Atlantic LNG’s (ALNG) new heads of agreement between the Government and energy powerhouses Shell and bpTT will see a greater involvement in the supply and marketing of LNG by the State, said the Prime Minister during the signing with ALNG shareholders at Hilton Trinidad, Port of Spain on Tuesday.
“Until now, all marketing of the energy minister’s share of natural gas in production sharing contracts was undertaken by the operator, on behalf of the minister,” said Dr Rowley.
He said in the recently executed Manatee field production sharing contract with Shell, the minister will be taking a more active role in the marketing of the gas. Rowley added that in the new ALNG structure the National Gas Company (NGC) will have a new and increased shareholding.
“This shift in policy enables the State to play a more in-depth role in the commercial arrangements for the marketing of LNG which will be consistent with the actions of most gas-exporting countries,” Rowley said.
Government, Shell and bpTT have been working on this agreement since 2018, and recently reached agreement on issues such as the terms and conditions of the licence, stakeholder participation in the new, restructured ALNG, third party access and a commitment to gas supply for all trains.
In 2019 shareholders signed a letter of intent to discuss the restructuring of ALNG with Government and submitted a proposal to begin negotiations. In January, shareholders signed the heads of agreement that outlined the governance principles that would form the basis of the final agreement – the Definitive Restructuring Agreement – which is expected to be signed at the end of March, 2023.
“The heads of agreement represented a commitment by all parties to commit to enter into good-faith negotiations regarding the restructuring of the Atlantic facility into a unitised model with a common ownership structure, a commercial framework for gas supply and offtake, and transitioning of the Atlantic facility into a single unitised facility,” Rowley said. “This has never been done before.”
Energy Chamber president Dax Driver said the agreement was pivotal for the future of the energy industry in TT.
“The key to creating supply of gas is the investment dollars going into exploration and development of the resources upstream,” Driver told Newsday after the signing. “Creating that long-term security would make investors more comfortable to invest upstream and would help investors make that final decision.”
In a release, the Energy Chamber said: “Securing future gas supply, and a fair return for all stakeholders, is not just important for the upstream, midstream and downstream companies and the Government; it is also important for all of the service companies and contractors who service the industry and all of their employees.”
Senior vice president and country chairman of Shell TT Eugene Okpere said the new structure of ALNG will play a critical role in the long-term sustainability of the country’s gas value chain.
“The early stages of covid19 and the ensuing economic crisis led to record low energy prices,” he said. “Now we have near record high energy prices as a result of the tragic Russian/Ukrainian war.”
“As we contemplate the future, we can expect even more uncertainty and volatility in the global energy system as we tackle the enormous challenge of energy transition and the ever-increasing need for secure, affordable and cleaner energy.”
bpTT president David Campbell said natural gas will continue to play a key role in the energy mix for decades to come, which would bode well for ALNG which plays an important role as a global LNG supplier.
“We are witnessing increasing demand for natural gas because of current global events, but the outlook for gas remains positive over the long-term.”