Atlantic LNG’s facilities in Point Fortin. (Image: KRISTIAN DE SILVA)
KYRON REGIS ([email protected])

There is a desperate attempt by the Government and the National Gas Company of T&T (NGC) to save Atlantic LNG Train 1 from being shut down come January.

It appears at this stage, Train 1 would have to be mothballed, and taken out of service, with the possibility of a loss of jobs and significant earnings for the government.

This is according to reliable sources familiar with the matter, who also have indicated that this situation has occurred because bpTT has said that it does not have gas for Train 1.

However, Guardian Media Ltd (GML) understands that bpTT has informed the government that it will be able to meet its contractual arrangements for Train 2, 3 and 4.

Earlier this year, bpTT told GML that its short-term supply arrangements on Train 1 have been extended to the end of 2020, and the company also was reviewing its forecast production for 2021 and beyond, while working with the Atlantic stakeholders to understand the options for extending the life of Train 1.

A possible crisis?

The Government met with bpTT yesterday in an attempt to convince the multinational to supply gas into Train 1, GML has learnt.

GML also understands that NGC wanted to assume the role of lead operator of Train 1 to keep it running. This is because the closure of the Train would exacerbate the already difficult situation in the T&T energy sector, which already has seen many petrochemical plants taken out of service.

GML has been informed that the concerns that bpTT and Royal Dutch Shell have in relation to Train 1, is that in addition to providing gas, the Train requires a multimillion-dollar turnaround to extend its operational life. Furthermore, with the NGC in a precarious financial position—it does not have the money to finance the turnaround.

NGC recently recorded a historic half year loss of $316 million for 2020. The company Chairman Conrad Enill and chartered accountants also have revealed that the company is currently undergoing cash management issues.

According to GML’s sources, questions have been raised by bpTT and Shell as to which stakeholder will pay for the turnaround even if the gas supply is found.

GML contacted Energy Minister Franklin Khan for comment on the prospect of NGC’s lead role on Train 1 for 2021, indicating that the information comes from reliable sources. Khan responded: “Well right, continue to contact your reliable sources. That’s all I have to say.”

Comments also were requested from Shell, which stated: “Discussions among the shareholders of Atlantic and the Government are ongoing. These discussions are commercially confidential and so we are unable to comment further at this time.”

Chairman of Atlantic LNG Ian Welch, when contacted by GML, also indicated that he was not able to comment on the matter.

Meanwhile bpTT told GML: “Atlantic, its shareholders and the government are continuing discussions on the future of Train 1, and we cannot comment further at this time”.

Previous commitments to Atlantic

Earlier this year, it was announced that Atlantic’s primary shareholders and the government are getting closer to finalising commercial agreements regarding the LNG plant’s operations.

In a release, the shareholders articulated they expected the negotiations would result in the unitization of the Atlantic entities that own the four LNG trains into a single entity with a simplified commercial structure.

It was expressed that the new structure would enable long-term investments in the upstream and at Atlantic. The shareholders indicated as well that unitization would enable greater operating efficiency and flexibility and ensure that Atlantic continues to operate as a world class LNG facility that can compete with new sources of LNG supply in the Atlantic basin.

It was also communicated that the negotiations would seek equitable distribution of returns for both TT and Atlantic’s shareholders.

The statement concurred that Shell, bpTT and NGC—as shareholders of Atlantic—believed that restructuring would help ensure the sustainability of Atlantic and also would create the environment for future investments in TT’s gas industry.

At that time, the parties also discussed their commitment to conclude negotiations on the extension of Atlantic Train 1 operations beyond March 2020.

In November 2018, Government had announced plans to extend Train 1 for five more years beyond its 20-year life, which would have come to an end in April 2019.

In May of 2019, bpTT told GML that the disappointing results on a couples infill wells would impact its supply into Train 1, especially in the 2020 to 2021 timeframe. However, records from the Ministry of Energy and Energy Industries have revealed that the company has not had a dip in its production and has maintained the gas flowing at close to two billion standard cubic feet per day.

bpTT then told GML that it was able to keep its production at such a high level because of improved rates of decline from other wells and better than expected performance from its Juniper and Angelin gas fields.

In the statement released early in 2020, the Atlantic shareholders expressed confidence in the future of the LNG plan.

William Lin, chief operating officer for BP’s Upstream Regions, posited via the release that the company remains committed to working with its partners in Atlantic and with Government, to create a future structure for the company that will allow it to be a world-class producer of LNG, while still ensuring equitable returns for both the country and shareholders.

In addition, Shell’s executive Vice President of Integrated Gas, De La Rey Venter, asserted that the successful conclusion of the negotiations would be a “significant achievement for TT and Atlantic’s shareholders, as we seek to further secure the country’s energy future”.

NGC president Mark Loquan added then in the statement, that the talks were critical for the future given the Government’s and NGC’s “strategic focus to seek greater value across the gas value chain for the people of TT”.

Train One currently is owned by Shell (46 per cent), BP (34 per cent), Chinese Investment Corporation (10 per cent), and the. NGC (10 per cent).