WHY WE LOST ANGELIN

By Kevin Ramnarine

Last week BP announced that it would not be fabricating the Angelin platform in La Brea. Angelin is BP’s next major gas development project in T&T. It follows on from the Juniper project which is getting ready to start production.

The overall investment in Angelin is US$ 800 million which is less than what was invested in Juniper (US$ 2.1 billion). BP’s understanding of Angelin’s geology was enhanced by its 3D Ocean Bottom Seismic Survey which was conducted in 2012 and 2013.

What did we lose when we lost the Angelin platform? I estimate that we lost an investment of approximately US$ 80 million or TT$ 550 million, direct employment of 200 jobs, work for 10 subcontractors of TOFCO, business for around 100 suppliers of TOFCO, loss of corporation tax and VAT and indirect employment.

Perhaps the biggest loss is the reputational hit that T&T has suffered in the eyes of the international oil and gas fraternity. What makes it more painful is the knowledge that this could have been avoided.

There are two reasons we lost this project.

The first reason is related to the BP/NGC contract. BP had signalled that they needed to have this contract finalized by December 2016. That didn’t happen and it still hasn’t happened. We are told its now close to happening.

No company will invest US$ 800 million and not have certainty of cash flow from that investment. If BP is to hit its target of “first gas” from Angelin by January 2019, they would need a time line of 24 months.

Twenty-four months before January 2019 is January 2017 (hence the need to have the BP/NGC contract finalized by December 2016).

This means that to keep that target date of first gas by January 2019 they would therefore have to compress the 24-month time line into let’s say 20 months or 19 months. This made the case for fabricating the platform outside of Trinidad stronger.

I will resist laying blame at the feet of the NGC because I know that company is staffed by great people. I will however say that someone at the NGC dropped the ball and allowed these negotiations to drag into 2017.

As 2017 started we heard BP’s President for Upstream Bernard Looney diplomatically saying at the Energy Conference, “I had hoped today that we could be announcing the sanction of Angelin – setting a course for first gas in 2019. We are not quite there yet but making good, steady progress.” That was three months ago. I can only assume the Chairman of the NGC was in attendance and listened to that statement.

The other issue is of course related to the industrial relations climate in La Brea. The protests during the fabrication of the Juniper platform have been discussed. The role of the OWTU in these protests is well known. In mid—2015, as a consequence of lost time due to protests, it was agreed that the fabrication of the Juniper jacket component be moved to Texas. This was done to maintain the project schedule.

The wider national interest demanded that Juniper produce natural gas by the third quarter of 2017. In any event the topside component was still being built in La Brea. The topside was completed by TOFCO in January 2017. One would have to accept and admit that the work stoppages and protests that plagued Juniper would have factored in any decision on future platform fabrication projects in La Brea.

My own view, having spoken to a wide range of industry insiders over the last week leads me to believe that the industrial relations issues in La Brea while damaging did not deal the death blow. What was more damaging was the inability of the NGC and by extension the Government to finalize the new supply contract with BP by December 2016 which led to the “compressed timeline”.

We cannot continue on this path of progressive un-competitiveness. If we do it will become our own “road to serfdom”. The world of global business is unforgiving and unrelenting. It waits for no man. While we vacillate, other countries in this hemisphere are moving ahead.

When Ancel Roget shouts to BP “take your platform, and go” other countries are saying “take your platform and come”. It is admirable what TOFCO, run by nationals of our country, has achieved. It would be sad to see the yard return to a lower level of activity.

Juniper proved that we could be world class. Ideally, as the Juniper platform was completed last January, work should have started on the Angelin platform almost immediately. That was not to be and we must question why.

The Angelin platform project is headed for McDermott’s Altamira yard near Tampico in Mexico. The Mexican Government has been most welcoming to investment. Mexico walks the talk. Jobs will be created in Mexico which should have been created in Trinidad. Money will be spent in Mexico that should have been spent in Trinidad. Mexican contractors will get work which should have gone to Trinidad contractors.

Don’t blame Mexico for having a better appreciation of what it takes to win in a global economy. We have lost out and we will continue to lose if we don’t change course fast.

Kevin Ramnarine is a former Minister of Energy of Trinidad and Tobago