Jamaica as a regional LNG hub

The recent US$200-million investment by New Fortress Energy to construct a liquefied natural gas (LNG) terminal to supply the Jamaica Public Service (JPS) Old Harbour 190-megawatt power plant is a clear vote of confidence in Jamaica and its transformation into a logistics-centred economy. This, as the investment highlights the symbiotic relationship between the provision of energy and the planned activities of the global logistics hub.

The construction of an LNG terminal carries with it many obvious benefits for Jamaica, including improving our energy security, diversification of the nation's energy mix, and lowering of our carbon footprint with a cleaner fuel.

It is also in keeping with Jamaica's energy policy and its primary goal of lowering energy costs. Let me, therefore, congratulate the minister and Ministry of Science, Technology, Energy and Mining; the Electricity Sector Enterprise Team (ESET), and its chairman, Dr Vincent Lawrence; and the Jamaica Public Service for their hard work over the past several months in achieving this milestone.

Congratulations are also in order for the Obama administration, which took the strategic decision to license Jamaica as the first country outside the North American Free Trade Area (NAFTA) for the export of US LNG.

Although the importance of LNG to the lowering of energy costs cannot be overstated, an LNG terminal has wider implications for growth, development and job creation in Jamaica. This investment in an LNG terminal and the proposal to build an LNG hub in Jamaica will have a catalytic effect and change the nature, scale and scope of industry, investment and commerce in our nation.

The simple fact is that the plan to construct and operate a terminal will strongly position Jamaica as a regional LNG hub and further deepen our participation in global supply and value chains. An LNG hub, therefore, fits seamlessly into the vision of Jamaica as a global logistics hub and reflects the joined-up governance approach to the GHLI's implementation.

Indeed, I had articulated the substantial benefits of using LNG in Jamaica from as early as 2002 while serving as minister of mining and energy. What I then called a gas park was an integral component of the LNG vision that I presented in the early 2000s.

INDUSTRIAL DEVELOPMENT

The idea behind the gas park concept was to utilise LNG as a means of spurring industrial development and to extract maximum energy potential by clustering an LNG terminal, a power plant and an industrial park. The industrial entities in the park would benefit from cheaper electricity because no significant transmission losses would be incurred in utilising electricity provided by the adjacent power plant, and being adjacent to the LNG terminal would allow these industrial facilities to benefit from the available cryogenic or cold energy.

What I called a gas park a decade ago would now be referred to as a special economic zone (SEZ), and it is serendipitous that I tabled an SEZ bill in Parliament in the same week that the New Fortress LNG investment was announced. I hope to see the gas park vision come alive by having an SEZ located in proximity to the LNG terminal and the 190MW power plant. Indeed, the LNG terminal will make Jamaica more attractive for both local and foreign investments.

Access to LNG within an SEZ will contribute to the further diversification of the Jamaican economy by adding a new dynamism for the manufacturing of chemicals, plastics and precision metal fabrication. It will also increase growth opportunities in the production of paper, stone, glass, clothing and food-processing industries.

A look at the science behind LNG will reveal that it is transported and stored at a temperature of minus 160 C. In a tropical country such as Jamaica where we incur high costs for refrigeration and cooling, large volumes of LNG at -160 C represent a significant resource. If the LNG is used merely for power generation we lose the potential cold energy it contains.

This availability of cold energy will, therefore, make Jamaica an attractive location for cold chain logistics involving products such as pharmaceuticals, refrigerated and frozen foods. This source of energy may also allow us to attract data centres involved in cloud computing that are interested in a greener form of cooling.

Jamaica, as an LNG hub, presents opportunities for investment within the LNG bunkering sector. Today, modern ships are moving away from using heavy Bunker C oil and switching to cleaner LNG as fuel.

A logistics hub offering maritime services, with the ability to supply fuel to the newly built LNG ships, will be an attractive hub location for shipping lines. And, with our geo-strategic location and natural harbours, it presents an additional competitive edge in the region. Critically, these prospects for industry development and commerce will provide much-needed employment for Jamaicans.

As we continue work towards creating a logistics-centred economy, this investment by New Fortress provides an important piece of the puzzle. I am more confident than ever that we are on the right track to transform the Jamaican economy and making it into a more prosperous one for our people.

What is clear is that the various elements of the global logistics hub are now falling in place. The Kingston Container Terminal has been privatised and dredging of the harbour is expected to commence next year.

The legislation to give effect to SEZ is expected to be passed before the end of 2015, and already there are entities such as Kingston Wharves and the Spanish Town Free Zone that are positioned to take full advantage of the SEZ status.

Further, the Ministry of Industry, Investment and Commerce is working towards the implementation of the Caymanas Special Economic Zone, with other hub-related investments expected to be announced in the near future. Jamaica is indeed hub active!

- Anthony Hylton is the minister of industry, investment and commerce and former minister of mining and energy (2001-2002) and ambassador with special responsibility for introducing LNG in Jamaica's energy mix. Email feedback to columns@gleanerjm.com.