The battle between the National Gas Company (NGC) and Caribbean Nitrogen Company (CNC) is now heading to the Court of Arbitration in the United Kingdom, the result of which could have dire consequences for both companies.
At the heart of the battle is the price the NGC is prepared to sell natural gas to the downstream companies, the continued shortage of gas and recent contracts signed by Prime Minister Dr Keith Rowley which wedded the NGC to pay higher prices for gas from both bpTT and EOG Resources. Ironically EOG Resources is a major shareholder of CNC.
The T&T Guardian has learnt through multiple sources at both companies and the Ministry of Energy that the action has already been filed with the UK Court of Arbitration and is expected to be heard within months. The option to approach the UK court is provided for in the original Gas Sales Contract.
Speaking on CNC3’s Morning Brew breakfast programme, chairman of the NGC Jerry Brooks hinted that the matter was now in arbitration and warned that the price that CNC was prepared to pay would result in billions in losses to the NGC and threaten thousands of jobs.
He also suggested that the days of cheap natural gas prices were over and companies had in the past made double digit profits.
But as the war of words heats up, CNC, in a strongly worded press release, called for an independent auditor to look at what is called the value chain and see where most of the money is made.
In T&T the NGC buys gas from Upstream companies like BPTT and EOG and then sells the gas at a profit to companies like CNC and other petro chemical companies. The NGC charges a basic price and when the price of methanol or ammonia rises globally the NGC makes further profit in a windfall arrangement. “It’s time for the NGC to be transparent and stop hiding behind vague statements that don’t have any basis in reality,” said Jerome Dookie, CEO of CNC.
“We do not agree with Mr Brooks’ position and completely reject his statements that accuse CNC of having unreasonable expectations, double digit returns and the potential for billions of dollars of losses for the NGC.”
In shutting off the gas it is understood that CNC believes that the NGC is in violation of its original contract which it believes guarantees an automatic five-year extension as part of their last contract and therefore the NGC’s assertion that the contract came to an ultimate end last year October is to be challenged.
MHTL was once part owned by the Clico group and when the Government took control of Clico Proman said it had a right to buy the 51 per cent shares and the matter went to arbitration and T&T lost and was forced to sell the shares to Proman. Once again the Government, through the NGC, is going to face Proman and its partners in a court of arbitration unless a solution is found to the standoff.
Source: www.guardian.co.tt (Curtis Williams)