Premature to finalise contracts four years in advance

Jun 28, 2020
Jun 28, 2020
2 min to read

AS a minister of energy from 2011 to 2015, I took careful note of the comments made by former National Gas Company (NGC) president Frank Look Kin in the Sunday Express. It would be useful to know what contracts Mr Look Kin was referring to when he said Trinidad and Tobago would have been in a better place if contract renegotiations had taken place in 2012.

If he was referring to the BP and EOG contracts, as I suspect he was, these were expiring in December 2018 and it would have been premature for the NGC to finalise new contracts almost four years ahead of the expiration of existing contracts when there was so much uncertainty.

In addition, the years 2012 to 2015 were years of high prices for natural gas, ammonia and methanol. Negotiating in that high-price environment would have meant that the NGC would have had to pay the same high prices for natural gas from its suppliers.

If the NGC had done that, I am willing to bet that someone in the current Government would have said that was the wrong time to re-negotiate these contracts.

In addition, as Mr Look Kin well knows, the Ministry of Energy was finalising the Natural Gas Master Plan with Poten and Partners which would have better guided us. This plan was completed in August 2015.

Take his logic about early negotiations to its natural conclusion; it could also be said we should have negotiated these contracts in 2011 or 2010 or 2009 or 2008. So, when does one renegotiate a contract that expires in December 2018?

Interestingly the said BP and EOG contracts were renegotiated in 2017 (not 2016 as he stated) and became effective in early 2019. Since then, we have had a significant increase in natural gas prices to the plants at Point Lisas as the result.

We must also take into consideration that we had a situation around 2009 to 2011 where the upstream had stopped exploration and we had to kick start that via fiscal incentives. Had we not done that this country would be in a far worse situation today.

I also find it strange that I did not hear these views from 2011 to 2015 while I served as minister of energy. I can also say with certainty that when we left office in 2015 all plants at Point Lisas were operating and we did not have eight plants down as we have today.

In addition, when we left office in 2015 there were no expired contracts between NGC and its “upstream suppliers”. I keep hearing that fiction in Parliament. I also find the comment about future gas supply to be inaccurate as BP had sanctioned the largest gas development in this country’s history in August 2014 namely the BP Juniper project and we knew about plans for BP Angelin project as far back as 2014.

I get the impression that the PNM expected the energy sector wrapped with a neat bow in 2015 but the nature of the business is contracts are always coming up for renewal and you have work to do. But let us not be distracted by the fact that Point Lisas and maybe Atlantic are in serious trouble.

Kevin Ramnarine

Former minister of energy

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