COP wants answers on TT-Venezuela gas deal

Monday, August 27, 2018 - 15:15

The Political Leader of the Congress of the People (COP), Carolyn Seepersad-Bachan, is calling on the government to reveal details of the Terms of Agreement (TOA) signed by Prime Minster, Dr. Keith Rowley and the Venezuelan President, Nicholas Maduro.

The COP said in a statement that whereas the Government may not be able to publicly state the agreed price for gas produced from the Dragon field, it ought to provide details on the pricing formula and other emerging issues related to this project.

"As reported, the 150mmcfd gas produced by the Dragon field, in the first phase will be used to boost this country’s gas supply for both LNG and the petrochemical sectors. In the case of LNG, the price at the well-head is determined based on the netback pricing formula and in the case of the petrochemical sector, NGC’s resale prices are linked to international commodity prices. If the same approach is not applied to the pricing of the Dragon gas the NGC is at risk of its sale price being lower than its cost price thus incurring huge losses," the statement said.

The COP adds that "as reported in the public domain a Special Purpose Vehicle (SPV) was created and an agreement signed in March 2017 by Shell, NGC and PDVSA for the construction of 30km gas pipeline, pumping stations, metering systems and installation of safety and control systems at a total cost of 100 million US Dollars".

It wants to know what is the percentage holding of NGC in this SPV as this will dictate capital investment required for this project.

Additionally, the COP is asking at what point does fiscalisation occur and is it the intention for NGC to take ownership from the well-head and pay a fee for the transportation of gas via this infrastructure.

"In this regard the Minister of Energy, Franklyn Khan erroneously likened this project to the Loran Manatee cross border field in which Trinidad and Tobago owns 2.7 tcf. This field was unitized by signed agreement in August 2010 to facilitate a joint operator. On the contrary, the Dragon gas field is located across the border and therefore this project involves the sale of Venezuelan gas," the COP said.

Finally, it says that given the current state of affairs in Venezuela, it wants to know if the government has taken into consideration the geopolitical risks, which significantly impact on the viability and reliability of this project.

"What assurances are there that future governments will honour this agreement to supply gas at the agreed pricing? In such an event the NGC and by extension the citizens of Trinidad and Tobago will bear the full cost of lost revenue for ALNG and downstream petrochemical companies. In addition, the literature is replete with examples of expropriation of assets in the Venezuelan energy sector. This places the US100 million dollar investment at risk should such an event occur. The GoRTT and the NGC must openly indicate to the citizenry how they intend to mitigate these risks," the COP said.

It says that answers to these questions will clearly indicate whether this is a theoretical dream or an implementable reality.