Home' Trinidad and Tobago Guardian : November 13th 2014 Contents NOVEMBER 2014 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
The presidents of bpTT and
Atlantic have both confirmed
to the Business Guardian they
are witnessing a fall in LNG
prices in both the Far East and
Europe due to lower oil prices.
Nigel Darlow, president of Atlantic, spoke of
the fall in oil prices and its effects on LNG prices.
"I think it is going to have a depressing or
dampening effect on gas or LNG prices and I
think we are already seeing that. The LNG
pricing has come off fairly significantly and a
large part of that is because there is a lot of
LNG contracts that are effectively oil indexed.
So with the declining oil price, you have seen
a reduction in the LNG pricing."
Norman Christie, regional president of the
country s largest natural gas producer and
Atlantic s largest shareholder, bpTT, also con-
firmed the falling LNG prices.
"Of course, some prices are tied to crude and
some are delinked from crude. In the Far East,
some of those prices are tied to crude. So we
have seen some fall off in prices in those areas linked to
crude. So we have a mixed block."
Their statements are in stark contradiction to the position
of Finance Minister Larry Howai and Energy Minister
Kevin Ramnarine that the country s revenues were not
being significantly impacted because crude oil only accounts
for less than 20 per cent of energy revenues.
In fact, on Tuesday at the launch of the consultancy
to have a natural gas master plan done, Ramnarine was
still sticking to that argument.
He said overall, the country is getting more revenues
from natural gas at this time.
"We have had a roughly US$22 a barrel decline in crude
prices in the last two months. What we have seen is the
natural gas sector in terms of revenues has held."
When asked if his statement was not in contradiction
with what was the reality in Europe and the Far East, two
markets for this country s LNG the minister said, "We
are keeping a very close eye on the prices in Asia and
Europe and they will eventually begin to harmonise with
the oil price. But thus far, the gas revenue base is not
When asked if he was suggesting that the fall in prices
in Asia and Europe was not affecting revenues, Minister
Ramnarine responded: "We have not seen that impact
as yet. We also have very good prices now for ammonia
and methanol and some of our gas contracts are linked
to those prices."
Asked if he was then expecting a softening of government
revenues because the natural gas prices in Asia and Europe
are falling because of their link to crude prices, Ramnarine
said, "We have a presentation this evening at the Ministry
of Finance and we have the opinions of all of the major
experts in the world and they have forecasted the price
and we will simply look at what the experts have to say
on oil price and we await the outcome of the OPEC
meeting to see what decisions OPEC arrives at in terms
of supply. Predicting oil prices is one of the most difficult
things to do in the world as I suppose is gas prices."
Atlantic s president also raised the issue of lower pro-
duction which combined with lower prices is sure to
further hurt Government s coffers. He said the issue of
gas shortages continues.
"Yes, and that s a challenge for Atlantic, it s a challenge
for the country. It s a frustration I think for Atlantic and
a lot of other gas consumers," Darlow said.
Darlow said Atlantic has been very responsive in terms
of capturing higher value markets in terms of LNG pricing
so what you have seen is Atlantic is moving away from
its traditional market, North America, US, into other
markets predominantly into South America.
"Approximately half of our LNG is being sold into
South America this year where we have seen very robust
pricing, so Atlantic is very responsive to market pricing
and will go to the highest priced markets," he said.
He said the Russian deal to provide piped natural gas
to China was unlikely to hurt LNG prices over the long
term since it will only meet a small percentage of China s
demands and, when you look at supply and demand,
even with all the new plants being built, it s hard to see
supply catching up with demand.
Ramnarine told reporters that in the last 20 years, gas
has become the dominant hydrocarbon and there has
been a focus by previous governments on natural gas that
has borne significant benefits to the country, but the Gov-
ernment has taken a decision to focus on oil and "we
have started to see oil production begin to pick up. The
number s coming out for October, subject to finalisation,
for the month of October is 86,000 bo/d.
"Revenues per barrel of oil versus revenues per barrel
of oil equivalent. You get more value from a barrel of oil
because oil is subject to a different tax regime. There is
something called supplemental petroleum tax that applies
t oil and not gas, so per unit, we actually get more revenue
per barrel of oil."
T&T is the most diversified exporter of LNG in the
Atlantic, bptt presidents:
Low oil prices affecting LNG
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