­kets for methanol,” Thomp­son said. “We are see­ing that the ma­rine in­dus­try is grow­ing, with many more methanol-pow­ered ships on or­der.”

Heavy trans­port is the sec­ond pil­lar. Pro­man is prepar­ing to launch a pi­lot project with Du­more En­ter­pris­es us­ing 100 per cent methanol-fu­elled trucks on its lo­cal lo­gis­tics routes. Four trucks are ex­pect­ed to be de­ployed in the first phase, with fur­ther ex­pan­sion de­pen­dent on per­for­mance and op­er­a­tional da­ta.

The ob­jec­tive, Thomp­son ex­plained, is to test and val­i­date methanol as a clean­er fu­el op­tion for heavy haulage and in­dus­tri­al trans­port seg­ments that are more dif­fi­cult to de­car­bonise us­ing bat­ter­ies or elec­tri­fi­ca­tion alone.

The third pil­lar, methanol to pow­er, has the widest re­gion­al im­pli­ca­tions.

A fu­el for is­lands with­out gas

T&T’s do­mes­tic pow­er sys­tem is built on nat­ur­al gas, a re­source that re­mains un­avail­able to most Caribbean states. Across the re­gion, elec­tric­i­ty gen­er­a­tion con­tin­ues to re­ly heav­i­ly on im­port­ed diesel and heavy fu­el oil, ex­pos­ing util­i­ties and con­sumers to volatile in­ter­na­tion­al pric­ing and sup­ply shocks.
“There are many places in the world that don’t have gas and have to re­ly on cost­ly heavy fu­el oils or diesel to fu­el their pow­er gen­er­a­tion,” Thomp­son said. “For our Caribbean neigh­bours, en­er­gy se­cu­ri­ty has al­ways been an is­sue be­cause they are ex­posed to in­ter­na­tion­al price volatil­i­ty.”

Geopo­lit­i­cal un­cer­tain­ty over the past sev­er­al years has in­ten­si­fied that ex­po­sure, dri­ving sharp swings in oil-linked fu­el prices and in­creas­ing im­port costs for small is­land economies. At the same time, much of the re­gion’s pow­er gen­er­a­tion in­fra­struc­ture is ap­proach­ing end-of-life, forc­ing gov­ern­ments and util­i­ties to con­sid­er new in­vest­ments.
“Methanol pro­vides quite a unique so­lu­tion,” Thomp­son said. “Many of the is­lands al­so have am­bi­tions to low­er their car­bon foot­print, and methanol from Trinidad al­lows us to sup­port en­er­gy se­cu­ri­ty while align­ing with those am­bi­tions.”
The strat­e­gy dove­tails with the gov­ern­ment’s stat­ed ob­jec­tive of restor­ing T&T’s role as the en­er­gy hub of the Caribbean. Thomp­son raised the prospect of methanol sup­ply­ing a re­gion­al role once filled by con­ces­sion­al oil arrange­ments, but struc­tured through com­mer­cial sup­ply, trade agree­ments and low­er-emis­sion out­comes.
“Could this be the next Petro-Caribbean,” she asked, “where methanol pro­vides af­ford­able, sta­ble pric­ing com­ing from with­in the Caribbean, while ben­e­fit­ting from Cari­com trade agree­ments and de­liv­er­ing low­er emis­sions?”

How Pow­er32 emerged

Pow­er32 was es­tab­lished to trans­late that con­cept in­to mar­ket-ready projects. Man­ag­ing di­rec­tor David Knipe traced the com­pa­ny’s ori­gins to Pro­man’s in­ter­nal busi­ness de­vel­op­ment work ex­plor­ing al­ter­na­tive mar­kets for methanol.

“Pow­er32 grew out of Pro­man’s busi­ness de­vel­op­ment ac­tiv­i­ties,” Knipe said. “The com­pa­ny and its le­gal en­ti­ties were found­ed in Feb­ru­ary last year, but the think­ing be­hind it goes back sev­er­al years.”

Knipe joined at in­cep­tion to lead the tran­si­tion from con­cept to ex­e­cu­tion. The com­pa­ny ben­e­fits from deep in­te­gra­tion with­in the Pro­man group, pro­vid­ing ac­cess to pro­duc­tion fa­cil­i­ties, ship­ping ca­pac­i­ty and en­gi­neer­ing ex­per­tise.

“We have the up­stream pro­duc­tion, the ship­ping or­gan­i­sa­tion with Valenz to move prod­uct to mar­ket, and an  En­gi­neer­ing, Pro­cure­ment, and Con­struc­tion (EPC) ca­pa­bil­i­ty that has been in­volved in more than 10 gi­gawatts of pow­er in­stal­la­tions,” he said. “That com­bi­na­tion al­lows us to bring com­plete so­lu­tions to clients.”

Pow­er32’s ini­tial fo­cus is the Cari­com re­gion, where elec­tric­i­ty sys­tems re­main heav­i­ly de­pen­dent on im­port­ed liq­uid fu­els. The so­lu­tion is not de­signed for coun­tries with abun­dant re­new­ables or in­dige­nous gas, but for mar­kets fac­ing high fu­el bills, age­ing as­sets and lim­it­ed pric­ing cer­tain­ty.

Pric­ing cer­tain­ty and con­ver­sion op­tions

A cen­tral el­e­ment of Pow­er32’s propo­si­tion is long-term price sta­bil­i­ty. Methanol sup­ply agree­ments can be struc­tured with fixed or in­fla­tion-linked pric­ing over ex­tend­ed pe­ri­ods, re­duc­ing ex­po­sure to oil-in­dexed volatil­i­ty.
“We can of­fer pric­ing struc­tures out to 10 or 15 years,” Knipe said. “That lev­el of cer­tain­ty is not avail­able with diesel or LNG, which are in­dexed to oil mar­kets .”

He out­lined that cap­i­tal costs vary by is­land, de­pend­ing on stor­age, han­dling and port in­fra­struc­ture, but re­cent bids in­di­cate methanol can be com­pet­i­tive with his­tor­i­cal diesel pric­ing. In one case, Knipe cit­ed the long-term methanol price as be­ing aligned with the low­er end of diesel prices record­ed over the past five years.
He stat­ed de­ploy­ment time­lines al­so favour con­ver­sion projects. Many Caribbean util­i­ties op­er­ate ex­ist­ing en­gines, of­ten Wärt­silä units that can po­ten­tial­ly be con­vert­ed to run on methanol.
“Con­ver­sions of­fer a faster route to mar­ket,” Knipe said. “You avoid in­stalling en­tire­ly new as­sets, which can re­duce time­lines to one or two years, com­pared with two to three years for new gen­er­a­tion.”

Gas pric­ing, ex­ports and for­eign ex­change

The strat­e­gy un­folds along­side on­go­ing ne­go­ti­a­tions be­tween Pro­man and the Na­tion­al Gas Com­pa­ny over new gas sup­ply con­tracts. Thomp­son ac­knowl­edged that gas pric­ing in­flu­ences methanol com­pet­i­tive­ness in ex­port mar­kets but em­pha­sised the im­por­tance of main­tain­ing a vi­able val­ue chain.
“The dis­cus­sions are about en­sur­ing every­one in the val­ue chain earns a re­turn while keep­ing the busi­ness eco­nom­i­cal­ly vi­able,” she said, ex­press­ing con­fi­dence that pro­duc­tion can con­tin­ue while new mar­ket op­por­tu­ni­ties are de­vel­oped.
Be­yond en­er­gy se­cu­ri­ty, the ini­tia­tive car­ries im­pli­ca­tions for for­eign ex­change in­flows. Knipe not­ed that rev­enue time­lines de­pend on project type, with con­ver­sions of­fer­ing ear­li­er ex­port po­ten­tial than green­field in­stal­la­tions.
Mar­ket di­ver­si­fi­ca­tion is al­so a dri­ving fac­tor. Trade mea­sures, tar­iffs, CBAM and an­ti-dump­ing du­ties have in­creased costs and com­plex­i­ty in tra­di­tion­al mar­kets, par­tic­u­lar­ly in Eu­rope and parts of North Amer­i­ca.
“If we can sell in­to Cari­com mar­kets and ben­e­fit from trade agree­ments, that im­proves net­back prices for the coun­try,” Thomp­son said. “The same tonne of methanol earns more be­cause ship­ping costs are low­er and tar­iffs don’t ap­ply.”
While methanol ex­ports to the Unit­ed States have de­clined, re­cent Gov­ern­ment en­gage­ment has helped roll back some tar­iffs on oth­er prod­ucts, in­clud­ing fer­tilis­ers, eas­ing pres­sure on parts of the en­er­gy val­ue chain.
For Pro­man and Pow­er32, methanol’s evo­lu­tion from an in­dus­tri­al in­put to a tran­si­tion fu­el rep­re­sents both a com­mer­cial piv­ot and a strate­gic move. The bet is that clean­er com­bus­tion, re­gion­al sup­ply, long-term pric­ing and in­te­grat­ed de­liv­ery can po­si­tion T&T once again as a crit­i­cal en­er­gy sup­pli­er this time in a low­er-car­bon Caribbean fu­ture.