Trinidad and Tobago wants more from $5bn deal
By Canute James in Kingston
Published: December 2 2002 4:00 | Last Updated: December 2 2002 4:00
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The Trinidad and Tobago government is seeking to renegotiate the terms of a $5bn liquefied natural gas (LNG) facility with a consortium of international energy groups in an attempt to secure a larger profit share from the venture.
Patrick Manning, the country's prime minister, said that unless the Atlantic LNG consortium improved the government's profit share, the expansion of the group's existing LNG facility would be blocked. "It is a battle that has gone on for years between developing governments and transnational corporations," said Mr Manning. "We will do only what we consider to be in our national interest."
Atlantic LNG - comprising the UK's BP and British Gas, Spain's Repsol, Tractebel of Belgium and the National Gas Company of Trinidad and Tobago - said that negotiations to add a fourth production unit to the facility were continuing, but were focused on discussing a new financial formula to meet the government's new demands.
The consortium expects to commission a third unit at its facility early next year. The fourth unit that is the subject of the dispute would lift annual exports to 13.8m tonnes, with cumulative investments of $5bn.
According to the agreement for negotiations between the government and the consortium, construction of the fourth unit was scheduled to begin by the end of this year, with commissioning at the end of 2005. The dispute has put this schedule in doubt.
Robert Riley, chairman of BpTT, the local subsidiary of BP, said the value of the LNG project to Trinidad and Tobago should not be seen as being limited to tax dollars.
"I agree that the country ought to get a fair return from the gas, and it ought to be determined by the country how that gas is used, but there are other significant values as well," he said.
The enlarged project would see Trinidad and Tobago supply 5 per cent of the US LNG market and "give us some power on the world stage", said Mr Riley. "There are geo-political values."
Output from Atlantic LNG's first unit is being sold on the North American and European markets. Tractebel is taking 60 per cent for the US market, with Repsol's Enagas unit taking the rest for the Spanish market.
The government has yet to indicate what it considers a fair share of earnings from the enlarged facility. Revenues from LNG production and export are determined by a formula based on LNG market prices and production and shipping costs, according to the energy ministry.
Trinidad and Tobago, an English-speaking republic of 1.3m people, has 32,600bn cubic feet of proven, probable and possible gas reserves. The energy ministry said that there are potential gas reserves of 92,000bn cubic feet. |
