Spanish energy giant Repsol E&P T&T Limited has offered a US$.5 million bid for two of the National Gas Company (NGC) of T&T Limited’s offshore fields, as the company seeks to offload assets with the energy sector continuing to struggle due to low prices on the international markets.
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The two companies are expected to sign off on a deal at the end of this month which would see Repsol purchasing NGC’s platform in the Teak and Poui fields for US$.25 million each—a total purchase of US$.5 million, or approximately TT$3 million.
However, contacted for an immediate comment on the deal yesterday, Prime Minister Dr Keith Rowley declined, saying: “No, I am sorry, I am not briefed on that matter at this time.â€
Also contacted yesterday, former minister of energy Kevin Ramnarine said he also did not know of such a deal when he was in office, although the initial contact between the companies took place under the People’s Partnership government.
According to a document obtained by the T&T Guardian, by letter dated April 22, 2015, Repsol submitted a proposal to NGC for the purchase of assets after learning of its intention to feel them off. Repsol followed this up with a letter outlining its condition for the sale of the assets on May 26, 2015 and both parties executed a confidentiality agreement on September 16, 2015, in order to facilitate an evaluation by Repsol relating to the integrity if the assets.
By letter dated September 25, 2015, Repsol requested permission to conduct a due diligence exercise relating to the proposed acquisition.
A Heads of Terms agreement was entered on December 30, 2015 and will remain in effect until March 31, 2016. This document was signed for and on behalf of NGC’s acting president Maria Thorne and Repsol’s business adviser Allan Russell on December 30, 2015.
According to the document received by the T&T Guardian, NGC had been providing Repsol with gas lift compression services from the two platforms in the Teak and Poui offshore fields pursuant to the Third Amendment to the Teak Compression Services Agreement and the Poui Compression Services Agreement,dated July 21, 2015.
But when the arrangement ended on December 31, NGC moved to get rid of the platforms and related equipment, including compression gear, all specialised test equipment, tools, hardware and related software.
The T&T Guardian understands that both parties agreed to a purchase price of US$.25 million (approximately TT$1.7 million) a platform, including all equipment, and, in accordance with the terms and conditions of sale, will sign off on the purchases and wrap up the deal on April 1, 2016.
Until the purchase is completed, NGC agreed to operate their platform subject to Repsol’s approval and limit the number of offshore personnel used in those operations.
Under the agreement, Repsol is also not guaranteeing that there will be no job cuts.
“Repsol shall have the right but not the obligation to choose from the list of NGC offshore personnel for possible contracting purposes. Additionally, Repsol has no obligation to retain any of the NGC existing personnel associated with the operation and maintenance of the asset,†the Heads of Terms stated.
Contacted for comment yesterday, Repsol’s business adviser and assets manager, Allan Russell, said the topic was too sensitive in nature to give an official comment.
Minister of Energy Nicole Olivierre also did not want to say much when contacted. However, she noted that compression of low pressure gas is an important part of the country’s oil operations and ensuring the service is provided and continued was “important to both parties.â€
Asked if NGC was selling the platforms because it was cash strapped and why to Repsol, Olivierre replied: “I would not really say that NGC is cash-strapped, but that NGC is… well you know, I really don’t want to comment further on this.â€
Olivierre then ended the call. NGC acting president Maria Thorne asked that questions be sent to her via her email but up to last night she had not responded.
Conditions of NGC/Repsol Sale
7.4 In order to achieve a smooth and efficient transfer of the assets, during the interim period NGC shall designate two of its land-based personnel to provide planning and logistical support as may be required by Repsol.
7.5 Repsol shall have the right to conduct a due diligence, including but not limited to financial, commercial and legal records related to the compression business of NGC.
7.6 (a) Repsol shall have the right but not the obligation to continue with any of NGC’s existing contracts related to compression operations in the Teak and Poui offshore fields. As and from the January 1 2016.
Repsol shall have absolute discretion to restrict or cancel the rendering of any planned or existing contracts or services of NGC and use its own contracts for the execution of any works related to compression operations.
(b) Where a Repsol contractor is required to execute works related to compression operations on the assets in accordance with this sub-clause 7.6, Repsol shall:
(i) Indemnify and hold NGC harmless from and against any loss, liability (including reasonable legal expenses) or damage to any person or property whatsoever where such loss, liability or damage is caused by, results from or arises out of the performance of such works save and except to the extent of NGC’s negligence or wilful misconduct;
(ii) indemnify and hold NGC harmless from and against all claims, suits, actions and demands for any loss, injury, damage or liability (including reasonable legal fees and expenses) to any person or property whatsoever caused by, resulting from or arising out of the performance of the works save and except to the extent of the negligence or willful misconduct of NGC.
7.7 Repsol shall have the right to purchase any spares contained in NGC’s warehouse at a price to be agreed between the parties.
7.8 The parties shall use reasonable endeavors to negotiate an agreement to facilitate the supply of high pressure gas lift compression services in the Teak, Samaan and Poui offshore fields.
7.9 Repsol shall handle all operational emergencies on the NGC gas transmission system located on the assets as requested by NGC subject to the execution by the parties of an indemnity agreement. NGC shall provide suitable training to Repsol on procedures for the safe opening and/or closing of the valves on the NGC gas transmission system.
7.10 NGC shall provide to Repsol all available technical and operational information required for the safe and efficient operation of the assets.
7.11 Subject to the competition of the due diligence referred to in Clause 3 above, decommissioning liabilities will be transferred to the TSP owners upon signing of the SPA.
