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Congress of the People (COP) leader Carolyn Seepersad-Bachan is calling on the Government to reveal details of the Terms of Agreement (TOA) on the Dragon gas contract signed by Prime Minister Dr Keith Rowley and the Venezuelan President Nicholas Maduro.
Seepersad-Bachan said yesterday that while the Government may not be able to publicly state the agreed price for gas produced from the Dragon field, it ought to provide details on the pricing formula and other emerging issues related to the project.
The first gas from the Dragon field is expected to get to this country by late 2020 or early 2021, according to Energy Minister Franklin Khan. The agreement is for 150 million cubic feet of gas per day in the first phase, which will be used for the LNG and the petrochemical sectors.
In a release yesterday, Seepersad- Bachan said, “In the case of LNG, the price at the well-head is determined based on the netback pricing formula and in the case of the petrochemical sector, NGC’s resale prices are linked to international commodity prices. If the same approach is not applied to the pricing of the Dragon gas the NGC is at risk of its sale price being lower than its cost price, thus incurring huge losses.”
It has been reported that a Special Purpose Vehicle (SPV) was created and an agreement signed in March 2017 by Shell, NGC and PDVSA for the construction of a 30km gas pipeline, pumping stations, metering systems and installation of safety and control systems at a total cost of US$100 million.
Seepersad-Bachan said the Government needs to give the country the details.
“What is the percentage holding of NGC in this SPV, as this will dictate capital investment required for this project? Additionally, at what point does fiscalisation occur? Is it the intention for NGC to take ownership from the well-head and pay a fee for the transportation of gas via this infrastructure?”
She accused Khan of “erroneously” likening the project to the Loran Manatee cross-border field in which Trinidad and Tobago owns 2.7 tcf, which was unitised by signed agreement in August 2010 to facilitate a joint operator.
But she said, “On the contrary, the Dragon gas field is located across the border and therefore this project involves the sale of Venezuelan gas.”
Seepersad-Bachan also wants to know, given the current state of affairs in Venezuela, whether the Government had taken into consideration the geopolitical risks which significantly impact on the viability and reliability of this project.
“What assurances are there that future governments will honour this agreement to supply gas at the agreed pricing?” she asked.
In such an event, she said the NGC and by extension, the citizens of this country will bear the full cost of lost revenue for ALNG and downstream petrochemical companies.
In addition, she said,“The literature is replete with examples of expropriation of assets in the Venezuelan energy sector. This places the US100 million dollar investment at risk should such an event occur.”
As a result, she said the Government and the NGC must openly indicate to the citizenry how they intend to mitigate these risks.
“Answers to these questions will clearly indicate whether this is a theoretical dream or an implementable reality,” she said.