Thack­wray Dri­ver

The news that Nu­trien is ac­tive­ly look­ing to sell its Trinidad as­sets and that Pro­man is mak­ing sig­nif­i­cant new in­vest­ments in the Mid­dle East have re­fo­cused at­ten­tion on the fu­ture of the down­stream petro­chem­i­cal in­dus­try in Trinidad & To­ba­go.

Up to now, the pol­i­cy dis­cus­sion around the nat­ur­al gas in­dus­try in T&T has large­ly been cen­tred on gas pro­duc­tion. This is not sur­pris­ing giv­en the fact that the biggest is­sue fac­ing the gas in­dus­try in the coun­try for well over a decade was the short­age of gas sup­ply from the up­stream pro­duc­ers to the down­stream plants in Point Lisas, La Brea and the LNG ex­port fa­cil­i­ty in Point Fortin. While the pol­i­cy dis­cus­sion has fo­cussed on how to in­crease gas pro­duc­tion, the cru­cial is­sue of price al­so needs to be a cen­tral con­cern. Gas must not just be avail­able; it has to be avail­able at a price that al­lows the down­stream plants to be prof­itable.

The Trinidad petro­chem­i­cal in­dus­try was orig­i­nal­ly de­vel­oped when com­pa­nies off­shored pro­duc­tion from the USA to Trinidad to take ad­van­tage of com­pet­i­tive gas prices. The re­al­i­ty now is that com­pa­nies can ac­cess cheap­er gas in the US than in Trinidad. This is a se­ri­ous threat to the fu­ture of Trinidad’s petro­chem­i­cal in­dus­try.

The key bench­mark price for Trinidad petro­chem­i­cal plants is the US Hen­ry Hub gas price, be­cause that is ap­prox­i­mate­ly the ac­tu­al pur­chase price for US Gulf Coast petro­chem­i­cal plants (Hen­ry Hub is a phys­i­cal lo­ca­tion in the gas pipeline net­work in Louisiana). Plants in the Hous­ton ship chan­nel will typ­i­cal­ly have to pay slight­ly high­er prices than the Louisiana prices, re­port­ed to be on av­er­age USD 0.20 above Hen­ry Hub.

Da­ta on nat­ur­al gas prices in Trinidad is not eas­i­ly and trans­par­ent­ly avail­able, un­like the pro­duc­tion da­ta which is pub­lished in de­tailed month­ly bul­letins from the Min­istry of En­er­gy or the up­stream tax and roy­al­ty da­ta that is pro­duced in ex­cel­lent an­nu­al T&T Ex­trac­tive In­dus­try Trans­paren­cy Ini­tia­tive re­ports (though in both cas­es if would be great to have the da­ta avail­able faster). It is, how­ev­er, pos­si­ble to glean some pric­ing da­ta based on com­pa­ny fi­nan­cial re­ports and statu­to­ry fil­ings and some in­dus­try pol­i­cy and analy­sis re­ports.

Graph of T&T up­stream gas prices

The av­er­age an­nu­al re­alised price ob­tained by the pub­licly list­ed ma­jor up­stream com­pa­nies op­er­at­ing in Trinidad & To­ba­go is avail­able from their an­nu­al fi­nan­cial state­ments, as shown in the graph. For both Shell and BP the da­ta re­port­ed is their av­er­age South Amer­i­can price; for BP this can be as­sumed to be their T&T price, as this is their on­ly pro­duc­tion in the re­gion, while for Shell it could be con­sid­ered broad­ly re­flec­tive of the T&T price, as this ac­counts for around half of their South Amer­i­can pro­duc­tion.

When con­sid­er­ing the down­stream plants, the re­alised prices ob­tained by EOG Re­sources are the most rel­e­vant. This is be­cause EOG sells all of its gas to the Na­tion­al Gas Com­pa­ny (NGC), while BP and Shell route a sig­nif­i­cant per­cent­age of their gas pro­duc­tion di­rect­ly through At­lantic to in­ter­na­tion­al mar­kets. The high­er prices ob­tained by BP and Shell, es­pe­cial­ly in 2022, re­flect the fact that in­ter­na­tion­al LNG prices in­creased with the Russ­ian in­va­sion of Ukraine and Eu­rope’s piv­ot away from pipeline gas from Rus­sia. The EOG price can there­fore be used as a proxy for the NGC pur­chase price (though NGC does al­so have cheap­er sources of small vol­umes of gas, for ex­am­ple from on­shore pro­duc­er Touch­stone).

It is no­tice­able that for the past three years EOG’s sell­ing price to NGC has been above the Hen­ry Hub price, and by as much as US$1.44 high­er in 2024.

These av­er­age re­alised up­stream gas prices do not tell us the price that the down­stream plants pur­chase gas from the NGC. That da­ta is not read­i­ly avail­able in any of the pub­lished sources I have found. The price paid by plants is ne­go­ti­at­ed with the NGC and typ­i­cal­ly con­sists of a floor price, be­low which the price will not fall, and an es­ca­la­tion price that in­creas­es as com­mod­i­ty prices rise or fall. The floor price al­so in­creas­es an­nu­al­ly. This sys­tem means that NGC shares in the up­side risk when com­mod­i­ty prices in­crease, but they are al­so pro­tect­ed from down­side risk when com­mod­i­ty prices fall (es­pe­cial­ly as floor prices have in­creased over the years).

The NGC sales prices are con­fi­den­tial and not re­port­ed any­where. There are, how­ev­er, two sources that could pro­vide a guide:

* The NGC has re­cent­ly sig­nif­i­cant­ly in­creased the gas pur­chase price to its Light In­dus­tri­al Cus­tomers (LIC) to US$5.30 per mmb­tu, stat­ing that this is the min­i­mum price that it could charge to take in­to ac­count its pur­chase prices from the up­stream and the costs as­so­ci­at­ed with de­liv­er­ing this gas to the con­sumer. This has been wide­ly re­port­ed in the lo­cal press;

* The 2015 Poten and Part­ners Gas Mas­ter Plan pub­lished de­tailed in­for­ma­tion about gas pric­ing, based on fig­ures from 2014. At that time, they cal­cu­lat­ed that the mar­gin be­ing col­lect­ed by the NGC on gas be­ing sold to the am­mo­nia pro­duc­ers was US$2.41 per mmb­tu. If you add this to the 2025 av­er­age EOG sell­ing price you get a fig­ure of US$6.20 per mmb­tu.

Dou­ble Hen­ry Hub price

If a sim­i­lar mar­gin is still be­ing added to the av­er­age gas pur­chase price, that means that plants in Trinidad are pay­ing some­where be­tween US$5.30 to US$6.20 per mmb­tu of nat­ur­al gas. Giv­en the state­ments from the NGC at the time of the new LIC prices be­ing an­nounced, I would ex­pect that the US$5.30 per mmb­tu would cor­re­spond to a floor price for all sales con­tracts.

These prices are around dou­ble the Hen­ry Hub price, cur­rent­ly at USD$2.72 per mmb­tu, or the Hous­ton ship chan­nel price, around US$2.90 to US$3.00 per mmb­tu.

While in­ter­na­tion­al LNG prices have in­creased due to the dis­rup­tions in the Mid­dle East, this does not di­rect­ly im­pact nat­ur­al gas prices in the US. It seems coun­ter­in­tu­itive, but in­creased oil prices could ac­tu­al­ly mean down­ward pres­sure on nat­ur­al gas prices with­in the US. This is be­cause a lot of nat­ur­al gas in the US is as­so­ci­at­ed gas pro­duced along with crude oil, so if high­er oil prices dri­ve up oil pro­duc­tion that means gas pro­duc­tion al­so in­creas­es. With no ad­di­tion­al de­mand with­in the US and ac­cess to LNG mar­kets re­liant on ex­port in­fra­struc­ture, that can mean sup­ply out­strip­ping de­mand, and hence falling prices. There have been some lo­ca­tions in the US over re­cent months that have ac­tu­al­ly had neg­a­tive nat­ur­al gas prices (mean­ing that pro­duc­ers have had to pay to have the nat­ur­al gas tak­en off their hands).

There may be an as­sump­tion that the high am­mo­nia and methanol prices due to the dis­rup­tions in the Mid­dle East mean that the Trinidad plants will still be prof­itable, even with the high­er gas pur­chase prices com­pared to the US. How­ev­er, the struc­ture of the NGC sales con­tracts with the sig­nif­i­cant es­ca­la­tor claus­es at high­er prices means that much of the up­side from high­er com­mod­i­ty prices goes to the NGC rather than the down­stream plants.

The NGC sales price is based on the deemed sales price of the com­mod­i­ty rather than the ac­tu­al price for which a par­tic­u­lar ship­ment is sold. In the cur­rent en­er­gy cri­sis, ship­ping costs have sky­rock­et­ed but be­cause the NGC sales con­tract is tied to con­tract­ed sales price in the mar­kets this is not tak­en in­to ac­count when cal­cu­lat­ing the deemed price. So ef­fec­tive­ly the Trinidad plants get high­er gas pur­chase prices but not high­er ac­tu­al prices on the sale of the com­mod­i­ty in Trinidad (and the US plants do not have the same is­sue of ship­ping costs).

This all means that Trinidad no longer has a com­pet­i­tive gas price for the down­stream plants, when com­pared to the US petro­chem­i­cal in­dus­tri­al clus­ters in Louisiana and Texas. In its 2025 an­nu­al re­port Nu­trien stat­ed that their av­er­age nat­ur­al gas pur­chase price across all lo­ca­tions in 2025 was US$3.53 per mmb­tu. Trinidad would there­fore be a sig­nif­i­cant­ly high­er cost lo­ca­tion, as­sum­ing the US$5.30 to US$6.20 per mmb­tu pric­ing. In their Q1 earn­ings call, Nu­trien re­port­ed low­er gas pur­chase prices com­pared to pre­vi­ous quar­ters, as all of their gas pur­chas­es for their ni­tro­gen pro­duc­tion are now in the US.

Di­rect im­pact

High­er gas pur­chase prices have a di­rect im­pact on the prof­itabil­i­ty of down­stream plants. In their 2025 an­nu­al re­port, Nu­trien dis­closed that a US$1.00 mmb­tu change in gas prices would have a US$180 mil­lion im­pact on their net earn­ings (be­fore fi­nance costs, tax­es and de­pre­ci­a­tion).

All of this means that down­stream plants in Trinidad are fac­ing an ex­treme­ly chal­leng­ing sit­u­a­tion. Not on­ly are they op­er­at­ing be­low ca­pac­i­ty, but the gas that they are able to pur­chase is at a much high­er price than in the US, their main mar­ket for sales.

Nu­trien have re­port­ed that they are as­sess­ing their op­tions for their Trinidad op­er­a­tions and that ac­tive dis­cus­sions are un­der­way for them to sell their Trinidad as­sets.

Mean­while, Methanex ad­vised in­vestors in their an­nu­al re­port that there was a risk that they would not be “able to se­cure ad­di­tion­al nat­ur­al gas on com­mer­cial­ly ac­cept­able terms or that ex­plo­ration and de­vel­op­ment ac­tiv­i­ties in Trinidad and To­ba­go will be suc­cess­ful to en­able us to op­er­ate at ca­pac­i­ty or at all”.

While all of the pol­i­cy fo­cus has been on in­creas­ing gas pro­duc­tion it is ob­vi­ous that we al­so have to struc­ture our gas in­dus­try so that down­stream plants can se­cure nat­ur­al gas at prices that will al­low them to con­tin­ue to in­vest in main­te­nance to keep on pro­duc­ing.

This rais­es ob­vi­ous ques­tions about the role of the NGC as the mo­nop­oly gas mar­ket­ing com­pa­ny and the over­all strat­e­gy to en­cour­age in­vestors to re­main and to in­vest in their Trinidad as­sets. It is im­por­tant to re­mem­ber that plants have to make ma­jor in­vest­ments in their plants every few years to con­tin­ue to op­er­ate safe­ly. With on­ly short-term con­tracts avail­able in Trinidad at high gas pur­chase prices, it is dif­fi­cult for plants to jus­ti­fy in­vest­ing sig­nif­i­cant cap­i­tal in main­te­nance projects in Trinidad. This is why busi­ness ac­tiv­i­ty is so slow in Point Lisas at the mo­ment.

It is im­por­tant that the pol­i­cy di­a­logue in Trinidad does not just cov­er pro­duc­tion but al­so price and the over­all strat­e­gy for the down­stream in­dus­try.

This com­men­tary by Dr Thack­wray Dri­ver, the for­mer CEO of the En­er­gy Cham­ber of T&T, was first pub­lished on the caribbeanen­er­gy.net web­site on May 8.