(Trinidad and Tobago Newsday, Sean Douglas, 28.Aug.2018) — Four questions have been posed by Congress of the People leader and former energy minister Carolyn Seepersad-Bachan over the Dragon gas deal signed on Saturday between the leaders of TT and Venezuela.
“Whereas 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 this project,” she said in a statement yesterday.
Saying the field will boost this country’s gas supply for both liquefied natural gas (LNG) and the petrochemical sectors, she said each use of gas is priced separately.
“In the case of LNG, the price at the well-head is determined based on the net back pricing formula, and in the case of the petrochemical sector NGC’s (National Gas Company’s) re-sale 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.”
Secondly, Seepersad-Bachan asked what is TT’s obligation to the special purpose vehicle (SPV), formed with Shell and PDVSA to build a 30 kilometre gas pipeline for US$100 million.
“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?”
Thirdly, she wondered about the deal in light of the current state of affairs in Venezuela. “Has the Government taken into consideration the geopolitical risks, which significantly impact on the viability and reliability of this project?” Would future governments of Venezuela honour this deal to supply gas at the agreed pricing?
If not, the NGC and the citizens of TT would bear the full cost of lost revenue for ALNG and petrochemical companies, Seepersad-Bachan said. “In addition, the literature is replete with examples of expropriation of assets in the Venezuelan energy sector. This places the US$100 million investment at risk should such an event occur. The Government and the NGC must openly indicate to the citizenry how they intend to mitigate these risks.”
She said answers to these questions will show whether this is “a theoretical dream or an implementable reality.” Seepersad-Bachan alleged Energy Minister Franklin Khan had erroneously likened the Dragon project (which fully lies within Venezuelan territory) to the Loran Manatee project which is a cross-border field.