Feb 2013 Financial News

NGC to undergo major strategic shift

Feb 21, 2013

The National Gas Company of T&T (NGC) will undergo a major shift in its strategy going forward, government energy officials have said.

“I would also say that a lot of assets are changing hands in this country right now because of what is happening in the global environment, and that the NGC has been mandated by the Government, by the Ministry of Energy and Energy Affairs, to begin to relook its business model. Its business model was put in place in 1975. The NGC was formed in 1975 to transport gas from Amoco’s east-coast fields to T&TEC, and it has since evolved way beyond that,” said Energy Minister Kevin Ramnarine during the Finance Bill 2013 debate.

Minister Ramnarine said Finance and Economy Minister Larry Howai, who piloted the bill, would have learned “when he was the chairman of the NGC; I think that he would tell you that the time he spent in NGC has contributed to making his understanding of the economy all that better, because the NGC is a very central actor in the economy of T&T.”

Ramnarine gave some of the history of the NGC saying: “In 1974, very humble beginnings, I believe the first chairman was Ben Primus. They had to be supported by the then Ministry of Petroleum and Mines with staff and all of that. Now, 35 to 38 years later, 2013, they are managing 1,000 kilometres of pipeline. That is a very significant pipeline network, and they also have an asset base of US$5 billion which includes current assets of $17 billion.”

With that platform, Ramnarine believes “we have the seed to begin to diversify the economy and diversify the energy sector. The vision for the NGC has to be an expansionist vision that takes it out of T&T.

“We have, therefore, mandated the company to relook its strategic direction. The company is seeking to vertically integrate backward into the supply side. NGC does not own any gas reservoirs. They have to buy natural gas from BP, BG and EOG and BHP and so on. So, they are looking to vertically integrate backward. They are looking to vertically integrate forward, we are looking at investment opportunities around the world. There is an emerging market for liquefied natural gas (LNG) and compressed natural gas (CNG) in the Caribbean. The NGC would like to play in that market.”

Don't put energy in leprosarium

There are three conversations happening right now between multinationals in this country and the NGC for the total acquisition or the partial acquisition of assets, Ramnarine said.

“So we see the NGC as a vehicle for that growth and for that diversification, because diversification does not only mean diversification away from the energy sector. I think that has been one of the fundamental flaws in the diversification argument. Whenever we seek to talk about diversification in this country, we always believe we should put the energy sector in a leprosarium because we have to move away from energy,” he said.

Ramnarine said: “In business school 101, growth comes from a marriage of strengths and opportunities. What are our strengths in T&T? Energy. What are the opportunities? We look around the region, we see an emerging gas market in the region. We look to Africa; we see they need help to develop the energy sector. So, growth could come from a marriage of strengths and opportunities.”

The NGC is being poised to take part in that growth, and it is conceivable that the day will come in the future of this country when the NGC will be to T&T what Petrobras is to Brazil, the minister said.

“Petrobras is almost as powerful in Brazil as the Brazilian government,” Ramnarine said, “or Ecopetrol to Colombia. We heard the wonderful story of Ecopetrol that its value went from a couple of US$ billion to US$100 plus billion. It is one of the most valuable companies in the world. Ecopetrol has created tremendous value for the people of Colombia who are shareholders in Ecopetrol. NGC could become to T&T what Petronas is to Malaysia.”

Ramnarine told the Senate: “The whole concept to me of the energy sector approaching its autumn and winter is not relevant. I believe we have not even started to approach spring and there is a tremendous amount of opportunity out there, but it requires vision and will to unlock that opportunity.”

Also confirming the coming change for NGC was business adviser to the NGC president, Terry Follen, who wrote on his Linkedin page: “NGC revamps its business model. With a healthy balance sheet, good core skills and some new key executives in place over the past 12 months, NGC is well placed for this undertaking.”


Source:
Trinidad Guardian
Thursday February 21, 2013

http://www.guardian.co.tt/business-guardian/2013-02-20/ngc-undergo-major-strategic-shift