Page 5 - LatAmOil Week 03 2020

LatAmOil COMMENTARY LatAmOil
 Closetohome
As noted above, these shifts have the potential to undercut Trinidad and Tobago’s gas industry over the long term. In the meantime, the sector is also facing acute short-term problems closer to home.
NGC is not just involved in the LNG export trade; it also serves the domestic market in Trin- idad and Tobago. That is, it sells gas to consum- ers such as methanol and ammonia producers. But its relations with local clients have been deteriorating lately because of pricing disputes.
More specifically, NGC has demanded that downstream clients pay a higher price for domestically produced gas.
The state-owned company has justified this stance by saying it must set prices at levels that allow it to make a profit. But some of its custom- ers fear that the rate hikes will end up putting them out of business.
Problems at Point Lisas
These concerns are not unreasonable, given that the Titan Methanol plant in the Point Lisas Industrial Estate may have to close its doors soon if it cannot come to an agreement with NGC on the price of future gas supplies.
Methanex, the operator of the facility, has been in talks with the state-run company for about a year without striking a deal. It is now running out of options – and running out of money, since it spent more than $250mn last year on an upgrade project. According to the Trinidad and Tobago Guardian, the company has made arrangements to shutter Titan Meth- anol if the parties do not forge a compromise before the end of January.
The plant’s closure would be a blow to the economy of Trinidad and Tobago, and not just
because it would lead to the loss of more than 100 high-paying jobs, as well as tens of millions of US dollars per year in government revenues. It would also be the second such closure of a local manufacturing facility within the last two months. The Yara ammonia plant, which is also part of the Point Lisas complex, shut its doors in December after failing to come to terms with NGC on gas prices.
Economic consequences
The closure of Titan Methanol could also lead to further deterioration at Point Lisas.
As former energy minister Kevin Ranmarine wrote in an article published by the country’s Daily Express newspaper last week, no less than four plants have gone idle at the complex within the last four years. Yara’s closure was preceded by the shutdown of the Mittal steel mill and of two plants owned by Methanol Holdings Trinidad Ltd (MHTL), he noted. He pointed out that one of MHTL’s two methanol plants had come back online, while the other, known as MHTL1, has remained idle.
According to Ranmarine, the complex is unlikely to make a recovery any time soon. Global prices for methanol and ammonia have dropped significantly over the last few years, largely because the US shale gas boom has driven up feedstock supplies. As a result, facil- ities such as Titan Methanol were already under pressure before they fell into pricing disputes with NGC.
Under these circumstances, the former min- ister argued, Trinidad and Tobago ought to start looking for policy solutions. In doing so, he said, the government should try to address the prob- lems of the Point Lisas complex, as well as the LNGsector.™
“ downstream
MEXICO
Pemex issues $5bn worth of 11- and 40-year bonds
The country’s
gas buyers are unlikely to make a recovery any time soon
MEXICO’S national oil company (NOC) Pemex said on January 21 that it was issuing $5bn worth of new medium- and long-term bonds denom- inated in US dollars. Eight banks will be help- ing the NOC manage the sale, which is due to launch on January 28.
According to a statement from Pemex, the bonds were issued in two separate sets. Half of the bonds will have a term of 11 years and a cou- pon of 5.95%, and the other half will be 40-year bonds with a coupon of 6.95%, it said. This is the first time the company has ever issued bonds with such a long term.
Pemex explained that it was issuing the bonds as New Money Securities, under a programme
that allocates $102bn for Series C medium-term notes.
The securities “will constitute unsecured obligations of Pemex and will be jointly and severally guaranteed by Pemex Exploración y Producción, Pemex Transformación Industrial and Pemex Logística and their respective suc- cessors and assignees,” the company said in its statement.
The proceeds of the bond issue will be used to finance Pemex’s outstanding debts. The com- pany will reserve some of the funds to repur- chase US dollar-denominated debts that are due to mature this year, and another portion will be reserved for general refinancing purposes.
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