Ammonia producers in Trinidad and Tobago are struggling under the weight of natural gas supply curtailments and increased competition from lower cost US producers.
Ammonia production in January to September 2016 fell to 3.56mn t, 2.6pc less than a year earlier, according to latest revised data from the energy ministry.
Trinidad´s gas production fell by 13.8pc to 3.338bn ft³/d (93.5mn m³/d) in January and September, deepening a supply deficit that has also dented the country's production of LNG for export.
Ammonia production consumed 544mn ft³/d of gas in January-September, 9pc less than the corresponding 2015 period, the ministry data indicates.
The gas shortage coincides with a period of falling US ammonia prices rooted in increased shale gas production, which makes ammonia cheaper to produce there. The trend is driving Trinidad's producers to search for new ammonia markets such as Latin America, government and industry officials tell Argus.
The Caribbean country has 11 ammonia plants with total operational capacity of 5.2mn t/yr.
The biggest producer is Canada's PotashCorp that operates four plants with combined capacity of 2.2mn t/yr. The company's production between January and September was 1.45mn t, or 66pc of capacity.
Trinidad's ammonia contracts are based on the CFR Tampa market price that is increasingly irrelevant for Trinidad, an energy ministry official said.
Official Trinidadian data obtained by Argus indicate that prices for ammonia sold by the country's exporters in 2016 have recently averaged $176/t, against an average $645/t in 2012.
Trinidad expects to ease the curtailments next year when the UK's BP, Australia's BHP Billiton and US firm EOG Resources bring on new domestic production.
Longer term, Trinidad wants to purchasing gas from Venezuela's offshore Dragon field, and has a tentative agreement with Caracas to establish a commercial venture to exploit gas deposits that straddle their maritime border. But Venezuela's political and economic crisis suggests that neither plan will move forward quickly.
"An end to the gas curtailments will help significantly," a spokesman for one producer said. "Production capacity is being expanded rapidly in the US.
"The markets in the US are not very attractive and financially competitive, so new markets have to be found by Trinidad's producers, and Latin America is one area we are exploring.
"The traditional markets for mainly liquid ammonia have been the US, but now we are being squeezed by producers in the US and some in the Middle East."
