The Guardian T&T: Mottley to take key role in gas negotiations

24 August 2017: “Cabinet sources said the government’s team will include Mottley, technocrats from the Ministries of Energy and Finance, the office of the Attorney General, the National Gas Company (NGC), and consultants from Poten and Partners.”

“Poten and Partners is the company that produced the Natural Gas Master Plan in which it raised significant issues with respect to LNG and the way forward.”

“A change, as proposed by Poten and Partners, is likely to impact their bottom line although it is may result in more revenue for the NGC and, by extension, the Government.”

“Poten and Partners said: “Poten’s view is that post-expiry of the existing contracts any future gas supply should be routed through NGC to provide an efficient route for the Government to maximise its take from the LNG value chain.””

““Rather than maintaining the status quo of direct gas supply contracting between upstream and Atlantic, Poten’s view is that, on expiry of the existing LNG contracts, NGC’s wholesale role should be expanded to include Atlantic, ie for new gas supply to Atlantic. NGC would buy gas from upstream and sell it to or toll it through Atlantic,” the master plan read.”

““NGC would also continue this wholesale role for supply to methanol and ammonia. Although this is very much an interventionist approach, Poten’s view is that this approach is likely to maximise government’s overall take from the sector in the future, due to the significant economic rent that is captured by NGC in the midstream and ultimately distributed back to government as a dividend.””

“In the Natural Gas Master Plan, Poten and Partners told the government that NGC should:

• Continue to act as the monopoly buyer of gas from upstream, gas transporter and wholesale supplier of gas to the methanol and ammonia industries.

• Expand this role to include gas supply to LNG on expiry of the existing gas supply/LNG sales contracts.

• Be forced to divest its non-core assets, eg upstream production.

• Be forced to automatically dividend back surplus funds to government.

• Provide the necessary analysis and recommendations to government/ministry on future downstream gas allocations, with the government/ministry making any final decisions.”

“In terms of LNG marketing, Poten’s view is that continuing with the negotiated contracts model is unlikely to provide the best value for T&T.”

“It urged having a process to ensure “that the best price is realised for sales over the period that is covered by a tender. It is also gaining increasing traction in the LNG business as the number of market players, shipping / regasification availability, and overall liquidity increases. As such, Poten’s view is that this is the route that T&T should follow for future LNG sales to avoid the issues under the existing arrangements.””

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