(Trinidad Guardian) The National Gas Company (NGC) now has a 10 per cent stake in a landmark agreement for a new commercial structure for Atlantic LNG, which was signed in London on Tuesday.
One year ago, the Government inked new agreements with regard to the restructuring Atlantic LNG with bpTT, Shell and the NGC, which changed the commercial structure of T&T’s liquefied natural gas entity – Atlantic LNG – for the first time in 27 years.
Yesterday’s signing culminates five years of negotiations between the parties and opens the door for greater revenue to be derived by the state from the Atlantic LNG trains.
For the Government and country, it means an increase in potential revenue, as Energy Minister Stuart Young had said Government stands to benefit financially from the restructuring. For the NGC, who remits taxes and dividends to the State, it means a greater stake in LNG business.
Quantifying the potential revenue, however, will depend on the global demand for LNG and T&T’s ability to keep supplying the three trains with natural gas. Presently, the Government is in negotiations with Venezuela to commercialise the Dragon Gas field, which would add longevity to the life of the trains and secure T&T’s energy future. As it stands, T&T is the seventh largest global producer of LNG.
For Shell and BPTT, the deal is sign of their commitment to continue investing in T&T.
Negotiations began in 2018 and were expected to be executed by March 31 but were only concluded last week.
In remarks following the signing in London yesterday, Prime Minister Dr Keith Rowley explained that it was a long journey since he had made the case to BPTT and Shell that the country was not getting enough revenue from the contracts first negotiated when the trains were set up, and asked them to re-negotiate.
“It was a fit of madness to think we could have done this but as I read it, I realised it was doable and we did it,” Rowley said.
He thanked all those involved in the restructuring process.
It is unprecedented for energy companies to open fixed contracts to re-negotiate with a government to give a country a greater stake in a business deal.
As such, Rowley counted it as a major win for the Government in terms of its ability to negotiate and expressed certainty that just like other countries have used the Atlantic Trains template, T&T will use the template in future negotiations.
As part of negotiations with energy companies over the past five years, the State has earned an additional $15 billion in revenues.
The latest agreements were signed by Young on behalf of the State.
Young began restructuring negotiations in 2018 in his capacity as Minister in the Office of the Prime Minister and concluded as Minister of Energy.
In a media statement, BP said the new structure will also facilitate a market-reflective pricing mechanism that provides fair value from the sale of LNG for both T&T and the shareholders and will allow for an intensified focus on the operational efficiency and reliability of Atlantic.
BP said for investors, it will provide the certainty required for sanctioning the next wave of upstream gas projects.
bpTT president David Campbell said, “bp welcomes the new structure for Atlantic LNG which has come as a result of close collaboration with all stakeholders. The new structure will benefit both the Government of Trinidad and Tobago, as well as Atlantic’s shareholders. For bp, the new structure sets a strong foundation for future investment in T&T’s energy industry, including the deepwater.”
Meanwhile, the NGC said it is excited by the future prospects of the new shareholding arrangement and is prepared to leverage its current participating interest in Atlantic LNG to generate maximum value for the country.
“The landmark commercial arrangement for the facility signals the country’s pursuit of excellence on a global scale, in an effort to maximise all opportunities for bolstering the sustainable development of Trinidad and Tobago’s LNG and energy sectors,” NGC said.
“The company reaffirms its commitment to seek avenues to optimise the performance of this arm of its business. NGC has strengthened its resilience in the face of a transitioning energy future and will continue to act in the best interest of the citizens of Trinidad and Tobago.”
