T&T has been able to avoid a catastrophe, according to Prime Minister Dr Keith Rowley in his address a ceremony to mark the signing of a new gas sales agreement between the National Gas Company (NGC) and the country’s largest ammonia producer, Nutrien.
The two parties signed a five year deal yesterday morning at the Hyatt Regency in Port of Spain which brought an end to two years of what by their own admission were “gruelling negotiations.” The agreement paves the way for further investment in Nutrien’s local operations and ensures their continued operations in T&T.
The negotiations were so challenging that at times it required the intervention of the head of Government to keep it on track. At yesterday’s signing, Rowley admitted that if the deal had not been reached it would have been catastrophic for Government and Nutrien’s shareholders.
He said his administration wanted to send a signal that T&T is a good place to invest, that foreign direct investment is welcomed, there is sanctity of contracts and there is no need for corruption, but rather mutual respect and an attempt to reach an agreement that is fair to all parties.
Nutrien’s Managing Director Ian Welch said: “Today is both an end, and a beginning. An end to an extended period of intense, arduous negotiation, and the beginning of a period of renewed collaboration. When we can say our negotiations have concluded in such a manner that relationships have not been tainted but have been enhanced all around, then we know we have done well. Throughout this process, which began almost 24 months ago, the parties have been professional and respectful.”
All parties agreed that the fundamentals had changed significantly with cheap gas no longer available in T&T, while the country is dealing with the significant challenge from shale gas in the United States. More than that, Nutrien and other downstream producers have been losing revenue due to the continued gas shortages that have plagued the country for the last seven years.
Energy Minister Franklyn Khan admitted that the gas curtailment was “eroding the performance of the petrochemical sector.”
To put it into context, Nutrien is the largest producer of ammonia in the country accounting for close to 40 per cent of the country’s total production. It operates four ammonia plants and one urea plant. The company also uses 13 per cent of all the gas sold by the NGC making it the largest amount of gas sold to a petrochemical ammonia plant in the country. The company pays millions of US dollars in taxes annually to the government and both directly and indirectly employs thousands, according to the companies’ joint press release.
The signing of the agreement also comes at a time when T&T has lost its place to Russia as the largest exporter of ammonia in the world.
Dr Rowley talked about a vision of making T&T the gas processing centre of the Caribbean by utilising both domestic gas and gas from neighbouring countries like Venezuela and Grenada.
Ammonia is a crucial component in the agriculture sector and is used to enhance production. It uses natural gas as a feedstock and cheap natural gas in the US has recently put downward pressure on prices.