The National Gas Company (NGC) has told bpTT it wants less natural gas than is available to it for the rest of the year, leaving behind almost 50 million standard cubic feet per day, even though there has been a natural gas shortage in the country.
Officials of bpTT and the NGC were tight lipped about the situation. The British energy giant would neither confirm nor deny the development citing confidentiality of contract, while NGC would only say it is acting in the best interest of itself and the local gas market.
NGC has decided to purchase less gas than is available although for nine years petrochemical plants at the Point Lisas Industrial Estate have not been getting all the gas they need to run at maximum performance. This has made them increasingly uncompetitive and has also led to lawsuits with NGC having to pay out millions of dollars in compensation.
Government has repeatedly stated that the country needs all the gas it can get to reduce the shortfall in gas for the downstream sector and Atlantic LNG. The shortage has already cost the treasury hundreds of millions of dollars.
However, in a strange twist, reports are that the price of gas recently agreed upon by NGC and bpTT is partly to blame for the difficulties NGC is now facing in selling that gas at a reasonable profit.
The NGC officials told the Sunday Guardian it is “operating in a manner that supports its contractual and commercial imperatives.”
NGC was asked whether it is able to purchase enough gas to supply 100 per cent of the needs of its customers and it coming on stream of the Mitsubishi, NGC, Massy methanol plant will mean an increase in aggregate demand. The company was also asked if it has given its forecast demand for 2019 to bpTT, the country’s largest natural gas producer, and if bpTT can make available more gas than is being request
In response, the company said: “NGC as gas aggregator continues to actively collaborate with both the upstream suppliers and downstream customers to ensure an optimal gas supply/demand balance is achieved and will continue to operate in a manner that also supports our contractual and commercial imperatives.”
While NGC was unwilling to go further on record, several senior company officials, speaking on condition of anonymity, said NGC was trying to survive in difficult financial challenges and the price of gas they were buying from bpTT in the new deal meant that downstream companies still on old contracts were getting gas at prices inimical to the interest of the NGC.
In addition, with a number of plants including Titan Methanol currently shut down for maintenance, for the next two months all the companies on the Point Lisas Industrial Estate are getting all the gas they are contracted to receive.
The challenge comes when those plants and finished with their maintenance and all up and running, in addition to which Methanol Holdings still has a methanol and melamine plants down due to a lack of sufficient natural gas while the NGC is expected to bring into operations its own methanol plant currently being constructed with Massy and Mitsubishi.
NGC is the aggregator of gas in T&T and buys gas from upstream companies, including bpTT, Shell, BHP, EOG and DeNovo, then sells that gas to petrochemical plants at a higher price, or what is called a margin.
The company is therefore the custodian of the gas and determines which companies get gas and the amount in keeping with various contractual arrangements.
In buying gas from bpTT, the NGC can nominate how much gas it wants on a daily, monthly and annual basis and bpTT will supply in keeping with the forecasted amount at an agreed price.
The decision to buy less gas from bpTT means less gas will be in the system for downstream companies to access and bpTT’s additional gas will now be sold to Atlantic LNG, a highly placed source told the Sunday Guardian.
In addition, with more gas coming on from bpTT’s Angelin and Shell ramping up production, sources said the natural gas curtailment in the downstream should come to an end unless plants that are down are brought back into production.