Corporate NGC

NGC history and national economic development.

The start of the 1990s transformed the way NGC was viewed.  Long thought of as the ‘sleeping giant’, the ‘humble one’ or the ‘state’s best kept secret’, NGC was grappling with its past as much as it was having to deal with a future in which much was expected.

The Company’s rapidly increasing size and organization structure was evident.  The company moved from having just an Administrative Section headed by a Commercial Manager and a Technical Section headed by a Gas Engineer to a structure with a workforce of approximately 250 skilled persons in the Accounting and Administration divisions; Offshore and Land Operations; Engineering, drawing office and Internal Audit, all dedicated to fulfilling a national mission of providing leadership in gas development.

Moreover, for the first time in the company’s history, NGC would create a Public Relations Unit within its Information Centre, a move it envisioned as being necessary to manage its new and heightened image as one of the top five energy companies in the country.

The Prime Mover

By 1992 NGC gas sales had increased to 513 MMscf/d and mandated by the Government to be ‘prime mover in gas-based development’, meaning it was responsible for the development and evaluation of new investment opportunities in the energy sector.  In effect, the Company was given the responsibility of facilitating and promoting energy projects that would deepen and broaden gas utilization.  However the expanded mandate predicated major organizational restructuring which involved the strategic merger of the National Energy (NEC) with NGC, which acquired 100% of NEC’s shareholding.

NEC had been incorporated in 1979 as a state enterprise to continue the work of the government-appointed Task Force to develop and promote the country as a site for gas-based investment, as well as to maintain and develop the marine infrastructure at Port Point Lisas.

This company along with the Ministries of State Enterprises and Petroleum and Mines, and the Industrial Development Corporation (IDC) developed the first wave of plants on the estate in the 1980s.  The first plants at Point Lisas – ISCOTT, TTUC and TTMC – were developed as state-owned plants, with NEC owning the Methanol and urea plants.

By the end of the 1980s these companies had barely weathered the depression and new strategies were being sought to sustain and expand the gas industry based at Point Lisas.   One strategy involved the divestment of these state-run petrochemical and steel firms to private enterprise.  This new policy encouraged the private sector to take a leading role in the energy sector’s continued development.

Another strategy, the NGC/NEC merger in 1992 sought to rationalize the competencies of these two state companies operating in the natural gas sector.  NEC, reassigned within the newly structured NGC Business Development Group, provided the competencies of project evaluation and development, gas marketing, infrastructure development, and port and marine construction and management.

In 1992, NGC was therefore directly responsible for reshaping the natural gas landscape by expanding the market for new business ventures.  This market, as envisioned by NGC, would be one that yielded higher value added projects and increased revenues.  Such projects included ethylene, syngas, LNG and aluminium smelting.

Thus NGC set to work by undertaking major capital expenditures such as upgrading NGC Teak and Poui, constructing an additional spur line on the estate to form a ring main pipeline system, constructing an additional berth on the Savonetta Pier known as SP No. 2. During the course of the year, the company also acquired 20% shareholding of the South East Coast Consortium’s (SECC) lease that had been previously assigned to Trintoc.

During 1992/1993, NGC made in-roads with a number of interested parties who were serious about locating their operations in Trinidad and Tobago.  Its earliest strategic achievement was to facilitate the diversification of the country’s offshore production shareholdings which culminated with two new producers coming on stream, thereby enhancing the security and reliability of gas supplies.

Secondly, NGC had engaged itself in discussions with other participants – Cabot, Amoco, BG and Repsol- in furthering the development of LNG production and export in the country. The decision to pursue LNG Train 1 with a probable capacity of 350 MMscf/d came at a time when technological improvements in LNG shipping and storage, as well as the emerging markets in the US and Europe made it economically feasible.

Thirdly, NGC was instrumental in getting the NUCOR Corporation to make an investment decision to site the world’s first Iron Carbide plant on the estate, making Trinidad a site for new technologies.

The facilitation of these early business development projects by NGC signaled the start of a new age and vision for the local natural gas landscape, that at that point was dominated by petrochemicals (53%), power generation (27%) heavy industry (18) and Light industry (2%).

The petrochemical industry for instance showed the fastest growth of 11% with the establishment of the country’s third methanol plant by private sector investors by 1994.   By 1995, NGC’s gas sales were 593 MMscf/d and projected to increase to 683 MMscf/d in 1996.

In July 1995, NGC had been one of the participants in the creation of Atlantic LNG, the company formed to manage the proposed LNG processing facility and terminal at Point Fortin.  The pundits hailed the creation of this company as a resounding indication of success to come; more so as most LNG projects had a 10-year gestation period.

Project 2000

With LNG negotiations on stream, NGC was already anticipating the demand such a facility and other gas demand would have on its network by setting out to expand the transmission network.

The project began using pipeline-modeling software to determine the optimum expansion model.   Aptly named ‘Project 2000’, in anticipation of the ‘boom’ of petrochemical and steel plants to be constructed and on-stream by the year 2000, the project sought to increase capacity from 780 MMscf/d to 1.4 Bcf/d and entailed the construction of 42 miles of 36-inch-diameter landlines from Beachfield Valve Station to Phoenix Park Valve Station, as well as a modification of the downstream distribution network.

The pipeline in effect was designed to meet the operational requirements of NGC’s customers yet still be interconnected to the 36-inch-diameter line that was also being constructed and dedicated to LNG at Picton Valve Station in order to receive gas during emergency conditions.

La Brea Estate

Yet with all the strides taking place, NGC was also working overtime to develop a new estate.  Since 1992, NGC’s business development group (the former NEC) had been looking for suitable industrial sites.  In fact, NGC and the Point Lisas landowner, Plipdeco, had recognized that the 800-hectare Estate would be approaching maximum utilization by the end of the decade and therefore unable to provide the land space necessary to house the government’s vision for a new industrial landscape.   This factor fuelled NGC to provide a solution by making available an industrial site that met the needs of investors.

Between 1992-1993, a selection process was undertaken with land sites across the country being evaluated for their suitability to be part of the investment package offered to prospective investors.   In late 1993 the La Brea/Brighton area was chosen as being the best possible area.  The location itself was not a ‘greenfield’ site, having been the location of a refining operation in the last century.  However, the estate’s proximity to one of the country’s remaining natural deepwater harbours at Brighton prioritized its location in the mix of possibilities for establishing industrial parkland.  By February 1994, NGC, in joint venture with Petrotrin, the La Brea site’s former landowner, formed The La Brea Industrial Development Company Limited (LABIDCO) to manage the estate’s development.

Although originally earmarked and monies expended to house large gas-based industries such as LNG and the world’s largest ammonia facility at the time, becoming as it were the country’s second natural gas cluster in the new wave of natural gas development, the area was instead developed and marketed in 1996, by the newly installed Panday government, as a provider of developed lands for leasing purposes, harbour and dock facilities, bioremediation services and as a logistics base for offshore companies.  (LNG would be moved to Point Fortin and the ammonia facility to the northern boundary of the Point Lisas Industrial Estate).

This development was in effect a terrible blow for NGC’s morale.  Mandated from the onset to operate like a private company with the government holding all shares in trust for the people of the country, NGC’s reputation was ridiculed in the media a situation that tarnished its good name for years to come.

Strategic Planning

In addition, within NGC itself a new thinking evolved with strategic planning being given added focus where the growth of NGC and the industry lay in the development of a five-year strategic plan that did not place La Brea at the centre of the industry.

In fact, 1996 marks a turning point in NGC as a more modern approach guided the very fabric of how the company saw its role as ‘prime mover’.  During the year, NGC registered a record profit of $373 million, substantially more than the TT$ 33 million made in 1992. At the end of the year, Trinidad ranked 14 among the top 20 upstream gas opportunities and was projected to have the fastest growing gas industry in the region.  Against this backdrop of performance and bolstered by 21 years of sustained and progressive profitability, events worldwide were beginning to impact on the industry necessitating a change in how things were done.

Since NGC found itself operating in an industry that was undergoing rapid changes in terms of deregulation, competition and technology it had to redefine its vision for the future. The implications therefore for a state-owned company were tremendous and challenging more so than in the previous years, demanding as it were that NGC re-engineer and re focus its energies to cope with what was ahead.

Vision 2001

NGC’s developed a corporate vision known as ‘Vision 2001’ after it canvassed and considered a wide range of ideas and opinions from stakeholders, employees, customers, suppliers and special interest groups.  The vision for the five–year period 1997-2001 was the confluence of views which resulted in a new vision and mission and strategic priorities and operation plans which would map the way NGC would go about establishing Trinidad and Tobago as a major player in the global gas business, as well as maximize value from the development of the industry for the benefit of Trinidad and Tobago.

The Company’s vision of the future and what it could achieve encapsulated its core values or philosophy that its corporate mission was dictated by the fact that natural gas as a non-renewable resource must be utilized for the benefit of all the citizens of Trinidad and Tobago.

NGC recognized the following developments:

  • Diversification of portfolio mix
  • Pioneering of new technologies, especially in the metals sector
  • Competition for value added downstream investment
  • Domestic integration of natural gas as an environment-friendly fuel
  • Increasing need for industrial and port infrastructure
  • Increasing technological capability to move the gas throughout the country
  • Spin off industries
  • International investments

Domestic integration

Significant for the year 1997 was that NGC reached its 100th customer – 17 major and 83 small.  With regard to the latter category of customer, NGC had a breakthrough in the use of natural gas in ‘cooling applications’ by the Maritime Centre, which signified the first time gas-fired, air-conditioning had been used commercially in the country.   The success of this effort paved the way for other cooling systems to be commissioned in the country and for the distribution network to be expanded to the northwestern peninsula at Cocorite.

A negotiating company

From the administrative and financial level, NGC made significant strides in becoming a global company through its negotiation with multinationals, international financial houses and agencies.  Indeed, NGC was successful in finalizing the Principles of Agreement between Amoco and NGC to renegotiate the terms of the gas supply agreement and construction of offshore and onshore pipelines.  It also finalized a TT$544.3 million Standby Letter of Credit with a syndicate of international banks which was established as security for long-term loans, one for TT$359.1 million from the European Investment Bank and the other for TT$135.5 million from the Caribbean Development Bank to finance NGC’s infrastructural programme for 1997-2001.  Added to these achievements was the finalization of a TT$158 million Fixed Rate Bond with Citibank Trinidad and Tobago for the financing of its 10% equity share in Atlantic LNG through NGC’s new subsidiary NGC Trinidad and Tobago LNG Limited. Moreover, NGC also negotiated amendments to the Natural Gas Processing Agreement with PPGPL in 1997 whereby PPGPL would increase its gas processing capacity from 750 MMscf/d to 1,350 MMscf/d.

The year was also very successful for the company in terms of expansion of its asset base and profitability.   NGC recorded a profit of TT$ 353 million and had assets of over TT$ 2 billion which had increased by 28% over the previous year.  This increase resulted from developmental works on pipeline and port infrastructure. Gas purchases and sales averaged 717 MMscf/d, which represented an increase of 5% over the previous year.

The achievements go further.  In terms of human development and efficiency, NGC commenced an organization redesign exercise, as well as participated as a key stakeholder in the establishment of the National Energy Skills Center whose objective is to further human resource development within the country, in particular the energy sector.

Reoperation of NEC

In January 1999, NEC was reoperationalized as a separate subsidiary entity to look after the challenging business of managing the port and marine infrastructure at Port Point Lisas and Brighton.  Although reoperationalized within the ambit of an emerging NGC Group of Companies, the move signaled the new focus towards improving the performance and efficiency of the NGC Group at specific activities.  To this end, NEC was responsible for providing and managing port and marine facilities at Port Point Lisas; the management of the La Brea Estate and adjoining port on behalf of Labidco, as well as the continued development of new industrial sites.

Challenges

In the course of the year, natural gas demand grew with sales increasing 7 % over the previous year.  1999 was the second year NGC had been adversely affected by depressed petrochemical and iron and steel market prices as thee was a corresponding low return on sales.  The company saw profit margins fall precipitously from TT$353 million in 1997 to TT$19 million in 1998, and, in 1999, there was some recovery, mainly arising from the robust performances of subsidiary companies, enabling the NGC group to record a net profit of $TT33.7 million.

Despite the constraints imposed by the depressed market conditions, natural gas remained the fastest growing energy source in the world and this factor was evidenced by the fact that the country remained a prime investment location for gas – based operations and the Point Lisas Estate was now the home to 22 large industrial plants.  In the domestic front, natural gas, compared to the other available fossil fuels, remained the cheapest fuel enabling NGC to market natural gas to the growing light industrial/commercial sector, which comprised 95 small consumers on the distribution network.

In addition, new petrochemical plants were on the drawing board, warranting the construction of a new marine and port facility at Port Point Lisas, the state-of-the-art, Savonetta Pier No. IV.   This multi-user pier was viewed as being key to the overall strategy of meeting the import and export needs of new customers locating their businesses at Point Lisas. By the end of 1999, the outlook for the industry, the economy and NGC was at least in the medium term favourable having passed the worst.

The successful commissioning of LNG Train 1 in the last quarter of 1999 added to the mystic surrounding its establishment as the first greenfield LNG project to be developed in the Western Hemisphere in 25 years.   This fact and the project’s short gestation period cemented the applause worldwide, moreso as it had occurred in a small country such as Trinidad.

NGC’s key role in this event led investors to pay more attention to the country and to prospects of establishing methanol and ammonia plants as well as value added processes like aluminium and ethylene.

Since 1992, the Company had done all it could to expand and build a new energy landscape, evaluating and analyzing projects that ultimately benefited the shareholder and country.  Thus developed a new role crystallized from the company’s mandate of ‘prime mover’.  This new role, viewed as a custodian role, was aptly memorialized in the idea of the ‘Keeper of the Flame,’ which described the essence of NGC in all its activities at home and abroad.

At the end of the 1990s, NGC emerged as a successful group of companies with interests spanning the entire spectrum of the gas business. NGC with NEC and Labidco therefore provided an integrated ‘one-stop-shop’ service to new investors seeking to locate natural gas-based industries in Trinidad and Tobago.   In 2000, NGC finalized arrangements for the establishment of two further LNG trains.  The success of this initiative made the natural gas story in Trinidad being brought on to the world’s energy stage with many other countries seeking to copy what was termed the Trinidad model.

NGC had reached its 25th year of operations with much it could be proud of.

These achievements included:

  • Trinidad and Tobago becoming the world’s leading exporter of ammonia and methanol.
  • The leading role NGC had taken in the initiation of LNG and the promotion of a number of new steel technologies such as HBI and Iron Carbide.
  • 25 years of uninterrupted profitability.
  • Attainment of a peak level of gas sales, which increased from 570 MMscf/d in 1994 to 1 Bcf/d in 2000.
  • Assets increasing to ……

New Millennium

In the period 2001-2003 NGC was operating in an environment that looked little like what existed in 1975.

In February 2004, the NGC group witnessed new changes with the realignment of business development activities being assigned to NEC, meaning that that company would now be responsible for the development of new downstream opportunities in value added products, as well as to continue with its industrial site and port and marine infrastructure development works.

In this regard, NEC is involved in preparing industrial sites at Union, La Brea and at Chatham, Cap de Ville.   Massive civil and infrastructural works have already started to establish the utilities that are required to support petrochemical, aluminium and other plants earmarked for the Estate.

The deep-water harbour is also at present being developed at Brighton Harbour with a second construction dock now completed to facilitate the delivery of construction equipment and machinery.   A petrochemical pier and related facilities are also envisioned.