Long-term strategy needed for NGC, natural gas business

Government must face the reality that the business assumptions that underwrote the creation of the National Gas company (NGC) and the Point Lisas Industrial Estate no longer exist.

Some of the biggest international players in the energy sector in TT have already signalled their intention to shift from extraction of raw materials to renewable and sustainable energy production.

That's already had an immediate impact on their presence in the country.

In November, BPTT retrenched 100 workers across its operations here, part of its new strategy to become a zero-emissions company by 2050.

Methanex announced on Thursday that its Titan methanol plant will be idled indefinitely. The company shuttered the plant temporarily in March after covid19 lockdowns and diminished international demand made doing business unprofitable.

There won't be an immediate shift to renewable energy sources, but clearly if TT is to continue to rely on its energy sector for revenue, it must chart a course that takes it to new destinations.

Behind the scenes of the business is a continuing issue with the price of natural gas that has affected both buyers of the product and its sellers.

Caught between them is NGC, downgraded by regional credit ratings firm Caricris on Monday.

NGC emerged as a powerful player in the petroleum sector soon after its creation in 1975, and enjoyed a reputation for both profitability and efficiency between 1980 and 2010.

But the energy-pricing issues it faces today are not easily resolved. NGC is challenged by the rising cost of natural gas, instability in supply and increasingly soft markets.

TT was an early mover in the natural gas market and profited from that foresight, but it is, ultimately, a small player. This country has 11 trillion cubic feet (tcf) of proven gas reserves, against with world's 7,000 tcf proven.

The decade-long gas-supply shortfalls that stymie NGC also dramatically affect the fortunes of Atlantic LNG, which processes more than half the available output for export.

The Government's 2015 Gas Master Plan, more a report than a strategic statement, encouraged traditional incentives for more exploration and better negotiation of the rent contracts that served TT for decades.

The plan also failed to articulate an evolved strategic role for NGC in the maturing local gas market and offers little foresight into the challenges facing the sector.

The lack of quality thinking about the future of the industry suffuses the 2015 report – with multiple warnings that the Energy Ministry is understaffed and underqualified to manage the challenges facing the country's core industry.

That situation must change quickly and decisively and a new strategy for managing the country's energy resources moved to the front burner for government consideration and stakeholder evaluation.