Natural gas supply contracts and the future of LNG Train 1

The manner in which the politicians of T&T have managed the affairs of the energy sector of the T&T economy since independence has never been de-colonised as a result transparency of its operations does not exist. Two gas supply contracts: one between BPTT and the NGC expires in 2017 and the supply contract of gas for Train 1 of the LNG plant at Point Fortin expires in 2019. Key developments in the economy of T&T and the issues at hand are not in the public domain especially given the present price collapse that is impacting the oil and LNG markets of the world. On January 23, 2015 the minister of energy announced in the House of Representatives that a memorandum of understanding will be executed between BPTT and the GORTT concerning the 2017 gas supply contract. BPTT on the same day announced the offer of VSEP to its employees in T&T which points to the issues BPTT have repeatedly raised concerning the pricing of the gas supply to the domestic market in T&T and  their inability to sell gas directly to its end users. These developments are all coloured by the fact that since 2010 there is a shortfall of gas to domestic users which is not going away. The reality is that the much touted Juniper project by BPTT will not alleviate the gas shortfall. Hardball geo-politics given the reality of the markets as the new paradigm of energy created by the US shale gas revolution is putting in place a new energy order whilst the politicians of T&T remain trapped in perceptual denial. In the course of the statement of the minister of no energy he made a most interesting and unexplained statement concerning the possible mothballing of Train 1 by ending its gas supply by not renewing the contract to supply gas. As far as I know the Train 1 LNG plant is not owned by the GORTT and people of T&T so its not ours to mothball. Train 1 was granted an income tax holiday by the then UNC government. When does this tax holiday expire? Have the owners of Train 1 indicated that without receipt of gas at a cost which reflects the US shale gas pricing reality then the plant will be mothballed? Have the owners of Train 1 now indicated that given the realities of the US shale gas revolution a gas supply contract must now reflect this reality thereby making the plant competitive? As usual in T&T we the citizens can only guess concerning state policy on energy. Remember BP is a shareholder of and the major gas supplier to Train 1. Over to the minister of no energy. Persons interested in this reality can read my book: “The Geo-Politics of LNG in Trinidad and Tobago and Venezuela in the 21st century” by Daurius Figueira available online at Amazon etc. Click on the link for the report on the minister’s statement:

http://www.tv6tnt.com/home/featured-links/-National-Gas-Contracts-for-Renewal–3035—289646691.html

The games continue at a time when the LNG market in Asia for the first quarter 2015 is mired in low demand and oversupply where electricity generating plants with non-LNG fired plants are switching to fuel oil given the collapse in prices and the cutthroat competition for market share. Whilst in Latin America the only new demand for the quarter at present is 13 loads of LNG put out to tender to supply Mexico and the EU is now deeper into  the doldrums. BP is then calling the shots in T&T and the political talk about the surety of our gas economy in these market realities is political delusion hoping for a miracle in an election year. Click the link:

http://finance.yahoo.com/news/global-lng-prices-fall-lacklustre-163735409.html;_ylt=AwrBJR_Z38RUTUcAY1HQtDMD

Whilst on the oil markets the glut heightens as tight oil production in the US continues to break records as inventories rise and demand grows given the expansion of the US economy and the fall in energy prices. The estimated glut on oil markets of 2 million barrels per day is not decreasing as US production is not slowing yet. The drilling rig count on the shale  plays are diminishing and the small or undercapitalised companies are under grave pressure but already the players are lining up to gobble the weak and floundering thereby creating a new order on the shale plays. Watch carefully the emerging shale power of ExxonMobil. The shale revolution is not going away learn to live with it and the House of Saud will soon be forced to learn. Click the link:

http://www.worldoil.com/Oil-trades-below-48-as-US-crude-supplies-seen-worsening-glut.html

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