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With MMBtu spelt out: T&T lost US$120M in LNG deal with BP
Trinidad and Tobago lost US$120 million ($771.6 million) in revenue between 2009 and 2012 while a Liquified Natural Gas (LNG) marketing arrangement with BP, approved by the previous administration, was in effect, Energy Minister Kevin Ramnarine told the Senate last week.
Responding to Opposition Leader Keith Rowley’s statements during the debate in the Lower House of the Appropriation Bill 2012 for Financial Year 2013 when “he (Rowley) spoke about the need to capture more value from LNG,” Ramnarine said: “I am in agreement with the Leader of the Opposition, but he was part of the Cabinet that presided over the National Gas Company (NGC) giving this contract to BP.”
Ramnarine said that in 2011 “under this administration, under the distinguished chairmanship of one Larry Howai (then NGC chairman), the NGC served notice to BP that they would be decontracting this arrangement, which means basically they would be putting this arrangement to an end, and they had to give 12 months’ notice for that to happen, so that brings us to 2012.”
He said the first cargo was lifted on August 17, 2012 and it was sold via an international bidding process. After assessment of all bids, he said, the cargo was awarded to a company called Gunvor, a trading company with offices in Singapore and Geneva.
“Details of the winning bid are as follows: the volume lifted 118,000 cubic metres of LNG and the price—this is the important one —and the price the NGC got $9.25 per MMBtu (million British thermal unit),” he said. In dollars and cents, the minister said, this means that based on the above $9.25 per MMBtu and the volume, this cargo earned revenue of US$25 million for the NGC.
Ramnarine said a calculation on what would have been earned had this cargo been marketed under the previous arrangement, shows that “we would have gotten a price of around US$1.60 per MMBtu. That is US$4.3 million. Therefore, by making this very bold and strategic move, the NGC was able to gain over US $20 million in incremental revenue on one cargo.”
After 13 years exporting LNG, and complaining that “we have not captured the correct value, or captured enough value from the liquefied natural gas industry, which is now one of the pillars of the economy of Trinidad and Tobago,” Ramnarine said.
He said it was after that first self-marketed LNG cargo that “the Minister of Energy and Energy Affairs had to understand if it is that we were making an incremental revenue gain of US$20 million on one cargo, how much money did we lose as a country, with that arrangement in place with BP?” He said the NGC did the analysis, after which, it was discovered that, “The incremental revenues lost to T&T amounted to US$120 million between 2009 and 2012.”
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