Aug 2013 Financial News

NGC pays $3.9 billion for 39% of Phoenix Park Gas

Aug 19, 2013

State-owned National Gas Company yesterday announced that the company had acquired the 39 per cent stake in Phoenix Park Gas Processors (PPGPL) owned by American energy giant ConocoPhillips for US$600 million ($3.9 billion). In a statement yesterday, NGC described the acquisition as one of the most significant developments in the history of the national energy sector and in the 38 years of the NGC.

It said that the acquisition was in keeping with the mandate of the Ministry of Energy to grow the NGC through diversification and acquisition. PPGPL is a joint venture formed in May 1989 which was owned by NGC (51 per cent), ConocoPhillips (39 per cent) and Pan West Engineers and Constructors Inc. (10 per cent). In 2001, NGC divested 20 per cent of its shares to National Enterprises Limited (NEL).

Speaking of the investment, NGC President Indar Maharaj said: “This step cements NGC’s relationship with PPGPL, a company which has earned a reputation for strong financial performance, operating efficiency and safety.”

Maharaj went on to say that, as a state-owned company, “NGC acts in the best interest of the country and citizens , and investments such as the PPGPL share purchase are business-driven and informed by careful research and due diligence. The time is right for the company to pursue new initiatives on behalf of the nation.”

Speaking after the launch of the 2013 deepwater bid round at the Hyatt yesterday, Energy Minister Kevin Ramnarine said Phoenix is a “very valuable asset” in terms of its profitability and its payments of “dividends to its shareholders.” He said there was unanimous agreement by “all parties involved” that “this was an excellent acquisition” and that NGC was advised by Credit Suisse and First Citizens.

Asked if NGC owning 90 per cent of the company means that Phoenix Park has been nationalized, Ramnarine said he prefers “democratisation,” as this was the term used in Colombia.

“It is still 10 per cent GE(-owned) through Pan West Engineers. We are considering—and I spoke to the Minister of Finance (Larry Howai, a former NGC chairman) this morning—the divestment of some of this 39 per cent onto the T&T stock exchange (TTSE). What modality that will follow is left to be seen. Some have advocated National Enterprises Ltd (NEL) as a possible vehicle, and there is some of Phoenix Park already in NEL. Twenty per cent of NGC's 51 per cent is in NEL. One could also consider a new vehicle.”

Ramnarine said: “For too long the energy sector has been divorced from the stock exchange. When one looks at the stock exchange, the stock exchange is not a reflection of the national economy. You see banking. You see manufacturing. You see insurance but there is little or no representation there of the country's main economic driver, and this is something we want to change through this Phoenix Park acquisition.”

He cited the success of the First Citizens Initial Public Offering as an example that “there should be more.” NGC Chairman Roop Chan Chadeesingh, in the company’s statement, said Phoenix Park is one of the largest gas processing facilities in the Americas and is consistently one of the most profitable companies in Trinidad and Tobago.

NGC delivers unprocessed natural gas to PPGPL, which extracts the associated natural gas liquids (NGLs) - propane, butane and natural gasoline - from the gas stream and redelivers cleaner, high quality residue gas to NGC for distribution to its customers. PPGPL exports most of the NGLs produced in the process to regional and international markets. The acquisition brings several immediate and tangible advantages to the NGC and by extension T&T, according to the statement.

“These include greater strategic national control of a critical component of the natural gas value chain; increased dividend stream to the NGC from PPGPL and further diversification of the NGC asset portfolio,” it said.


Source
Trinidad Guardian
Saturday August 17, 2013

https://guardian.co.tt/business/2013-08-17/ngc-pays-39-b