Major shareholders sign agreement to restructure Atlantic LNG

This announcement that the parties have reached an agreement on the commercial terms of the restructuring is a very important milestone to secure the future of the gas industry and therefore the overall economy of Trinidad and Tobago. The decision will also allow Atlantic to improve the efficiency of operations and make further investments to decrease the carbon intensity of their LNG. The Atlantic LNG facility is made up of four trains with a combined production capacity of 14.8 metric tonnes per annum (MTPA). Previously, each train had a separate ownership structure. Under the new agreement, the facility will now operate as a single, unitised facility with one ownership structure. Clarity on the ownership and commercial structure of Atlantic LNG and the pricing mechanisms for natural gas exported through the facility are vital for investor confidence. These agreements will assist companies in making investment decisions in new upstream exploration and development, which are also critical for the country’s petrochemical sector. The announced system to allow third-party gas suppliers a route to access the facility will also help spur upstream investment beyond the Atlantic shareholders. Securing future gas supply and a fair return for all stakeholders is not just important for the upstream, midstream and downstream companies and the Government, it is also important for all of the service companies and contractors who service the industry and all of their employees. These negotiations have been long and extremely complicated. As the Prime Minister made clear, they are historic and there have been no other examples where this sort of restructuring has taken place. The successful conclusion of these negotiations is testimony to the hard work and commitment of many people in the companies and within the Ministry of Energy and Energy Industries. The success of Trinidad and Tobago in the global gas industry has been based upon finding alignment and win-win outcomes between the Government and energy companies. In recent years the future of Atlantic LNG has been in question since the shuttering of Train 1. However, the unitisation agreement seeks to sure-up future opportunities for the company and the country by extension.

More value for T&T Dr The Hon. Keith Rowley in his feature address indicated that, “One of the major issues that has been of concern to the Government is the value accruing to the State from the monetisation of our country’s gas resources, in particular LNG.” He added, “In the Amended and Restated HOA the parties have agreed in principle to formulae which are market reflective and are patterned on the Train 1 FOB Pricing Formula. This is consistent with the objective in the Government Principles of the HOA that the people of Trinidad and Tobago receive a fair and equitable return for our resources and the shareholders earn commercially reasonable levels of profit commensurate with the degree of commercial risks assumed by such entities. The full impact of the benefit to the country, of the proposed pricing, will become apparent on the completion of the restructuring and the full commercialisation of the restructured entity. However, based on the current FOB Price, the revenue that would accrue to Government could amount to double that of the earlier arrangements.” Expanded role for The National Gas Company of Trinidad and Tobago Limited (NGC) The Prime Minister also noted that the new Atlantic LNG structure will see a greater involvement by the State in the supply and marketing of LNG. Until now, all marketing of the Minister’s share of natural gas in Production Sharing Contracts was undertaken by the operator, on behalf of the Minister (GOTT). In the recently executed Manatee Field PSC with Shell, the Minister will be taking a more active role in the marketing of natural gas to be produced from that field. NGC, which will have a new and increased shareholding in the new Atlantic LNG structure, will benefit from this variation in the marketing of the Minister’s share of production. This shift in policy enables the State to play a more in-depth role in the commercial arrangements for the marketing of LNG which will be consistent with the actions of most gas exporting countries. Minister of Energy and Energy Industries, Hon. Stuart Young said that this was the first time anywhere in the world where the government has sat down and negotiated the future of LNG trains for the future with the shareholders. He added that this

agreement secures a place for T&T in the LNG market, and it secures continued upstream investment in T&T. Optimism for the future At the event were, the heads of the stakeholder companies, Eugene Okpere, Senior Vice President and Country Chair, Shell Trinidad and Tobago; David Campbell, President, bp Trinidad and Tobago; Mark Loquan, President, NGC. Mark Loquan, President of NGC said, “Discussions around the ideal commercial and ownership structure for the Atlantic facility have been protracted, not just because of the complexity of existing arrangements, but because it was imperative that we get it right. We needed to land on an agreement that considered the interests of all stakeholders along the natural gas value chain and although the multi-party process was, at times, arduous, complex and time consuming, I am sure that all shareholders would agree that the eventual outcome augurs well for our shared vision for Atlantic to operate at a world class level.” Eugene Okpere, Senior Vice President and Country Chair, Shell Trinidad and Tobago said, “Atlantic LNG is a home-grown institution, one that every citizen of Trinidad and Tobago should be proud of. This institution has generated significant value for the country, which has been used to foster deep economic and social growth. It has created and nurtured world class energy sector employees and has played a pivotal role in community development, particularly in the community of Point Fortin. This agreement is essential in providing what Atlantic needs, to remain at the forefront of the global LNG market so it can continue to deliver material benefits for this country.” David Campbell, President, bp Trinidad and Tobago said, “The agreements we are signing are a crucial and enabling step to unlocking Trinidad and Tobago’s energy future. This is no doubt a pivotal moment in the country’s energy development, and it comes at a time when it has never been clearer that the world needs more energy AND it needs energy that is clean, affordable and secure. For these reasons, natural gas will continue to play a crucial role in the energy mix for decades to come. We are witnessing increasing demand for natural gas because of current global events but the outlook for gas remains positive over the long-term as well.”