May 2016 Financial News

TTNGL's ready to develop Loran/Manatee, Africa

May 12, 2016

Phoenix Park Gas Processors is signalling that it is ready to deepen its footprint in Africa and to assist T&T’s neighbours in Venezuela to monetise gas in the cross-border Loran/Manatee field—both of which will redound to the long-term benefit of TTNGL shareholders.

So said state-owned National Gas Company (NGC) chairman Gerry Brooks, in an interview at the TTNGL’s annual meeting at Hilton Trinidad and Conference Centre last Thursday. TTNGL is a holding company for shares in Phoenix Park, which is majority-owned by NGC. TTNGL shares were offered to local institutional investors last year.

Brooks said the Loran/Manatee field offers the possibility of about 10.3 trillion cubic feet of gas and TTNGL is ready to monetise that gas to the benefit of both countries.

“Because of the location of our infrastructure and our proven capability, there is an opportunity for us to combine the Venezuelan capacity, NGC and the State to be able to marshall benefits to Venezuela and for the benefit of T&T.

“That’s what we are doing now, having those discussion around operatorship, commercialising it and, ultimately, monetising it for the benefit of both countries.”

Asked whether he is confident that Venezuela would be receptive to assistance, he said, there is power in partnership and Venezuela recognises that as well as, “there is that coincidence of economic and financial interest.”

Venezuelans have been protesting over the decision to have two-day working week in order to save on energy. The largest dam in that country is also not in operation due to the challenges which it faces.

Commenting on the protests and the likelihood of getting the project off the ground, Brooks said if TTNGL is able to monetise the gas in a way that benefits the two countries then, “what you would begin to see is an increase in the financial flows both in Venezuela and T&T which would ease the very difficulties that they have. It’s in their interest to have the project go forward.”

Referring generally to the oil price hovering around US$44 per barrel, he said it is a positive sign because it had earlier this year decreased to US$27.

“Gas has recovered but not that much. LNG is in the US$2.08 or US$2.09 region. It is still a long way to go because we are still basically on that floor.

“As to sustainability, there is still a number of factors in there, moving parts that is, on the demand side you still have the lack of robustness of the demand and some economies have to recover.

“On the supply side, you still have to clear some inventories but the key is, I think for all of us, how do we recalibrate and reengineer our organisations to be able to navigate and succeed in this world and to ensure that you are positioned so when the price rebounds you are able to take more profit and able to move forward.”

According to Brooks, the company is operating in a global external environment where there is continuous change. He said energy prices have been in deep decline. “The demand for energy has, in fact, fallen off as economies have slipped, all of the BRIC territories are now in decline.”

The second issue is that supply from Iran has come into the market place where demand is falling and oil and gas supply increasing. He said the US has now become a net exporter of energy.

But, despite the changes in the energy sector, he said NGC is determined to deepen its footprint in Africa and that the company is “cautiously optimistic” about going into that continent.

“The group NGC has had missions and delegations to Africa before. We are looking at three or four opportunities. The Prime Minister and the Minister of Energy are very supportive of the thrust and they are very supportive of our expansion thrust.”

Brooks joined the delegation led by Prime Minister Dr Keith Rowley last week on a fourday official visit to Ghana to discuss the possibilities of Phoenix Park’s expansion.

Energy efficiency

Speaking the day after the US/Caribbean Energy Summit held in Washington DC and hosted by US vice president Joseph Biden, Brooks said Phoenix Park is planning and testing its renewable energy project. Trends are showing that there is an appreciation of renewable energy initiatives in T&T, he added.

Brooks said the Government had laid down a policy and mandate on renewable energy, one which TTNGL subscribed to.

“We are looking at one project, a fairly significant project which is going through the stage-gate process (this is the testing stage), which is a renewable energy project.”

Adding: “We expect to bring in some mass transit vehicles very shortly with one of the dealers, an 18-seater and a 24-seater. The 18- seater is going to be $100,000 less than the traditional 18-seater with $20,000 less in annual running costs, which will save you $200,000 over a five-year period.

“In the case of the 24-seater, the savings is going to be about $300,000. I am advised that we are going to be bringing 50 in the first instance and as we roll out the gas station programme we have 40 gas stations that we are going to be rolling out in 2016 then, another cohort in 2017.”

Asked what it will cost NGC to go into renewable energy, Brooks said: “We have to prove the project….we are looking at the economics, we are looking at the CECs (certificate of environmental clearance) so we are now in the stage-gate process.”

Brooks added that the project requires a gestation period of at least two and a half years because there are a number of things that are required to be done.

“One is that you are required to get the financing. Two, you are required to get the CECs and, third, you are required to do the engineering. You are required to get the marketing because when one is spending $1.5 billion, you have to ensure the project’s methodology and proving of the projects are sound because it is not a small amount of money.”

Asked whether international financing would be searched for, he said: “There is going to be an element of partnering as we construct a consortium. Typically, you have two or three people in the consortium each bringing international experience to the project and we would follow that model.”

Leadership

Brooks said Ken Allum, former Petrotrin president, have been re-appointed to the NGC board.

“Allum has been re-elected. It is a pleasure to have him and Andrew Jupiter because they are both well-known, highly respected energy professionals.

“Allum has deep energy experience. He has deep refining experience and he has deep oil experience. Many of the oil contracts, the refinery operation, the operatorship, the engineering aspects he brings a tremendous amount of commercial and energy acumen so we are very grateful to have him.”

 

Source:
Business Guardian, BG8
Thursday May 12, 2016