Is some­thing fun­da­men­tal­ly wrong with the Na­tion­al Gas Com­pa­ny’s (NGC) style of ne­go­ti­a­tions?

The ques­tion is be­ing asked be­cause since the ap­point­ment of the cur­rent board there has been un­ease among multi­na­tion­al com­pa­nies about the pace, tone and tenor of ne­go­ti­a­tions with the NGC.

There are at least three in­ci­dents in the pub­lic do­main that raise ques­tions about the coun­try’s flag­ship en­er­gy com­pa­ny.

One is the pro­tract­ed ne­go­ti­a­tions with bpTT and EOG Re­sources for which no so­lu­tion seemed in sight be­fore Prime Min­is­ter Dr Kei­th Row­ley went to Hous­ton and bro­kered a so­lu­tion among the three com­pa­nies. While these ne­go­ti­a­tions were on­go­ing, bil­lions of US dol­lars in in­vest­ment were be­ing with­held from T&T by BP and EOG.

Then there was the un­prece­dent­ed turn­ing off of nat­ur­al gas to the Methanol Hold­ing plant—which is still shut down with work­ers un­em­ployed—as well as the CNC am­mo­nia plant, be­cause the NGC was un­able to reach an agree­ment with these com­pa­nies.

An­oth­er mat­ter of con­cern is the re­cent­ly signed Nu­trien deal which was reached af­ter two years of ne­go­ti­a­tion. By the par­ties own ad­mis­sion, set­tle­ment re­quired the in­ter­ven­tion of Prime Min­is­ter Row­ley.

Man­ag­ing di­rec­tor of Nu­trien Ian Welch, a for­mer school­mate of the Prime Min­is­ter, said at the sign­ing cer­e­mo­ny: “We must thank our Prime Min­is­ter, Dr Kei­th Row­ley, Stu­art Young and Franklin Khan for the piv­otal role each has played in bring­ing these ne­go­ti­a­tions to a suc­cess­ful con­clu­sion. They helped to cre­ate an en­abling en­vi­ron­ment for our ef­fec­tive col­lab­o­ra­tion. When­ev­er we ap­peared to be stalled, they, in­di­vid­u­al­ly and to­geth­er, did what was nec­es­sary to keep us mov­ing in the right di­rec­tion, for the ben­e­fit of all stake­hold­ers.”

What Wekch did not say, and what many ex­ec­u­tives in the down­stream sec­tor will ad­mit pri­vate­ly, is that they find the NGC’s style of ne­go­ti­at­ing is to make un­re­al­is­tic de­mands and its start­ing po­si­tion is nev­er based on the re­al­i­ty of to­day’s eco­nom­ics. Adding that this makes it dif­fi­cult to come to a win-win sit­u­a­tion.

Pres­i­dent of the NGC Mark Lo­quan, re­spond­ing to com­plaints about the com­pa­ny’s style of ne­go­ti­a­tions, said: “I would dis­agree quite a lot with that be­cause I think we know that we are in a dif­fi­cult sit­u­a­tion. I think it does re­quire us lis­ten­ing to the cus­tomers and it does re­quire the down­stream­ers to un­der­stand the changes in the land­scape.

So if we ap­proach the ne­go­ti­a­tion in such a way that there is mu­tu­al re­spect, where we are in­ter­est­ed in the long term we can get re­sults as to­day has proven.”

On the is­sue of the Nu­trien ne­go­ti­a­tions—which took two years to com­plete and re­quired the in­ter­ven­tion of Dr Row­ley and oth­er se­nior gov­ern­ment of­fi­cials—he said: “There are some things I can say and some things I can­not say. The ap­proach to me has been very pro­fes­sion­al.”

There is no doubt that the land­scape has changed. The NGC is buy­ing more ex­pen­sive gas from up­stream pro­duc­ers, has re­duced vol­umes and is en­ter­ing in­to short­er term con­tracts.

The com­pa­ny is al­so fac­ing law­suits from down­stream com­pa­nies for short­ing them on gas with no re­course to sup­pli­ers be­cause the con­tracts ne­go­ti­at­ed do not in­clude penal­ties to up­stream pro­duc­ers for short­ing the NGC gas. In ad­di­tion, petro­chem­i­cal com­pa­nies are fac­ing ad­di­tion­al com­pe­ti­tion from shale gas in the Unit­ed States.

The NGC al­so has to try to get the great­est val­ue for the peo­ple of T&T and, just like the down­stream com­pa­nies, that are try­ing to max­imise their prof­its by mak­ing the best mar­gins, it has a fidu­cia­ry re­spon­si­bil­i­ty to get the most for this coun­try.

How­ev­er, there must be a mid­dle ground, a place where cap­i­tal feels wel­comed and where there is rea­son­able­ness. With sev­er­al gas con­tracts com­ing to an end next year, time will tell if the NGC’s ap­proach is more harm­ful than good.