Curtis Williams, TT Guardian
In the midst of a massive $4.7 billion dollar turnaround of its fortune between 2020 and 2021 and a likely strong financial results in 2022, the National Gas Company Limited (NGC) is bemoaning its inability to collect billions of dollars from State-owned T&TEC, saying it threatens the NGC’s ability to grow.
In response to several questions from the Business Guardian (BG) on its 2021 financial performance and the outlook for 2022, the NGC said, “We remain very concerned about the non-payment as well as the subsidized gas price for the supply of gas to T&TEC and the impact it would have on NGC’s growth aspirations. NGC continues to engage key stakeholders towards resolution of this challenge.”
Speaking at a 2019 signing of a term sheet agreement with Royal Dutch Shell, Prime Minister Dr. Keith Rowley revealed that T&TEC owed the NGC US 700 Million or TT $4.5 billion.
On Tuesday the line minister for T&TEC, Marvin Gonzales, did not know the extent of T&TEC’s indebtedness to the NGC but assured that the matter was being handled by the government.
Saying he did not understand why NGC was ‘wining’ about the situation, the Minister acknowledged that the state of affairs was unacceptable but said the government was seeking to protect the population from high electricity rates.
“NGC is fully aware that the government of Trinidad and Tobago is fully cognisant of the concerns and as the government we will collectively address the problem. NGC is also a stakeholder and is owned by the government of T&T and the people of T&T and the government will address the problem holistically, so I am not going to respond to NGC directly, I have stated on public record what my views on those matters are and I will work collectively with my colleagues in the Cabinet to address it.” Gonzales told the BG.
He added that while it makes academic sense to let people pay a more realistic price for electricity it was not a simple decision for the government to make.
Gonzales said, “Given the fact that the people of T&T are already burdened with the high cost of living, and while it might be technically and academically accurate to want to come to that conclusion, things are more complex than that. You have to take into consideration if we remove the subsidy how it is going to affect the ordinary man and the ordinary woman who are already complaining about the rising cost of living.”
Another challenge the NGC is facing is the continued shortage of natural gas. According to the latest billeting, in May 2022 natural gas production was 2.551 billion standard cubic feet per day (bcf/d), but when you look at natural gas utilisation the figure was 2.472 bcf/d. However a closer look at the numbers show the amount of gas going into power generation has increased by a whopping 23.6 percent from January to May this year, with 11.4 percent of the country’s total natural gas production going into power generation or 282 million standard cubic feet per day(mmscf/d). In January the country used 8.22 percent of the gas it produced for electricity generation or 228 mmscf/d.
Clearly concerned about the lost opportunity to sell more molecules of gas to the petrochemical sector rather than on trust to power generation, the NGC said the gas shortage is being made worse by the level of molecules being consumed by T&TEC’s choice of Independent Power Producers.
“The NGC Group is projecting another solid performance for 2022 should the current conditions that we have experienced in the first half of 2022 be realized in the latter part of the year. Volumes remain a challenged, which are being exacerbated by the additional use of gas for power (with improvements only expected when reliability issues on T&TEC and IPP’s facilities are resolved) given the events in 2022.” the company told the Business Guardian.
The NGC said it has been unflagging in its efforts to secure the supply and sale of natural gas and finalised gas contracts after negotiations with DeNovo in the upstream, and Trinidad Nitrogen Company Limited (TRINGEN) and Methanol Holdings (Trinidad) Limited (MHTL) in the downstream. The Company also increased its shareholding in Block 3(a) from 11.41% to 31.54% with the acquisition of Heritage Petroleum’s Non-Operated Joint Venture (NOJV) participating interest.”
The NGC warned that the lower natural gas production, which has fallen from 2.870bcf/d in January to 2.551 bcf/d in May could negatively impact its 2022 financial performance.
“As stated above, lower upstream gas supply production to NGC is one of the factors that is expected to impact NGC’s final 2022 performance. There are new upstream gas developments already online (Shell’s Barracuda &Colibri and DeNovo’s Zandolie) or expected before the end of the year (BPTT’s Cassia compression, Touchstone onshore gas (Coho) and EOG’s Osprey), but these are more to keep stability against decline. There have also been disappointments with Woodside’s Ruby performance so the upstream focus remains of significance for future sustainability.” The NGC told BG.
In calender year 2021 the NGC recorded an after tax profit of TT$2.6 billion.
The company said the after-tax profit represents a significant improvement in its performance when compared to 2020 when it recorded a loss of TT$2.1 billion.
The Group’s revenue for last year stood at TT$23.6B, an increase of TT$12.2B over the revenue of TT$11.4B for 2020. The NGC’s Board of Directors said the Group’s revenues and margins benefited from the rebound in commodity prices as the global prices of ammonia, methanol, liquefied natural gas (LNG), and natural gas liquids (NGLs), increased by 190%, 92%, 911% and 112% respectively.
Asked if the high commodity prices were actually masking weaknesses in its business model, the NGC said it is not of the view that there is a fundamental weakness in its business model relating to margins and production.
The company said, “NGC’s current integrated energy business model is aimed at ensuring that there is sharing of value/risks across the full value chain between upstream producers, midstream and downstream industries including energy marketing and trading given the vagaries of the current T&T energy industry. Expansions have already begun along the chain as evidenced by PPGPL acquisition activity.”
It added, “ NGC continues to work as an integrated player across the gas value chain, pivoting its efforts for the future on the Green Agenda and sustainability working collaboratively with upstream producers, Atlantic LNG, its customers and MEEI as regulator and Line Ministry. As a shareholder in ALNG, we are also focused on supporting efforts to become world class in LNG operations with Atlantic and its shareholders.”
The NGC insisted that it remains focused on optimizing returns across the gas value chain. This includes optimizing value from aggregation and trading business, looking at all areas of leakage and implementing strategies towards optimization including molecular optimization in the power sector, utilization of technology to optimize value and investments in accretion projects. A key focus the company said remained the integration and implementation of its Green Agenda strategies within its current business activities and into the future for the overall reduction of GHG emissions within its operations, locally and regionally.
With respect to the incorporation of a green agenda NGC said its initiatives include methane reduction, use of satellites, sale of LNG, the use of CariGreen and Sustainability initiatives, partnering with universities and communities, and pursuing new clean energy business development initiatives locally, regionally and internationally as an integral part of its strategy.
The NGC ended, “Our sustainability reports over the last 5 years (the 5th -2021 will be launched shortly) show NGC to be action oriented, being admitted to the GRI membership community, and Oil and Gas Methane Partnership (OGMP) reporting, indicate the fundamental changes, reporting and transformation that is occurring to strengthen the institution for the future, while remaining focused on the core issue of gas supply and sustainability of our energy sector.”
guardian.co.tt 08 23 2022