Natural Gas: Consumer Perspective
Authors: Motilal Rampersad 
Published: October 2008

Abstract
This paper addresses a. The users of natural gas and their relationship with vendors, b. Natural gas pricing for keeping the users competitive in a changing global market place, c. Perspectives for co-operation between producers and users in joint venture downstream projects and d. The future of transportation fuels as they relate to natural gas.

Introduction
Natural gas consumers of Trinidad and Tobago operating in the Global Petrochemical Industry face an unbalanced structure along their value chain. On the market side, petrochemical producers are subjected to an open transparent global market, where pricing is determined by the full interplay of market forces. On the raw material supply side, consumers of natural gas see a monopoly supplier who can extract greater value for itself from the chain, as open competitive forces are substantially absent. Accordingly, although there are several suppliers for natural gas at the producing level sufficient to support a competitive environment, the existing structure does not allow free competition to prevail. Accordingly consumers are squeezed along the value chain. This structure may have to be revised to provide more direct access by the consumers to the various natural gas suppliers, thereby promoting similar efficiencies along the chain.
The world reserves of natural gas have more than doubled over the last twenty years despite increasing consumption worldwide. In 1998, the global reserves to production ratio stood at 62 years. With greater environmental pressure on the flaring of associated gas, and continuing decline in vented and reinjected gas, oil producers in remote areas have to find an outlet for their surplus gas. A likely target is into petrochemical production where input prices can be extremely low and even down to zero. Consumers in Trinidad and Tobago now have to face competitors with such pricing levels in the global marketplace. Accordingly, while the existing natural gas pricing regime, linking natural gas prices to product prices worked to the benefits of both consumers and producers in the past, the new global environment of low natural gas pricing demands a drastic restructuring of the gas pricing required in Trinidad and Tobago to allow petrochemical producers to survive. In this scenario there is no place for elements such as fixed escalators and high floor prices if producers are to retain their competitiveness.
The product related gas pricing structure provides a vehicle for the natural gas supplier to share some of the market risks and conversely participate in market rewards. Lately, suppliers have been seeking opportunities for direct equity participation both in primary natural gas consuming projects such as methanol and in further downstream projects such as acetic acid. This initiative is driven by the need of gas producers to secure market share in a projected over supplied natural gas market and more specifically in areas where several potential gas producers are fuelling the competition for market space. In Trinidad and Tobago, while several producers have expressed interest in direct investments in downstream projects using their reserves of natural gas, implementation has been difficult to date as facilitating government policy and a commercial transmission pipeline network through which gas can be delivered to the downstream plants directly are not yet available. Consumers and users have a like desire to cooperate with producers to secure a stable natural gas source at competitive prices, and have expressed a willingness to share the rewards equitably.