Trinidad inks Atlantic LNG restructuring deal with Shell, BP

Trinidad and Tobago is progressing with Atlantic LNG restructuring plans and has signed a heads of agreement with the shareholders of the Point Fortin export terminal, including Shell and BP.

The Point Fortin facility features four trains with a total capacity of about 15 million tonnes per annum of LNG but the facility has been experiencing supply issues due to dwindling domestic gas reserves.

Shell and BP have the biggest stakes in Atlantic LNG trains, followed by NGC and Chinese Investment Corporation (CIC).

The government and partners in the facility have been in talks to find solutions to ensure the future supply to the facility, most notably for the first train, and to simplify the shareholding structure.

Trinidad’s energy ministry said in a statement on Tuesday that the government has signed the heads of agreement with Shell, BP, and NGC.

“This milestone agreement comes after months of discussions and complex negotiations as the parties work towards a restructuring of Atlantic LNG,” it said.

According to the statement, the shareholders have also entered into a separate heads of agreement in which they “have committed to pursue, in good faith, discussions on the restructuring of Atlantic LNG.”

China Investment Corporation (CIC), which has an equity interest in Atlantic LNG Train 1, is not actively participating in the restructuring of Atlantic LNG but has been having discussions with the shareholders and the government, the statement said.

Single ownership structure

In 2018, Trinidad initiated discussions with the country’s major gas producers BP Trinidad and Tobago and Shell Trinidad and Tobago on gas-related issues.

After that, the parties signed a deal to explore the restructuring of Atlantic LNG, which comprises four LNG trains, each with different shareholder structures and commercial arrangements.

The ministry said that the parties agreed that the Atlantic LNG facilities would be managed more efficiently if brought under the framework of a single ownership structure.

“To attempt to restructure the shareholding and other commercial arrangements is unprecedented and involves many sensitive details at a time when the global energy landscape can be volatile,” it said.

In February 2020, the shareholders submitted a proposal to the government to start negotiations on a heads of agreement.

Following “intensive” negotiations, the parties finally agreed on the deal in January this year.

“BP, Shell and NGC have committed to continue good faith discussions on the basis of agreed principles and to use reasonable efforts to negotiate and execute definitive restructuring agreements for the ALNG restructuring project,” the ministry said.

It added that the proposed date for completion and execution of the definitive restructuring deals is June 30, 2022.

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