Asha Javeed

Lead Ed­i­tor In­ves­ti­ga­tions

asha.javeed@guardian.co.tt

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 yes­ter­day.

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 liqui­fied 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 yes­ter­day, 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.”

He thanks PM Row­ley and Young for their per­son­al stew­ard­ship of the com­plex ne­go­ti­a­tions.

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.”

Share­hold­ing struc­ture

The share­hold­ers of At­lantic LNG are now bpTT, Shell and the NGC.

The Chi­na In­vest­ment Cor­po­ra­tion (CIC), which had an eq­ui­ty in­ter­est in AL­NG Train One, ex­it­ed last year.

Be­fore, the ex­ist­ing share­hold­er arrange­ments in AL­NG’s four trains were:

Train One: Shell – 46 per cent; BP – 34 per cent; NGC – 10 per cent; CIC – 10 per cent.

Train Two: Shell – 57.5 per cent; BP – 42.5 per cent.

Train Three: Shell – 57.5 per cent, BP – 42.5 per cent.

Train Four: Shell – 51.11 per cent, BP – 37.78 per cent, NGC – 11.11 per cent

Since last year’s agree­ment, rather than sep­a­rate share­hold­er arrange­ments which pre­vi­ous­ly ex­ist­ed for the four trains, the three share­hold­ers now op­er­ate as a uni­tised en­ti­ty for the three op­er­a­tional trains.

In de­liv­er­ing the fea­ture ad­dress in No­vem­ber 2022, Prime Min­is­ter Dr Kei­th Row­ley had said that the new AL­NG struc­ture will see a greater in­volve­ment by the State in the sup­ply and mar­ket­ing of LNG.

To this end, there will be more in­volve­ment by the Min­is­ter of En­er­gy and the NGC.

“Un­til now, all mar­ket­ing of the min­is­ter’s share of nat­ur­al gas in Pro­duc­tion Shar­ing Con­tracts was un­der­tak­en by the op­er­a­tor, on be­half of the min­is­ter (GOTT). In the re­cent­ly ex­e­cut­ed Man­a­tee Field PSC with Shell, the min­is­ter will be tak­ing a more ac­tive role in the mar­ket­ing of nat­ur­al gas to be pro­duced from that field,” Row­ley had sa­di then.

“NGC, which will have a new and in­creased share­hold­ing in the new At­lantic LNG struc­ture, will ben­e­fit from this vari­a­tion in the mar­ket­ing of the min­is­ter’s share of pro­duc­tion. This shift in pol­i­cy en­ables the State to play a more in-depth role in the com­mer­cial arrange­ments for the mar­ket­ing of LNG which will be con­sis­tent with the ac­tions of most gas ex­port­ing coun­tries.”

Dr Row­ley had not­ed that T&T will ben­e­fit from in­creased rev­enues from the new ne­go­ti­a­tions.

He ex­plained that in the Amend­ed and Re­stat­ed HOA, the par­ties had agreed in prin­ci­ple to for­mu­lae which are mar­ket re­flec­tive and are pat­terned on the Train 1 FOB Pric­ing For­mu­la.

“From in­cep­tion in 2018, the Train 1 FOB price main­tained on av­er­age a US$2.0 per mmb­tu dif­fer­en­tial over Hen­ry Hub. How­ev­er, by the com­mence­ment of fis­cal 2022, this dif­fer­en­tial had in­creased to US$6.0 per mmb­tu and rose as high as US$16.0 per mmb­tu in fis­cal 2022. The com­bi­na­tion of im­proved glob­al en­er­gy prices, new mar­ket­ing arrange­ments for LNG and mea­sures in­tro­duced by this Gov­ern­ment, as well as con­tracts ne­go­ti­at­ed in our down­stream Petchem sec­tor, have re­sult­ed in en­er­gy rev­enue for fis­cal 2022 of over $29.0 bil­lion com­pared to an av­er­age of $10.0 bil­lion for the pre­ced­ing five-year pe­ri­od. Whilst high­er com­mod­i­ty prices are part of the ba­sis for this in­creased rev­enue, it is al­so di­rect­ly re­lat­ed to the bet­ter terms that have been ne­go­ti­at­ed since 2017,” he had said.

“The re­struc­tur­ing of At­lantic LNG has giv­en us the op­por­tu­ni­ty to rein­vent the LNG Busi­ness in Trinidad and To­ba­go.

“If we are to make this project a suc­cess, we need to bring these up­stream projects on stream and ac­ces­si­ble to the Re­struc­tured AL­NG Fa­cil­i­ty. As a Gov­ern­ment, we are pre­pared to in­ter­vene if nec­es­sary but hope that the par­ties will take an ac­com­mo­dat­ing stance with­out jeop­ar­dis­ing their com­mer­cial in­ter­ests. We have shown that we are a strate­gic and proac­tive Gov­ern­ment in the en­er­gy sec­tor and I as­sure all of our stake­hold­ers that we will con­tin­ue to work with you to en­sure that we re­main a lead­ing and com­pet­i­tive province.”

New At­lantic LNG deal time­line

2018 - The Gov­ern­ment ini­ti­at­ed dis­cus­sions with the coun­try’s ma­jor gas pro­duc­ers BP Trinidad and To­ba­go LLC and Shell Trinidad and To­ba­go Lim­it­ed on gas re­lat­ed is­sues. One ma­jor ob­jec­tive of the ne­go­ti­a­tions with BPTT and Shell was an agree­ment by the par­ties to re­struc­ture At­lantic LNG.

2019 - In March, the share­hold­ers of At­lantic LNG signed a let­ter of in­tent to dis­cuss the re­struc­tur­ing of At­lantic LNG.

2020 - 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).

2022 - 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 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 uni­tised mod­el with a com­mon own­er­ship struc­ture, a com­mer­cial frame­work for gas sup­ply and off­take, and tran­si­tion­ing of the At­lantic Fa­cil­i­ty in­to a sin­gle Uni­tised Fa­cil­i­ty.

De­cem­ber 2022 - Par­ties agreed to amend and re­state the orig­i­nal HOA dat­ed Jan­u­ary 25, 2022, with agreed terms of the De­fin­i­tive Re­struc­tur­ing Agree­ments in the sub­stan­tive is­sues which were built on the Gov­ern­ment Prin­ci­ples and the Com­mer­cial Con­struct was forged by the par­ties.

De­cem­ber 5, 2023- New Re­struc­tur­ing Agree­ment fi­nalised.