You are here

T&T bars DeNovo gas sales to MHTL

Thursday, April 20, 2017

The Government has taken a policy decision that the state-owned National Gas Company should be the aggregator of natural gas in T&T, meaning NGC would buy the gas output of upstream producers and then sell that gas to the downstream users on the Point Lisas Industrial Estate.

This was disclosed by Minister in the Office of the Prime Minister Stuart Young at a news briefing at his office earlier this month.

Young disclosed that the decision on NGC’s status between producers and users of natural gas was taken even before Cabinet officially approved the natural gas master plan.

“We have taken a decision that NGC should remain as an aggregator because our position is that ultimately all of this gas belongs to the citizens of T&T and not to any single entity or group,” said Young, making the point that the Government is trying to maximise the returns to the country by the adoption of the policy.

NGC’s role as aggregator means that no company operating downstream can make an arrangement to buy natural gas directly from a producer of the commodity, such as BP, Shell or BHP Billiton. That arrangement would have to be with NGC.

Asked if it made financial sense for NGC to maintain its role as aggregator in the context of the gas producers demanding higher prices and the gas users demanding lower prices, Young said: “Yes. This Government’s position is yes. As you would appreciate there are margins, so obviously you have the formula of margins that can be used.

“But if we open up the market and allow upstream producers to sell directly to downstream users, you would literally have killed NGC.

“The upstream producers are trying to make arguments that the government would continue to get revenue based on the taxation at the wellhead and from the downstream users by the sale of commodities.

“We have taken a policy decision that we are not going to open up the market to just allow new players in upstream to sell directly to downstream.

“There are many different formulations that you can have in between there, so we are thinking outside of the box. There are margins that can be reduced, but there are other areas we are looking at that, if our conversations continue, will revolutionise the way that upstream ends up in downstream with NGC continuing as an aggregator.”

Young said the only gas producers that do not sell gas through NGC are Atlas Methanol, which is partly owned by BP, and Atlantic LNG—whose major shareholders are BP and Shell, both of which sell directly to the liquefaction facilities at Point Fortin.

Atlas Methanol is 63.1 per cent owned by Canada’s Methanex and 36.9 per cent by bpTT.

Proman, which owns MHTL, is also the owner of DeNovo, which acquired two Gulf of Paria blocks, 1(a) and 1(b), from Centrica last April.

Given the difficulties that Proman has had getting gas from NGC, it acquired the two blocks in order to directly supply its methanol, ammonia and petrochemical plants on the Point Lisas industrial estate.

Questioned on why the government would prevent DeNovo from supplying a dedicated stream of gas directly to MHTL, given the precedent of BP supplying directly to Atlas, Young said: “That is a government policy, for exactly the same reason I just outlined to you. That we are not at this time prepared to open it up to allow upstreamers to go directly to downstreamers.”

When it was pointed out that the precedent of BP supplying directly to Atlas was in place, Young said: “One out of how many others. We are not prepared to open up the gates and tell upstreamers go and negotiate directly with downstreamers.”

Questioned on whether the government’s policy to strictly enforce NGC’s role as an aggregator of natural gas was putting the future of Point Lisas at risk, Young said: “No because there are conversations and negotiations taking place.”

DeNovo has an 80 per cent working interest in the blocks, with the Petroleum Company of T&T (Petrotrin), owning the other 20 per cent.

Cabinet confirmed NGC’s status as the natural gas aggregator despite the fact, Young said, that the company had not been able to meet its gas sales contracts with the Point Lisas users since 2010.

He said that NGC had not been able to satisfy the demand for gas from downstream users “because of the upstream producers failure to supply contracted quantities under their gas sales contracts,” to the NGC, for which the established contracts of the upstream producers do not require them to pay NGC any form of damages for this failure.

—Anthony Wilson


User comments posted on this website are the sole views and opinions of the comment writer and are not representative of Guardian Media Limited or its staff.

Guardian Media Limited accepts no liability and will not be held accountable for user comments.

Guardian Media Limited reserves the right to remove, to edit or to censor any comments.

Any content which is considered unsuitable, unlawful or offensive, includes personal details, advertises or promotes products, services or websites or repeats previous comments will be removed.

Before posting, please refer to the Community Standards, Terms and conditions and Privacy Policy

User profiles registered through fake social media accounts may be deleted without notice.