Deepening the Gas Value Chain
Going global During this period, NGC continued to expand its global reach to…..
During this period, NGC continued to expand its global reach to support its vision of becoming an international, integrated energy player by pursuing opportunities in other countries.
Recognising that it could not only remain a domestically based entity competing in a jurisdiction where costs have raised significantly, NGC strategised on pursuing external opportunities that will give the company diversification, scale and an improved cost profile.
During this period, NGC continued to deliver historic financial returns to the country and expanded its asset base through strategic investments in major infrastructural works. The Company, however, was severely impacted by lower gas availability from major suppliers because of upgrades and maintenance of major producing facilities and reduced commodity prices on the international market.
To facilitate reliable gas supply to current and potential customers, NGC engaged in continuous activity to upgrade and expand the supply and related infrastructure vital to assure the Company’s integrity and ability to make gas available throughout Trinidad and Tobago.
Five projects aimed at increasing capacity, efficiency and sustainability were already under construction at a capital cost of TT$7.3 billion.
The ongoing projects were:
- Union Industrial Estate Pipeline to supply gas to the Trinidad Generation Unlimited (TGU) power plant in the Union Industrial Estate – mechanical completion achieved for pipelines and receiving facilities and pre-commissioning activities in progress;
- NEO Pipeline to transport gas from BHP Billiton’s Gas Export Platform to interconnect with the existing pipeline network at Beachfield;
- Tobago Pipeline to transport gas from BHP Billiton’s Gas Export Platform – the main offshore line has been completed and tested and the Mechanical, Engineering & Instrumentation (ME&I) contract for the Tobago inlet facility is in progress;
- Multiproduct Liquid Fuels Pipeline Network to transport RON 92 and RON 95 Gasoline, AVJET fuel and diesel from Petrotrin Pointe-à-Pierre to Caroni, with a pipeline from Caroni to Piarco for AVJET Fuel – pipeline and tanks;
- Phoenix Park Valve Station (PPVS) Upgrade to increase the station’s current capacity of two bcf/d to three bcf/d natural gas.
Although the Company’s operations were affected by shutdowns from the upgrades and maintenance of major producing facilities which resulted in the curtailment of gas production and reduced production of LNG and natural gas liquids in 2011, buoyant international commodity prices and higher resultant gas prices compensated for these challenges.
Major accomplishments recorded that year with respect to transmission included the commissioning of the NEO pipeline and the initiation of gas supply to TGU through the completion of the Union pipeline project and the pigging on the 36˝ NEO and 24˝ Union Estate pipelines.
A new strategic focus, 2011-2015
Focusing on growing shareholder value and ensuring company sustainability, NGC redefined its strategic focus for the period 2011-2015 which was built around five strategic pillars:
- Grow external and new markets
- Grow local market
- Strengthen asset integrity
- Strengthen brand and corporate social responsibility
- Strengthen culture and competencies
Besides its traditional business of compressing, purchasing, transporting and selling natural gas to industries, NGC focused on other areas along the local value chain and the deepening of integration into all facets of the gas business. This included:
- Capitalising on its own shipping of LNG cargoes from the company’s investment in Atlantic’s Train IV
- Continued expansion of the pipeline network
- Development of industrial parks and projects
- Expansion of CNG conversions in the local transportation sector
- Continued concentration on a global vision to export its business model to countries that are in their own developmental stages.
NGC also successfully engaged with the Mitsubishi consortium and other local and foreign stakeholders to initiate the estimated US$850 million Mitsubishi Methanol to DME project.
Capital works continue
Capital works were concentrated primarily at NGC’s Tobago Gas Processing and Metering Facility in Lowlands, which was commissioned in December 2012. Similar work continued at the Phoenix Park Valve Station (PPVS) Upgrade while construction continued on the Liquid Fuels Pipeline Project.
Other initiatives included the continuation of works on the pipeline to the Diamond Vale Industrial Estate, the design for the diversion of the 16-inch diameter line into Charlieville to replace ageing pipeline infrastructure and the design and planning for the NGC-owned CNG stations at Point Lisas and Beachfield to facilitate the convenient refuelling of the Company’s fleet of vehicles.
The continued reliable and safe transmission of natural gas was facilitated by the achievement of a pipeline system availability of 100%.
The major accomplishments with respect to transmission included the commissioning of the 36-inch diameter NEO pipeline, the initiation of gas supply to TGU through the completion of the 24-inch diameter Union Estate pipeline project, and the pigging of the NEO and Union Estate pipelines.
Acquiring assets, sharing wealth
NGC also deepened its participation in the local gas value chain through:
- The acquisition of the 39% shareholding of ConocoPhillips in PPGPL, increasing ownership to 90% equity interest.
- Acquiring the assets of the French natural gas and oil producer Total S.A. in Blocks 2 (c) and 3 (a) in the Angostura field, located off the northeast coast of Trinidad.
- NGC E&P Investments (Netherlands) B.V. and NGC E&P (Netherlands) B.V. were established to own those assets, with these subsidiaries holding 30% and 8.5% of Blocks 2 (c) and 3 (a) respectively.
Reflecting its commitment to national development and the involvement and participation of members of the public in the natural gas industry, NGC publicly announced the proposal of an Initial Public Offering (IPO) of shares in Trinidad and Tobago NGL Limited (TTNGL).
The Company also successfully renegotiated the renewal of natural gas sales contracts with ammonia producers PCS Nitrogen Trinidad LTD, Yara and Tringogen while discussions continued with other companies.
Strategic Plan 2016-2020
Faced with one of the most challenging years in its history, in 2016 NGC embarked on re-engineering the Group to achieve sustained growth and improved profitability while supporting sector-wide development.
The Company continued to confront significant challenges, including the continuing natural gas curtailment issues, expiring contracts on both the purchasing and sales ends of the business and reduced commodity prices, particularly for ammonia, methanol and oil, and the consequential fall in revenue.
A Strategic Plan 2016-2020, informed by and in sync with the Natural Gas Master Plan 2015, underscored the importance of NGC to the national interest in the local gas value chain.
The NGC Group strategy was predicated on four pillars –
- Developing the organisation
- Securing the current business
- Grow locally and internationally
- Strengthening national contribution.
In its CNG business, 2018 was easily its most successful year as investments made by NGC CNG continued to yield positive macroeconomic benefits and lead the transition to a greener transportation environment in Trinidad and Tobago.
The Government’s increase in fuel prices in October 2017, and again in 2018, to boost its national revenues, provided a major stimulus to the CNG market. In 2018, the Natural Gas Vehicle (NGV) population increased by 59% to 6,340 vehicles. Correspondingly natural gas sales were up by 48% in 2018.
It is estimated that NGC’s investment in this sector has generated economic activity estimated at TT$487 million, a multiplier of 3.5%. The CNG thrust continued in 2019 with the expansion of the CNG network in Trinidad and Tobago and the opening of the largest CNG station in the region at the strategically located Point Lisas Interchange.
NGC, in the third year of executing its Strategic Plan, delivered a positive financial performance in 2018 despite a complex and difficult environment. The commissioning of bpTT’s TROC and Juniper projects, a year earlier, brought some measure of stability to the gas supply situation.
Greater assurance was achieved in 2018, as a result of several important developments:
- Supply agreements were completed with EOG Resources, bpTT and De Novo. The latter is a new local player providing gas from Iguana field (Block 1(a)), in which NGC is a partner;
- Negotiations with Shell on a domestic gas supply agreement are at an advanced stage;
- Shell brought the Starfish field back on stream in July 2018, increasing the stability of supply.
Several diversification projects are also in the pipeline. In 2018, an aluminium project – a wire rod and cable manufacturing plant – was significantly advanced through the signing of a Memorandum of Understanding (MOU), as well as confidentiality agreements. This project is now execution ready.
In addition, Trinidad and Tobago can become a regional epicentre for dredging based on another project which is also execution ready. Both projects will create jobs and generate vital foreign exchange.
Recognising that business growth is the key driver of shareholder value, NGC’s business expansion thrust is being led by two new divisions within the Commercial Group – Gas Business Development and Energy Marketing and Trading.
In its continuing geographic outreach, a Technical Services Agreement (TSA) was signed between NGC and Mozambique’s National Hydrocarbon Company (ENH) by which NGC would provide consultancy services to ENH on technical areas of natural gas development.
NGC also advanced its relationship with Ghana from an MOU to a TSA where Ghana Gas officials spent six weeks in Trinidad and Tobago observing and refining their ability to operate a Gas Fractionation plan.
Apart from plans to incorporate a company in Ghana in 2019, NGC plans to actively bid on projects promoted by the government of Ghana where NGC’s proven expertise and track record gives them leverage and competitive advantage.
Similarly, NGC plans to expand its presence in Guyana, following several team visits to the South American country and the establishment of an MOU between Trinidad and Tobago and Guyana. NGC, through National Energy, also plans to open an office in Guyana in 2019.
NGC is also exploring opportunities for growth within the Caribbean LNG market. The Energy Marketing and Trading Division is exploring, with strategic partners, the opportunity for small-scale LNG in neighbouring islands, particularly in the southern Caribbean.
Ever solid financials
Despite facing major challenges throughout this period, the NGC Group continued to record impressive financial returns for the country surpassing the billion-dollar mark several times.
In 2013, the NGC Group recorded its highest ever after-tax profit of over TT$6.5 billion and contributed just over TT$7.0 billion in taxes and dividends to the treasury. Its previous highest level of profit was in 2011 when it posted after-tax profit of TT$4.6 billion. Sales revenue was TT$19.0 billion. Gas sales revenue of TT$16.7 billion, which was 36.7% higher than in 2010, accounted for 87.8% of total sales revenue.
The challenging environment also resulted in re-engineering operations and strategic plans which played a key role in improved performance and profitability in the Company.
By 2018, the NGC Group posted an after-tax profit of TT$2.3 billion, representing an increase of 135% above 2017 after-tax profits of $0.98 billion. This follows a growth of 37.26% in 2017 and 29% growth in 2016. Payments to Government of dividends and taxes in 2018 totalled TT$2.21 billion.
A pillar of energy
In its almost 45 years of operations in Trinidad and Tobago, the NGC Group of Companies has transformed the petroleum-dominated energy sector and diversified its business portfolio by becoming involved and participating in every aspect of the gas value chain.
Through its organic growth, as a result of careful strategic decision and risk-taking, NGC has contributed immeasurably towards the treasury and directly impacting the lives of citizens.
Given its first mandate to develop the natural gas industry and maximise value for the country, NGC has surpassed all expectations even in the face of numerous challenges, retaining its innovative spirit, grit and perseverance it displayed from inception.