JPS signs ‘historic’ LNG agreement with US firm
JAMAICA Public Service Company (JPS) on Friday announced that it has signed a “historic” agreement with New Fortress Energy for the supply of Liquefied Natural Gas (LNG) to Jamaica, but did not state the price at which it would purchase the commodity, arguing that to do so would put the light and power company in breach of a non-disclosure clause.
Yesterday, JPS President and CEO Kelly Tomblin told the Jamaica Observer that her company was also unable to discuss price because New Fortress is involved in a competitive bidding process to provide gas for JPS’s Old Harbour plant.
“I would never disclose what their bid is, but I can say over the years it (LNG) will save our customers a couple hundred million dollars, depending on the cost of fuel; but what I hope everyone is getting is that, once you open up the door to gas, it opens up all kinds of possibilities and opportunities here in Jamaica,” an obviously excited Tomblin said.
She explained that the conversion to LNG at Bogue will not lead to an immediate reduction in the price of energy.
“Bogue is just one plant. What we have done is take a first step to convert a power plant to operate on gas,” Tomblin told the Sunday Observer. “Fortress had the best deal out of eight bidders that we looked at and two LNG providers. We got a competitive bid and we’re excited about the price and what it will save, but we’re more excited, because it’s clean fuel.”
According to JPS, it signed the deal with New Fortress after receiving approvals from the Government and the Office of Utilities Regulation.
“Under the agreement, US-based New Fortress Energy will provide JPS with Liquefied Natural Gas for its 120-megawatt power plant in western Jamaica, at Bogue, Montego Bay. The plant, which was first commissioned into service in 2003, is being converted to run on gas instead of automotive diesel oil,” JPS said in a news release.
“This is a historic moment for JPS and for Jamaica,” the release quotes Tomblin. “JPS has worked since 2012 to procure gas as part of our fuel-diversification strategy. We are fortunate that we can now take advantage of technology related to gas shipments, and supportive US policies that allow the export of gas to non-FTA (Free Trade Agreement) countries.”
Tomblin said Fortress received its permit on Friday from the US Government to export gas to Jamaica.
“JPS is honoured to be leading this game-changer for the energy sector,” she said, adding that the introduction of gas will support the national goals of energy security, sustainability, and affordability.
“The move to cleaner fuels and more flexible generation will reduce our environmental footprint by allowing Jamaica to optimise our use of renewables while we simultaneously reduce emissions from our base load generation,” the release quoted Tomblin as saying.
The light and power company said it has been working closely with the Electricity Sector Enterprise Team, which was set up by the Government to oversee the upgrade and expansion of Jamaica’s energy sector.
Tomblin noted that Energy Minister Phillip Paulwell has been “instrumental in helping to establish the framework for this move to gas”.
The signing of the agreement, JPS said, has set the stage for work to begin on the infrastructure needed for the delivery of gas to Bogue by early 2016.
Yesterday, a company executive told the Sunday Observer that they expect the infrastructure will be in place by the first quarter of next year.
“This agreement opens the door to a new era of energy diversity and independence for Jamaica and its citizens, enabling the region to benefit from cost-effective, stable supplies of US natural gas,” the JPS release quoted Fortress Investment Group founder and Co-chairman Wes Edens.
“Our vision extends far beyond Bogue. This will be the catalyst to establish Jamaica as an energy hub for the Caribbean and Latin America,” he said.
Edens described Jamaica as the ideal location to execute this vision, and said his company intends to invest significantly in energy, port and logistics infrastructure here.
“Change takes vision, and we applaud JPS, its leadership, and the Government of Jamaica for working tirelessly towards this moment,” he said.
New Fortress Energy is part of Fortress Investment Group, a highly diversified global asset firm with approximately US$72 billion assets under management, and, together with its affiliates, has a long history of owning and operating energy, transportation, infrastructure-oriented assets throughout the world.
The company supplies energy, logistical services, and financing to end-users seeking to convert their operating assets from diesel or heavy fuel oil to natural gas fuel use in order to reduce operating costs, increase equipment availability, and enhance their environmental stewardship.