New contracts in the downstream petrochemical sector signed by NGC

The National Gas Company of Trinidad and Tobago Limited (NGC) recently signed two contracts with downstream petrochemical plants. Over the past year, several natural gas contracts expired and negotiations were initiated to renew the contracts to ensure the natural gas supply to those petrochemical facilities. 

In the past, long-term contracts were typically used, which according to the Gas Master, mostly expired between 2015 and 2020. Newer contracts have been short-term, about 3-5 years in duration. Plants have also continued to operate with monthto- month interim agreements after their original long-term contracts expired. 

It should be noted that many of the recent renegotiation terms and durations have been kept confidential due to the sensitive commercial nature of the contracts. 

Recently, however, failure to renegotiate some contracts led to plants being forced to shut down as temporary agreements could not be achieved. Notably, two Proman/MHTL facilities (M4 and M5000) were forced to close at the end of March until a new agreement was signed. These two plants are among the largest methanol plants in the country, and together they have the capacity to produce 2,470,000 Mt/y of methanol. 

Other plants that have closed over the past year include the Methanex Titan plant and the Yara plant. 

In April, NGC and Proman announced the signing of a new interim gas sales agreement which allowed the M4 and M5000 plants to be restarted. 

The interim agreement was put in place while the commercial terms of a long-term gas supply contract are being negotiated between the two parties. 

Mark Loquan, President of NGC, said, “The negotiating teams have had very constructive discussions to forge a path forward for the short term, while also remaining focused for longer-term collaboration, which will ultimately bring value to all stakeholders. I would like to thank both teams for their open and purposeful discussions which led to this agreement.” 

Claus Cronberger, Managing Director of Proman Trinidad, said, “We are pleased to have reached an interim agreement with NGC to supply gas to M4 and M5000. Restarting the plants will bring immediate benefits to the gas value chain and the national economy. We remain focused on working with NGC to achieve a mutually agreed, sustainable, long-term gas supply contract in the shortest possible timeframe.” 

In addition, NGC arrived at a new gas sales agreement with Yara/Tringen for the continued supply of natural gas to the Tringen 1 and Tringen 2 facilities. 

During the signing ceremony, it was confirmed that the gas supply to the Tringen facilities would be covered under the new contract up to 2023. 

The Tringen assets in Trinidad were some of the first petrochemical facilities built in Pt Lisas. Tringen 1 was commissioned in 1977 and just over a decade later, Tringen 2 was also commissioned. The two plants each have a nameplate capacity of 500,000 Mt/year; each therefore, together can produce 1,000,000 Mt of ammonia per year. 

At the signing, Yara Trinidad President, Richard De La Bastide, expressed his appreciation to all the stakeholders who contributed to this achievement. He said, “The many meetings and the difficult environment made this one of the more challenging negotiations. I sincerely appreciate the professionalism of the NGC team, the support from Yara, our local negotiation team and particularly the role played by the Tringen Board. Tringen remains committed to developing its assets for the future to ensure the sustainability of our operations.” 

Speaking at the event, Karen Darbasie, Chairman of Tringen, said, “The ever-changing global energy landscape often makes decision-making difficult, but the signing of the gas sales agreement helps to reduce some of the uncertainty relating to the external environment that affect the sector and secures the natural gas supply from the National Gas Company for the foreseeable future.” 

She added, “We as leaders reaffirm our commitment to collaboration with industry stakeholders as we all contribute to the long-term sustainability of the energy sector.” 

At the signing event, the new Minister of Energy and Energy Industries (MEEI), The Honourable Stuart Young, lauded the efforts of all involved to bring the negotiation to a successful completion. Minister Young noted that Trinidad had suffered from declining production but also noted that, “There are a lot of upstream projects that we are having conversations on to ensure certainty.” Minister Young also hinted that gas may be available from outside of Trinidad and Tobago’s waters. 

Minister Young also reinforced the government’s commitment to the gas-based industries in Trinidad and Tobago. 

According to the NGC press release, work has also begun on the gas value chain analysis led by the MEEI, with a view to securing the future of the industry for the next decade, with active engagement planned for all other value chain players. The review is key to ensuring that Trinidad and Tobago navigates along a path of sustainability through the difficult economic and industry conditions now being faced.