Optimizing the Natural Gas Value Chain

Developing Energy Based Manufacturing Industries Vernon Paltoo

Team Leader Office of the President National Energy Corporation
CARIBBEAN INVESTMENT FORUM

Trinidad Hilton
June 2011

Presentation Outline
The Case for Energy Based Manufacturing Projects Options for Energy Based Manufacturing Projects The Way Forward

The Case for Energy Based Manufacturing Projects

Overview of Energy Industry Trinidad & Tobago

Global Leader in

Export of Methanol

Export of Ammonia

Export of LNG to USA

Leading Methanol Exporter in the World Leading Ammonia Exporter in the World Leading Exporter of LNG to North America

Issues Affecting Future Development of Primary Chemical and Gas Based Industries
Expansion in additional methanol and ammonia capacity could adversely affect our position as a key player by further saturating the market. As other lower cost locations become established, capacity for methanol and ammonia may have to be gradually reduced in this country. US domestic gas prices are becoming competitive with gas from Trinidad and Tobago. Development of the Shale Gas Industry in the US would adversely impact our LNG Markets in North America. Creation of a sustainable and diversified energy industry is critical to the future state of the economy.
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Progress of Energy Sector

Gas-based Development
Integrated Petrochemical Complex 2010
Petrochemicals & Metals 1970s/80s LNG 1990s

Integrated Energy-based Manufacturing Industries 2010 & Beyond

Gas Production 1960s/70s

Benefits of Developing Smaller Energy Based Manufacturing Projects

Larger number of permanent and construction jobs per unit of capex Build technical and intellectual resources Impetus and stimulation for high level and specialized manufacturing industries Enhanced and broader R&D potential Leveraging the strengths of the energy sector to develop manufacturing industries Allows for development of additional and more integrated energy service industries Minimal impact on levels of reserves Allows for development of a sustainable and diversified energy industry

Advantages of Smaller Chemical and Manufacturing Industries

Natural gas used as a fuel as opposed to a raw material Minimal infrastructure requirements Relatively small capital expense

Modest utility requirements

Minimal land requirements

Less complex to establish than chemical industries

Options for Energy Based Manufacturing Projects

Global Chemical Products Business

Value of Current Global Chemical Production: > US$2 Trillion

Specialty Chemicals 14% Coatings 5% Adhesives and Sealants 1% Polymers, Syn. Rubber & Fibres 14% Bulk Petrochemicals & Organics 17%

Consumer Products 12% Agri. Chem. 5%

Pharmaceuticals 26%

Industrial Gases 2%

Inorganics 4%

Source: CMAI/ACC
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Methane Processing

Formaldehyde & UF Resin Acetic Acid PP/PE Methanol Natural Gas /Methane MTP/MTO Chemicals

Exp/Man

Exp/Man Exp/Man

Exp/Man

Urea

Melamine

Exp/Man

Ammonia

Nitric Acid

Ammonium Nitrate

UAN

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Melamine-based Manufacturing Business Opportunities

Melamine Moulding Compounds Dinnerware Adhesives Coatings Laminates Plasticizers

Manufacturing Industries from Melamine

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Conceptual Estate Plan for Downstream Melamine Industries

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Using Acetic Acid for Backward Integration of Chemical and Manufacturing Industries in Trinidad and Tobago
Carbon Monoxide

Acetic Acid

Xylene

Ethylene

Purified Teraphthalic Acid (PTA) Ethylene Glycol

Acetic Anhydride

Vinyl Acetate Monomer (VAM)

Salicylic Acid Acetylsalicylic Acid (Aspirin)

PVA Textiles Adhesives Bldg. Material Coatings Paints

EVA/VAE Textiles Adhesives Bldg. Material Coatings Paints Packaging

Polyester/PET Bottles Containers Film Insulation Fabric Clothing Textiles

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Derivative Chemicals and Manufacturing Products from Ethylene

Benzene, NaOH, Sulphur Trioxide

Ethylene

Hydrochloric Acid

Acetic Acid Vinyl Acetate Monomer Textiles Clothing Paints Resins Packaging Car Parts Safety Glass

Oxygen

Linear Alkyl Benzene Sulphonate Surfactants Detergents Cleaning Agents

Ethylene Glycol

Polyvinyl Chloride Pipes Insulation Furniture Fittings Packaging Doors Windows

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Polyester Fibers Clothing Car Seats Polyester Films Packaging Antifreeze

Derivative Chemicals and Manufacturing Products from Propylene

Chlorine

Propylene
Hydrogen Peroxide

Ammonia, Oxygen

Water

Glycerol

Propylene Glycol

Propylene Oxide

Acrylonitriles

Food Applications Pharmaceuticals Antifreeze Solvent Detergents Explosives

Food Applications Pharmaceuticals Antifreeze Solvent Paints Resins Coatings

Polyurethane Fumigant Biological Apps.

Syn. Fibers Clothing Carpets Rubbers Packaging Elastomers

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Manufacturing Industries from Polyethylene and Polypropylene

Polyethylene Containers Pipes Appliance Parts Bottle Crates Film Sheeting Bags Bowls Polypropylene Carpeting Brushes Carpet Backing Rope Tape Film Sheeting Containers Appliance Parts Bottles & Caps Cups Toys
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Butane Processing
ISO-BUTANE REFINERY APPLICIATION FOOD PRODUCTS
Natural Gas

BUTANE UNSATURATED POLYESTER RESIN

N-BUTANE

MALEIC ANHYDRIDE

OIL ADDITIVES

SPECIALITY CHEMICALS

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Manufacturing Products from Maleic Anhydride

Unsaturated Polyester Resins used in fibre glass, automotive parts, building panels, etc. Foods and Pharmaceuticals Personal Care products hair spray, etc. Domestic Products floor polish, adhesives, etc. Water Treatment Chemicals Detergents Pesticides Agricultural chemicals

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The Way Forward

Engaging Local and Foreign Investors

Establish target projects via market assessments and resource requirements for particular projects Engage in direct contact with established manufacturers Engage local petrochemical and chemical industries Participate in local and foreign networking events Engage local entrepreneurs and financiers

Seek Partnerships
Mutually beneficial arrangement Technical Capabilities and Experience Knowledge Transfer Sound Financial Position Availability of Resources Market Access Integration of Value-chain

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Investment in Trinidad and Tobago

Strategic location for market access Consistent and transparent Governance Known and accepted tax regime Known and accepted legal system Well-trained and knowledgeable labour force Competitive cost structure for raw materials and construction Quick decision making process
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Conclusion
Developing smaller and diversified downstream chemical based and manufacturing industries is integral for optimizing natural gas resources along the entire value chain. Trinidad and Tobago is well positioned for the development of integrated manufacturing based energy projects for production from the primary energy product to the finished manufactured goods.

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Thank You

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