This coun­try’s ma­jor en­er­gy play­ers have agreed that the sim­pli­fied At­lantic LNG com­mer­cial struc­ture will en­able the free­ing-up of re­sources, to fo­cus on in­creas­ing op­er­a­tional ef­fi­cien­cy and re­li­a­bil­i­ty.

In fact, Eu­gene Okpere, se­nior vice-pres­i­dent and coun­try chair, Shell T&T Ltd said this new frame­work is crit­i­cal for the long-term sus­tain­abil­i­ty of T&T’s gas val­ue chain as it pro­vides a high­er lev­el of com­mer­cial cer­tain­ty, to un­der­pin mul­ti-bil­lion-dol­lar in­vest­ments in the up­stream.

“It will en­able and sup­port the com­pet­i­tive­ness of gas sup­ply projects in the medi­um and longer term, like Shell’s Man­a­tee project which is one of the largest un­de­vel­oped nat­ur­al gas fields in the coun­try,” Okpere ex­plained as he and oth­er At­lantic share­hold­ers were present at the sign­ing cer­e­mo­ny of the com­mer­cial term sheets for the re­struc­tur­ing of At­lantic LNG.

In 2018, the Gov­ern­ment recog­nised the con­text for T&T’s en­er­gy in­dus­try was un­der­go­ing a fun­da­men­tal change and be­gan dis­cus­sions with the ma­jor play­ers in the lo­cal in­dus­try.

This was how the idea for a sim­pli­fied At­lantic LNG val­ue chain was born, Okpere not­ed.

The sim­pli­fied At­lantic com­mer­cial struc­ture, he said, will en­able the free­ing up of re­sources, to fo­cus on in­creas­ing op­er­a­tional ef­fi­cien­cy and re­li­a­bil­i­ty.

Ac­cord­ing to Okpere as the world tran­si­tions to a low­er car­bon en­er­gy fu­ture, LNG will con­tin­ue to play a sig­nif­i­cant role in de­vel­op­ing new mar­kets for gas and sup­port­ing the switch away from coal-in­ten­sive en­er­gy sys­tems.

To­day, over two bil­lion peo­ple still de­pend on coal for their en­er­gy needs.

Shell, Okpere added, has been a pi­o­neer in LNG for more than 50 years and is a world lead­ing LNG trad­er, de­liv­er­ing car­goes to more than 25 coun­tries.

“At­lantic LNG plays an im­por­tant role in the glob­al Shell port­fo­lio as we con­tribute to ful­fill­ing the en­er­gy needs of the lo­cal and in­ter­na­tion­al mar­kets,” he added.

This agree­ment al­so sees the Na­tion­al Gas Com­pa­ny (NGC) in­crease its share­hold­ing in the sim­pli­fied At­lantic LNG there­by, en­hanc­ing de­rived ben­e­fit for T&T.

Dis­cus­sions around the ide­al com­mer­cial and own­er­ship struc­ture for the At­lantic fa­cil­i­ty how­ev­er, have been pro­tract­ed, not just be­cause of the com­plex­i­ty of ex­ist­ing arrange­ments, but be­cause it was im­per­a­tive to get it right, NGC’s pres­i­dent Mark Lo­quan said.

“We need­ed to land on an agree­ment that con­sid­ered the in­ter­ests of all stake­hold­ers along the nat­ur­al gas val­ue chain and al­though the mul­ti-par­ty process was, at times, ar­du­ous, com­plex and time con­sum­ing,” he ex­plained.

To un­der­stand the im­por­tance of the sign­ing, Lo­quan al­so con­tex­tu­alised At­lantic’s busi­ness in both the na­tion­al and glob­al econ­o­my.

“In T&T, a large frac­tion of the val­ue that we gen­er­ate from our gas de­rives from the LNG busi­ness. It stands to rea­son that the strength of our econ­o­my is tied to the health of that in­dus­try.

“Hav­ing an op­ti­mal com­mer­cial struc­ture for At­lantic will help stream­line our LNG busi­ness, and in the process, re­in­force that pil­lar of our na­tion­al econ­o­my.

“In T&T, a large frac­tion of the val­ue that we gen­er­ate from our gas de­rives from the LNG busi­ness. It stands to rea­son that the strength of our econ­o­my is tied to the health of that in­dus­try,” Lo­quan said.

Hav­ing an op­ti­mal com­mer­cial struc­ture for At­lantic, he added, will help stream­line the coun­try’s LNG busi­ness, and in the process, re­in­force that pil­lar of the na­tion­al econ­o­my.

More­over, Lo­quan al­so echoed it is ex­pect­ed that with the com­ple­tion of the At­lantic re­struc­tur­ing ex­er­cise, fo­cus can now be placed on in­vest­ment de­ci­sions to pur­sue de­vel­op­ment projects such as Man­a­tee and the deep­wa­ter acreage that will hope­ful­ly bring more gas in­to the sys­tem.

“With At­lantic’s fu­ture made more se­cure by this re­struc­tur­ing, we hope to see more de­vel­op­ment ac­tiv­i­ty, which ul­ti­mate­ly boosts gas avail­abil­i­ty and long-term sus­tain­abil­i­ty for the lo­cal gas in­dus­try,” he added.

The NGC Group is al­so spear­head­ing a num­ber of clean en­er­gy ini­tia­tives as part of its Green Agen­da.

And since nat­ur­al gas is recog­nised as a crit­i­cal fu­el for the en­er­gy tran­si­tion, LNG is a top tier so­lu­tion in its suite of car­bon mit­i­ga­tion strate­gies.

Ac­cord­ing to Lo­quan NGC is con­fi­dent that the re­struc­tur­ing of At­lantic will al­low the com­pa­ny to bet­ter serve its grow­ing mar­kets, pos­si­bly in­crease its eq­ui­ty stake in the busi­ness, and strength­en its sup­port of glob­al de­car­bon­i­sa­tion ef­forts through LNG.

At­lantic con­tin­ues to play an im­por­tant role as a glob­al sup­pli­er of LNG as in 2021, ac­cord­ing to bpTT’s sta­tis­ti­cal re­view of world en­er­gy mar­kets, LNG car­goes from At­lantic made their way to 18 coun­tries over­seas. And for bpTT, the sign­ing of these agree­ments is very time­ly.

David Camp­bell, bpTT’s pres­i­dent said, “We have just tak­en a fi­nal in­vest­ment de­ci­sion on our next gas de­vel­op­ment Cypre and we have a se­ries of fu­ture po­ten­tial gas de­vel­op­ments and in­ter­est in pro­gress­ing deep­wa­ter ex­plo­ration and pro­duc­tion.

“These com­mer­cial terms will sup­port our abil­i­ty to com­pete for cap­i­tal with­in bpTT to fur­ther our in­vest­ments in T&T. This is an ex­cit­ing time for the T&T en­er­gy sec­tor and we at bp are proud to play our part in se­cur­ing T&T’s en­er­gy fu­ture,” Camp­bell said.

He added that clar­i­ty of com­mer­cial terms will be im­por­tant to sup­port con­tin­ued in­vest­ment in the up­stream and the sanc­tion of the next wave of up­stream gas projects.

And while the agree­ment is im­por­tant there is a wider mes­sage, the im­por­tance of col­lab­o­ra­tion, Camp­bell ac­knowl­edged.

“Al­though my time in T&T has not been very long, what is clear to me is that there is a com­mit­ment to col­lab­o­ra­tion on the de­vel­op­ment of T&T’s en­er­gy sec­tor, and this agree­ment--in fact the ne­go­ti­at­ing process--is a clear demon­stra­tion of that com­mit­ment,” he not­ed.

Side­bar

In March 2019, the share­hold­ers of At­lantic LNG signed a let­ter of in­tent af­firm­ing their will­ing­ness to agree to dis­cuss with Gov­ern­ment the re­struc­tur­ing of At­lantic LNG.

In April 2020, the share­hold­ers sub­mit­ted a pro­pos­al to Gov­ern­ment to com­mence ne­go­ti­a­tions on a Heads of Agree­ment which was to be fol­lowed by de­fin­i­tive agree­ments.

Fol­low­ing in­ten­sive ne­go­ti­a­tions agree­ment was reached on a Heads of Agree­ment (HOA).

On Jan­u­ary 25, 2022 the Gov­ern­ment and At­lantic LNG Share­hold­ers signed the HOA that out­lined the gov­ern­ing prin­ci­ples re­ferred to as the Gov­ern­ment prin­ci­ples that will form the ba­sis of the de­fin­i­tive re­struc­tur­ing agree­ments for the re­struc­tur­ing of At­lantic LNG.

The HOA rep­re­sent­ed a com­mit­ment by all par­ties to com­mit to en­ter in­to good faith ne­go­ti­a­tions re­gard­ing the re­struc­tur­ing of the At­lantic fa­cil­i­ty in­to a uni­tized mod­el with a com­mon own­er­ship struc­ture and a com­mer­cial frame­work for gas sup­ply and off­take.

The HOA al­so out­lined the Gov­ern­ment prin­ci­ples which formed the guide­lines of the ne­go­ti­a­tions that took place over the last 11 months.