Economists: Separate exploration and production company nothing new

ECONOMIST and energy and strategy consultant Gregory McGuire described NGC’s move to form a separate company, NGC Exploration & Production Ltd (NGCE&PL), to deal with exploration and production of the Dragon Gas field as “nothing new” in a conversation with Newsday on Monday.

“The formation of individual companies for exploration and production is normal. Nothing unusual about that.”

He explained that NGCE&PL may be a special-purpose company for the exploitation of the Dragon field.

Former energy minister and economist Kevin Ramnarine agreed, saying there were many benefits to taking that approach.

“It allows the liability of the project to be ring-fenced within the confines of the subsidiary. It is par for the course in the energy sector. That is how business is done internationally,” Ramnarine said.

National Energy Ltd, TTNGL Ltd, LABIDCO and NGC Green Ltd are part of NGC’s overall group of companies. The group also has more than 15 subsidiary companies and more than ten associated companies.

Mc Guire also noted that one of the first exploration and production projects undertaken by NGC was in 2013 when the group acquired the assets of France-based global company Total. Ramnarine was minister of energy at the time.

Ramnarine said the acquisition was different from forming a company as NGC acquired the assets from a company already existing and operating.

Ramnarine commends Venezuela’s transparency

Where the two economists' opinions differ is on the issue of transparency. While Mc Guire was not keen on having details on deals such as the Dragon deal shared in the public space, Ramnarine said the world is now moving more toward transparency.

He commended the Venezuelan Government for publishing details of the dragon deal and the license in its government’s Gazette on January 29.

“It is not something that is done in TT. Those things are secret documents. All governments, including the government that I was a part of, have been tight-fisted and closed with information. You will never see a copy of a production-sharing contract between a multi-national company and a ministry of energy.”

“That may have served a purpose for that time but the world is trending toward transparency.”

Venezuela was not the only country to divulge information. Ramnarine noted that Guyana also publicised its production-sharing agreement with Exxon. Ramnarine said it was a wake-up call to TT and may be a sign that it is time for a conversation about transparency in energy arrangements.

“Maybe we don’t have to put the entire thing out but at least a fact sheet that is agreed upon by both parties so the public is aware of what decisions are being taken on their behalf.”