Next year could see state-owned National Gas Company (NGC) having windfall profits because it was prepared to negotiate hard with the downstream petrochemical companies insisted Energy Minister Stuart Young.
Speaking during the budget debate in the Senate Young also sought to play down the $400M failed attempt by the NGC to restart the Atlantic LNG Train 1 saying the money was already recovered because of strong negotiations.
Young:; “So all of what you’ve been hearing about losses at NGC and these wild accusations of losses and figures of $400 million. These are complete falsehoods. So yes sometimes businesses take risks, risk or gamble, and it doesn’t work out, that is the energy sector. You know how many people drill dry holes and dry wells.
“But I stand here today and assure the people of T&T as we continue to negotiate, as we’re doing right now with Atlantic LNG restructuring, we will find a way to recover, as we did for the first time with a basket price of gas prices that was never done before. And the revenue we’ve earned by that, the increased enhance revenue, by negotiating that and pushing and fighting for that has doubled and tripled.”
The Energy Minister told the Upper House that the Government had not damaged the downstream sector by the gas negotiation he and the Prime Minister Dr Keith Rowley were involved in and that the constant closure of petrochemical plants last year was due to low international commodity prices.
He said: “When they had those commodity prices crashing they said no is Rowley and Young went to Houston and negotiate a bad gas price that was leading to the disruption at Point Lisas. Completely false. I asked the population to listen, since April of this year. Have you heard anything about plant shutdown at Point Lisas? The answer is no.”
Young’s statement came after several pants were shut down in 2019 and 2020 following complaints about both insufficient quantities of natural gas and the price.
In fact, one of the world’s largest producers of methanol, Methanex continues to keep its Titan methanol plant closed even in the face of robust prices after its CEO insisted he would not sign a deal for natural gas if he did not feel the plant could be profitable .
Even as the Minister crowed about the NGC’s projected improved performance the state-owned enterprise has quietly gone on the US market and borrowed the equivalent of $3.3 billion. The Business Guardian has confirmed from multiple sources that the NGC borrowed US $489 million to fund T&TEC requirements, Caribbean Gas Chemical Ltd cash calls, working capital requirements, capital expenditure requirements and upstream projects including completion of the purchase of Heritage share in the Colibri project.
The following questions were posed to the NGC’s president Mark Loquan on September 27 but up to press time he has not responded.
1) ↓Is the NGC seeking to borrow or has borrowed USD $489 million?
2) ↓Can the NGC say whether Citi or any other financial institution is to place the loan?
3) ↓What is the interest rate and repayment period ?
4) ↓What are the funds to be used for?
5) ↓Did the NGC have the option of utilising its retained earnings?
With the UN climate change conference mere days away the Minister of Energy is adamant that natural gas remains the fuel of choice to transition between fossil fuels and renewables.
He said: “It is the conclusion of all that the transition energy source is going to be gas, and that is fortunate for T&T and that we had the foresight, a couple of decades ago, to move to gas production in T&T and it is generally accepted that this will be the position and gas will be the transition energy commodity until at least 2050. That’s the horizon, we’re looking at,”
To prove his point the minister pointed to the recent events that have caused a major spike in natural gas prices, particularly in Europe.
“There was a slowdown in wind patterns, and it collapse the whole energy production and electricity production. They then became a shortage of gas supply in Europe, and they went into a semi crisis. This has shot gas prices up globally and that is a warning that whilst we move away from the fossil fuels, as we should, there is a transition that needs to take place, so right now you’re seeing for the first time in many decades, extremely high gas prices. It’s led to a number of consequences in Europe, and those countries who had moved towards more reliance on renewables,” Young argued.
“Due to this gas shortage, and the reliance on renewables that did not come through. Immediately they had to restart this coal to ensures as they go into their winter months, there is electricity being produced for heating and manufacturing and production.” Young added.
He talked about the queues for fuel in the UK as evidence that the world had to be careful and plan the emergence from fossil fuel use.
The Energy Minister told the Upper House: “We saw the Prime Minister in the United Kingdom having to call out the army to drive tankers to get oil to gas stations, so let us not be fooled, let us not be worried in T&T unnecessarily, the government is aware that the globe is moving more towards renewables, but we’re also realistic.
“We are also realistic and you’re seeing first-hand, this is not hypothetical. The effects of complete reliance too early on renewables, there must be a fall-back position right now, that continues to be gas. T&T has nothing to fear with respect to our oil and gas energy sector, for the foreseeable decades,” Young asserted.