Atlantic LNG Train 1 is dead. It is as simple as that. No amount of spin, no amount of stalling, no amount of attacking the media and citizens, no amount of blaming the multinationals, no amount of hand wringing will change that. The gas is simply not there, will not be there any time soon and the corollary of all of that is the National Gas Company’s ill-fated attempt to save Train 1 has failed and the money gone down the proverbial drain.
On Saturday a forlorn-looking Prime Minister, Dr Keith Christopher Rowley held a news conference upon his return from Glasgow and effectively said what this column and newspaper has reported for almost a year, that Train 1 is effectively dead and all that is left to be done is the zipping up the proverbial body bag.
He said; “It is not for the Government to just walk out of a situation on Train 1. Train 1 is integrally connected to Trains 2, 3 and 4 and it’s not that we own the business, we are only a ten per cent owner but as a country, we have a much larger interest than ten per cent so we would be the last person to walk away from the table on Train 1 but in the discussions that we have been having, we as a Government would have done and we continue to give hope for the breathing of life into Train 1 until the doctor says it’s dead.”
Rowley continued; “I think the doctor is putting on his coat right now and we had the kind of discussions where, with BP and Shell, particularly with BP, the largest gas producer, where, … initially we relied, Government relied, when we extended the life of Train 1 for five years and BP was engaged in an infield drilling programme, we anticipated a positive out-turn. As fate would have it, BP drilled a number of dry holes and had to, in the end, confirm that we don’t have the gas for Train 1.”
The Prime Minister said as a 10 per cent shareholder in the Train 1 project, T&T had to spend some money to keep its options open but now the discussion was more about how to salvage the projects going forward.
“We spent, I think it is about US$33 million to keep the Train 1 option open, not only for negotiation purposes but also for the possibility that if gas was available that we would continue. I think we can now conclude that the gas is not there because BP has not been successful,” the PM said.
“What we discussed is what BP is going to do going forward in terms of investing and again keep continuing to try to find more gas in the Columbus Basin and elsewhere. ... so that being so, the shareholders of Train 1 now have and we have agreed that by the end of the first quarter of 2022, we will take a definitive decision on how we together do what has to be done about Train 1 and attempt to conclude the restructuring of Trains 2, 3 and 4 where all the shareholders will have their interest well served in a restructured arrangement of the 2, 3 and 4 trains. So that is well underway and that was part of our discussions.”
It was in December last year that the Business Guardian broke the unfortunate news to the country that Train 1 would have to be shut down come January 2021.
The story was immediately seized upon by the Opposition United National Congress and it raised the issue in the Parliament.
From December 4, until last Sunday the government has tried to spin to the population that the Guardian’s reporting was false and misleading.
The former Energy Minister, the late Franklin Khan led the charge telling the Parliament that the story was inaccurate and Train 1 will be running all of 2021. History will show this was simply not accurate.
Khan told the Parliament; “Madam Speaker Atlantic Train One will not be shutting down in January 2021. Train One will continue to operate in 2021 and will be part of wider negotiations which have been taking place among the Atlantic LNG shareholders to form one unitised facility encompassing all four trains.”
It must be understood that while Khan was saying Train 1 would be saved at the same time the National Gas Company was committing itself to pay for the turnaround of the plant, and its maintenance for 2021 which, if it had kept to its contract, would have added up to well over $400 million. The Prime Minister appeared pleased that the loss of a quarter billion dollars was a reasonable gamble.
Based on documents the Business Guardian has we have confirmed that the government knew on December 3, 2020 that there would be no gas for Train 1 as the country’s largest natural gas supplier and the only supplier to Train 1, 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.
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.
New documents provided to the Business Guardian confirm Loquan and Verlier Quan Vie, the NGC’s Vice President Commercial, led the charge in the move by NGC to take advantage of the fact that Yara, Tringen and MHTL were all in active and advanced negotiations with NGC around December 2020. Due to COVID and the effects on methanol and ammonia prices, a couple of the plants at Point Lisas also invoked the “economic shutdown” option clause in their contracts which allowed them to unilaterally shutdown their plants for specific periods of time without any liability once methanol and ammonia prices dropped below a certain threshold. The “economic shutdown” option proved itself risky and not well thought out by Loquan and Quan Vie because while downstream plants can invoke it unilaterally, once the pricing threshold is reached, NGC had no coverage against this in its upstream contracts. In other words, NGC could not invoke “economic shutdown” in any of its upstream contracts but still offered this option to many of its downstream customers.
Under the failed plan, the gas would be “freed up” as it appeared that the Yara plant, the Tringen 1 plant and one of the then four operating MHTL methanol plants would continue and that methanol and ammonia prices would remain depressed for most of 2021 and therefore the plants that were involved “economic shutdown” would remain closed for all or most of 2021. They also assumed that the Methanex plant which was down, as they could not agree on a gas price in the renewal discussions with NGC, would remain down because the NGC had no plan to offer a better price to Methanex for the gas needed by Titan and Methanex was not prepared to budge on the issue. Even amidst high methanol prices, Titan remains closed.
The NGC’s chairman Conrad Enill admitted as much during an interview on I95.5fm when he explained 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,” Enill revealed.
He added, “Atlantic came to us and said, we need you to make a decision because by January 12th, 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 shutdowns 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 the 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 (use) which we were negotiating, which if it had been converted to LNG would have at least given us some revenue. That was in December.
Yet the government up to the Budget debate last month still tried to spin the issue and pretend the negotiations were live and too complex for ordinary citizens to understand.
Over the last year, the Business Guardian has kept faith with its readers and reported factually and with deep analysis on the situation.
For reporting on this major public interest issue and bringing the facts into the public domain, which is the essence of journalism, I have been attacked by the Prime Minister, the Minister of Energy and their proxies.
All have attempted to rubbish the reports while stoutly defending the NGC and, more specifically, its president.
Curiously, in performing the media’s role as watchdog, I have not only been vilified by a government that shows no appetite for holding the NGC to account but by individuals trading on their past in the profession of journalism or as Energy Experts who were prepared to ignore the truth.
I really wish it did not come to this. I wish our leaders had made better decisions because I know Aria, Che, Nathaniel, Makela, and Kalyise are counting on our leaders to do better and those of us entrusted with the responsibility of the fourth estate to speak truth to power and hold people to account.
It’s time the spin comes to an end.