Expert: Judge NGC Train 1 investment on its benefits

Atlantic LNG, Point Fortin - File photo/Jeff Mayers
Atlantic LNG, Point Fortin - File photo/Jeff Mayers

Energy consultant Gregory McGuire has said investments in Atlantic LNG Train 1 should not be judged on short-term outcomes but more on the medium to long-term cost or benefit factors surrounding the decision.

In a statement on Friday, he said discussions about an investment by the National Gas Company (NGC) focused mainly on cost and failure and have not looked at any possible benefits.

McGuire said, “Available information suggest that NGC remitted TT$224 million to Atlantic for Train 1 2021 expenditure including turnaround costs. This is a far cry from the figures being quoted by some whose intention is to mislead the public.

“The intent was to keep the train operable and to process any natural gas that became available. The strongest criticism against this has been that the main producers – Shell and BP – said that they had no gas for Train 1.”

McGuire, who has served on government sub-committees on energy and economic recovery, pointed out that Shell and BP were not the only stakeholders with interest in Train 1 but rather its survival was a matter of national interest.

Energy consultant Gregory McGuire -

He explained that while the cost factor seemed to be an extensive investment, the decision by some companies on the Point Lisas Industrial Estate to idle or shutdown operations, placed NGC in a position where it would have had unpredictable buyers.

“The most significant benefit was this investment provided NGC with the opportunity to potentially mitigate take or pay liability from gas suppliers. We will recall that several plants on the Point Lisas estate were idled or shut down in 2019-2020 because of inefficiency, market conditions and or stalled negotiations for new gas supply contracts.

“This meant NGC would have contracted gas which may not have firm buyers. In an extreme case, such a situation could have led to a take or pay exposure amounting to hundreds of millions of dollars. Further it would have meant gas staying in the ground which bring no value to TT in the short-term,” he explained.

McGuire said other benefits included NGC sales expansions of LNG in the international market and, acceptance of third-party natural gas since unitisation arrangements would have given access to non-shareholders which would have provided a major stimulus to new upstream activity.

Former energy minister Kevin Ramnarine, however, questioned the timing of investments by NGC, saying it knew of the risks because of the failed drilling programme on Cashima and Cannonball in May 2019.

He told Sunday Newsday that NGC knowingly embarked on a deal which resulted in a commercial miscalculation and a loss of $224 million,

“It was reported that the decision by the NGC board to finance the ongoing operations of Train 1 happened in December 2020. The timing of these two events seems to escape many. We must recall that the late Franklin Khan came to Parliament and denied that Train 1 was shutting down.

“BP had informed NGC that no gas was available for Train 1 and NGC was therefore fully apprised regarding the non-availability of natural gas. Yet they went ahead to finance Train 1 on the hope that a temporary toggle of gas from Point Lisas would have justified that decision.”

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