Trinidad seeks bigger slice of Atlantic LNG

Trinidad and Tobago is discussing a proposal with Shell and BP to increase the state's shareholding in the Atlantic liquefaction complex.

The government proposal for greater state interest in the consortium, contained in a government policy paper seen by Argus, reflects the state's "concern about aspects of the management of the Atlantic plant," Trinidad's energy ministry said.

The Caribbean state's bid for increased ownership is part of a planned restructuring of the consortium that runs the country's four-train 14.8mn t/yr liquefaction facility, a ministry official tells Argus.

"The government's intention is to have greater involvement in the operations of this facility that is important to the national economy, and also to increase the income that the state gets from LNG production and export," the official said.

Shell and BP are the main shareholders in Atlantic. The government's existing minority interest is through state-owned natural gas company NGC.

The other minority shareholder is China's sovereign wealth fund CIC unit Summer Soca.

Shell was circumspect about the talks. "Details of our negotiations with the government of Trinidad and Tobago and the other Atlantic shareholders are still ongoing and are commercially confidential," Shell said.

BP has not responded to a request for a comment.

Shell owns 46pc of the 3mn t/yr train 1. BP holds 31pc, and NGC and CIC have 10pc each.

Shell has 57.5pc and BP 42.5pc of both trains 2 and 3, which each have 3.3mn t/yr of capacity.

For 5.2mn t/yr train 4, Shell holds 51.1pc, BP 37.7pc and NGC 11.1pc.

The ministry declined to indicate the level of shareholding the government is seeking, or whether it wants stakes in trains 2 and 3 in which NGC currently has no interest.

"These details are matters to be negotiated," the ministry official said. "Revealing the government's position would put it at a disadvantage in the negotiations."

The government's concerns about the operations of Atlantic emerged in May 2019 when BP said it may close Train 1 after 2019 because of a shortage of feedstock. The UK major said its infill drilling program targeted at the train would deliver about 300mn cf/d less output than forecast.

The pioneering Atlantic complex, which was first established in 1999, has been hamstrung by limited domestic feedstock for years. A Shell-led plan to supplement domestic supply with pipeline gas imports from Venezuela starting this year fell apart amid turmoil in the neighboring country.

The government responded to BP's announcement of the likely shutdown of train 1 by pointing to a recovery in gas production.

Trinidad's gas production has rebounded modestly since November 2017 following a long slide from a peak of 4.3 Bcf/d in 2010. The shortage forced supply curtailments, suppressing output of LNG, ammonia and methanol.

Gas output in February 2019 averaged 3.956 Bcf/d, up by 8.6pc from January. Production in January-February averaged 3.798 Bcf/d, 0.7pc more than a year earlier.

The increased availability of gas led the Atlantic consortium to produce 4.96mn m³ of LNG in January-February 2019, up 2pc on a year earlier, according to the energy ministry.

No new production figures have been issued by the energy ministry since the February data that was published on 1 May.