IAN Moore, a local partner of the Exmar Marine LNG consortium, is of the view that Contractor General Greg Christie’s 609-page report on the tendering process for the Government’s proposed Liquefied Natural Gas (LNG) project is inconclusive, sullies his reputation and will delay the project, thereby incurring costs of around US$1 billion.

Last week, Christie declared that he had identified multiple irregularities and improprieties in the tendering process which saw Exmar Marine chosen as the preferred bidder and that he had referred his report to the Director of Public Prosecution (DPP) in order that a probe be conducted into the actions of Moore and Conrad Kerr, who are partners in Exmar on the project, and Stephen Wedderburn, who was LNG project co-ordinator for the Petroleum Corporation of Jamaica (PCJ). Christie determined that Wedderburn’s relationship with Exmar “compromised the integrity of the entire FSRU LNG Project.”

Christie has recommended that a new tender process be undertaken by the PCJ and the Ministry of Energy and Mining because his investigations discovered a conflict of interest and “overwhelming and incontrovertible evidence… of a lack of transparency, absence of fairness, and a glaring demonstration of impropriety and irregularity” in the circumstances which surrounded the bidding process for the LNG project.

Moore said that he had to suffer the indignity of having to supply 15 years of his family’s financial records and thousands of e-mails to the Office of the Contractor General (OCG) although he only served as chairman of the PCJ for 11 months in an unpaid capacity. The information he supplied has not unearthed any wrongdoing on his part, he says.

Speaking with Sunday Finance on Friday, Moore said: “How do we get to the point where Government is in the middle of a private project which it has not invested a single dollar into? The studies that were done were completed in 2009, so had the Government not been involved we would have been commissioning the project this year. It now means that a two-year delay would have cost us somewhere around US$1 billion. Even at this juncture we have an inconclusive report from the contractor general that seeks to further delay this vital project and probably add another year to it. Can the Jamaican people afford to pay out of their pockets another half-a-billion US dollars on something that is inconclusive?”

No Criminal activity

Moore went on to say that Christie has not found a smoking gun or any evidence that he or his partners did anything untoward or criminal. “All he (Christie) has done is kick his 609-page report to the DPP and said now you take a look at it. He has not recommended that anybody be charged for criminal activity. Any private individual that had made the assertions that Christie has done, based on the evidence before him, would have been sued for defamation. It is the cloak of his office that is protecting him,” said Moore.

Christie has recommended that a new law be put in place that sees chairmen of public bodies having a specified period after demitting office within which they are barred from related business activities. Moore is of the view that Christie cannot use this recommendation retrospectively, and that issues concerning restraint of trade have to be carefully evaluated and considered.

Of particular concern to the former chairman of the PCJ is the country’s ability to continually pay escalating oil bills which skews its balance of payments. Furthermore, he notes, Venezuela is positioning itself to renegotiate the terms of the PetroCaribe agreement.

“Our oil bill is a sizable part of our total GDP and we cannot continue to go this route and expect to grow the Jamaican economy,” said Moore. “To this end, the Government has taken the decision that LNG will become our fuel of choice. If oil prices continue to increase, it will decimate not only our manufacturing sector but our entire productive sector. Already we are paying 30 cents per kilowatt hour for electricity, one of the highest prices in the region and that will only increase with our present energy solution.

“I see the threat as, if we continue with oil and we have an adverse decision as it relates to PetroCaribe, Jamaica can go to Venezuela and be asked to pay the full price for that country’s oil which means we have to find an additional half a billion US dollars to pay for it. That would be a killshot to the Jamaican economy. We have already lost two years on the LNG project and now with this OCG report and the Government’s present stance, we may lose a further two years which will only serve to cost the country dearly.

“Conversely, if we can reduce our balance of payments by US$300 to US$400 million a year, it would be very positive for the country and underpin all the other initiatives undertaken by this government to grow the economy. Let’s not forget that the JDX is only a time-saver. Unless we make some structural adjustments while we have the time it becomes ineffective.”

According to Moore, Exmar’s LNG project will take about 24 months to implement and cost around US$400 million, but more importantly will create many jobs. It will also see a related power plant project of 360 megawatts which is US$600 million. Therefore between the two of them it is a US$1 billion energy project investment over two years. Now, if the bauxite companies decide to retool, that’s a further US$600 million invested, spelling crucial job flows.

“What is mind-boggling to me is that the Government is failing to consider reducing its own electricity bill. Our LNG project would see it go down by 30 per cent, which is a saving in the region of J$4 billion a year. LNG is the way to go because of the abundance of the product. America, which is the biggest consumer of LNG, has now become a net exporter of it. America has over a hundred years of reserves of natural gas. Now, I don’t know if we are able to lock in a price now for natural gas for the next 20 years. What I do know is that supply and demand situation shows a depressed market curve for the next 10 years. What I can tell you though is that we have lost some advantage in not yet locking in a price. When the PNP, under Tony Hylton, started this LNG alternative route, the stumbling block it faced was the source of the gas was not as abundant. That changed in 2008 when the global financial crisis bore down and energy consumption started to dip and natural gas prices fell.

“Changes in technology, such as horizontal drilling and fractionation, meant that an abundance of natural gas could be found in America. We did not move quick enough when that window was open and what we now see is that the world economy is picking up and the buyer’s market has now turned to a supplier’s market. Also, let’s not forget that the Japanese earthquake catastrophe means that natural gas is in high demand as Japan looks to rebuild its economy. However, there will always be a disparity between natural gas and oil and for an economy such as ours natural gas is the way to go.”

Moore pointed out that continuing on the path of oil was injurious to the Jamaican environment and that in fact, according to a World Bank study, Jamaica emits more CO2 per capita than China. This means that with the Kyoto Agreement shaping emissions policy, Jamaica would be regarded as high on the list of offenders and so would incur penalties it can ill afford, hence it is imperative that it turns to a cleaner source of fuel.

Costly delays

As far as Moo re is concerned, the CG Report will mean further costly delays, and though Exmar consortium may re-tender, it will take even more time to complete implementation. He said that Exmar has already negotiated for over a year with the bid going out in November 2009. That means that for over a year-and-a-half nothing has transpired and Jamaicans continue to pay exorbitant costs for energy. He further added that there is no guarantee that the CG will not issue another similar report on the new bid process thus spelling even more delays.

“This CG Report will only scare away much foreign investment needed in this country,” he said. “Imagine what investors think when they see something like this. It is essential to have local partners who know the landscape and can guide the investor. Exmar thought this was very important and didn’t think it would become such a negative. As local partners we facilitated pre-assessment and feasibility studies and ensured that the engineers did not have to waste time with administrative obstacles. We were in fact intermediaries and doing a very good job too. This is common practice throughout the world. BMW does not make and sell their cars in Jamaica, but Stewart’s Motors represents them here. You see my point.”

Fuel of choice

Explaining how he got involved in this Exmar LNG project, Moore said that after Prime Minister Golding announced that LNG would be the fuel of choice for Jamaica, he started checking whether bringing LNG through the use of FRUS technology was feasible. It would be a private engagement to deliver this service to the bauxite companies. He did not contemplate servicing JPS at the time or the government. He knew that due to the fiscal space available to the government that there would be no government guarantee and the investors agreed to continue on this basis. His team then spent US$500,000 hiring Becthel after its feasibility studies. Bechtel is the number one LNG engineering firm in the world.

“The Government then intervened in a private process and today you see where we are. I was appointed for a two-year tenure to chair the PCJ and that was terminated rather abruptly. However, I was not issued a contract and I had to make a living. There was no non-compete clause. There has never been a conflict of interest and this is something that Christie needs to explain to me,” said Moore.

“There are precedents of people sitting on boards and doing business with those boards. In my circumstance, a bid came out a year after I was fired.

“People say I was privy to inside information, which is improper, but the PCJ in the bid specifically speaks to the fact that it had never done any studies on FSRUs. We as a consortium were the first to commission studies on FSRUs. I am not in breach of any procurement rules. There was never ever any conspiracy or collusion. The OCG has not found any definitive wrongdoing or egregious acts on my part in 609 pages of his report.

“It is said that how can I be part of a winning bid when I have no experience of LNG projects. Again I stress, Exmar are the experts, I am part of a facilitating team. What is wrong with that? All of this Christie mischief is costing the Government US$1 billion but no one is looking at that. This Contractor General Report has cast aspersions on my character and my reputation,” declared Moore.