U.S. Energy Information Administration (EIA)
Caribbean Analysis Brief – March 2011
Although most Caribbean countries are energy importers, the Caribbean has important centers for oil refining and storage, and Trinidad and Tobago is one of the largest LNG exporters in the world. The Caribbean Fact Sheet is now available on the EIA website and contains information on the oil and natural gas sector in the relevant countries.
Although most Caribbean countries are energy importers, the Caribbean has important centers for oil refining and storage, and Trinidad and Tobago is one of the largest LNG exporters in the world.
The islands of the Caribbean basin are predominantly net energy importers, with the exception of Trinidad and Tobago, which is a major exporter of liquefied natural gas (LNG). Venezuela provides a sizable amount of crude oil and refined products to its Caribbean neighbors at below-market prices and with favorable financing terms under the Petrocaribe initiative. Some islands, such as Aruba, Curacao, and the U.S. Virgin Islands, are important centers for oil refining and storage, due to their proximity to the U.S. market. In recent years, there has been concern that higher global oil prices will impair the Caribbean economies, as they are highly dependent upon oil for their energy needs. In response, the island nations have been discussing ways to promote alternative energy sources and better integrate their energy sectors.
Trinidad and Tobago is the largest oil producer in the Caribbean
Trinidad and Tobago
Trinidad and Tobago contains the majority of the Caribbean’s oil production. In 2010, the country produced 147,000 barrels per day (bbl/d) of oil, of which 100,000 bbl/d was crude oil, the remainder mostly consisting of natural gas liquids (NGLs). The largest oil producer in the country is the state-owned Petroleum Company of Trinidad and Tobago (Petrotrin). Other large producers include BP Trinidad and Tobago and BHP Billiton.Trinidad and Tobago consumed an estimated 40,000 bbl/d of oil in 2009, allowing it to export a sizable amount of its production. The United States was the primary destination, with 73,000 bbl/d exported to the United States in 2010.
Cuba produced 48,000 bbl/d of oil in both 2009 and 2010, while consuming an estimated 152,000 bbl/d in 2010, making the island a net oil importer. Most of this comes from Venezuela via its Energy Agreement with Cuba, signed in October 2000. Cuba’s oil production has increased significantly in the past two decades, as the country only produced 13,000 bbl/d in 1988. Most of Cuba’s oil production occurs in the northern Matanzas province, producing a heavy, sour crude that requires specific processing. Much of this production occurs onshore, though there is some offshore production in shallow coastal waters. Cuba’s oil production seems to have largely stabilized in the near term, with any additional increases in production dependent upon the discovery of substantial new reserves (see below).
There has been considerable interest in exploration activities in Cuba’s offshore basins, especially in the Gulf of Mexico. The U.S. Geological Survey (USGS) mean estimate for undiscovered oil reserves in the North Cuba Basin (the basin north and west of the island in the Gulf of Mexico) is 4.6 billion barrels. Cubapetroleo, or Cupet (Cuba’s state-owned petroleum company) estimates that all of Cuba’s offshore basins could contain in excess of 20 billion barrels of undiscovered oil reserves. However, actual exploratory drilling in the area has been, to date, quite limited. Seven offshore exploratory wells are scheduled to be drilled in Cuban waters by the end of 2012. Repsol, which drilled an unsuccessful exploratory well in 2004, will drill the first of the new round of exploratory wells in August 2011.
While Barbados does not have significant crude oil reserves, it does maintain a small amount of domestic production. Oil production in Barbados during 2010 averaged about 1,000 bbl/d, while the country consumed an estimated 9,000 bbl/d. As Barbados has no refining capacity, its oil is mostly sent to Trinidad and Tobago for processing, with the refined products returned for domestic consumption.
The Caribbean has several export-oriented oil refineries, geared mainly towards the U.S. market. It has also become an important oil storage center.
According to Oil and Gas Journal, the Caribbean region has a combined 1.7 million bbl/d of nominal nameplate refining capacity as of January 1, 2011. Smaller refineries mostly produce petroleum products for local demand, whereas the larger facilities are geared towards exports to the United States and other markets. The Caribbean is also an important storage location, particularly for crude oil brought in from outside the region.
The largest refinery in the Caribbean is the Hovensa facility in the U.S. Virgin Islands, with crude distillation capacity of 500,000 bbl/d. Hovensa, a joint venture of PdVSA and Amerada Hess, sends most of its refined product output to the United States. Other large facilities in the region include the 320,000-bbl/d Isla refinery in the Netherlands Antilles, operated by PdVSA. Both the Hovensa and Isla refineries source the bulk of their crude oil supplies from Venezuela.
Many of the Caribbean countries import oil from Mexico and Venezuela under favorable terms. Under the San Jose Pact, Barbados, the Dominican Republic, Haiti, and Jamaica receive oil and refined products from those two countries. Cuba also receives crude oil and petroleum products from Venezuela at a discounted rate. In 2005, nearly all Caribbean countries signed the Venezuela-backed Petrocaribe initiative. Under the program, Venezuela sells crude oil and refined products to these countries under favorable financing terms.
Exports to U.S.
The United States imports about 15 percent of its refined product imports from the Caribbean, or 390,000 bbl/d in 2009. However, while the share remained fairly constant, total product imports from the region declined by 135,000 bbl/d from 2007 levels. The reduction in imports from the region was, in part, the result of the decline in U.S. petroleum demand following the recession that began at the end of 2007.
Liquefied Natural Gas
Trinidad and Tobago is the largest exporter of liquefied natural gas to the United States, and the fifth largest in the world.
Trinidad and Tobago
Natural gas production in Trinidad and Tobago has climbed dramatically in recent years. In 2009, the country produced 1.5 trillion cubic feet (Tcf) of natural gas, up 7 percent year-on-year and over three times the level seen in 1999. Exports of liquefied natural gas (LNG) have facilitated this large increase in production. The country has benefited from a large amount of foreign investment, with BP Trinidad and Tobago (BPTT) accounting for about 60 percent of the country’s natural gas production. Other important players in the natural gas sector include British Gas (BG) and Chevron.
Trinidad and Tobago is the largest supplier of LNG to the United States, and the fifth largest exporter in the world after Qatar, Malaysia, Indonesia, and Algeria. Trinidad and Tobago exported 236 Bcf of natural gas to the United States in 2009, about 50 percent of total U.S. LNG net imports, but only 1 percent of total U.S. natural gas supply. U.S. LNG imports from Trindad and Tobago in 2009 were almost half the amount received in 2005, reflective of the general decline in total U.S. LNG imports in 2009.
The Atlantic LNG Company, a consortium led by BP, BG, GDF Suez, and Repsol-YPF, operates four LNG trains at Point Fortin, on the south-western coast of Trinidad. The first LNG train was completed in March 1999, with subsequent trains completed in 2002, 2003, and 2006. The four trains have capacity to produce a combined 14.8 million metric tons (Mmt) of LNG per year (775 Bcf of re-gasified natural gas). Atlantic LNG and the government of Trinidad and Tobago have indicated that there may be a fifth and sixth train, though currently there are no firm plans as of yet to pursue these projects. Trinidad and Tobago also has a substantial petrochemical industry to further monetize natural gas reserves.
Other Regional Developments
Some Caribbean islands have begun to look towards LNG as a way to diversify their energy consumption away from imported oil. Jamaica approached several companies to build a LNG re-gasification facility in an effort to begin shifting away from oil. It is currently negotiating with a consortium consisting of Exmar, Promigas, and Caribbean LNG to build the $600 million facility.
Integrated LNG-power generation schemes have become a viable option for electricity generation in the Caribbean, especially as it can displace costly diesel or fuel oil. In the Dominican Republic, AES operates the Andres facility, an LNG regasification terminal that combines a 319 MW power plant and a LNG terminal. The LNG is shipped primarily from nearby Trinidad and Tobago, for use by AES plants and for sale.
In August 2000, Puerto Rico began importing LNG at its Peñuelas facility located at Guayanilla Bay, Peñuelas, about 9 miles west of Ponce, Puerto Rico. The gas is used to power the 461 megawatt EcoEléctrica cogeneration plant which sells electricity to the Puerto Rico Electric Power Authority and uses steam to power a desalination facility on the site.
The Bahamas has become a proposed gateway for LNG to enter the United States via Florida. AES has proposed the Ocean Express project, which would include an LNG receiving terminal in the Bahamas and an undersea pipeline to deliver natural gas to Florida. The project is reportedly still in the regulatory and planning process.
>>Read the full Analysis Brief here.