Page 5 - LatAmOil Week 38 2022

LatAmOil COMMENTARY LatAmOil

Whither Atlantic LNG? this month that at least one possible solution had
Atlantic LNG made headlines last week after already been put forward.
Prime Minister Keith Rowley revealed that he
had met with representatives of Shell and BP The sanctions problem
(UK), another shareholder in the plant, to dis- Rowley and his Energy Minister Stuart Young,
cuss future plans. along with Guyana’s President Irfaan Ali and
One of Rowley’s goals was to secure more officials from other countries in the region, have
information about future deliveries of feedstock said they favour proposals for relaxing US sanc-
to the Atlantic LNG plant. The facility’s Train 1 tions on Venezuela with the aim of allowing the
has been offline largely because BP is not pro- South American state to send its gas to Trinidad
ducing enough gas to sustain operations, and via some combination of subsea pipelines and
Port of Spain has been pushing for more clarity tie-backs connecting their adjacent offshore
on this front for some time. zones.
Shell is currently extracting around 850mn Proponents of this plan argue that the scheme
cubic feet (24.07mn cubic metres) per day of would allow Venezuela to reduce associated Europe’s gas
gas in Trinidad and Tobago, the highest level gas flaring during the development of onshore
recorded since 2016, but there are still questions oilfields, while also enabling the development supply woes have
about the adequacy of feedstock deliveries to of offshore gas fields and increasing feedstock erupted at a time
Atlantic LNG. deliveries to Atlantic LNG. It’s worth noting,
These questions have led Rowley’s adminis- though, that this plan would also face significant when Trinidad
tration to push for a restructuring of the plant’s hurdles.
shareholder structure – that is, a reapportion- One of these hurdles is, of course, the US and Tobago is
ment of stakes among the investors in each pro- sanctions regime, which remains largely in place
duction train in a way that gave Trinidad and even though President Donald Trump, whose facing challenges
Tobago a consistent share of equity across the administration did so much to intensify trade that constrain its
entire plant. This share would, presumably, be restrictions, has been out of office for more than
held by a state-owned entity such as National a year and half. Trump’s successor Joe Biden has ability to benefit
Gas Co. of Trinidad and Tobago Ltd (NGC). shown signs of being more amenable to lighten-
The prime minister indicated last week that ing sanctions, but this will take time – and until from rising
he had discussed restructuring proposals at his there is significant movement on this front, it
meetings with Shell and BP representatives but will continue to be difficult to secure large-scale demand and
did not reveal the details of these plans beyond investment in Venezuelan gas projects. prices
saying that the country would become a stake-
holder in Atlantic LNG. Running out of time?
Some observers speculated, though, that the And that is unfortunate for the plan favoured by
reordering would also include reorganisation – Rowley et al., as a great deal of investment will
that is, the permanent closure of the plant’s Train be needed to facilitate gas shipments from Ven-
1, in a move that would reduce Atlantic LNG’s ezuela to Trinidad and Tobago.
production capacity from 14.8mn tpy to 11.8mn The two countries may not be far apart
tpy. geographically, and their maritime zones may
adjoin. They may even share a major asset –
New pricing arrangements namely, a sizeable gas field known alternately as
As of press time, Port of Spain had not con- Loran and Manatee. But Venezuela’s oil and gas
firmed or commented on the matter. sector is not in the best condition, and existing
Rowley did tell the press, though, that the production and transportation infrastructure
talks with BP and Shell had borne fruit in other will not be able to send gas from onshore fields to
ways – specifically, in the form of an agreement the neighbouring island state without extensive
on changes to pricing structures. rehabilitation and repairs.
Thus far, he explained, Atlantic LNG has Meanwhile, Venezuela has little in the way of
been selling its production at a price linked to offshore gas infrastructure, so investors would
US benchmark Henry Hub prices, but it will have to set it all up. These processes would be
now be able to set prices according to a basket expensive, and they would take time.
that references Henry Hub, European and Asian The question is whether they will take more
rates. This new arrangement will be more profit- time than Trinidad and Tobago has. Rowley
able for the country, he said. recently raised the alarm about this issue, saying
that the country’s gas output was likely to drop in
Turning to Venezuela? the second half of the decade unless the govern-
This shift is good news for Port of Spain, given ment found a way to gain greater influence over
the current price differentials between US and development strategy.
European gas markets, and it does put the coun- “[If] we do not make decisions ... the diagram
try in a better position to benefit from current shows that by 2026, 2027, 2028 the levels of gas
conditions on world gas markets. However, it that will be available in Trinidad and Tobago –
does not address the medium- and long-term if no new improvements are [made] – will have
problems of how to compensate for declining far-reaching consequences for government
gas output and maturing fields. revenues and, I dare say, for the quality of life of
Nevertheless, the Energy Chamber of Trini- all the people of Trinidad and Tobago,” he said,
dad & Tobago pointed out in a blog post earlier according to a report from OilNOW.gy. ™

Week 38 21•September•2022 www. NEWSBASE .com P5