Atlantic LNG not likely to benefit from gas supply deal

Atlantic LNG (ALNG) is unlikely to benefit from the natural gas supply agreement signed last week between Venezuela and neighboring Trinidad and Tobago.

The Caribbean twin-island nation’s Prime Minister Keith Rowley confirmed that Trinidad and Tobago’s downstream petrochemical companies will be the beneficiaries of the 1-bcfd supply agreement saying their contribution to government revenue is greater than ALNG and therefore they will get priority when Venezuelan gas first lands in 2020.

ALNG, which operates four trains, has complained bitterly about the gas shortage that it said is at times as high at 30% and that the company said meant it could not fulfil at least 70 cargoes this year.

Speaking at a news conference following the signing of the agreement to bring gas from Venezuela’s Dragon field to Trinidad and Tobago, Rowley said his government would provide gas to ALNG if there was sufficient supply, but that downstream producers would receive priority.

The agreement calls for “the parties to take reasonable steps to facilitate the development, construction, operation, and maintenance of one or more pipelines from the Mariscal Sucre region in Venezuela to Trinidad and Tobago including a pipeline from the Dragon field to the Hibiscus platform.”

In addition, “The delivery of gas from fields in northeastern offshore area of Venezuela to Trinidad and Tobago.”

The gas will come from Patao, Mejillones, and Rio Caribe fields when they are developed. The Mariscal Sucre project includes four gas fields: Dragon, Patao, Mejillones, and Rio Caribe. Mariscal Sucre Dragon field is about 40 km north of the Paria peninsula in Sucre state in 100-130 m of water.

Rowley also revealed that the existence of Royal Dutch Shell PLC’s Hibiscus platform in the North Coast Marine Area was crucial to the rapid advancement of the project.

He said Shell, which recently bought BG Group and Centrica assets, was playing a vital role and was a partner with National Gas Co. of Trinidad & Tobago (NGC) in the project.

BG Group operates the North Coast Marine Area (NCMA), 40 km off the north coast, that includes four gas fields: Hibiscus, Poinsettia, Chaconia, and Ixora. In April 2000, a unitization agreement was signed, and in December 2000 Trinidad and Tobago approved the development of the first three of these fields. These fields are being developed in up to four phases to supply gas to ALNG Trains 2, 3, and 4.

Hibiscus platform as successfully installed in September 2001, in 150 m of water. The 107-km), 24-in. pipeline from the NCMA development to the ALNG plant is the longest pipeline in Trinidad and Tobago. Debottlenecking in September 2003 increased capacity of the pipeline to 30% above the original design.

Rowley said the deal means Trinidad and Tobago could settle the issue of gas supply to 2035 and in that context announced that when the agreement is fully operational, close to a quarter of the country’s gas supply could be coming from Venezuela.

Trinidad and Tobago is the largest exporter of methanol in the world and the largest exporter of ammonia to the US. It is also the sixth-largest global exporter of LNG. It has been, over the last 4 years, however, plagued by gas curtailments because of the slow production of reserves.