Caribbean Project Market Heats Up

By Simon West

In a feature story from Issue 5 of Breakbulk Magazine, we take an in-depth look at some of the opportunities and challenges for projects logistics in the Caribbean, a region dominated by one country's booming offshore oil and gas sector.

Speak to project professionals about opportunities around the Caribbean and talk quickly turns to Guyana, the former British colony perched on the northern tip of South America that in less than a decade has become the world’s most exciting hotspot for offshore oil and gas – and a mine of wealth for companies involved in handling breakbulk and project cargo.

On the back of a string of discoveries, ExxonMobil and its partners are looking to deploy six floating production, storage and offloading, or FPSO, vessels by the end of 2027, which would lift Guyana’s production capacity to more than 1.2 million barrels per day, or bpd.

A sense of excitement surrounding Guyana’s neighbor Suriname is also palpable, with the former Dutch colony on the verge of its own offshore boom. Production sharing contracts have already been inked between state-run energy company Staatsolie and several oil majors, including TotalEnergies, Chevron, Shell and QatarEnergy.

But move north from mainland South America to the Caribbean islands and territories, and the discussion becomes a little more circumspect.

Roberto Fernaine, regional head of Latin America & the Caribbean at Maersk Project Logistics, or MPL, said project opportunities in much of the archipelago – which comprises 13 sovereign states, 12 dependent territories and thousands of smaller islands and cays stretching from the Bahamas off the coast of Miami down to Trinidad and Tobago off the northern shores of Venezuela – were “in a smaller number.”

“That doesn’t mean that they don’t have potential, but it’s just small in comparison to everywhere else in the region. The businesses in those islands are not necessarily related to a particular project logistics volume, but you do have specific projects that sometimes arise,” said Fernaine, who has worked on projects in the Dominican Republic, Guatemala, El Salvador, Nicaragua, Suriname, and Trinidad and Tobago.

“If you go to the smaller islands – to Aruba or Saint Martin, or to Bonaire or Curaçao – you may have an expansion of a refinery or a processing plant here and there. But these are very small capex approvals with a very limited amount of resources that sometimes take too much time for a company like ours to be dedicated to. Those projects are usually awarded to smaller service companies dealing in the project logistics business.”


Building Up Expertise

One project professional, who asked not to be named, has worked on projects throughout the Caribbean – mostly on a spot basis.

“I’ve managed operations for multiple companies, and in my time in the Americas, there’s always been a project that we’ve had to execute in the Caribbean. But we’d always parachute our team in, they’d execute the job, we’d bring some equipment from elsewhere, and as soon as our job was done, everybody scatters,” the executive said.

“There’s not the same level of investment and focus in those countries because the activity just isn’t there. So we ask ourselves, how do we justify involvement, or how do we start to strategize and put someone in position?”

The executive pinpointed some of the challenges facing logistics firms in the Caribbean, where many of the dependent territories have their own laws and regulations that can complicate the movement of breakbulk and project cargo. Shipments to Puerto Rico, for example, are still bound by the requirements of the Jones Act – the century-old law that says goods and equipment can only be transported between U.S. ports by vessels that are built, owned and manned by U.S. citizens.

“When we get into discussions for any type of project activity, supporting operations, transport – it’s critical that we understand what the requirements are in each country.”

“A case in point – there was no streamline of protocols regarding how Covid vaccines were going to be received from island to island. It was completely different everywhere. Aruba had one set, Puerto Rico had a set, St. Thomas had a set, Dominican Republic had their rules and quarantine. Everything was completely different. It never got standardized.”

One solution could be the expansion of regional trading blocs such as the Caribbean Community, or Caricom, which comprises 15 members and five associate members of mostly English-speaking nations plus Suriname and Haiti, or the creation of new alliances to harmonize policies and boost economic growth.

“I like to think of those GCC countries in the Middle East, where you have a more standardized approach as far as doing business,” the executive said. “I think it would be great for the Caribbean and it would help alleviate a lot of those – I guess – “confusions”. It could possibly be a solution, and if it’s not a solution, then it could be an avenue toward one.

“It’s a forever evolving lifecycle down in the Caribbean. And I think that’s starting to make it very attractive for a lot of people. But we need to make sure we spend time looking at it, understanding the culture, the dynamics, the politics, because every single country is different. How we do something in Puerto Rico for example is different to how we do it in St. Thomas, and the islands are neighbors in the same territory.”


Bright Dominican Republic Prospects

Still, some exciting opportunities for breakbulk and project cargo are starting to emerge in one or two of the bigger islands. Fernaine singled out the Dominican Republic – which shares the Caribbean island of Hispaniola with Haiti – and the U.S. territory of Puerto Rico.

The Dominican Republic – a country whose prospects are bright enough for Fernaine to consider deploying a full-time presence in the country – has embarked on a clean energy drive in a bid to generate 25 percent of its power from renewables by 2025. Some 14 world-scale solar photovoltaic, or PV, plants and three wind energy projects currently being built are expected to add about 800 megawatts, or MW, of energy by the end of the year.

Puerto Rico, meanwhile, still recovering from the impact of Hurricane Maria in 2018, remains focused on rebuilding key infrastructure, the MPL executive said.

“Dom Rep is the most exciting island to be in based on its economic drive and size – you have a number of sectors there that continue to grow in comparison with other islands in the region,” he said. “Then you have Puerto Rico, which is also a growing island, especially with the large financing it receives from the U.S.”

Ramps Logistics also pointed to the growing project market in the Dominican Republic.

The Trinidad and Tobago-headquartered forwarder has an agency agreement in place that “works well,” according to Dale Lutchman, vice president of customer experience.

“We have a really good agent – they’re responsive on time. They also help us with a few other things we do on our charter desk, so we don’t see that need just yet for our own office,” Lutchman said to Breakbulk.

The executive picked out some exciting project developments in Trinidad and Tobago itself, whose well-equipped ports and infrastructure have been used to handle most of the heavy and oversized cargo destined for Guyana’s offshore oil and gas projects.

In April, a consortium of bp, Shell and green energy developer Lightsource bp began construction work on Trinidad’s first utility-scale solar PV project – a 112-MW plant located across two sites at Brechin Castle and Orange Grove. A new substation close to Trinidad’s airport will also be installed.

“We expect to see a lot of moving parts and large solar panels, generators and everything coming in from Europe, (as well as) Mexico and other parts of South America,” Lutchman said.

In the upstream sector, the island’s offshore Manatee gas development project, operated by Shell, is slated to start production in 2025. A frontend engineering design, or FEED, contract was awarded to Houston-headquartered McDermott in April.


Guyana Steals the Show

For all the talk of prospects elsewhere, it is Guyana that continues to grab the lion’s share of investment – and will likely do so for years to come.

ExxonMobil reaffirmed its commitment to Guyana’s offshore sector after announcing in August plans to spend another US$13 billion, this time to develop the Whiptail field, its sixth offshore oil project in the country.

For breakbulk movers wanting to get a slice of the action, the country’s strict local content laws mean seeking out Guyanese partners. Blue Water Shipping has already acquired Guyana-owned and operated Falcon Logistics, while UTC Overseas has joined forces with Guyana Shore Base Inc. to offer operators project forwarding, warehousing, distribution and shore-based services, along with air, ocean and land transportation and customs clearance.

CET Logistics is another company looking to set up business in Guyana.

The Rio de Janeiro-headquartered forwarder, which specializes in transport, logistics, supply chain and storage for the global oil and gas industry, has already conducted fact-finding missions to both Guyana and Suriname.

“You will need a local reliable partner in order to comply with the local content policy,” said Marcelo Franceschetti, chief commercial officer at CET Logistics. “It is imperative to establish a trustful local partnership agreement that is good for both parties the moment it’s signed but also later in the years to come. This is key for success – as is the case in other regions of the globe – which prevents any future pitfalls.

“But it’s worth it. The booming country, when you look at the region – it’s really Guyana.”

Ramps, one of the leading logistics providers for Guyana’s offshore sector, has teamed up with several companies in the country. Earlier this year, the forwarder solidified a contractual partnership with N&S Algoo, Guyana’s largest commercial broker, to provide local customs brokerage services.

“We approached them as one of our local content efforts, and we were able to come to a mutual agreement,” Lutchman said. “They don’t have the experience of the energy industry, but they’re a family-owned company and they share a lot of cultural similarities to Ramps. They’re getting their feet wet bit by bit, understanding the sector, understanding its needs, its timelines. And we’re working with their staff to train them up to make us all stronger.”

Meanwhile, the development of onshore infrastructure to support oil and gas operations – such as the nation’s first deepwater port on the Berbice River and the US$300 million Vreeden- Hoop shore base in capital city Georgetown – continues to ramp up.

“You’re seeing that investment both by the private sector and the government to develop the growing industry, both technically and professionally in terms of infrastructure and personnel,” said Rudy Rampersad, operations director at Ramps. “So we are seeing that improvement – some major, major improvements coming on board. Lots of positive signs.”


*Latin America’s project market will be the focus of a mainstage panel session at Breakbulk Americas 2023. "Latin America Spotlight: Outlook, Projects and Opportunities", moderated by Fox Brasil’s Murilo Caldana and featuring expert speakers from Tradelossa, DHL Global Forwarding, Port of Açu and Valaris, will take place on September 27 from 1:20pm-2:10pm.

Check out the full main stage agenda for this year’s event, happening on 26-28 September at the George R. Brown Convention Center in Houston, Texas.

PHOTOS: Ramps Logistics