The state-owned National Gas Company of T&T (NGC) continues to suffer heavy financial losses into 2020 as it has recorded a loss after tax of $316.2 million for the first six months, according to its chairman’s report for the period ended June 2020.
In an interview with Guardian Media on Saturday, Conrad Enill, chairman of NGC attributed these losses to volatile commodity prices on international markets, impairment provisions on assets associated with changes in market outlook, and non-payment for gas sales by NGC’s largest customer which is the T&T Electricity Commission (T&TEC).
Enill said NGC’s loss did not begin in 2020 but there was a shortfall in 2019 as well.
“Last year we basically found ourselves with a $2 billion change but this year it continued because of the conditions,” he said.
Enill said despite the loss in the first half of 2020 and in 2019, he remains optimistic about the future of the company.
“I expect these conditions to occur for the next 12 to 18 months. We have already started to see changes in the market price for ammonia as it has started to recover a bit. Therefore, I expect that maybe at the beginning of the first quarter in 2021 we would start to see a change in the pricing structure and that is going to benefit that in a particular way. In the short and medium terms, the market will start to rebalance itself and that would change the pricing structure.”
The $316.2 million represents a decrease of 296 per cent or $477.3 million from the six-month profit for 2019 of $161.1 million. Revenues decreased by 22.9 per cent or 1.74 billion from $7.61 billion for the six months ended June 2019 to $5.87 billion for the six months to June 2020, the chairman’s report stated.
The report attributed losses to margins continuing to be affected by the volatility of the commodity markets with prices decreasing by 33 per cent, nine per cent and 34 per cent for methanol, ammonia and natural gas liquids respectively in the reporting period.
The report also said that the downstream sector has been significantly challenged in the new environment and companies have responded by using this period to curtail operations, execute turnarounds and prepare for market recovery.
NGC said they would continue to work with all stakeholders to create a sustainable industry both in the short term and longer-term recovery.
The report also noted that in 2020, NGC signed a Framework agreement with Touchstone Exploration Inc and Heritage Petroleum Company Ltd for the development, sale and purchase of all natural gas and natural gas liquids produced from the Ortoire Block and are now in detailed discussions for the execution of a fully termed gas supply contract.
The NGC also executed a new gas supply with BHP for the supply of gas from Block 3(a) which is under development with the first gas expected in the fourth quarter of 2021.
The group has also continued with its internationalisation thrust and acquired the NGL marketing assets of Twin Eagle Liquids Marketing LLC and incorporated a Company Phoenix Park Energy Holdings (PPEH) to own and operate the assets.
NGC’s chairman report concluded that despite challenges faced, the group remains focused on the execution of its current strategy of being an integrated gas player participating in all stages of the gas value chain. NGC also promised to continue investments in technology to support the transformation of their business.
According to Enill, “Despite the current COVID-19 pandemic and associated challenges, the NGC Group has been able to ensure business continuity and keep critical operators required for the functioning of the national economy. This was possible due to the group’s investment in various technologies that have supported work-from-home activities in accordance with the Ministry of Health protocols.”
Lashley: NGC Group’s financial performance would not directly impact NEL
Ingrid Lashley, chairman of the National Enterprises Ltd (NEL) told Guardian Media that they do not have investments in the NGC group as a whole, but only in its subsidiaries and in this case it would be NGC NGL.
NEL is an investment management company that receives dividends from companies they have invested in and NEL would be impacted if these companies are unable to pay their dividends. At this moment, NGC NGL continues to pay dividends to the NEL, she noted.
So the NGC Group’s financial performance as a whole would not directly impact NEL.
For the fiscal year ended March 31, 2020, NEL recorded a loss of $327.5 million compared to a profit of $12.5 million in the comparable period last year.
In the company’s financial statements, Lashley said the loss was largely due to the decline in the value of NEL’s investment in Telecommunication Services of T&T Ltd (TSTT) of $127.5 million and NGC NGL $175.3 million.