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‘I lived out of a suitcase from city to city to renegotiate gas deals – T&T Prime Minister told citizens last week
Kaieteur News – Trinidad and Tobago’s Prime Minister, Dr. Keith Rowley, recently recounted the relentless pursuit of contract renegotiation by his administration to secure the nation’s financial future amid declining gas production and unfavourable market conditions.
Trinidad and Tobago’s Prime Minister, Dr. Keith Rowley
According to Rowley on the program ‘Conversations with the Prime Minister’, upon assuming office, his government was met with the challenge of dwindling gas production and a steep decline in oil output. Central to this economic conundrum was the country’s gas-selling contracts, which were pegged to the Henry Hub, a pricing point in the United States.
“Gas production was going down because of the age and extraction levels in our fields. Oil production had gone down. And the contracts for selling gas were hinged against something called Henry Hub,” Rowley explained.
The Prime Minister detailed how, in the past, gas priced against that benchmark could sell for over US$10 per unit, a figure that has since plummeted to US$1.93, significantly below Trinidad’s budgeted price of US$5 a unit. To address this predicament, Rowley explained that his government took proactive steps. ”
The government that you elected in 2015 saw the danger of this and decided to do something about it,” he stated. This decision launched a series of negotiations aimed at ensuring the country’s gas sales contracts did not rely only on the volatile Henry Hub pricing. Rowley recounted an international negotiation marathon, involving great personal sacrifice.
“I made so many trips abroad, ate so [much] hotel food, lived out of a suitcase so many days, in so many cities, London, Amsterdam, Houston, Washington, to convince these people to agree with us, to not use Henry Hub as our reference,” he shared. The payoff from these negotiations, as Rowley articulated, was significant. Trinidad and Tobago managed to renegotiate its gas sales contracts, diversifying its reference points beyond Henry Hub to include European and Asian market prices.
“As a result of that, our gas sales are now not referenced only against Henry Hub, but against the European market and the Asian market,” he noted. This shift, according to Rowley, has had a profound impact on the nation’s finances.
The renegotiated terms have reportedly netted approximately $17 billion TT dollars more than what would have been earned under the original contracts. Furthermore, these new arrangements have enabled Trinidad and Tobago to earn substantially more per unit of gas sold, even as the market price at Henry Hub remains low.
Rowley explained that these financial gains had broader implications for Trinidad and Tobago’s economic sovereignty and stability. He suggested that without the successful negotiations, Trinidad might have found itself relying on the International Monetary Fund to bring it back from potential economic ruin.
“We gave this country the commitment… that we will do whatever has to be done, but we will not find ourselves with an IMF program,” he said. Meanwhile, in Guyana, despite years of advocacy for a better Stabroek Block Production Sharing Agreement (PSA), successive governments have refused calls for renegotiation.
The fiscal terms, which include an unpopular 2% royalty rate and a 75% cost recovery ceiling, have been condemned as inadequate. Vice President Dr. Bharrat Jagdeo believes that if Guyana pursues a better deal, there would be less momentum for investments in new oil and gas projects. The government is preparing to approve Exxon’s sixth project, with no apparent effort to get a better deal if even for that project alone.
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