We generate value for T&T

BPTT has responded to the call by the Prime Minister Dr Keith Rowley for the renegotiation of LNG contracts by saying it is not impossible to align its shareholders’ interest with that of the government. But the company would only talk yesterday about negotiating the Train 1 contract which is about to expire.

In a carefully worded statement to queries from the T&T Guardian, bpTT did not deal with the PM’s central call for the renegotiation of contracts years before they are due to expire.

“We do not believe that seeking the interests of our shareholders and seeking the interests of the citizens of Trinidad and Tobago are mutually exclusive principles. In fact, we believe it is essential to align both interests. We are already in negotiations on the Atlantic Train 1 contract which expires in September 2018. We believe that the negotiations can be concluded with outcomes that seek the mutual long term interest of the people of Trinidad and Tobago and our company.”

At Wednesday’s Spotlight on Energy, the PM raised the possibility of a renegotiation of the LNG contracts.

He said, “There is a willingness not to treat contracts as cast in stone. While contracts bind us to terms and conditions, if the conditions (in the global energy market) have changed dramatically, then the re-opening and the renegotiation is a reasonable demand of the people of T&T. We anticipate that our partners in this business will see our claim as a fair and just one. We anticipate that there would be some re-opening of contracts, so that at the end of the day, we can all benefit from the riches of T&T.”

To understand the issue in its simplest form, bpTT and Shell Trinidad are the two largest owners of Atlantic LNG and also the two suppliers of natural gas to the plant. There are four processing plants at Atlantic and each plant has different combination of ownership. Each processing facility is called a train and each “train” was built at different times and are governed by 20-year contracts. The trains were completed in 1999, 2002 and 2005. Therefore, the first contract expires next year, the second in 2022 and the third in 2025. It is the contracts that expire in 2022 and in particular 2025 that the Government wants renegotiated now.

BPTT told the T&T Guardian that its LNG shipments from Trinidad and Tobago are “part of the company’s global LNG portfolio, which is managed carefully to ensure compliance with local and global gas contractual commitments. In this way, we continue to generate value for both Trinidad and Tobago and our company.”

Asked if it agrees with the estimates from the Government’s consultants, Poten and Partners, that the country lost billions of US dollars from LNG exports, BPTT said, “In terms of your question on estimates used in Wednesday’s Spotlight on Energy, we were not privy to the underlying assumptions and data sources used to determine the “value leakage” and we are thus, unable to comment.”

Commenting on the issue, however, economist Dr Ronald Ramkissoon yesterday said the Government’s attempt to renegotiate the agreements will be difficult because the country is not in a strong position. He argued that the move was to essentially break a contract and while parties may be open to make changes, Trinidad and Tobago must approach it will skill and tact.

“The issue of negotiating strength does not favour Trinidad and Tobago at this time. It has a lot to do with how disposed the companies are to the Government’s proposal.

“We must also accept that whatever agreements exist, we went into them with our eyes wide open and we may or may not have put our best people to do those negotiations,” Ramkissoon explained.

He said while there is no harm in asking a partner to renegotiate the contracts given the changed circumstances, one must recognise in such a situation you are in effect breaking a contract and its not the same as negotiating a new contract, as would be the case with Train 1.