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Failed diplomacy in LNG bid

A series of U.S. Embassy cables document the unsuccessful diplomatic maneuvers made over two administrations to get a go-ahead for liquefied natural gas (LNG) pipelines from Florida to The Bahamas.

One of the cables obtained by The Nassau Guardian through the whistleblower organization WikiLeaks said that in 2009 AES Corporation proposed constructing an LNG pipeline from Ocean Cay near Bimini to New Providence at no cost.

According to a former AES representative, when this idea was presented to Prime Minister Hubert Ingraham, the PM said he “wouldn’t be pushed into doing it.”

AES eventually decided to forgo this idea due to technological challenges and associated costs, the 2009 cable said.

The cables show aggressive steps taken by companies like AES in an effort to convince, first the Christie administration, and then the Ingraham administration to approve the project.

In 2005, AES representatives met with then U.S.

­Ambassador to The Bahamas John Rood to discuss the status of their proposed $650 million LNG project.

“AES expressed its frustration at the inability to get a final decision from Prime Minister Perry G. Christie, whom they claim is delaying a decision in an effort to get them to withdraw so he will not be blamed for the project’s failure,” a U.S. Embassy official wrote in a cable.

“AES is the current front-runner to get the LNG project.  Opposition has centered on the impact any possible environmental damage would have on the Bahamian tourist industry.”

The government at the time was also considering a pair of competing proposals for an LNG facility and pipeline in The Bahamas.

Both projects would have included an import terminal, a re-gasification plant, and an undersea pipeline to South Florida, in addition to other support infrastructure.

The AES project called for the construction of an LNG facility on Ocean Cay near Bimini.

The cable claimed the AES officials met with the ambassador “to provide an update on their LNG proposal and to request assistance in dealing with an indecisive Christie Cabinet.”

However, other cables show that AES officials were equally frustrated by the Ingraham Cabinet’s failure to make a decision on the project in a timely fashion.

At the 2005 meeting with the ambassador, AES representative Aaron Samson said the company had already spent more than $55 million on the project, and noted that an agreement in principle had been signed, “and the prime minister will not speak to them because there are no other requirements that AES must satisfy,” the cable said.

“AES officials are especially frustrated with Bahamians and complained that although they have visited an operating AES LNG plant and seemed to be convinced of its safety, they now fail to speak out in favor of an LNG plant on Ocean Cay,” the embassy official wrote.

The official said that at an earlier meeting, David Davis and Ronald Thompson of the Office of the Prime Minister said that in their opinion “LNG is dead”.

The cable noted that then Minister of Trade and Industry Leslie Miller, the government’s chief proponent of LNG, estimated that the project would generate approximately $40 million in average annual revenues over the course of 25 years, for a total contribution to the Public Treasury of nearly $1 billion.

The project was also expected to create about 450 jobs during the construction phase and 25 to 35 permanent positions.

The cable noted that Minister Miller had alleged in a radio interview that the environmental group Re-Earth’s opposition to LNG was getting more media attention than it normally might because the group’s leader, Sam Duncombe, is white.

“Had this been a regular Bahamian of a hue like you and I, it would not have been tolerated or she would not have gotten the coverage that she has certainly gotten,” Miller was quoted as saying.

The cable also documented the nasty exchange on Cat Cay between Miller and Cat Cay investor Manuel Diaz.

A protracted debate

In the comment section of the cable, the embassy official wrote, “The consideration of the various LNG proposals typifies the slow and opaque decision-making process of the Christie government.

“Government ministers have been promising a decision ‘in a few weeks’ for nearly two years.

“Even for the consensus-driven society of The Bahamas, the LNG debate has been long, protracted, and increasingly bitter.”

The embassy official wrongly predicted, “In the end a cash-strapped Bahamian government may be forced to make a decision about an LNG facility so it can start collecting the revenue the project will generate.”

In another 2005 cable, Christie told Ambassador Rood he did not want the Cabinet to touch the LNG issue while he was recovering from his stroke.

“He acknowledged that certain Cabinet members — Foreign Minister Fred Mitchell; Tourism Minister Obie Wilchcombe and Transport Minister Glenys Hanna-Martin — were resolutely against LNG, but that many others saw the benefit the project would have for The Bahamas,” the cable said.

“The PM gave his assurances that LNG ‘would be dealt with’.”

But it never was before the change of government in 2007.

The Americans’ hope that LNG would be approved under Ingraham also turned out to be wrong.

After a courtesy call on Deputy Prime Minister and Foreign Affairs Minister Brent Symonette by U.S. Charge d’ Affaires Brent Hardt in 2007, an embassy official noted in a cable that Symonette was against approving any such projects.

In June 2007, Phenton Neymour, state minister responsible for energy issues, noted that the new government had not had time to address the LNG issue “but he signaled that the door was still open to eventual approval.”

“Views on LNG within the new Cabinet are quite diverse, with some ministers known to be strongly opposed and some in favor,” an embassy official wrote.

“Having provided the initial approvals for LNG development back in 2002, however, the FNM will certainly take a close look at whether to move ahead with what would be an important new economic direction that would help diversify the tourism-dependent economy.

“Energy prices are very high in The Bahamas and the embassy continues to encourage the government to explore alternative sources of energy.”

Recognizing though that LNG was not a priority for the Ingraham-led government, AES officials planned to review other ancillary projects on Ocean Cay including a rest stop for cruise ships and reopening mining operations on the island.

A source close to AES told The Nassau Guardian that while the project was never officially taken off the table, it is not now being aggressively pursued.

 

 

 

 

 

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