Hav­ing spent hun­dreds of mil­lions of dol­lars on what now ap­pears to be an ill-ad­vised at­tempt to save At­lantic LNG Train 1, State Owned Na­tion­al Gas Com­pa­ny (NGC) uni­lat­er­al­ly walked away from its agree­ment to fund the main­te­nance of At­lantic LNG in the process cre­at­ing a cri­sis for the rest of the share­hold­ers.

To un­der­stand how it came to this we must go back to De­cem­ber 3, 2020, when doc­u­ments ob­tained by the Sun­day Busi­ness Guardian show that on the said day bpTT wrote to the NGC ad­vis­ing the state-owned com­pa­ny that it (bpTT) would not be de­liv­er­ing its full dai­ly con­tract­ed quan­ti­ties (DCQ) for con­tract year 2021. bpTT fur­ther ad­vised NGC in that very De­cem­ber 3, 2020 email, that NGC should take this in­to con­sid­er­a­tion be­fore mak­ing any de­ci­sion to in­vest in Train 1.

Guardian Me­dia has a pletho­ra of doc­u­ments and based on mul­ti­ple sourc­ing, can con­firm that the NGC—led by its pres­i­dent Mark Lo­quan—was con­vinced that it could pro­cure the re­quired gas for Train 1 and ad­vised the Board and the Kei­th Row­ley gov­ern­ment to pur­sue the uni­lat­er­al fund­ing of the Train 1 Turn­around (up­grade) and to fund the main­te­nance of the Train 1 op­er­a­tions.

Train 1 is owned by At­lantic Trinidad Lim­it­ed (At­lantic) which al­so owns the en­tire fa­cil­i­ty at Point Fortin where all 4 trains op­er­ate. There­fore as the own­er of the fa­cil­i­ties, At­lantic cov­ers the shared cost to main­tain and op­er­ate the en­tire fa­cil­i­ty which is used by all 4 trains. This shared cost is paid for by the Train 1 share­hold­ers who get pro­duc­tion pay­ments from the oth­er trains. The bud­gets cost for train 1 for the pe­ri­od Au­gust to De­cem­ber 2021 is US$45.3 mil­lion out of which US$18.7 mil­lion is shared cost. There­fore, this split turns out to be ap­prox­i­mate­ly US$27 mil­lion for train 1 spe­cif­ic cost and US$18 mil­lion for shared cost.

Prime Minister Dr Keith Rowley

OFFICE OF THE PRIME MINISTER

Guardian Me­dia pe­rused a se­ries of doc­u­ments but could not lo­cate if a de­tailed busi­ness case and vol­ume analy­sis were made to the Board of Di­rec­tors by the NGC man­age­ment of where the gas would come from. But sources in the gov­ern­ment in a po­si­tion to know, told the Sun­day Busi­ness Guardian that on sev­er­al oc­ca­sions Lo­quan in­sist­ed he had site of gas that could be used to sup­port the Train ini­tia­tive.

From as ear­ly as Feb­ru­ary 2021 the NGC knew that that its deal was in trou­ble and that to breakeven in the train 1 re­quired pour­ing even more mon­ey in­to the com­pa­ny and its com­mis­sion­ing based on the De­cem­ber to Feb­ru­ary turn­around.

“Fail­ure to ex­e­cute such Agree­ments to­day will lead to a ma­te­r­i­al de­lay in the com­mis­sion­ing of Train 1 to April 2021 giv­en that AL­NG has now com­menced a turn­around on Train 3 and giv­en the COVID re­stric­tions are lim­it­ed in terms of the num­ber of per­sons that can be on their fa­cil­i­ties and would there­fore be un­able to car­ry si­mul­ta­ne­ous op­er­a­tions be­tween Train 1 start up and Train 3 turn­around. Such de­lay would prej­u­dice NGC in that the breakeven off­take LNG price would move from (price giv­en)” the let­ter to Fi­nance Min­is­ter from NGC Chair­man Con­rad Enill read.

The Sun­day Busi­ness Guardian has tak­en an ed­i­to­r­i­al de­ci­sion to with­hold the NGC’s com­mer­cial­ly sen­si­tive in­for­ma­tion be­cause it is im­ma­te­r­i­al to the sto­ry and could dam­age the state en­ter­prise.

This is the same let­ter of Feb­ru­ary 25, 2021, in which the NGC asked the Min­is­ter of Fi­nance to in­dem­ni­fy it, its sub­sidiary com­pa­ny NGC LNG and the di­rec­tors per­son­al­ly .

Enill said, “We al­so pre­vi­ous­ly dis­cussed your com­mit­ment to in­dem­ni­fy the NGC com­pa­ny and Di­rec­tors for any claims or loss­es stem­ming from the Train 1 res­cue pack­age ($168M). Our re­quest is to ex­tend that in­dem­ni­ty to cov­er AL­NG fund­ing for the April 1, 2021 to De­cem­ber 31, 2021. NGC is al­so re­quired to in­dem­ni­fy its sub­sidiary NGC LNG which holds the 10 per cent in­ter­est in Train 1.”

We now know that Prime Min­is­ter Dr Kei­th Row­ley was him­self sup­port­ive of the in­dem­ni­fi­ca­tion move that ef­fec­tive­ly seeks to pro­tect the di­rec­tors of the NGC from le­gal jeop­ardy.

Row­ley told a news con­fer­ence in To­ba­go that he sup­port­ed the un­prece­dent­ed move and that the sit­u­a­tion is com­plex and asked the coun­try to trust that his ad­min­is­tra­tion is act­ing in the best in­ter­est of the coun­try.

The need for the fund­ing was so ur­gent yet NGC re­fused to ter­mi­nate the fund­ing agree­ment and al­lowed it­self to be ex­posed to cash calls from At­lantic when NGC had the op­tion to ter­mi­nate by 2 days no­tice with­out cause. NGC con­tin­ued to leave it­self open to cash calls and in fact re­fused to not on­ly ter­mi­nate the fund­ing agree­ments but al­so did not pay its June and Ju­ly cash calls in the sum of US$6 mil­lion.

NGC President, Mark Loquan

SHIRLEY BAHADUR

That led to a se­ries of emails be­tween At­lantic’s pres­i­dent and Lo­quan call­ing on the NGC to pay its debt but the State en­ter­prise did not and on Au­gust 3, At­lantic’s CEO Ronald Adams wrote to NGC say­ing its deal has been ter­mi­nat­ed.

Adams wrote, “Pur­suant to Clause 4 of the Agree­ment AL­NG 1 there­fore here­by no­ti­fies NGC LNG of the ter­mi­na­tion of the Agree­ment ef­fec­tive Au­gust 5, 2021.”

The fol­low­ing ques­tions were sent to NGCs pres­i­dent Mark Lo­quan:

1. ↓Did you as part of the NGC Board seek an in­dem­ni­fi­ca­tion from the Min­is­ter of Fi­nance and the Gov­ern­ment for the At­lantic Res­cue pack­age? If so, why?

2. ↓Was there a fear that the US $24.7 mil­lion and the sub­se­quent US $40 mil­lion were at risk of be­ing lost? If so did you as a di­rec­tor feel you had a fidu­cia­ry re­spon­si­bil­i­ty to not pur­sue the in­vest­ment be­cause of its risk to share­hold­ers?

3. ↓Were you writ­ten to on Au­gust 5 by At­lantic LNG in­di­cat­ing that the fund­ing agree­ment and the gas sales agree­ment for Train 1 be­tween At­lantic and LNG had been ter­mi­nat­ed?

4. ↓Did you ad­vise the Board that the NGC could go ahead with the in­vest­ment in Train 1 be­cause you were of the view the gas could be found?

5. ↓In ret­ro­spect was that bad ad­vice ?

Lo­quan did not di­rect­ly re­spond but Lisa Bur­kette, the com­pa­ny’s Cor­po­rate Com­mu­ni­ca­tion Man­ag­er wrote Guardian Me­dia and said the fol­low­ing:

“Up­on re­view of your ques­tions, one must ap­pre­ci­ate that they re­late not on­ly to the de­ci­sions made re­gard­ing Train 1. In fact, they speak to wider con­ver­sa­tions on the sta­tus of the en­tire At­lantic fa­cil­i­ty with par­tic­u­lar in­ter­est in the is­sue of uni­ti­sa­tion, its fu­ture busi­ness mod­el, etc.

The dis­cus­sions sur­round­ing these is­sues are on­go­ing among the stake­hold­ers of At­lantic, which in­clude NGC, oth­er share­hold­ers and the GORTT. Such dis­cus­sions are at a crit­i­cal and sen­si­tive junc­ture and NGC must act re­spon­si­bly and ex­er­cise pru­dence to avoid mak­ing any pre­ma­ture an­nounce­ments on what are com­plex mat­ters with far-reach­ing im­pact. NGC must al­so main­tain fi­deli­ty to the agreed pa­ra­me­ters of con­fi­den­tial­i­ty on this is­sue, and as such we are pre­clud­ed from dis­clos­ing any in­for­ma­tion at this time.”

Conrad Enill

While Bur­kett is in­sist­ing that dis­cus­sions are on­go­ing and at a sen­si­tive stage, state­ments sim­i­lar to what En­er­gy Min­is­ter Stu­art Young and Prime Min­is­ter Dr Kei­th Row­ley have in the past told the coun­try, both in­ter­nal NGC doc­u­ments and a let­ter from the pres­i­dent of At­lantic LNG to Lo­quan paint a com­plete­ly dif­fer­ent pic­ture.

Since the ter­mi­na­tion of the fund­ing agree­ments At­lantic does not have any funds to pay its month­ly op­er­a­tional cost. Un­der the share­hold­ers agree­ment (SA), it is there­fore left for the 4 share­hold­ers (BP, Shell, NGC and Sum­mer So­ca) to in­ject mon­ey via cap­i­tal con­tri­bu­tions.

How­ev­er, be­fore any res­o­lu­tion for cap­i­tal in­jec­tion in­to the com­pa­ny can be ap­proved, the SA re­quire 100% ap­proval from all share­hold­ers. Sub­se­quent to the ter­mi­na­tion of the fund­ing agree­ments, Sum­mer So­ca (the Chi­nese) has in­di­cat­ed that giv­en that train 1 is closed and there­fore can no longer gen­er­ate in­come, they (Sum­mer So­ca) have no busi­ness case to in­ject any fur­ther sums in­to train 1 and would there­fore no longer ap­prove any res­o­lu­tion for cap­i­tal in­jec­tion by the share­hold­ers in­to train 1.

There­fore, all at­tempts by At­lantic and the oth­er share­hold­ers to have res­o­lu­tions for cap­i­tal in­jec­tion in­to the com­pa­ny to fund its month­ly costs have been de­feat­ed with the re­sult be­ing that At­lantic is quick­ly run­ning out of mon­ey. Since the cap­i­tal in­jec­tion res­o­lu­tion can­not be passed there is no con­trac­tu­al oblig­a­tion on Sum­mer So­ca to in­ject funds in­to At­lantic. The Sun­day Busi­ness Guardian has doc­u­ments that show share­hold­ers are of the view that train 1 is ef­fec­tive­ly closed and this is fur­ther sup­port­ed by the fact that At­lantic has al­ready in­stalled blinds on the train.

Sum­mer So­ca has said it is not putting any mon­ey in­to train 1. BP and Shell has said that it is not pay­ing any mon­ey to­wards shared cost as clo­sure of train 1 is im­mi­nent. Giv­en the pos­tur­ing of NGC and Gov­ern­ment, both BP and Shell ad­vised that they would on­ly fund its share of one third of the train 1 spe­cif­ic cost and that they re­quire gran­u­lar­i­ty and cer­tain­ty on train 1 clo­sure and de­cou­pling and de­com­mis­sion­ing cost. There­fore the share­hold­ers were asked to fund their re­spec­tive shares of US$9 mil­lion (1/3 of the US$27 mil­lion train 1 spe­cif­ic cost). Sum­mer So­ca nev­er ap­proved the res­o­lu­tion for this sum which un­der the At­lantic SA re­quired 100% share­hold­er ap­proval. The res­o­lu­tion was there­fore de­feat­ed.