Solid deal, no cheap gas

UPDATE:

ENERGY Minister Franklin Khan yesterday declared the Dragon gas deal is a solid commercial agreement. He also said TT is not receiving cheap gas from Venezuela. Khan made these statements as he rejected two daily newspapers which respectively claimed the deal was secret and the gas from Venezuela was cheap.

Addressing a news conference at the Hyatt Regency Hotel in Port of Spain, Khan said two documents pertaining to the Dragon gas field were signed in Venezuela on Saturday. The first of these, he explained, was a term sheet which settled “all the commercial terms of the gas sales agreement, especially the issue of volume and price.” Khan added that volume and price are two of the most important details in any gas sales agreement.

This agreement was signed by Venezuelan state oil company PDVSA, Shell and the National Gas Company (NGC). “That is a commercial agreement,” Khan said. The second agreement signed between the Prime Minister and Venezuelan President Nicolas Maduro, Khan said “committed both governments’ to the implementation of the project and the continued support to see this project through its finality.”

He explained that while the deal has a commercial component, it is a cross border arrangement and “at its fundamental level it is a government to government arrangement” Therefore, Khan said no one can claim the deal was secret. He said it is well known that the commercial terms of gas sales agreements are “subject to the strictest confidentiality clauses.” Khan explained this is why Dr Rowley referred to the price as “extremely competitive” but gave no figure.

But volumes are not always confidential. Khan said this was why the PM said the agreement would initially see TT receiving 150 standard cubic feet per day (scfd) from Dragon with the option to increase this to 300 scfd. He reminded reporters that no government in this country’s history has “ever made known to the public, any negotiated price of gas.” Khan refuted one report which claimed the gas from Venezuela was cheap.

“Nobody ever said competitive means cheap,” Khan said. He rejected claims from a Venezuelan writer the gas price for the Dragon deal was US$1 per mmbtu (one million British Thermal Units).

“That is not the case. the price we are paying is substantially more that the one dollar,” Khan said. The price, he continued, allows TT to import the gas, send it downstream for LNG and petrochemical production and “still make a profit.” Khan said the price also allows Venezuela to “get a good monetary return for the sale of its gas to TT.”

Saying Government “takes umbrage to this to this kind of reporting”, Khan said the Dragon deal is a game changer for TT. Firstly, Khan said the gas from Dragon will help TT to address the gas curtailment problem which it has been saddled with for years. Outside of deepwater exploration finding new reserves, Khan said the gas the country has is “just enough to keep us where we are.”

The deal, Khan said also secured “a long term symbiotic energy relationship with Venezuela.” He said the pricing model and template for Dragon has set the stage to move forward to access natural gas from fields which straddle the TT-Venezuelan maritime. One of those fields, Khan continued, is the Loran/Manatee field. He said the significant gas reserves in that field were not accessible because the former Patrick Manning and Hugo Chavez administrations could not reach agreement about it.

Recalling that price was a sticking point at that time, Khan said if price cannot be agreed upon, no deal is possible. “Price is money,” he added.

ORIGINAL STORY:

ENERGY Minister Franklin Khan today rejected respective reports in two daily newspapers that the Dragon gas deal was secret and the gas being supplied from the Dragon field was cheap. Khan made his statements at a news conference at the Hyatt Regency Hotel in Port of Spain.

He said two agreements were concluded in Caracas on Saturday, pertaining to the supply of natural gas from the Dragon field in Venezuela to TT. The first of these, Khan continued, was a commercial agreement between Venezuelan state oil company PDVSA, Shell and the National Gas Company. He said the underpinnings of this agreement are solid and there is no possibility of the deal collapsing.

The second agreement signed between the Prime Minister and Venezuelan President Nicolas Maduro, Khan explained, commits TT and Venezuela to the Dragon deal. While natural gas prices are strictly confidential in these types of agreements, Khan said it was wrong to claim TT is receiving cheap gas from Venezuela. On Saturday, Dr Rowley described the price as "extremely competitive." Khan said competitive does not mean cheap.

Describing the deal as " a marriage made in Heaven", Khan said the pricing model established in the Dragon deal has the potential to lead to other agreements which could see TT receiving natural gas from cross border fields such as Loran/Manatee. He called on the two daily newspapers to issue apologies for misleading the public on a significant development which will benefit the country.