Home' Trinidad and Tobago Guardian : November 14th 2013 Contents NOVEMBER 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
ENERGY | BG9
Atlantic LNG has made a sig-
nificant change in its exports
out of Point Fortin with
almost half of LNG from
Trains I, II and III now being
shipped to South America
where the prices are rivalling those seen in
the Asia/Pacific region.
This was revealed by the company s chief
executive officer Nigel Darlow, who said low
LNG prices in the US had led Atlantic to sig-
nificantly reduce the amount of the commodity
sold up north and instead export it to South
"As of the end of September this year, 45
per cent of Atlantic s LNG from the first three
trains has gone to South America and 18 per
cent to the US market so you have seen a big
change over the last five years.
"If you had asked me that question five
years ago probably 80 per cent would have
gone to the US market. So there is a huge
turnaround in terms of where Atlantic s LNG
is going at the moment and that is in response
to pricing," Darlow told the Business Guardian.
In South America, Atlantic s customers ship
LNG cargoes to Argentina, Chile and Brazil
with Argentina becoming the largest importer
of LNG from T&T.
Darlow explained that there was a major
differential in the LNG prices in North and
South America with North America s spot
prices at less than US$4 per million British
thermal units (mmbtu) while South America
has spot prices in the vicinity of US $15 per
Asked to explain how T&T benefits from
LNG sold to South American markets, an
Atlantic official said: "Based on the current
high prices for LNG in the South American
market, the net back from LNG sales would
be much higher than for the US market.
"This results in higher margins, which results
in higher tax revenue for T&T.
"Additionally, the price for gas from the
upstream suppliers is also partly determined
in reference to the average market price.
"Higher LNG market prices therefore result
in higher prices for gas supply. This also con-
tributes to greater tax revenue for T&T."
Atlantic s customers also ship LNG cargoes
to other destinations, including Japan, India,
South Korea, China, Spain, Puerto Rico and
the Dominican Republic.
Darlow said the advent of shale gas in the
United States does not pose a risk to Atlantic
LNG because the global demand for LNG con-
tinues to be robust well into the immediate
He said, "I don t worry about that from
Atlantic perspective, because if you look at
the industry consensus is that the demand
will still outstrip these new sources of supply.
So we are building all these new plants and
all these plants are getting commissioned to
be built but even that will not be sufficient
to match the expected growth in LNG demand.
I think you will still see hunger for Atlantic s
LNG because demand will be that strong par-
ticularly in Asia Pacific."
He said there have been significant discov-
eries of natural gas globally, particularly in
West Africa as well as new LNG plants coming
on stream in several parts of the world including
Australia and soon the United States.
Even these new developments will not be
enough to match the expected doubling of
LNG demand in the next decade. It is in part
why he is confident that Atlantic will be in
a good position to continue to benefit from
Darlow told the Business Guardian: "When
the Panama Canal expansion gets finished in
2015, it will for the first time be able to take
conventional sized LNG vessels....So our vessels
will be able to transit the Canal and provide
much quicker access to the largest LNG market
in the world which is the Asia/Pacific market
so that is a big bonus for us."
He added: "To build the average LNG plant,
if there is such a thing, costs over five times
more per unit tonne than it cost to build
Atlantic. That means Atlantic will have a strong
competitive advantage because it has much
lower sunk costs. I think Atlantic s LNG will
always have a home in the marketplace."
Darlow argued that the power sector in the
US will continue to move towards LNG because
the advantages of gas over coal from an envi-
ronmental and efficiency point of view were
very clear and in both North America and
other markets around the world, including
China, there will be a move away from coal
He also doubted that China was likely to
undergo a shale gas revolution as in the US
which would impact global LNG prices.
"There is a lot to do and a lot of investment
to happen to have shale gas in China affect
global gas supplies and its very uncertain how
that might play out," said Darlow.
Atlantic s CEO said most of his company s
LNG is sold under long term contracts even
though the off-takers trade the LNG to the
places that they get the best price.
He thinks going forward there will continue
to be regional differentiation of prices because
the market is underpinned by long-term con-
Unlike oil, there is a need for long-term
contracts to underpin the huge capital invest-
ments in constructing LNG plants but even
though he expects more spot trading of LNG
he does not see it being more than 20 per
cent of global production.
"When you are investing in LNG you are
investing billions and billions of dollars and
you need to have an assured cash flow. So you
are going to put in place a long-term contract
for the majority of your LNG to underpin the
investment you are making. What you may
find is instead of 100 per cent of your LNG
being placed under long-term contract, it
might be like 80 per cent to give the flexibility
to go and put the other LNG into other mar-
kets." Darlow said.
He admitted that the gas shortage over the
last two years had a negative impact on
Atlantic s operations as it has all the down-
stream users. The expectation is that the short-
fall will ease in 2014 and into 2015.
"We are not at maximum capacity that s
for sure because of gas shortfalls. We normally
supply something in the region of 260 cargoes
a year so we would be short on a few cargoes."
Atlantic LNG is the sixth largest exporter
of LNG in the world accounting for 15 million
tonnes per annum.
The first three trains have total nameplate
production of 9.6 million tonnes per annum,
while Train IV produces 5.2 million tonnes
Darlow said that due to the commercial
arrangements for Train IV, Atlantic is not privy
to its cargo destinations.
An article published on Page BG9 of the
September 5, 2013 edition of the Busi-
ness Guardian under the headline "New
York court filing: World GTL accuses PWC
of being 'a puppet receiver'" contained
statements which could have been un-
derstood by some readers as suggesting
that there was an existing matter in a
foreign court by which World GTL was
claiming the sum of US$2 billion from
Petrotrin and the Government of the Re-
public of T&T for expropriation.
Although World GTL did file a lawsuit in
the US District Court (Southern District
for New York) against Petrotrin claiming,
inter alia, expropriation, at the time of the
publication of the article those proceed-
ings were stayed as the dispute in ques-
tion was covered by an agreement to
Since the New York litigation has been
stayed, World GTL has not pursued any
claim for expropriation against Petrotrin.
There is a dispute between the parties
that is before the London Court of Inter-
national Arbitration and in that dispute,
World GTL is not seeking damages of
US$2 billion from Petrotrin.
We wish to express our regret to
Petrotrin for any distress or embarrass-
ment that it or its board or management
may have suffered as a result of the pub-
lication of said article. We apologise for
Atlantic sending LNG south
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