Sep 2016 Financial News

NGC establishes Marketing and Trade Desk

Sep 08, 2016

A Marketing and Trading Desk (MTD) is one of the key initiatives in the 2016 to 2020 Strategic Plan of the National Gas Company of Trinidad and Tobago (NGC).

NGC chairman, Gerry Brooks and acting president of Phoenix Park Gas Processors Limited (PPGPL), Alvin Dookie, spoke with Business Day recently about the MTD’s role in improving profits for the State-owned energy company and its subsidiaries.

Brooks said the MTD was set out as a formal part of the new five-year plan because the NGC Group of Companies needs to be “more participatory in the entire value chain”.

“We are building and deepening capacity in the organisation and we’re also taking costs out of our business through shrewd procurement and the utilisation of shared services as a model, as well as strengthening our capacity via training and recruitment.”

Asked why NGC felt the need to establish an MTD, Brooks explained that doing so allows NGC to derive far more value, either through contract arrangements or through spot selling. “That premium is double digit premium, which means more revenue for the NGC and more revenue for TT.”

NGC is looking at new markets, better selling and re-assuming control of gas that was “previously assigned to others,” but Brooks was keen to point out that the company “will respect contractual arrangements.”

“Those agreements are the subject of long-term contracts. So it is a very careful, very deliberate, expansion of our MTD...Right now, we have gas supplies that are within our control and what we’ve been doing is marketing and trading in those through PPGPL, through NGC et cetera. So it is a very careful, very respectful, very orderly approach to what we’re doing.”

Seeking to explain to persons not familiar with the energy sector how an MTD works, PPGPL’s acting president said, “NGC has equity interest in a range of hydrocarbon product. Oil from its upstream investments, LNG; equity interest in Atlantic, from TT National Gas Limited (TTNGL).”

“So the MTD is really combining and creating a synergy of all those marketing efforts that were being handled in different areas (of the NGC Group) into a common knowledge centre. The MTD will therefore derive greater benefit from the country’s resources,” Dookie stated.

PPGPL has always marketed its liquefied petroleum gas (LPG) and natural gas liquids (NGL) whereas NGC only started doing so in 2014.

The aforementioned new markets for NGC’s gas includes the United States and countries in Central America and Asia. Which markets NGC ends up selling to will depend on timing and opportunity.

Brooks told Business Day the company is “seeing kernels of opportunity” based on demand and supply, which NGC is already pursuing as a strategy.

“We plan to deepen that in 2017 and 2018 through the formalisation of the MTD, training; where our people go off on assignments with major marketing entities, and by ramping up the volumes which are available for sale; examination of our contracts and assuming dominion or control of the gas which previously had been signed under agreements, in a way which respects the sanctity of contract.”

NGC essentially intends to cut out the middle man and sell its products directly to whichever market has the best price at the time in question.

Dookie explained that the MTD was formalised in the 2016 to 2020 Strategic Plan because the same expertise required by PPGPL to market, trade and export NGLs is the same expertise that is relevant to NGC’s marketing.

“Combining that into one trading desk that can develop that expertise into a centre of excellence would allow us to derive greater benefits from the portfolio of molecules that we have to market, be it oil, LNG, NGLs.”

Looking even further ahead, Dookie told Business Day that the MTD will also be a platform to move into trading activities, where the NGC Group would “buy and sell molecules that are not necessarily indigenous to TT.”

This, in the company’s view, is a key strategic area that it intends to develop for the long-term.

Source:
By Sasha Harrinanan
Newsday
Thursday September 8, 2016

http://www.newsday.co.tt/businessday/0,232939.html