The quar­ter of a bil­lion dol­lars the Na­tion­al Gas Com­pa­ny (NGC) pumped in­to At­lantic LNG Train 1, which has not since processed a mol­e­cule of nat­ur­al gas, was not an in­vest­ment in­to LNG pro­duc­tion, but rather much need­ed main­te­nance costs.

This is the as­sess­ment of the chair­man of the NGC Con­rad Enill who told the Busi­ness Guardian that while it pro­vid­ed an op­por­tu­ni­ty to process gas, the re­al rea­son for the spend was about main­te­nance of Train 1.

Asked if a year on he felt it was a mis­take to spend the quar­ter bil­lion dol­lars on Train 1 Enill said: “Oh ab­solute­ly not. In fact I don’t know why peo­ple con­tin­ue to talk about it as an At­lantic in­vest­ment, it was a main­te­nance cost ba­si­cal­ly, that we com­mit­ted to in cir­cum­stances where we had gas and that cre­at­ed for us an op­por­tu­ni­ty, should the gas not have a take up. That’s what it was .”

Q: But you lost quar­ter bil­lion dol­lars?

Enill: “I did not lose quar­ter bil­lion dol­lars, be­cause to­day as we speak, the plant con­tin­ues to op­er­ate. The plant of it­self, where Train 1 is part of the in­fra­struc­ture, con­tin­ues with­out any safe­ty is­sues. I was more con­cerned about the safe­ty is­sues.”

Are you say­ing that spend was about safe­ty is­sues?

“Pri­mar­i­ly it was about main­te­nance. The de­ci­sion we took was main­te­nance. In look­ing at the main­te­nance is­sues, we al­so cre­at­ed op­por­tu­ni­ties that we could have pur­sued had the con­di­tions re­main as they were.

But the con­di­tions did not?

“No, the con­di­tions changed as it re­lates to events we found out about through the process and the mar­ket.”

Enill’s ex­pla­na­tion is some­what dif­fer­ent from the one he gave last year when the mat­ter was first brought to the pub­lic’s at­ten­tion by the Busi­ness Guardian.

“At that time the NGC’s chair­man said the com­pa­ny was re­ly­ing on gas con­tract­ed to the down­stream petro­chem­i­cal sec­tor in its ef­fort to restart Train 1 but the mar­ket changed and the down­stream com­pa­nies de­mand­ed their gas, mak­ing its plan in­op­er­a­ble, and the quar­ter bil­lion in­vest­ment in restart­ing Train un­nec­es­sary.

He al­so ad­mit­ted the rea­son the Board want­ed an in­dem­ni­ty from the Gov­ern­ment was be­cause it knew that the suc­cess or fail­ure of the deal was not in its hands and ef­fec­tive­ly the Board was putting the suc­cess of the in­vest­ment in hands of the Gov­ern­ment as the mul­ti-na­tion­als and did not want to take the fall if it failed.

In the in­ter­view that was con­duct­ed last year on i95, Enill said then: “If you look at what the con­di­tions were at that point in time, the NGC found it­self in a sit­u­a­tion where most of these down­stream com­pa­nies were not tak­ing the gas al­lo­cat­ed to them.

“So we had a sit­u­a­tion where we had gas, we had to pay for gas and the down­stream­ers were ba­si­cal­ly say­ing lis­ten, on the ba­sis of the cost that is avail­able to us, we pre­fer to shut our plants down, at least for some time.

“And in those cir­cum­stances, we had a sit­u­a­tion where the NGC faced a sig­nif­i­cant amount of loss­es.”

To un­der­stand the is­sue more close­ly the NGC has what is called take or pay con­tracts with the gas pro­duc­ers like bpTT, Roy­al Dutch Shell, BHP and EOG.

This means the NGC has to take the con­tract­ed gas and if it can’t, it has to still pay for it. How­ev­er the NGC sells that gas to the petro­chem­i­cal com­pa­nies and tra­di­tion­al­ly has had no such agree­ment.

This means the NGC has to take the gas it has con­tract­ed from the up­stream com­pa­nies and then sell it on­to the petro­chem­i­cal com­pa­nies, but if they don’t take it, then the NGC is left hold­ing the bag.

Enill went on fur­ther to ex­plain what the sit­u­a­tion was like in De­cem­ber 2020: “We looked at the sit­u­a­tion where we had gas, do­mes­tic gas, and yes—Cur­tis is cor­rect, BP wrote us and said to us, lis­ten we have some short­ages, we think it is go­ing to be about a month or so, we un­der­stood that was nor­mal and we could deal with that.

“So we were work­ing on the ba­sis that we had gas, and we had no tak­ers. We had planned a Train 1 main­te­nance of which the NGC would pay some por­tion be­cause we are part own­ers in Train 1.”

He added: “At­lantic came to us and said, we need you to make a de­ci­sion be­cause by Jan­u­ary 12, 2021 if you do not com­mit to the main­te­nance on this plant, the next op­por­tu­ni­ty that you have is in a No­vem­ber of 2021, be­cause im­me­di­ate­ly, as soon as your plant is main­tained, we have to do shut downs on two and then three in the nor­mal course of things...

“We found our­selves in a sit­u­a­tion there­fore where, NGC took the de­ci­sion that we are go­ing to sup­port and main­te­nance of the plant al­though the oth­ers (BPTT, Shell, the Chi­nese in­vestors) de­cid­ed that they were not go­ing to so do, be­cause we un­der­stood that we had gas that was avail­able for do­mes­tic which we were ne­go­ti­at­ing, which if it had been con­vert­ed to LNG to at least give us some rev­enue.“

He added in the same in­ter­view: “We com­mit­ted to the down­stream pro­duc­ers that once they want­ed the gas, the gas would have been avail­able to them. So we moved the gas back in­to that fa­cil­i­ty. And the chal­lenge the NGC had with hav­ing gas, hav­ing to pay for the gas, and hav­ing no op­por­tu­ni­ty for con­vert­ing it to rev­enue was re­solved.

“In those cir­cum­stances there­fore the in­vest­ment in keep­ing Train1 op­er­a­tional to use the gas for LNG, was no longer re­quired be­cause the gas that was back in­to the down­stream­ers and the com­pa­ny had been re­stored to the rev­enue po­si­tion that it was look­ing for.”