NGC: Methanex wanted gas at significantly reduced price

The Na­tion­al Gas Com­pa­ny of Trinidad and To­ba­go Lim­it­ed (NGC) has re­spond­ed to Methanex’s de­ci­sion to in­def­i­nite­ly idle its Ti­tan plant, stat­ing that the move stems pri­mar­i­ly from dis­agree­ment over gas pric­ing rather than sup­ply avail­abil­i­ty.

In a state­ment to­day, NGC said it wished to “place in prop­er con­text” the cir­cum­stances sur­round­ing the de­ci­sion, em­pha­sis­ing that it re­mained com­mit­ted to sup­port­ing the long-term sus­tain­abil­i­ty of the coun­try’s petro­chem­i­cal sec­tor and main­tain­ing a long­stand­ing re­la­tion­ship with Methanex.

The state-owned com­pa­ny said that through­out ne­go­ti­a­tions it en­gaged “con­struc­tive­ly and in good faith” in an ef­fort to reach a com­mer­cial­ly vi­able agree­ment. Ac­cord­ing to NGC, gas sup­ply vol­umes were not the is­sue. The com­pa­ny said it of­fered Methanex the same con­tract­ed vol­umes pro­vid­ed un­der the ex­pir­ing Gas Sales Con­tract and was al­so will­ing to con­sid­er an in­crease if re­quired.

NGC stat­ed that Methanex’s pri­ma­ry con­cern was in­stead the price of gas. The com­pa­ny said Methanex re­quest­ed a sig­nif­i­cant­ly re­duced rate com­pared to the ex­pir­ing con­tract, a price which NGC said fell be­low its own ac­qui­si­tion cost and be­low rates charged to light in­dus­tri­al and com­mer­cial cus­tomers, as well as oth­er en­ti­ties with­in the NGC Group.

NGC said Methanex had in­di­cat­ed that on­ly a low­er gas price would make con­tin­ued op­er­a­tions eco­nom­i­cal­ly vi­able. How­ev­er, the na­tion­al en­er­gy com­pa­ny stressed that it could not agree to sell gas be­low its ac­qui­si­tion cost, not­ing that such an arrange­ment would be in­con­sis­tent with its com­mer­cial oblig­a­tions and its re­spon­si­bil­i­ty to its share­hold­er—the cit­i­zens of Trinidad and To­ba­go.

De­spite the im­passe, NGC said it made sev­er­al re­vised pric­ing pro­pos­als dur­ing dis­cus­sions and even of­fered to main­tain ex­ist­ing con­tract pric­ing on an in­ter­im ba­sis un­til year-end while ne­go­ti­a­tions con­tin­ued. The com­pa­ny said these op­tions were not ac­cept­ed, as Methanex main­tained it re­quired a new agree­ment at its pro­posed rate.

NGC ac­knowl­edged Methanex’s com­mer­cial de­ci­sion and ex­pressed ap­pre­ci­a­tion for the com­pa­nies’ long-stand­ing part­ner­ship. It al­so said it re­mains open to fu­ture di­a­logue should con­di­tions al­low for a mu­tu­al­ly sus­tain­able arrange­ment.

The com­pa­ny added that, like Methanex, it is fo­cused on pre­serv­ing share­hold­er val­ue and will con­tin­ue work­ing to max­imise re­turns from the coun­try’s nat­ur­al gas re­sources while sup­port­ing in­vest­ment and the down­stream en­er­gy sec­tor.