Wray & Nephew inks 10-year gas deal with New Fortress Energy
Published:Tuesday | May 1, 2018 | 12:00 AMSteven Jackson/Senior Business Reporter
J. Wray & Nephew Limited (JWN) forecasts that it can save about US$1 million or J$125 million a year by running its rum distillery at New Yarmouth Estate in Clarendon on liquefied natural gas.
The spirits company announced on Monday that it signed a deal with a New Fortress Energy company, called NFE North Distribution Limited, to supply it with LNG starting January 2019.
"Savings will depend on the future price of oil. If the price of oil goes up then we could save US$1 million, but we don't know where oil will be, but in any case we do not expect to lose money from this venture," said JWN managing director Jean-Philippe 'JP' Beyer in a telephone interview with the Financial Gleaner.
"This is truly a mutually beneficial arrangement that stands to benefit both companies through flexible provisions," Beyer said.
The price of oil hovers at some US$68 a barrel, while the price of LNG hovers at some US$2.80 per 1,000 cubic feet, which translates to a barrel of oil equivalent of roughly US$15.70, energy data indicates.
The plant in Clarendon currently runs on bunker fuel. Beyer said the estate would require some amount of capital to convert to LNG, but that the investment would not be significant, without disclosing the amount. The pricing of the deal with NFE North was also not disclosed.
Beyer said the LNG agreement represents the latest effort by the Campari Group, the Italian owners of JWN, to introduce 'best in class' solutions to its Jamaican operations. The conversion will not only will save the company money but reduce its carbon emissions.
"The recent introduction of natural gas to Jamaica means that we can now incorporate one of the cleanest burning fossil fuels in our operations, and this is consistent with the Campari Group's sustainability programme," he said.
The NFE supply contract will run for 10 years, divided into five-year intervals. It requires JWN to purchase a minimum of 60,000 MMBtus of gas per month. MMBtu or millions of British Thermal Units is a measure of the energy content in fuel and is used in the power, steam generation, heating and air-conditioning industries.
Campari plans to implement other energy saving measures at its two other major locations in the island, including its offices in Kingston and its other factory and plantation at Appleton Estate in St Elizabeth. Beyer, however, sidestepped queries on whether its Appleton Estate operations would also be retrofitted with LNG.
Jamaica's white and red rum portfolio within the Campari Group earned annual revenue of €90.8 million last year. The top five markets for Jamaican rums, by value, are now Jamaica, United States, Canada, United Kingdom and Mexico.