Amid much pomp and ceremony on June 24, 2019 Government, led by the Prime Minister, and Shell gathered at the Hyatt Regency to sign a long-awaited agreement.
“This signing today is a bright light in a period which looked gloomy and our future is now in good hands,” Dr Rowley said in his address at the event. What the Government signed, though, was not a contract – a formal, legally binding agreement – but rather, a term sheet.
A term sheet, by definition, is a non-binding agreement. While it sets terms and conditions for what may ultimately become the final agreement, it’s not a guarantee. To be fair, the event was very clearly stated as a term sheet signing, but regarding a ten-day trip in May/June to Europe and the US, where the PM led a delegation to ostensibly meet with energy companies to finalise negotiations, the language of the Government has been at best ambivalent.
“The Government and Shell continued the phase one negotiations and in May 2019 the parties reached agreement on a number of items,” the Prime Minister said in a statement on his return. An observer then, perhaps not savvy in the clever language of energy negotiations, can be forgiven for making the reasonable assumption that these “agreements,” including a US$397 million settlement and billions in investment, were done deals.
Instead, as Energy Minister Franklin Khan told the Parliament, the agreement on the upstream issues has now cleared the way for the finalisation of Shell’s new gas supply contract with the National Gas Company. When is yet to be stated.
The last time the Government had an ostentatious signing ceremony for a term sheet was for the Dragon gas deal, last August, in Caracas, again with Shell, NGC and Venezuelan state oil company PDVSA. Dr Rowley and embattled Venezuelan President Nicolas Maduro also signed a government to government agreement. Notwithstanding the uncertain political and economic climate in Venezuela right now, the commercial aspect of that deal – the sales contract – is also yet to be finalised as the parties (Shell, NGC and PDVSA) are still hammering out the details.
It would be unfair to say Government hasn’t been making overtures to ensure some kind of continuity and stability in the energy sector in the short to medium term. The Prime Minister has in turns chided energy companies for taking advantage of the people of TT by not giving the country fair value while also positioning himself as the country’s number one salesman when promoting TT as a place for continued investment.
The appointment of an empowered negotiating team has also appeared to be beneficial in ensuring that TT has competent advocates in what is hopefully the country’s best interest. Dr Rowley has proudly proclaimed that this team has successfully renegotiated for a more equitable share of profits to TT, as well as caulking one of the leaks caused by transfer pricing, which he had estimated at the Spotlight on Energy, last year, as being up to US$6 billion annually.
We want to believe that what Government is doing is truly in the best interest of TT. Ambiguity in the status of negotiations will not engender trust. The average citizen is not an expert on hydrocarbon negotiations nor technical definitions that even Government has admitted are complex. We expect that Government will be clear as to the status of these negotiations that have yet to translate into final contracts. Transparency and accountability are paramount to mitigate any perception of corruption – regardless of buffs from energy companies complaining about confidentiality breaches.