OREANDA-NEWS. The government of Trinidad and Tobago plans to renegotiate its agreements with the shareholders of LNG exporter Atlantic because the state is getting short-changed, energy minister Nicole Olivierre said.

Current commercial pricing arrangements for the country's LNG are tied to North American destinations, even though only 16pc of LNG exports now go to North America, she said at an 18 January energy conference.

"With many of our commercial pricing arrangements tied to a US destination, this country is realizing netbacks well below the actual market price applicable to the true destination of our cargoes," Olivierre said.

"The only conclusion that can be drawn is that the contractual arrangements for the marketing of LNG are not now working in the best interest of Trinidad and Tobago," she said. "I am therefore forced to inquire: What has happened to the arrangement where the upside was to be shared 50/50 between the LNG partners and the government for cargo diversion? Is it that the LNG partners are now diverting cargoes to the South American market in a transfer pricing arrangement to avoid sharing the upside?"

Atlantic, a four-train complex with liquefaction capacity of 14.8mn t/yr, is owned by BP, BG, Shell, China's sovereign wealth fund CIC unit Summer Soca and Trinidad's state-run gas company NGC.

All LNG marketing agreements are to be reviewed and new negotiated agreements structured to ensure that the commercial arrangements are "equitable," she said.

"The 2018 expiration of (Atlantic's) Train 1 LNG contracts is certainly an opportunity for us to begin to recalibrate the LNG industry into one that brings greater benefit to the state."

Train 1 has a capacity of 3mn t/yr and is owned by BP (34pc), BG (26pc), Shell (20pc), NGC (10pc) and Summer Soca (10pc).

The country's sole LNG producer Atlantic has not responded to a request from Argus for a response to the minister?s remarks. Atlantic?s shareholders also declined to comment.

In 2014, the average price for US gas benchmark Henry Hub was $4.27/mn Btu compared with the average Argus Trinidad LNG price index of $12.10/mn Btu over the same period.

In 2015, Henry Hub averaged $2.63/mn Btu compared with the average Argus Trinidad LNG price index of $6.69/mn Btu.

"The details of current marketing arrangements between the government and the LNG partners cannot be divulged as this could prejudice future marketing agreements," an energy ministry official said.

Atlantic had exported around 70pc of its output to North American markets a decade ago, but this fell to 16pc in 2015, a consequence of a shale boom that has converted the US into an emerging LNG exporter.

South American markets now account for 62pc of Trinidad?s LNG exports, with 12pc going to Europe, 6pc to the Middle East and 4pc to Asia/Pacific, according to the energy ministry.

The government?s call for renegotiations comes amid persistent natural gas supply curtailments that have impacted LNG production.

LNG output declined by 9.1pc to 24.12mn m? in January-October 2015 compared with the same period a year ago, according to the latest government statistics.

In the same period, gas production fell by 6.3pc to 3.830bn ft?/d (107.2mn m3/d).

November statistics are due out next week.