Lead Editor–Newsgathering
kejan.haynes@guardian.co.tt
The dispute between the National Gas Company (NGC) and Methanex over the indefinite idling of the Titan methanol plant has renewed debate over whether natural gas prices from state-owned companies should remain confidential even after gas supply contract negotiations have ended.
On Tuesday, NGC maintained that gas supply volumes were not the issue in discussions with Methanex and said the company had been offered the same contracted volume under the expiring agreement, with the possibility of additional supplies if required. Instead, NGC said the disagreement centred on price.
NGC said Methanex sought a gas price that was significantly lower than that contained in the expiring contract and below NGC’s own acquisition cost.
“The requested price was also below NGC’s acquisition cost of gas and below the rates applied to NGC’s Light Industrial and Commercial customers, as well as to companies within the NGC Group,” the company said.
NGC added that agreeing to such a price would not have been consistent with its commercial obligations or its responsibility to maximise value from the country’s natural gas resources on behalf of citizens.
The dispute has again raised questions about how gas prices are determined and whether greater transparency is needed in an industry built on a national resource.
Earlier this year, this newspaper sought documents through the Freedom of Information Act relating to Nutrien’s shutdown and subsequent gas arrangements involving Proman.
NGC refused to disclose the records, arguing that releasing pricing structures and contractual arrangements would harm its commercial interests and those of third parties.
Yet, in its response, NGC acknowledged several arguments in favour of disclosure.
The company noted that “given the significant economic implications, public disclosure ensures that the Government is acting in the best interests of its citizens.”
It also stated that “transparency helps prevent corruption, mismanagement, and backdoor dealings that may not align with national interests.”
NGC further accepted that “natural gas is a national resource, and its extraction, pricing, and distribution should be openly discussed.”
The company also recognised that “ensuring a fair deal for the country is crucial, and public scrutiny can help identify whether the terms are favourable” and that “clarity on pricing mechanisms, revenue-sharing and legal obligations ensures fairness.”
Despite those arguments, NGC concluded that the public interest was better served by keeping the information confidential.
The company argued that “the arrangements surrounding NGC’s supply to the downstream gas-based sector are highly confidential, as NGC seeks to safeguard the energy sector and protect the economy.”
It also maintained that if the documents were disclosed, NGC’s ability “to negotiate and obtain competitive selling purchase prices from its downstream customers would be severely and adversely compromised.”
According to the State company, “an uncompetitive selling price would translate into reduced profitability of NGC and reduced revenues for the Government and the country.”
NGC further argued that making public the terms of gas agreements would “severely compromise NGC’s ability to negotiate a lower purchase price from upstream suppliers, with negative effects on the country’s economic fortunes.”
The company warned that such a development would have “a disastrous knock-on effect on the natural gas sector, which will ultimately impact the whole economy.”
NGC also maintained that disclosure could place it in breach of contractual obligations and said that “any disclosure of confidential pricing structures and negotiated terms could result in respective parties terminating any of the contractual documents.”
Energy consultant Gregory McGuire said calls for greater transparency must be considered within the unique structure of T&T’s gas market.
“The case for transparent gas prices is often based on evidence from markets in large countries. However, the market structure in these countries, with thousands of customers and dozens of suppliers and an open pipeline system, is competitive and fundamentally different from our market, which has a few suppliers and customers with a merchant/pipeline in the form of NGC sitting in the middle,” he said.
McGuire said discussions about making gas prices public should be accompanied by broader policy decisions regarding NGC’s role in the T&T economy.
“Conversations about transparent pricing need to be had together with policy decisions about the role of NGC, open access to the pipeline, and the wider interest of T&T, as it relates to gas allocation and the share of the value chain,” he said. McGuire noted that the only publicly known gas price has historically been that charged to the light industrial and commercial (LIC) sector.
“That is because there are over 100 customers taking small volumes and natural gas to the LIC competes with LPG (cooking gas) and diesel as alternative fuels,” he said.
Some energy experts, however, argue that the end of negotiations removes many of the commercial sensitivities that justify secrecy.
They contend that there is nothing preventing NGC from disclosing the relevant pricing information now that discussions with Methanex have concluded.
Some have also questioned which acquisition cost is being used by NGC, noting that the company purchases gas from multiple suppliers that may operate under different contractual arrangements and negotiated prices.
They argue that if NGC has generated profits over the life of those contracts, it could potentially accommodate lower prices for downstream customers without incurring overall losses.
Others have also suggested that NGC could seek to renegotiate its own supply agreements with upstream producers, noting that such commercial adjustments are not uncommon within the energy industry.
Methanex, meanwhile, has maintained that a significantly lower gas price was necessary for the Titan plant to remain economically viable. In announcing the decision to indefinitely idle the facility, Methanex president and CEO Rich Sumner said the move reflected the company’s focus on “preserving long-term shareholder value in a challenging environment where the structurally tight gas supply and demand balances in Trinidad and Tobago are making operations commercially unviable.”
The company said it would preserve the facility to allow for a possible restart should conditions materially improve in the future.
McGuire said the current supply constraints have also exposed wider policy questions beyond individual commercial disputes.
“The current situation of tight supply calls into question several policy issues, gas allocation between domestic industry and LNG, NGC’s role as aggregator, merchant and transporter, and with it the prospect of direct sale from suppliers to consumer, NGC pricing strategy, short-term profit maximisation versus long-term market sustainability,” he said.
“These are complex issues that do not seem to be part of the conversation today but are very germane to the long-term viability of our energy sector, particularly in the context of other regional gas producers in competition for new investment.”
