(Trinidad Guardian) NiQuan Energy has been forced to put its plant to sleep (it is now offline) because it has neither natural gas nor permission to run it.
That is because on August 14 the Government, through the Trinidad and Tobago Upstream Downstream Energy Operations Company Limited (TTUDEOCL), terminated its contract with the company over sums owed to it.
On August 21, Justice Kevin Ramcharan denied NiQuan an injunction to compel the State to supply natural gas to the plant.
Without a natural gas contract in place, NiQuan’s goal to get its Gas-to-liquids (GTL) plant fully operational has ground to a halt at this time.
NiQuan owed the TTUDEOCL US$21 million for natural gas contractually given to it. Up until April 2023, that sum was US$19 million. In turn, TTUDEOCL owes the National Gas Company (NGC) the equivalent sum for the gas it sourced from the company over the past two years. The debt remains in NGC’s books.
NiQuan owes hundreds of millions to financiers in T&T–among them banks, credit unions, and investment companies. Even the Government, through Petrotrin, has preference shares in NiQuan.
In communication with investors, founder, and chief visionary officer Ainsley Gill said the GTL plant has been placed “into an Asset Preserving ‘Silent Mode.’”
Gill’s dilemma is that without money to pay off the debt to TTUDEOCL, NiQuan cannot secure another natural gas contract either with TTUDEOCL or the NGC. And without a natural gas contract in place, he cannot get gas to operate the plant to bring it to full commercial operability–ideally up to 2,640 barrels per day (bpd) for a consistent four-month period. The plant has been serially challenged with technical issues which delayed its commercial operationalisation.
The company’s cash flow has now dwindled to the point that it issued an urgent appeal to financiers to help pay off bills.
While it was able to pay off some items such as monthly insurance premiums and overdue electricity charges to T&TEC from funds raised from noteholders, it still needs money to maintain the integrity of the plant while it is ‘asleep’.
In a letter sent to Republic Bank last Monday, the company said that it needed US$95,361.95 ($638,925 TT) for two urgent payments.
The two payments needed were:
US$30,119.00 for payment to cover one load of nitrogen which is required to preserve the static equipment on the plant.
US$65,242.65 to cover diesel to maintain operability of the plant instrument air compressor, fire water pump, and other equipment.
In June 2018, Niquan signed a mortgage debenture with Republic Bank Limited (RBL) for US$24.5 million and offered as security the land and assets on it–the GTL plant.
The Sunday Guardian understands that investors are concerned about the future of the plant given that it is now idle.
Even with financing to pay off bills, one investor argued, it is a non-starter if it cannot source natural gas.
NiQuan has appealed the High Court’s refusal to grant an injunction to compel TTUDEOCL to supply it with natural gas.
On July 30, the Sunday Guardian exclusively reported that NiQuan had over US$250 million ($1.7 billion TT) in debt and was struggling to meet payments to the tune of millions owed to contractors.
NiQuan was set to refinance its bonds in the sum of US$300 million ($2 billion TT) by July 31, but the accident at its plant on June 15, which subsequently resulted in the death of 35-year-old pipe fitter Allanlane Ramkissoon, set it back.
The company has been unable to refinance its facility and interest on the debt has been accruing. NiQuan has had five extensions to repay its first bond as it met with challenges trying to get the plant, which at one point was relegated to scrap metal, up and operational.
Gill, a former US-based lobbyist in Washington DC under the Manning administration turned entrepreneur, bought and invested in the abandoned plant with the goal of turning it into the Western Hemisphere’s first GTL plant.
In 2018 when NiQuan acquired the plant, Petrotrin received a cash payment of US$10 million, with the remaining US$25 million paid in Preference Shares.
To complete the plant, a further capital injection of approximately US$125 million was required.
Govt facilitated NiQuan’s entry into the T&T economy
To facilitate the establishment of NiQuan, the Government set up TTUDEOCL, and accepted shares in NiQuan as partial payment.
NiQuan’s contract with the TTUDEOCL is for the sum of 31 million standard cubic feet per day (mmscf/d).
The Sunday Guardian understands that over the past two years, TTUDECOL has written numerous times requesting payment to NiQuan.
On June 22, 2021, former TTUDEOCL chairman Richard Jeremie wrote to Gill stating, “All terms of the Gas Sales Contract must be given an interpretation that makes commercial sense. It is not the intention of the Gas Sales Contract that NiQuan (the buyer) can take an unfettered number of years to achieve commercial operations of the GTL plant without making any payments for the gas received. This interpretation will result in an unsustainable and fragile business relationship and was not in the contemplation of the parties”
In court filings, which the Sunday Guardian obtained a copy of, TTUDEOCL said, “By letter dated 10 July 2023, TTUDEOCL gave notice to NiQuan that eleven invoices for gas supplied to NiQuan under the contract for the period May 2022 to March 2023 totaling US$19,197,824.55 were outstanding, that NiQuan had failed and/or refused to make payment for gas supplied as per the said invoices and that same amounted to a material breach for the purposes of Article 13 of the contract. These unpaid invoices are in respect of gas supplied to NiQuan for the periods 28 to 31 May 2022, 1 to 30 June 2022, 1 to 31 July 2022, 1 to 31 August 2022, 1 to 30 September 2022, 1 to 31 October 2022, 1 to 30 November 2022, 1 to 31 December 2022, 1 to 31 January 2023, 1 to 28 February 2023 and 1 to 31 March 2023.
“Pursuant to Article 13.l (b) of the contract, by the said letter NiQuan was given notice that the said breach must be remedied within thirty (30) days of the date of the said letter failing which the Contract will be terminated by operation of that Article.”
Despite this, NiQuan failed to pay the invoices in whole or in part and the contract was terminated by August 14.
Last week, Prime Minister Dr Keith Rowley at a press briefing said that the battle between NiQuan and the State reminds him of the song ‘Maga Dog’ by Jamaican artist Peter Tosh, which touches on themes of ingratitude and treachery.
He said that NiQuan and the Government cooperated to introduce GTL into T&T’s economy as an element of economic expansion.
“That is the singular basis in which the Government was involved with NiQuan, a private business,” he said.
“And in so doing the Government would have assisted in every way possible to see that NiQuan becomes successful, that is the long and short of that, but at the end of the day, public interest and private interest may not converge,” Rowley added.
Gill’s bid to reopen plant denied
Gill has unsuccessfully tried to engage the Ministry of Energy and Energy Industries (MEEI) to reopen the plant.
NiQuan provided two reports to the MEEI in the expectation that it would be cleared to recommence operations–a report of an Independent Root Cause Analysis Report, dated August 19, of an incident at the plant on June 15 and a copy of an Occupational Safety and Health Authority Agency Certificate of Compliance dated August 23.
He issued a release last Tuesday which said the plant “is completely functional, and ready to operate at capacity today”.
He said that “the only reason the facility is not currently online is due to the lack of the minimum daily quantity of gas supply which the Government of Trinidad and Tobago—through Trinidad and Tobago Upstream Downstream Energy Operations Company Limited (UD)–agreed to provide to NiQuan pursuant to the Government’s contractual obligation to source and secure such required quantities of gas to keep the plant operational.”
As it stands, no contract exists between NiQuan and any state entity that will allow it access to natural gas.
“Whilst NiQuan is looking to work with the Government to arrive at an amicable resolution, we must preserve our legal remedies pursuant to the Gas Sales Contract terms, to protect the company and its numerous investors and stakeholders,” he said.
Yet NiQuan has filed an appeal to compel the Government to give it gas to operate its plant.
“If the parties fail to resolve the matter amicably then, whether or not the interim injunctive and declaratory reliefs are granted following the appeal hearing, the matter may ultimately be referred to ICC Arbitration as prescribed under the GSC. Further, NiQuan has engaged Baker & McKenzie LLP in London and New York, and leading commercial King’s Counsel Mr Stuart Isaacs KC of Wilberforce Chambers, to initiate the mediation process; and also, if no resolution can be agreed, to have oversight of all parallel legal and international remedies pursued against UD and the GORTT,” it said in a statement to the Sunday Guardian two weeks ago.
At this time, NiQuan does not have authorisation from the MEEI to reopen its plant as its own investigation into the June 15 incident is not complete.
Sunday Guardian reached out to NiQuan but the company declined comment.
NiQuan investors
To fund its operations, NiQuan raised money on the international bond market, loans, and sums from local investors.
Local investors, according to the company’s filings dated June 5, 2023, include:
1. Banks–Republic Bank Limited and RBC Trust (Trinidad and Tobago) Limited and JMMB,
2. Insurance company–Beacon Insurance Company
3. Investment companies–Firstline Securities, Prime Capital Limited, JMMB Securities Limited, Waterloo Capital Advisors, KCL Capital Market Brokers Limited, Inshallah Investments.
4. Firms–Farm Chem Engineering Management Limited, GM Homes Limited, M&J Services Limited, Central Finance Facility Cooperative Society of Trinidad and Tobago Limited, Petrotrin and Washington DC registered, NiQuan Energy LLC (the company’s largest shareholder–10,702,216 ordinary shares)
5. Individual investors which include NiQuan’s board members and former permanent secretary in the Ministry of Finance, Alison Lewis, Nicholas Galt, and NiQuan’s chairman John Andrews.
NiQuan’s background
NiQuan is a private company and is a subsidiary of the Washington-headquartered NiQuan Energy LLC.
Its founder is Ainsley Gill, a former Washington-based lobbyist for T&T under the Patrick Manning administration, who under his firm Ainsley Gill and Associates, worked for US$325,000 every three months.
NiQuan was registered on July 17, 2012, by Gill and former chairman of Atlantic LNG, John Andrews.
The company’s financial history on the company’s registry shows new investors, different classes of shares issued, and at least two debentures from Firstline–the first in 2013 for US$7 million and the second in March 2018 for $1 million. The company signed a mortgage debenture with Republic Bank Limited (RBL) for US$24.5 million and offered as security the land and assets on it–the GTL plant.
The company’s capitalisation has come under scrutiny as well as its boards of directors.
It was first raised by PWC, the company in charge of putting the plant into receivership.
According to court documents, filed by NiQuan in 2013, PWC had requested more financial information from the company.
Gill, in his affidavit filed in court, acknowledged that PWC had requested more information on whether the company could have financially supported the venture.
NiQuan emerged as the preferred buyer but with no track record, except a website that boasts of it, NiQuan scooped up the GTL plant after it was put up for receivership under the People’s Partnership administration.
There are interlocking directorships between the parent and the subsidiary with the common denominator being Gill.
NiQuan’s chairman is John P Andrews and its vice chair is Alison Lewis. Former independent senator David Small was the company’s Group Vice President, Global Energy Services but exited the company last year.
NiQuan’s website said that it “believes that small and mid-scale GTL technology is proven technology, and is no longer an impediment to delivering a successful GTL project. The success of GTL projects is dependent on putting all of the pieces together so that it can be economically viable”.
In June 2018, former energy minister Franklin Khan said the project was “worthy of Government support” because the country would benefit from a US$35 million payment to Petrotrin, a capital injection of US$125 million into the economy, and $2 billion in taxes and statutory payments.
“During the construction phase, which is projected at 12 months, 700 jobs will be provided, and on completion, there will be 65 skilled permanent jobs and 650 indirect supply chain jobs.”