Page 7 - GLNG Week 38 2022

GLNG COMMENTARY GLNG

High European gas prices

don’t erase Trinidad and

Tobago’s challenges

COMMENTARY As an established producer of natural gas and discuss future plans.
LNG, Trinidad and Tobago ought to be in a posi- One of Rowley’s goals was to secure more
tion to take advantage of recent developments on information about future deliveries of feedstock
European gas markets, which are in turmoil as to the Atlantic LNG plant. The facility’s Train 1
the heating season approaches. has been offline largely because BP is not pro-
That is, it ought to be able to arrange matters ducing enough gas to sustain operations, and
so as to promote itself to European buyers as a Port of Spain has been pushing for more clarity
reliable supplier of LNG – and, therefore, as an on this front for some time.
ally and good business contact at a time when Shell is currently extracting around 850mn
concerns about supplies and pricing are acute. cubic feet (24.07mn cubic metres) per day of
Instead, however, Europe’s gas supply woes have gas in Trinidad and Tobago, the highest level
erupted at a time when Trinidad and Tobago is recorded since 2016, but there are still questions
facing challenges of its own that constrain its about the adequacy of feedstock deliveries to
ability to benefit from rising gas demand. Atlantic LNG. These questions have led Rowley’s
In a general sense, those challenges encompass administration to push for a restructuring of the
the fact that the country’s gas output has been plant’s shareholder structure – that is, a reappor-
dropping for some time and is likely to continue tionment of stakes among the investors in each
doing so over the long term, as there have not production train in a way that gave Trinidad
been enough new discoveries to replace depleted and Tobago a consistent share of equity across
fields. And in a more specific and immediate the entire plant. This share would, presumably,
sense, the challenges include questions about be held by a state-owned entity such as National
the future of Atlantic LNG, the operator of the Gas Co. of Trinidad and Tobago Ltd (NGC).
country’s only gas liquefaction facility. The prime minister indicated last week that
Given its singular nature, Atlantic LNG is the he had discussed restructuring proposals at his
only thing keeping Trinidad and Tobago in its meetings with Shell and BP representatives but
spot as the world’s sixth-largest supplier of LNG did not reveal the details of these plans beyond
to Europe. It is also the only thing that has ena- saying that the country would become a stake-
bled the country to increase the share of total holder in Atlantic LNG. Some observers spec-
LNG exports going to European buyers from ulated, though, that the reordering would also
26% in 2021 to 40% in the first half of 2022. include reorganisation – that is, the permanent
The Atlantic LNG plant has four production closure of the plant’s Train 1, in a move that
trains and a combined total production capac- would reduce Atlantic LNG’s production capac-
ity of 14.8mn tonnes per year (tpy). Each of the ity from 14.8mn tpy to 11.8mn tpy.
trains is owned by a separate group of sharehold- As of press time, Port of Spain had not con-
ers and sources feedstock from a different set of firmed or commented on the matter. Rowley did
gas fields. Shell (UK) is a key shareholder in the tell the press, though, that the talks with BP and
plant, as it has a 46% stake in Atlantic LNG’s Shell had borne fruit in other ways – specifically,
Train 1, a 57.5% stake in Train 2, a 57.5% stake in in the form of an agreement on changes to pric-
Train 3 and a 51.11% stake in Train 4. (Train 1 is ing structures. Thus far, he explained, Atlantic
currently idle.) LNG has been selling its production at a price
linked to US benchmark Henry Hub prices, but
Whither Atlantic LNG? it will now be able to set prices according to a
Atlantic LNG made headlines last week after basket that references Henry Hub, European and
Prime Minister Keith Rowley revealed that Asian rates. This new arrangement will be more
he had met with representatives of Shell and profitable for the country, he said.
BP (UK), another shareholder in the plant, to

Week 38 23•September•2022 www. NEWSBASE .com P7