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What do Angelin and Galicia say about the PNM Cabinet?

Published: 
Thursday, April 20, 2017

For the month of April, the two stories referenced in the headline of this commentary have dominated the news cycle in T&T, with both of them generating a great deal of hand-wringing on social media platforms and concerned letters to the editors of local newspapers.

In my view, both the decision by the London-based energy giant BP not to construct the Angelin platform in T&T and the determination by the owners of the Super Fast Galicia to withdraw the vessel from the inter-island cargo service between Trinidad and Tobago reflect negatively on the decision-making ability of the Cabinet of the Republic of T&T.

From the evidence at hand, it can be argued that the failure by Cabinet to make timely decisions on important but time-sensitive issues contributed to the unsatisfactory outcomes of both issues.

Put another way, had the Cabinet heeded the warning of bpTT’s regional president, Norman Christie—that the government needed to sanction the Angelin development in the fourth quarter of 2016—T&T would have had a fighting chance to receive the mandate to construct the Angelin platform.

That warning was made public in an exclusive interview that Mr Christie did with the Business Guardian on March 2016 and one assumes he would have delivered the same caution to the government’s energy officials and the relevant ministers.

What may not have been obvious to all but the more discerning readers of that Business Guardian article is the likelihood that BP linked the sanctioning of the Angelin development with the renegotiations of state-owned National Gas Company’s (NGC) long-term gas supply contract with BP, which is due to expire in 2018.

In other words, BP officials (including Mr Christie) would have told the Government, in no uncertain terms, that for the energy giant to proceed with the Angelin development, it needed a comprehensive gas supply contract with NGC on terms that are more favourable than the existing contract.

The Angelin development is crucial to the medium-term survival of T&T’s petrochemical industries at Point Lisas and the liquefaction facilities at Point Fortin because the natural gas produced by Angelin is expected to replace the output from the Juniper development, which is forecast to begin declining in 2019 from its production peak of approximately 590 million standard cubic feet a day (mmscfd) from five subsea wells

The fact that the Cabinet was not in a position to provide the sanction for the Angelin development in the fourth quarter of 2016—for whatever reason—automatically meant that BP simply could not take the chance that the Oilfields Workers Trade Union (OWTU) and the poor but militant La Brea community would do to the construction of the Angelin platform what they did to the Juniper platform.

And it seems to me that what was done to the Juniper platform was that the workers at the La Brea fabrication yard agreed to a compensation package in order to get their jobs when construction began in the fourth quarter of 2014.

But, by January 2015, those same workers—inspired no doubt by the comrades of the OWTU—were protesting about the inadequacy of the compensation and the fact that more people from La Brea did not get work at the fabrication yard—both of which were masked by complaints about the health and safety conditions at the facility.

In a real sense, then, the Cabinet’s failure to provide the sanction for Angelin in a timely fashion—and at least some agreement on the key terms of the long-term contractual arrangements for the supply of natural gas by BP to NGC—would have compounded the pre-existing wariness of the energy company to trust the La Brea workers to honour their employment contracts. It is a straight case of: “fool me once, shame on you. Fool me twice, shame on me,” and the need by BP to promote and protect shareholder value.

 

On the issue of the cargo service between Trinidad and Tobago, it seems to me that former Works and Transport Minister Fitzgerald Hinds took a Note to Cabinet in April 2016 recommending that the Super Fast Galicia’s contract be extended for 18 months from April 2016 to October 2017.

Cabinet did not approve the Note brought by Mr Hinds, which would have allowed more than enough time for Cabinet to approve a replacement vessel for the service.

Having rejected Mr Hinds’ recommendation for an 18-month extension for the Galicia, Cabinet should have moved immediately, in May 2016, to source a replacement vessel for the inter-island cargo service.

Instead, what Cabinet seems to have done is ignore the issue for eight months, leaving it to fester until the owners of the Galicia—who had been reduced to a month-to-month contract—provided the mandatory two-weeks notice of the withdrawal of the vessel on April 1, 2017

The question that must unavoidably be asked is this: why didn’t the Cabinet move to source a replacement for the Galicia in May, 2016?

Didn’t any one of the 24 or 25 members of Cabinet realise the danger to the inter-island cargo service of not moving immediately to source a replacement for the Galicia?

In the April 12, 2017 edition of the T&T Guardian, Rosemarie Sant reported that former Chair of the Port Authority, Christine Sahadeo, commissioned a March 2016 evaluation of the suitability of the Super Fast Galicia by Captain Alfred McMillan of Magellan Maritime Services Ltd without the knowledge of the Board.

 

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That report, according to Mrs Sant’s unrefuted reporting, identified six shortcomings of the Galicia including that it “incurs many added costs because of the berthing configuration which is unsuitable.”

These additional costs included: “There has been a barge hired to use as the landing facility for the stern ramp every time we have to use the Galicia” The barge, he said, “comes at an additional daily cost of US$1,100.”

Captain McMillan recommended that the Galicia be replaced by a more suitable vessel.

In that additional report, submitted in April 2016 (unfortunately no specific date was provided), McMillan identified six vessels to replace the Galicia:

• The MV Straitsman which was at the time trading in New Zealand

• The MV Hammer Rodde, trading in Denmark

• The MV Levante, which was on Charter up to December 2016 in the Mediterranean

• The MV Daltivia which he said “could be made available for sale if the owners can find a replacement

• The MV Clipper Ranger, which is a freight only vessel and which the owners “want to sell,” providing they agree to the “conditions of sale

• The MV Ocean Queen, which was described as a car-truck carrier and which was “immediately available for sale.”

Of the six, McMillan recommended the MV Hammer Rodde, which he said “was most likely to meet the requirements of those instructing me.”

So, here is an apparently well-respected professional providing advice and a short list of potential vessels and indicating the one that he thought “was most likely to meet the requirements of those instructing me.”

That recommendation was made in April 2016.

The questions are these:

• Were McMillan’s reports made available to Cabinet in its deliberations on the issue?

• If the reports were made available to Cabinet, why did Cabinet not at least direct the Minister of Works and Transport to explore the possibility of securing the option recommended by McMillan or one of the other possibilities that he identified?

If the reports were not made available to Cabinet, the former chair of the Port Authority, Christine Sahadeo, has some serious explaining to do, both in terms of why she commissioned reports with regard to the inter-island ferry service, which were not shared with the other directors of the board? Also why didn’t Cabinet have the benefit of expert reports on the shortcoming of the Galicia and its possible replacement?

In conclusion, if Cabinet knew of Mr Christie’s warnings in March 2016 and Captain McMillan’s reports in April 2016 and still ignored these important issues for more than eight months, then the only conclusion that a fair-minded observer—which I consider myself to be—can come to is that the current Cabinet may be dysfunctional or that it simply dropped two large and consequential balls.

I personally would love to know the real explanation for these missteps.