CIRCUM – ATLANTIC CIRCUS

BP

A 5-member contingent of Prime Minister Rowley, Energy Minister Khan, Ministers Young and West and National Gas Company president Loquan met a high-level BP team, led by chief executive upstream Bernard Looney, including BPTT President Claire Fitzpatrick, Global Upstream Regions chief operating officer William Lin, planning and commercial finance head Richard Eaton and corporate operations vice-president Giselle Thompson.

In an informative and productive 90-minute briefing at BP headquarters in St James Square London, they had a detailed consultation about developmental plans for TT. They discussed BP’s recent drilling programmes and the future of LNG production in TT. BP provided an update on short and medium-term exploration and production gas programmes and on their platform fabrication at the Trinidad Offshore Fabricators (TOFCO) yard in La Brea.

The parties reaffirmed commitment to growth of the energy sector as they scheduled the continuation of negotiations between the empowered teams which are expected to begin in the middle of June in furtherance of specific objectives relating to the restructuring of Atlantic LNG, acceleration of field investigation, exploration, production and a large number of E&P licenses.

Rowley thanked BP for cooperation with the Government in the energy sector.

BP Upstream chief executive Bernard Looney emphasized the company’s long-term commitment to Trinidad and Tobago during the meeting with Government representatives.

‘BP values our long-term partnership with Trinidad and Tobago. We have been the largest investor in the country’s upstream sector – investing over US$6 billion in the last five years alone – and are committed to continuing to take our business forward. In the past two years we’ve started up three new Upstream major projects in Trinidad and recently approved the development of another two.‘

Most recently, BP Trinidad and Tobago (BPTT) started production from the Angelin gas project in February this year and late in 2018 sanctioned the development of the Cassia Compression and Matapal projects. BPTT has been the most successful explorer in shallow water acreage offshore Trinidad, discovering around four trillion cubic feet of gas resources since 2012, and has a continuing exploration programme, including wells in both shallow and deep water being drilled in 2019.

Looney, with Upstream chief operating officer regions William Lin and regional president Claire Fitzpatrick, welcomed the opportunity to meet the delegation to advance discussions with the government, including plans to maximize production from BPTT’s resource base and recent results in its infill drilling programme.

A track record of success in Trinidad provides a strong foundation for advancing opportunities to further develop its BP Trinidad business:’We continue to be confident in the Columbus Basin and I’m excited by the work being done by our team in Trinidad and Tobago to maximize production and create cleaner and more efficient methods to develop resources.’

Current work includes development of a new concept for future platforms being piloted for the Cypre development that is expected to significantly reduce the cost of developing resources as well as reducing carbon emissions. The Cypre project is targeting final investment decision in 2020. If the pilot in Trinidad is successful in unlocking marginal resources, the design may have the potential to be applied in other regions worldwide.

On the meeting with the delegation, Claire Fitzpatrick said: ‘We had a fruitful meeting, discussing current issues and updating the Prime Minister on our activities over the short, medium and long term. Our exploration programme, for example, will continue in 2019, as well as work on our two sanctioned projects, Cassia Compression and Matapal.’

BPTT is the largest producer of natural gas in Trinidad and Tobago, accounting for about 55 percent of national production and continues to make substantial investments in its business.

BP is also the biggest tax payer.

Background

The Cassia Compression facility will be located 57 kilometres off the south-east coast of Trinidad. The platform will have a throughput capacity of 1.2 billion standard cubic feet of gas a day (bscfd). The jacket will be fabricated in La Brea, Trinidad and the topside structure in Altamira, Mexico. First gas from the facility is expected in 2021.
The Matapal project will develop the gas resources discovered by BPTT in 2017 with the Savannah exploration well. The project will be a three-well subsea tie-back to the existing Juniper platform. With production capacity of 400 million standard cubic feet of gas a day, first gas from Matapal is expected in 2022.
The Cypre project is based on the Macadamia discovery in 2017. The project is progressing through BP’s project approval process with the aim of making a final investment decision in 2020.

Shell

The Prime Minister joined Ben van Beurden, Chief Executive Officer of Royal Dutch Shell on 29 May, 2019 to witness the signing of a new energy agreement with Trinidad and Tobago at the energy company’s headquarters in The Hague, Netherlands. This in­cluded ex­ten­sion of the pro­duc­tion shar­ing con­tract for blocks 6d and 6e and a mar­ket­ing and de­vel­op­ment plan for blocks 5c and 5d, the two blocks Shell is ex­pect­ed to de­vel­op to mitigate the short­fall from the BPTT in­fill drilling pro­gramme. This will add an­oth­er 300mm­scf-d of gas per day in­to the sys­tem.

Shell is the sin­gle largest share­hold­er in At­lantic with a 51 per cent share­hold­ing.

This new agreement is a significant milestone for Trinidad and Tobago as it features an enhanced revenue package for the sale of LNG. The energy deal follows positive and relationship-building discussions between Shell and the Government. The agreement reflects the mutual importance of the relationship and the value Shell places on Trinidad and Tobago as a province. The parties committed to continue their discussions on development of the energy sector in Trinidad and Tobago.

The Minister of Energy and Energy Industries signed on behalf of the Government while Derek Hudson, Vice President and Country Chairman of Shell Trinidad and Tobago signed on behalf of Shell. The ,Minister of National Security, Communications and Minister in the Office of the Prime Minister and De La Rey Venter, Executive Vice President of Shell’s Integrated Gas Venture business signed as witnesses.

Before the signing ceremony Rowley met Maarten Wetselaar, Integrated Gas and New Energies Director at Shell, responsible for Shell’s integrated gas business, including the industry-leading liquefied natural gas and gas-to-liquids positions. He also leads the new energies business, including Shell’s investment in new fuels, new energy carriers and new business models for a low-carbon future.

The West Indians viewed the most recent seismic imaging for Trinidad, the GeoCrawler programme which leverages artificial intelligence for faster, better opportunity de-risking and a presentation on Synthetic Borehole-log Generating.

Yuri Sebregts, Shell’s Executive Vice President Technology, Chief Technology Officer and Dr Dirk Smit, Vice President R&D Exploration Technology, Chairman Shell Science Council, Chief Scientist Geophysics delivered presentations.

On 29 May, 2019 the delegation visited the Shell Technology Centre in Amsterdam, Netherlands, for an update on the latest projects and technology used by Shell, specifically in TT, to leverage improved returns in the energy sector, including seismic imaging utilising artificial intelligence.

They toured laboratories including the 3D Printing and Rock and Fluids Laboratory.

In a follow-up to earlier meetings in the Netherlands with Shell, the visitors received an update on planned growth portfolios for TT from Shell at its Houston Woodcreek Campus on 3 June.

Presentations highlighted the significant increase in gas production from the Starfish field. Rowley visited Woodcreek in 2017 when he was briefed on efforts to overcome challenges Shell faced after the initial Starfish start-up did not produce anticipated results .

The contingent received a status report on the upgrade to Shell’s existing infrastructure, aimed at ensuring continued and increased natural gas production. They heard presentations on the company’s assets in the East and North Coast Marine Area, exploration, near-term and delivered projects. Energy Minister Khan, Minister Young and Minister West accompanied Rowley to Woodcreek Campus where he met TT staff working on projects related to TT.

EOG Resources Houston

On 4 June, 2019 Rowley, Khan, Young, West and Loquan met Chairman and CEO of EOG Resources William Thomas, James Woods, Vice President & General Manager, International; Ezra Yacob Executive Vice President, Exploration and Production and George Vieira, Managing Director, EOG Resources Trinidad Limited at EOG Resources Heritage Plaza, Houston, Texas.

EOG updated the group on exploration and production initiatives since the last meeting with EOG in Houston in 2017.

The energy company is executing an aggressive drilling programme which will continue with the drilling of a number of wells over the next year and beyond. There was a discussion on areas where EOG sees positive prospective in Trinidad and Tobago and the Prime Minister encouraged the company to continue speaking to the Government about their future plans and opportunities for greater collaboration.

EOG is the largest oil producer and one of the top ten gas producers in the United States. They confirmed that Trinidad and Tobago remains an important investment in their portfolio.

BHP Pe­tro­le­um

Geral­dine Slat­tery, Pres­i­dent of BHP Pe­tro­le­um and Vin­cent Pereira, Pres­i­dent BHP Trinidad and To­ba­go welcomed the circulating crew at the BHP petroleum office in Hous­ton, Texas. They discussed the BHP ex­plo­ration pro­gramme and op­por­tu­ni­ties for col­lab­o­ra­tion with the Gov­ern­ment to in­creas­e oil and gas pro­duc­tion. BHP pro­vid­ed an up­date on in­vest­ment de­ci­sions made since the prime minister visited BHP head­quar­ters in Mel­bourne, Aus­tralia last year. Tech­ni­cal staff delivered pre­sen­ta­tions on the ge­ol­o­gy/seis­mic sec­tions of the North East and South East blocks in Trinidad and To­ba­go and in­ter­pre­ta­tions of their shal­low and deep wa­ter hori­zons. The prime min­is­ter met Trinidad and To­ba­go citizens work­ing at BHP in Hous­ton. He ex­pressed sat­is­fac­tion with the com­pa­ny’s op­er­a­tions and the par­ties com­mit­ted to ac­cel­er­ate the mu­tu­al­ly ben­e­fi­cial re­la­tion­ship.

This fi­nal face-to-face forum ended a costly 10-day en­er­gy caucus to apprise key ex­ec­u­tives and tech­ni­cal per­son­nel of their busi­ness in Trinidad and To­ba­go.

Competitive Bid Round 2018

Supermajors, Roy­al Dutch Shell and BPTT were the on­ly bidders for the rights to ex­plore for oil and gas in the 2018 shal­low wa­ter com­pet­i­tive bid round. The com­pa­nies offered joint bids for blocks 4 (c), U (c), and Low­er Re­verse L, all lo­cat­ed offshore East Trinidad, where both com­pa­nies al­ready op­er­ate sev­er­al blocks.

Shell Trinidad Ltd vice president Derek Hudson and BPTT Regional President, Claire Fitzpatrick signed the T&T Shallow Water Competitive Bid Round 2018 at the Ministry of Energy and Energy Industry.

BP is the country’s largest oil and gas producer, with 13 offshore production platforms. About 65 per cent of BP’s natural gas produced in Trinidad is exported as LNG – the major portion of which goes to the United States. The other 35 per cent is sold for use as fuel or feedstock for local industry.

Regional BP President Claire Fitzpatrick said:

‘The decision to bid highlights our intent to continue to seek out opportunities to develop resources in the Columbus Basin. It also demonstrates our confidence in the potential of the Basin.’

Half of the blocks offered, NC­MA 2 and NC­MA 3, lo­cat­ed North of Trinidad and 1 (b) which is West of Trinidad received no bids, hence no com­pe­ti­tion in a com­pet­i­tive bid round.

“It is quite promis­ing to see that some in­ter­est has been gen­er­at­ed de­spite volatile en­er­gy prices over the last three years in par­tic­u­lar,” the Minister noted as the bids were re­vealed, He ex­pect­ed Shell to bid on NC­MA 2 and NC­MA 3, while he felt the po­ten­tial for 1(b) was so small that on­ly a com­pa­ny like De­N­o­vo op­er­at­ing in the Gulf of Paria would bid on it.

Part of the chal­lenge for a new en­trant was the presence of three of the largest en­er­gy com­pa­nies in the world op­er­at­ing in T&T­.

The Min­is­ter crit­i­cised me­dia reports, ques­tioning inadequate publication of his an­nounce­ment that the coun­try’s gas re­serves had in­creased in 2017 when com­pared to the pre­vi­ous year­, even though the in­crease was the first year on year since 2004 ac­cord­ing to the 2017 Ry­der Scott re­port.

“Oth­er as­pects of the in­dus­try get cov­er­age …..but its par for the course, we ac­cept it .. that’s what the me­dia thrives on but we have to be very care­ful that in telegraph­ing en­er­gy news a cer­tain lev­el of ma­tu­ri­ty and dis­cre­tion has to pre­vail. This is an in­ter­na­tion­al busi­ness.. of ex­treme­ly high cap­i­tal ex­pen­di­ture, this is a busi­ness that the pos­i­tive con­se­quences are enor­mous, but the neg­a­tive con­se­quences are equal­ly grave and that is the lev­el of ma­tu­ri­ty that we have to bring to the cov­er­age of en­er­gy is­sues.”

Khan said every­body has be­come an en­er­gy ex­pert overnight. “I like that be­cause the in­ter­est is there but what I say is that we have to be guard­ed how we tele­graph the news and the con­se­quences that can flow.”

He promised to re­lease a con­densed ver­sion after learning the rise was re­port­ed although, un­like past gov­ern­ments which re­leased the re­port, the secretive regime did not even present it to Par­lia­ment.

T&T Guardian recorded this in­crease in “Re­serves on the Rise” on October 26 2018.

The 2018 Ry­der Scott re­port is ex­pect­ed to be com­plet­ed by Au­gust and an on­go­ing au­dit of the coun­try’s oil re­serves by Nether­land, Sea­well and As­so­ciates Inc is ex­pect­ed to be com­plet­ed by the third quar­ter.

Gov­ern­ment in­tends to launch a deep wa­ter com­pet­i­tive bid round next year.

ECO, a free, online journal documents the industry with monthly updates from state, industry events and independent sources.

BP hires Vroon ERRVs

BP Trinidad and Tobago hired three emergency rescue and response vessels (ERRVs) from offshore support vessel provider Vroon.

BP hired the vessels from its subsidiary, Vroon Offshore Services Aberdeen. Vroon will provide the VOS Gorgeous, the VOS Fabulous, and the VOS Grace to support BP’s operations in the Caribbean. The vessels and crews departed from North Sea waters to service the contract and Vroon Offshore will establish a local presence in Trinidad and Tobago to support them.

ERRVs are fully equipped to recover and rescue people from the water, provide a place of safety and medical aid. They also monitor the safety zone, helping to avoid collisions, act as a first response in handling oil spills and as a reserve radio station.

The company did not provide specifics but described the deal as “a multiple year, multi-million-pound contract.” This contract follows a 2018 agreement between BP and Vroon Offshore to supply five ERRVs in the North Sea and West of Shetland on a long-term contract. Craig Harvie, managing director of Vroon Offshore Services Aberdeen, said:

“The award of this major contract, which further strengthens our relationship with BP, underlines their appreciation of the benefits of implementing the proven North Sea ERRV model. It’s a real signal of confidence in the effectiveness of North Sea emergency response and rescue services. We’re thrilled to have been selected as BP’s preferred partner in Trinidad and Tobago and view it as a platform from which to move into the wider Caribbean and South American markets.

‘Significant investment in our fleet in recent years has cemented our position as a market leader. Our modern and versatile fleet, combined with highly qualified, experienced colleagues, means we provide safe, reliable, value-added, cost-effective services which meet the needs of our customers.’

On the contract award, marine team lead at BP Trinidad and Tobago, Sham Parasram, said:

‘BP looks forward to working with Vroon and leveraging their expertise and the relationship already built up in our UK North Sea region.’

Source: Vroon Offshore

Trinidad Petroleum gets US$720m loan deal

Trinidad Petroleum Holdings Ltd (TPHL)will receive up to US$720 million in term loans from a syndicate of banks led by Credit Suisse AG, Cayman Islands branch as global coordinator.

In a May 31 release, TPHL is identified as the borrower while its subsidiaries – the Guaracara Refining Co Ltd, Heritage Petroleum Co Ltd and Paria Fuel Trading Co Ltd are the guarantors of the loan, a “single syndicated amortising term facility” which may have multiple tranches, maturing as early as three years following the funding date. (A syndicated loan, also known as a syndicated bank facility, is financing offered by a group of lenders – referred to as a syndicate – who work together to provide funds for a single borrower.

The borrower can be a corporation, a large project or a sovereignty, such as a government. The loan, together with funds from operations, would be used to repay, “at maturity, any 2019 notes that remain outstanding after its previously announced offers to exchange any and all of its outstanding notes for newly issued debt securities. This includes the payment of any principal, premiums, accrued interest, additional amounts, if any, and costs and expenses incurred in connection therewith.”

The first interest payment date of the new notes is September 15.

At the time of the press statement, TPHL had received over US$130 million from the loan facility. TPHL was established as part of the reorganisation of Petrotrin in December 2018.

A company source said they could not comment on the issue beyond that which was issued in the media release as the loan agreements are governed by the US Securities and Exchange Commission.

 

Former energy minister Kevin Ramnarine questioned the terms of the loan agreement and why current bondholders had not accepted the offer to exchange existing bonds for the new loan agreement. TPHL seemed to have “run out of confidence and goodwill with bondholders based on the poor acceptance of the exchange offer. There were three extensions of the deadline for bondholders to accept the offer. The question is why were bondholders not interested? Clearly this didn’t go to plan.” This may have led to the company seeking financing from the banks. “I wonder what those terms look like?”

World Gas-to-Liq­uids

In a 15-page judge­ment de­liv­ered at the U K Supreme Court in Lon­don, five Law Lords of the Privy Coun­cil ruled that the lo­cal courts were wrong to dis­miss a law­suit of Ravi Bal­go­b­in Ma­haraj which sought dis­clo­sure of doc­u­ments re­lat­ed to Petrotrin’s failed bil­lion-dol­lar (GTL) plant deal. The UNC ac­tivist ded­i­cat­ed his vic­to­ry to Petrotrin staff ter­mi­nat­ed last year af­ter the com­pa­ny was closed.

As part of the judge­ment, which he wrote, Lord Phillip Sales said that the ev­i­dence in the claim sug­gest­ed that there may have been “some grounds for think­ing” that there was po­lit­i­cal in­ter­fer­ence in drop­ping the case against for­mer Petrotrin ex­ec­u­tive chair­man Mal­colm Jones.

The Privy Coun­cil re­ferred to state­ments at­trib­uted to At­tor­ney Gen­er­al Faris Al-Rawi which were made ahead of advice of Queen’s Coun­sel Vin­cent Nel­son which gave the “ap­pear­ance of in­volve­ment of the At­tor­ney Gen­er­al in tak­ing that de­ci­sion.”

Jones died in Au­gust 2017 af­ter a civ­il claim, ini­ti­at­ed by for­mer at­tor­ney gen­er­al Anand Ram­lo­gan and for­mer UNC sen­a­tor Ger­ald Ramdeen un­der the then Peo­ple’s Part­ner­ship ad­min­is­tra­tion, was ter­mi­nat­ed. Vincent Nelson QC who claimed that legal action against former Petrotrin executive chairman, the late Malcolm Jones, would not succeed had advised the last PP government to pursue a case against Jones.

In ear­ly 2016, Nel­son ad­vised the Petrotrin board that the case had to be dis­con­tin­ued as state­ments of two key wit­ness­es showed that the deal was a bad busi­ness de­ci­sion and not based on neg­li­gence .

Last month, Nel­son was charged along­side Ram­lo­gan and Ramdeen over a State le­gal fee kick­back con­spir­a­cy.

Nel­son has signed a plea agree­ment with the Of­fice of the Di­rec­tor of Pub­lic Pros­e­cu­tions (DPP) to plead guilty to the charges and tes­ti­fy against Ram­lo­gan and Ramdeen.

In the case be­fore the Privy Coun­cil, an unnecessary waste of time and resources, Maharaj was es­sen­tial­ly grant­ed a life­line in his bid to ex­pose the PNM regime’s rea­son for dis­con­tin­u­ing the law­suit against Jones, who  died at 74 in Petrotrin’s Au­gus­tus Long Hos­pi­tal in Pointe-a-Pierre on Au­gust 4, 2017.

The de­ci­sion means that Ma­haraj can now con­tin­ue to pur­sue his law­suit seek­ing dis­clo­sure be­fore a new High Court Judge. It does not guar­an­tee that he would be even­tu­al­ly suc­cess­ful in his claim but Sales stat­ed that Ma­haraj had a re­al­is­tic prospect of suc­cess in prov­ing that there was a strong pub­lic in­ter­est in dis­clos­ing the doc­u­ments which Ma­haraj sought would nor­mal­ly be con­sid­ered ex­empt un­der the Free­dom of In­for­ma­tion Act.

The doc­u­ments were the wit­ness state­ments of for­mer Petrotrin ex­ec­u­tives Char­maine Bap­tiste and An­tho­ny Chan Tack. They were vi­tal in the com­pa­ny’s ar­bi­tra­tion against World GTL over the failed deal. Their state­ments were be­ing sought as they were the cat­a­lyst for the de­ci­sion to with­draw Petrotrin’s law­suit against Jones. The Privy Coun­cil said it was in the pub­lic in­ter­est to dis­close the state­ments as it “con­sid­ers that it is ar­guable that they are of sig­nif­i­cant weight, with a view to se­cur­ing trans­paren­cy and ac­count­abil­i­ty in re­la­tion to rel­e­vant de­ci­sions in a num­ber of re­spects.” The court held that the even­tu­al dis­clo­sure of the con­tentious state­ments would help the pub­lic form their own views on Jones’ con­duct in the World GTL deal and on Petrotrin’s han­dling of its sub­se­quent case against him.

Ma­haraj was rep­re­sent­ed by Richard Clay­ton, QC, Ram­lo­gan, Christo­pher Knight, Chelsea Stew­art and Alvin Pariags­ingh. Petrotrin was rep­re­sent­ed by Thomas Roe, QC, and Do­minique Mar­tineau.

About the World GTL Deal

In 2005, Petrotrin and World GTL en­tered in­to a joint ven­ture to build, fi­nance and op­er­ate a gas-to-liq­uids plant in Trinidad. The $2.7 bil­lion fa­cil­i­ty was sup­posed to con­vert nat­ur­al gas in­to a more ozone-friend­ly liq­ue­fied form of diesel.

Al­though part of the struc­ture of the plant was com­plet­ed, it re­mained non-func­tion­al due to lack of ap­pro­pri­ate tech­nol­o­gy. There were al­so is­sues with con­struc­tion de­lays and ex­ten­sive cost over­runs.Petrotrin ini­ti­at­ed ar­bi­tra­tion pro­ceed­ings against the plant’s for­mer own­er in the In­ter­na­tion­al Cham­ber of Com­merce and it even­tu­al­ly won. How­ev­er, the ar­bi­tra­tion award is yet to be paid. World GTL ini­ti­at­ed its own ar­bi­tra­tion pro­ceed­ings at Lon­don Court of In­ter­na­tion­al Ar­bi­tra­tion, which was al­so won by Petrotrin.

Kamla questions decision to drop lawsuit against Jones

Opposition leader Kamla Persad-Bissessar questioned the decision to withdraw the multi-million-dollar lawsuit against former Petrotrin executive chairman Malcolm Jones after the Privy Council said the decision “may have been influenced by political factors. Was it just a case of ‘friend’?”

Jones’ lawyer was Stuart Young, now National Security Minister . The lawyer who advised Attorney General Faris Al-Rawi on dropping the lawsuit was Vincent Nelson, the State’s main witness in the case against former attorney general Anand Ramlogan and former UNC senator Gerald Ramdeen in connection with a series of financial transactions and alleged rewards involving legal fees paid to him for representation in state briefs.

Because of this decision taxpayers now face a debt of $11 billion for three projects, including the gas-to-liquid project and the ultra low-sulphur-diesel project. Jones signed off on the loan with a guarantee that Petrotrin would repay it.

The decision to sell off Petrotrin was imprudent. She urged Government not to get rid of Petrotrin and promised that “when the UNC gets back into power, we will find a way to save the refinery.”

Jones joined a Cabinet sub-committee on energy, a move she described as “putting the cat to watch the butter. They are telling us everything is well, but they are living in a fantasy world. They say they are going to build 6,000 houses in fiscal 2020. .. In four years they didn’t build one house – they going to build 6,000 houses? Election chain-up. .. a government of announcements. .. saying they are going to build a port in Toco, but if any port is to be built in Toco it will be done under a UNC government. Rowley was the one who shut down the UNC plan for a port in Toco.” PNM spent $200 billion in four years in office, with not a single completed project to show for it. Government advised people to pray for rain and oil but the country needed more than that. “I believe in divine prayer, but what this country needs now is for them to call an election now.”

Piloting a bill to authorise the functioning of Paria Fuel Trade Company which amends the Petroleum, Petroleum Production Levy and Subsidy and Income Tax Acts, the Finance Minister reported the initial field of 70 companies vying to buy the mothballed former Petrotrin refinery had been whittled down to 25 “serious” bidders, a “huge number.” Deadline for bids is June 15 or 16. 45 companies were removed from the list of bidders by way of a pre-qualification process. No “fly-by-night company” could run the refinery, a billion-dollar operation.

Petrotrin received more than $700 million from the Finance Ministry. In November 2018 Petrotrin sought bridge financing to pay significant termination benefits to its employees in excess of $2 billion.