Ministry to give details of British Gas purchase of LNG contracts

The Minister of Energy is due to hold a press conference this week to go over the details of the transaction regarding the purchase by British Gas of El Paso Merchant Energy’s (EPME) LNG contracts as well as the issues dealt with in the letter to BGTT, which gave conditional approval of the transaction. In June 2000, Point Fortin LNG Exports Limited (PFLE) signed a 20-year contract with El Paso Merchant Energy LP (EPME) to supply LNG from ALNG Trains 2 and 3 to the Elba Island regasification terminal commencing January 1, 2004. The shareholders of the locally registered PFLE comprise British Gas Trinidad and Tobago (BGTT) Limited, Petrotrin, PetroCanada and ENI.

However, in early 2003, EPME, as part of its financial restructuring, announced its intention to pull out of its LNG merchant and trading activities and after inviting bids, began negotiating with various gas companies including British Gas (BG) for the sale of its Elba Island contracts and obligations. After almost a year of negotiations, BG was selected by EPME to take over EPME’s LNG rights and obligations at its Elba Island regasification terminal. The purchase by BG of EPME’s LNG contracts also included the PFLE 20-year sales contract and therefore required the consent and assignment from the non-BG PFLE partners — Petrotrin, PetroCanada and ENI. Consequently, the non-BG PFLE shareholders were also given an opportunity to attend a data room at which they assesses the value of the EPME access rights and downstream contracts.

The PFLE partners gave their formal consent to the assignment of the PFLE contracts under strict conditions that included mechanisms for auditing of decision by BG relating to the sales of LNG as well as subject to the formal approval of the Minister of Energy and Energy Industries. Accordingly by letter dated December 18 2003, BG formally applied to the Minister of Energy and Energy Industries for approval of the transaction. After final review by the technical staff of the Ministry and in consultation with Petrotrin representatives, the Minister granted conditional approval to BGTT by a letter dated December 24, 2003.