Energy giant BP yesterday said that the "implications of impropriety in BP LNG sales reported in recent media articles are incorrect." The company was responding to last week's statement by Energy Minister Kevin Ramnarine that T&T lost an estimated US$120 million ($771 million) between 2009 and 2012 because state-owned National Gas Company's (NGC) equity gas from Train IV was marketed by BP in that period.
NGC has an 11.11 per cent stake in Train IV, which entitles the company to that percentage of the production of the liquefaction plant-11.11 per cent of Train IV's rated capacity of 5.2 million metric tonnes per annum (mmpta) or 577,720 metric tonnes per annum.
Speaking in the Senate last week, Ramnarine said that NGC ended the commercial relationship with the BP marketing subsidiary that sold the state company's natural gas earlier this year. The first cargo sold independently by NGC in August by an international bidding process resulted in the company getting a price of US$9.25 per MMBtu (million British thermal unit) for 118,000 cubic metres of LNG.
He said a calculation of 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."
In a direct response to the statement by the Minister of Energy, which was reported exclusively by the Guardian on Monday, said that contractual obligations limit how much information BP can disclose on its LNG contracts, "however what we can say is that the implications of impropriety in BP LNG sales reported in recent media articles are incorrect."
The energy giant said that it the lead up to the final investment decision and eventual construction of Atlantic LNG Train 4 (ALNG T4), the joint venture partners, which included BP and the Government of the Republic of Trinidad and Tobago, mutually agreed the arrangements needed to enable the development of the project, including a gas supply and LNG marketing arrangements to allow NGC's participation in the LNG value chain.
This led to the successful start up of ALNG Train IV in December 2005. "BP's intent in 2005 when we entered into a marketing arrangement with the National Gas Company (NGC) was always to ensure that the LNG cargoes got a fair market price based on the prevailing market conditions as well as to ensure that we supported the NGC in building its own LNG trading capabilities to be able to take over the marketing of their cargoes at some point in the future," the energy company said.
But it added that market conditions have since changed considerably and BP is understanding of the government's desire to market its cargoes in the spot market which is currently attracting higher prices. BP stated that it does not agree with Ramnarine's statement that US$120 million would have accrued to NGC had the commercial arrangements between BP and NGC not been in place.
"We would like to point out that this figure is open to a lot of subjectivity in the underpinning assumptions which we do not share. Further, we do not wish to debate the merits of spot versus term contract arrangements as history tends to prove most price predictions wrong."