Enill: NGC passes on higher gas costs to Yara

CONRAD ENILL, National Gas Company (NGC) chairman, said ammonia plants face a very tough global environment, shaped by low ammonia prices plus a need for efficiency in energy inputs.

He was commenting on Yara's impending closure.

Yara said on Wednesday its Couva plant has an energy efficiency lower than average for this global firm, and that several negotiations with its gas supplier, the NGC, had failed to reach an agreement that could sustain the plant.

Enill, a former energy minister, told Newsday yesterday that unlike yesteryear’s environment of low gas prices, today the NGC must pay more for the gas it buys from upstream companies like BPTT.

“When it gets a higher-cost gas, it has to pass that on to the people buying it,” he said. “So the only way plants are going to survive is if they are very efficient, or if over the years they have systematically upgraded.

"Yara is 59 years old. It’s a very old plant, so whatever the price of gas is, it cannot make it work, because other plants are more competitive.”

Enill spelt out another woe. “On the market side, our expectation of the ammonia market is that for the next year or two it will be very tight, because there is a lot happening. You have low prices and also discounts.

"So plants are under pressure because they are not getting their normal revenue stream, plus their costs may be out of line with the new cost structures for gas.”

He said an organisation with deep pockets may withstand the period, but old plants cannot compete.

“If you have to invest in your plant to bring it up to speed, but don’t know where you will get good prices for your product, your board won’t approve that. This is the environment in which we find ourselves.”

Newsday asked if the Yara plant’s demise was a bad portend for other local ammonia plants.

Enill referred Newsday to a recent NCG news statement which said the company has concluded agreements with Caribbean Nitrogen Company, Nitrogen 2000 Unlimited and Nutrien for their ammonia plants at Point Lisas.

Enill was optimistic about the prospects for retrenched staff.

“I believe there will always be opportunities for energy-sector employees, because they are highly trained.”

Saying it is known that national economies can be cyclical, he said, “The more fundamental question is whether the plant has made sufficient provision to take care of the employees.”