On September 27 last year, just days before the restructuring of Atlantic LNG took effect on October 1, Prime Minister Dr Keith Rowley delivered the feature address at the Point Fortin Administration Building to commemorate Atlantic LNG’s 25th anniversary and the commencement of the restructured agreement.
Below is an excerpt of Dr Rowley’s speech:
“Today ought to be acknowledged as a very special day for the people of Trinidad and Tobago, and the people who are shareholders and beneficiaries of this company, this business called Atlantic LNG, located in Point Fortin in Trinidad and Tobago.
I crave your indulgence to listen for a few moments as I reflect on the coming into being of this entity, if only to let the people of Trinidad and Tobago know that our faith in ourselves has not been misplaced, and that we should continue to have faith in ourselves.
I was there in the Manning Government of the period 1991 to 1995, and if you may recall, we were facing then an IMF situation. And that was the period, in treating with that IMF possibility and the cloudy future of economic growth in Trinidad and Tobago, that the question arose: ‘What do we do for the future, to try and maintain the standard of living and the gains that we’ve made as a country, being known as one of the more successful countries in the Caribbean and facing a fairly cloudy future?’
I think, if my memory serves me right, that Mr Patrick Manning then held the portfolio also of Minister of Finance, and he had a very clear picture of the revenue challenges of Trinidad and Tobago—not of that day only, but of the near, medium, and distant term.
And the question of ‘Whither goest Trinidad and Tobago into an economic future?’ arose and formed the basis of a lot of discussions around small tables of the Cabinet. And it is there that the quiet, patriotic, Ken Julien, held out to the government of Trinidad and Tobago that we had a future, but that future could only be accelerated if we worked to put gas into the international market—monetise more of the gas that we knew that we had. And the Cabinet set out to accept that advice.
But, as you know, the government is a supporter in many of these situations and relies very heavily on the cooperation of the private sector. So we had to talk to Amoco. BP Amoco then was the big dog in Trinidad and Tobago. And Amoco would not hear of our stupidity of wanting to create an LNG exporting business in Trinidad and Tobago.
And I distinctly recall being called into the Prime Minister’s office and met Prime Minister Patrick Manning fairly down because Amoco wouldn’t listen. And we agreed that he should go to Amoco’s head office and talk to Amoco in their lair, to those who make the decisions. Go to Chicago and talk to them as the government of Trinidad and Tobago talking to the head of the shareholders of Amoco. And he did that, and he came back beaming that Amoco wouldn’t listen.
But Amoco made one move then, they said, ‘Well, if others are interested, we might be interested.’ And a little later on, BG came into the picture, and someone who I should thank today, Martin Houston from BG, said to us quietly, ‘It’s doable. Maybe we could do it.’
And the energy of that conversation, that little kernel of positivity, created in the government of Trinidad and Tobago a stride that caused us to want to commit to an Atlantic Train—Train 1. And that is where this business began.
By 1995, you may recall, the government changed in 1995. But by 1995, we were poised to export our first cargo. But the creation of the industry had its birth in that period from 1991 to 1995, and Train 1 was as far as we could look. And it is important for you to know that because when you look at the shareholding, you will see that in Train 1, the government only had a 10% shareholding, putting the toe in the water, because there was still in some quarters that this experiment would be an expensive failure.
And in the hydrocarbons business, given the limited resource base of Trinidad and Tobago and its limited revenue stream, the government can’t afford huge investments with huge risks that could, in fact, turn into huge losses. So, the government usually is very cautious. So, 10% in Train 1, with the other 90% held by other investors. But very quickly, as the cargoes began to go out, smiles began to appear on the faces of all those who were involved.
And then Train 2 came into view, Train 3 came into view, but no shareholding in Train 2 and Train 3 for the people of Trinidad and Tobago. And then we realised that we were too cautious in Train 1. We should have had more confidence in ourselves, and of course, we learned our lesson. Come Train 4, we got 11%.
So, we had this strange structure of a business with a government shareholding of 10% in Train 1, 11% in Train 4, and nothing in Trains 2 and 3. As the volume of gas began to become reduced both in practice and in vision, we knew that we were vulnerable because those who had shareholding in Trains 2 and 3 at 100% had an interest in a reduced gas production environment to have Train 1 out of the picture. Because the model then could have been Train 1 with a little bit, Train 2 with a little bit, Train 4…but the bottom line is that the business does not have to run like that.
So, of course, there were moves to get Train 1 out of the picture so that Trains 2 and 3 could survive. But we had no shareholding in that. So, the government had no interest in that model where Trains 2 and 3 survive, and Train 1 shuts down.
So even as the gas volume dictated the closure of Train 1 eventually, the government of Trinidad and Tobago had an interest in keeping Train 1 physically and negotiatingly on the table so that we remained on the table to discuss the future of Trains 2, 3, and 4.
And that is what many people in this country, especially our detractors, could not understand. We had to keep our place on the table, and the ownership in Train 1 kept us on the table. But what do we do at the table, just acknowledge that there are owners of Trains 2, 3, and in Train 4 we only have 10%? Or we set about to change the entire picture, restructure the industry, and get ourselves involved in Trains 2 and 3, and Train 4? And that is where the conversation began to be introduced. And you all may recall the famous, or I should say the infamous, meeting at the Hyatt hotel, something called ‘Spotlight on Energy,’ where the government of Trinidad and Tobago, through its minister and the prime minister, said to the hydrocarbon industry: ‘We are prepared to accept nothing less than a partnership in this business, and therefore we expect to talk to you about these industries and our take and our participation.’ That’s where it started.
So, I then had to lead a team. I had Minister Young with me and a very competent team from the Ministry of Energy to start talking to people in a conversation that hadn’t existed before. The government of Trinidad and Tobago expects a better take, and in a reducing volume, we are not prepared to stick to the Henry Hub reference when you are marketing elsewhere. And it is all about respect, and it is all about fairness.
And that is the kind of conversation that we had to have, expecting resistance. And there was significant resistance. Some people said: ‘Oh, the contract does not make provisions for that.’ And others said: ‘I’m listening.’ And then eventually, after a few of these meetings in The Hague, London, Amsterdam, and Houston, one party said, ‘I hear you,’ and the second party eventually said, ‘I hear you.’ And I knew we were making progress.
And at that stage, we set about to establish what we called ‘empowerment teams’—the government team of experts and a business team of experts to talk about this conversation. And I knew there were possibilities for success.
Today, I want to thank all the people who took part in those discussions, which were carried out by the highly competent empowerment teams established by the government of Trinidad and Tobago, and BP, and Shell.
They did the job, they managed the equations, they did the computations, and they advised the principals. And thankfully, among the principals to be advised then was the government of Trinidad and Tobago. Because, Atlantic LNG Train 1 or not, we remained at the table, we remained the driving force, and the objective was initially obtained.
I was there at the birth and I am here today at the graduation where Atlantic LNG has been restructured, and the people of Trinidad and Tobago today can claim ownership in all three trains, and we have an interest in all of the business of this facility.”