Currently, the local energy landscape is challenged as there exists a natural gas supply shortfall in the local energy sector, primarily as a result of depleting reservoirs (mature province); easy discoveries already found; little exploration contributing to the gas supply challenge; limited access to good quality and low cost seismic data and long negotiation period for gas contracts.
However, 2017 has been a game-changing year for The National Gas Company of Trinidad and Tobago Limited (NGC). The Company has entered into new gas contracts with oil majors bpTT and EOG Resources.
This may seem to be everyday business in the oil and gas industry. But in the current industrial climate, one of low gas supply and gas curtailment, the signing of these gas contracts, according to NGC’s President, Mark Loquan, is significant to the Trinidad and Tobago’s energy milieu, as they not only represent a future domestic gas supply for the country, but the forging of deeper relationships which would ultimately redound for future and more robust collaboration among upstreamers and NGC.
With existing gas agreements coming to an end in 2018, NGC signed a milestone gas supply contract with oil major bpTT, securing a future domestic gas supply for Trinidad and Tobago. Mark Loquan and bpTT’s Norman Christie signed contracts bringing an end to a process, which began over a year ago under the stewardship and direction of the then newly-appointed board of directors. Led by NGC Group Chairman Gerry C. Brooks, the negotiations were built around getting all agreements related to TROC (Trinidad Onshore Compression), in place. Loquan, who was appointed NGC President in September 2016, remarked that the contractual negotiations for future gas supply began in earnest in Q4 2016.
He noted that this signing represented a different operational and commercial relationship for the two entities. The spirit of the process, according to the NGC President, was respectful, mature, productive and professional at all times, “and though there were long days and nights, with continuous updating of all stakeholders, this new contract between NGC and an important partner such as bpTT, speaks to the shaping of a deeper association and stronger teamwork.” Citing the tenacity of the Board of NGC, along with the expertise of the NGC commercial team led by Verlier Quan-Vie, supported by Frank Look Kin, Loquan was in high praise of the professionalism and commitment shown. Equally, he thanked Norman Christie for his open communication during the process and the hard work by the bpTT team involved with tight deadlines and timeframes involved. He also remarked on the major learning from this experience:
“The days of long duration contracts and low pricing when compared to past contracts are over…these components now depend upon exploration and further development. There should be timely investments ahead of decline.” With both parties working closely at the strategic and operational levels, and with the Ministry of Energy and Energy Industries, and other stakeholders, value will be created for Trinidad and Tobago.”
On Wednesday 14th June 2017, NGC and EOG Resources Trinidad Limited (EOG) reached an agreement for a continued gas supply to the domestic market from 2019, following the execution of a gas supply contract for new reserves. Loquan noted that these were tough, yet exceptional negotiations. It was highlighted that at all levels in both organisations, Herculean efforts were made in getting this agreement executed. The NGC President commented that this now “paves the way for increased collaboration for both companies to stimulate increased gas production to the domestic market.”
EOG is one of the key suppliers of domestic gas to the petrochemical sector, with NGC already being a partner with EOG in the South East Coast Consortium (SECC) Offshore Block. George Vieira, Managing Director of EOG, stated at the signing that, “EOG is grateful to NGC for negotiating in good faith as this charts the course for future investment and partnership opportunities.” As with bpTT, Loquan also expressed thanks to “both the EOG and NGC Commercial and Legal teams, NGC’s Board, and all involved for their hard work and professional approach in reaching this major milestone; not only in the context of a good working history, but also for the future of our energy sector. Both companies can now get down to the business of collaborating on the development of smaller fields and creating further benefit along the value chain for Trinidad and Tobago."
These new contracts secure Trinidad and Tobago’s gas supply for the medium-term ending 2023. Additionally, the new discoveries by bpTT in the Savannah and Macadamia fields provide an additional two tcf of gas and will, assures Loquan, support the long-term development of the domestic gas industry. “The industry is at a critical juncture and NGC has a realistic, but no less optimistic view that current gas curtailment will be reversed over the medium- to long-term. However, an increase in supply is not the only change to the industry to be expected. There is also the prospect that there will be an increase in gas prices, primarily driven by higher upstream cost of production. NGC continues to negotaite with key upstreamers to stabilise future gas production.” Loquan pointed out some of these projects including Angelin gas development project, Trinidad Offshore Compression (TROC), Juniper, Sercan, and the cross border Dragon gas field.
While he could not speak to the specific details of the contracts, in terms of volume and time, Loquan commented that these milestones illustrated NGC’s new strategic direction and its mission of becoming a global player through strategic partnerships locally, regionally and internationally. “This is part of our new business model. This is how we will move forward. This is how we will manage and maximise value from the nation’s resources, to become more agile and effectively adapt to the changing energy landscape. NGC is the vital link needed between the upstream and downstream sectors and is honoured to act as mediator to find the delicate balance needed to create a win-win outcome for all players involved.“
From left: Verlier Quan-Vie, Senior Manager, Gas Value Chain, NGC; Mark Loquan, President, NGC; George Vieira, Managing Director, EOG; Lisa Gosein-Alleyne, Attorney- at-Law, Senior Division Counsel, EOG.
Focus on greater collaboration going forward, NGC’s Mark Loquan and bpTT’s Norman Christie sign agreements at bpTT’s Queen’s Park West office