MANDEVILLE, Manchester — The country could know as early as next month whether Belgium conglomerate Exmar or Hoegh LNG of Norway will be given the green light to develop the country’s multimillion-dollar Liquified Natural Gas (LNG) industry.

Petroleum Corporation of Jamaica (PCJ) officials are reporting that Government is close to sealing a deal with one of the two shortlisted bidders, and they say the evaluation process could be complete as early as May of this year.

LNG co-ordinator for the PCJ, Stephen Wedderburn told reporters at a Rotary Club meeting at the Golf View Hotel last Tuesday that the PCJ has already received a recommendation from the evaluation team, but he declined to say which of the companies had been recommended. He says once the deal is sealed, the company should start building LNG infrastructure by early next year and “by early 2013, LNG should be up and running to Jamaica”.

Bids from both companies were reportedly received in February, more than three months after Government invited proposals for companies to provide infrastructure and financing, in an agreement that would see the private entities owning and operating the industry. Government would act as regulators.

The winning bidder will have to put up some US$400 million, to kick-start the project and get the LNG infrastructure up and running.

Joint venture partners Korea Gas Corporation and Samsung Corporation of Korea, and BW Gas, also of Norway, were expected to submit proposals by the January 5, 2010 deadline, but they reportedly dropped out of the running last December.

The requests for proposals required the supply of 1.2 million tonnes of LNG, which PCJ officials say is the projected local demand in the short term. Wedderburn said this is equivalent to some 12 million barrels of oil.

He says Jamaica has no natural gas supplies, so it will source its LNG from overseas. The PCJ official said two “very big” suppliers had visited the island as recently as last month, to look at the market here.

“This was only an investigative trip so nothing was agreed, but yes, they’d be able to supply all of that,” he told the Business Observer.

The PCJ official said Government would not concern itself with where the suppliers sourced their LNG, as they would be given the freedom to pull from their overseas reserves. But he said indications are that the supplies could come from as far away as Africa or the Middle East.

Answering questions about whether another deal with Trinidad for LNG supplies was still being considered, the PCJ co-ordinator said “they were never off the table, but there is nothing definitive from them… In terms of location, Trinidad would be ideal, as they are the only source of LNG in this region”.

In 2004, Trinidad and Jamaica agreed on an arrangement that would have seen the Caribbean neighbour supplying some 1.1 million tonnes of LNG per year into Jamaica, beginning in 2009. However, the deal fell through after Trinidad pulled out, citing the unavailability of the product as a result of existing contractual arrangements and problems over the development of a new gas field they share with Venezuela.

The LNG co-ordinator said the introduction of LNG into the Jamaica could save the country some US$400 million per year, even after investment costs were factored in.

“As at today, oil is US$83, LNG is US$24… natural gas today is about 25 per cent of the cost of oil,” he said. He said even with the country demanding less oil because of the shutdown in bauxite and the decrease in prices, Jamaica’s oil bill is expected to reach well over US$1 billion this year.

“In 2008, we paid well over US$2 billion for oil. This wasn’t a massive increase in volume, just a change in price,” he said.

The country’s bauxite companies, the biggest consumers of oil in the country, have been among the hardest hit by the increase in oil prices on the world market, with a number of them closing down operations last year. Wedderburn says when LNG comes into operation, the bauxite companies are expected to take two-thirds of the supply, with the remaining one-third going to fuel electricity.

Wedderburn said the bauxite companies “are going to be the price drivers” for LNG.

The contracts they’re going to sign are going to be long-term contracts for supplies for about 20 years and they’re not going to enter into any such deal unless they’re very convinced that it will be at a competitive price, he said.

The decision to introduce LNG into the local energy market was first taken in the 1990’s under the PJ Patterson-led administration.