PM in Doha: ALNG restructuring will bring more revenue for Trinidad and Tobago

THE Prime Minister is confident that the restructuring of Atlantic LNG (ALNG) will improve the revenue Trinidad and Tobago earns from the export of LNG (liquefied natural gas) from the company's plant in Point Fortin.

Dr Rowley made this statement when he addressed the Sixth Summit of Heads of State and Government of the Gas Exporting Countries Forum (GECF), in Doha, Qatar on Tuesday.

"Natural gas has been the cornerstone of our economic development from the mid-1980s when gas superseded oil as the primary hydrocarbon."

Rowley identified the critical role played by natural gas in supporting TT's petrochemical and liquefied natural gas (LNG) industries. "TT has ten ammonia plants, seven methanol plants and four LNG Trains, all of which depend on natural gas as the primary feedstock."

While a viable and sustainable petrochemical sector is important to the long-term health of the economy, Rowley said there are challenges.

"On one hand, upstream producers have been requiring higher prices to adequately compensate for the higher production costs associated with operating in a mature hydrocarbon basin."

On the other hand, he continued, "We have a mature downstream petrochemical industry operating in a competitive global environment."

Rowley said TT's 2015 Gas Master Plan Report prepared by UK Consultants Poten and Partners confirmed that TT "lost US billions in potential revenue from LNG exports."

In light of this, Rowley said, "The Government has been having dialogue with companies to ensure a more equitable sharing of LNG revenues."

He added that this dialogue provides "an opportunity to correct this inequality consequent on the pending expiration of LNG licences and plans to restructure the LNG business in TT."

On January 25, Government and ALNG stakeholders signed a heads of agreement (HoA) that will guide the company's restructuring. The HoA is being executed by Government, BP, Shell TT Ltd and the National Gas Company (NGC).

In a statement on January 25, the Energy Ministry said, "Following intensive negotiations, agreement has been reached on a HoA. BP, Shell and NGC have committed to continue good-faith discussions on the basis of agreed principles and to use reasonable efforts to negotiate and execute definitive restructuring agreements (DRAs) for the ALNG Restructuring Project." The ministry said the proposed date for completion and execution of the DRAs is June 30.

Shell said the HoA would also lay the platform to accommodate expected future progress from upstream investments for the benefit of TT.

BP said, "This provides a framework for continued co-operation among all stakeholders to a create a simpler commercial structure to support more efficient utilisation of the LNG trains and improve value to TT."

Sources told Newsday last month the objective of the HoA is to restructure ALNG so its shareholders would own certain percentages in the new entity, as opposed to having ownership in its four trains. In the current arrangement, Government, through NGC, only has shares in trains One and Four. While the HoA may not immediately address issues concerning Train One, which is currently shut down, sources said a restructured ALNG could allow Government, through the NGC, to access a portion of the revenues from trains in which it currently has no shares.Train One has been shut down since November 2020.

Rowley also told the summit that Government has engaged the UK firm Gas Strategies Group Ltd. The company's mandate is to evaluate the gas value chain, to make proposals for changes in policies, structure, regulation and governance of the gas value chain to sustain and maximise the value to TT from its gas resources, He said the advent of shale gas in the United States meant this country is no longer the principal market for TT's LNG and this is now "directed to a wider spectrum of markets."

But with the majority of LNG contracts still based on Henry Hub, the US market price, Rowley observed, "This situation is to the disadvantage of TT."

These kinds of situations underscore the importance of TT's membership in the GECF since 2008. TT is one of the forum's 19 member states.

Rowley said, "The experience of the forum which possesses 70 per cent of the world’s proven gas reserves, 44 per cent of its marketed production, 52 per cent of pipeline, and 51 per cent of LNG exports in the world is formidable and can be of immeasurable benefit to members."

But he added, "If we are to maintain our leading position in the global gas market in this changing environment there must be meaningful collaboration and co-operation at all levels."

He was confident that in light of ongoing international energy developments, the GECF will coalesce and remain a cohesive force in this dynamic environment.

"Global gas and LNG markets have been undergoing structural changes, fluctuating between periods of convergence as well as divergence when oil prices are high."

He observed, "This volatility makes budgeting, for sovereign countries, extremely difficult. The GECF Global Gas Model is a valuable tool which can assist member countries such as TT in navigating this price volatility."

While natural gas is the cleanest of the fossil fuels, Rowley said, "There is a need to reduce its emissions intensity by the elimination of gas flaring and purging , the wider implementation of leak detection and repair programmes to eliminate methane emissions, and carbon sequestration." He also said an important element to the increase in demand for natural gas is a growing and more flexible LNG market, that has enabled global competition for gas supply. Rowley saw the GECF's Gas Research Institute playing an important role to GECF members and the international gas community in "expanding co-operation in the development, deployment and transfer of advanced technologies in the gas sector, upstream, midstream and downstream."

Current shareholding arrangement in Atlantic LNG

Existing shareholder arrangements in ALNG's four trains

Train One: Shell 46 &, BP 34 per cent, NGC ten per cent, CIC ten per cent.Train Two: Shell 57.5 per cent, BP 42.5 per cent.Train Three: Shell 57.5 per cent, BP 42.5 per cent.Train Four: Shell 51.11 per cent, BP 37.78 per cent, NGC 11.11 per cent.