Energy Minister Stuart Young said discussions are still being held about the future of the Atlantic LNG Train 1.
Replying to Opposition Senator Wade Mark on whether any decision has been taken to decommission Train 1 yesterday in the Senate, Young said, “The shareholders of Train 1 continue to be in discussions as to the future of all Atlantic LNG operations, the sharing of costs, income, cargoes associated therewith.”
On whether it might be mothballed, citing continuing talks, Young said Train 1, being the first Train in the LNG facility, there are certain engineering parts that must continue that Trains 2, 3 and 4 are appended to.
“So talks continue,” he said.
On the possibility of Train 1 continuing, the Energy Minister said he couldn’t predict the future and when decisions are finally made, Trinidad and Tobago will be told.
Young said no indemnification was granted by Cabinet for the National Gas Company or NGC LNG’s Board. However, he said if such an occasion arises, it will be given due consideration by Cabinet as all matters are.
On if any request for this is proposed, Young said as Minister of Finance and his late predecessor (Franklin Khan) said, such discussions may have taken place “but at the appropriate time if necessary, Cabinet will give all matters due consideration.”
But his response did not satisfy Mark, who yelled that Young and the Prime Minister should be held culpable for the situation and their “sellout.”
Young, who noted NGC suffered a loss when $2 billion had to be written off the UNC government’s only energy transaction, challenged Mark to “say it outside.”
However, Mark continued the accusation. Senate Vice President Nigel De Freitas ordered both to sit and to give questions and answers succinctly.
Young said NGC’s funding towards Atlantic Train 1 Turnaround was not to “upgrade” the Train as Mark wrongly claimed but to ensure the Train was in a state of readiness and safe to operate and accept gas for processing.
“As per the terms of its supply contracts with upstream suppliers, NGC has an obligation to take gas or pay for the product it does not take (take-or-pay contract clauses). NGC remitted USD$32.4 million to Atlantic for Train 1 2021 expenditure, including Train 1 turnaround costs.”
He added, “In 2021, NGC was potentially faced with upstream gas supply commitments in excess of guaranteed downstream demand, given possible plant shutdowns and sustained reduced industrial activity due to COVID-19. In addition, at the end of 2020, NGC was still in commercial negotiations with several large consumers, as they were seeking contract terms that were uneconomical to NGC over the long term. Therefore, NGC had no firm contractual obligation to several of the large downstream plants.
“Given the drastic decline in commodity prices in 2020 due to the COVID pandemic and fears of 2nd and 3rd wave of COVID impact of reduced industrial demand in 2021, several of the downstream plants could have made the decision to shut down their operation, at least temporarily, rather than purchase the gas. This would have resulted in continued losses for NGC. There existed the possibility for NGC to monetize volumes not taken by the Petchem plants to Train 1 for LNG production. In fact, one of the companies opted to shut down two of its plants in April 2021.”
He continued, “In as much as the company would be billed for its upstream commitments, it made commercial sense to find an alternative use for the volumes not taken up by the downstream. This would yield incremental revenue for NGC and maximise the commercialisation of T&T’s natural gas resources. Additionally, if Train 1 was closed in 2020, it would also have had an adverse impact on the complex negotiations between the Government and shareholders, thereby placing the Government and NGC in a disadvantageous position in the long term regarding its Atlantic shareholding, which is critical revenue stream for T&T.”