PORT OF SPAIN, Oct. 30 -- ConocoPhillips has decided to pull out of Trinidad and Tobago and immediately sell its shares in Phoenix Park Gas Processors Ltd. (PPGPL) along with a number of North American interests. Company officials confirmed the sales, which are expected to be completed within the next 6 months as the newly merged ConocoPhillips attempts to restructure its operations.
Linsi Crain, a company spokeswoman, told OGJ that the move is in keeping with ConocoPhillips's decision to streamline its midstream assets as it attempts to maximize the benefits from the merger of the former Conoco Inc. and Phillips Petroleum Co..
"An evaluation of ConocoPhillips midstream assets and their place within the long-term objectives and strategies for ConocoPhillips has been under way," Crain said. "As a result of this review, certain midstream assets have been designated for sale. Consistent with that decision, a marketing process has been initiated for Phoenix Park."
Crain continued, "ConocoPhillips is continually looking for opportunities to improve our business holdings and portfolio around the world. This possible sale is part of a company-wide and global effort to streamline our business and to realize the full value of the recent merger."
Assets sale details
PPGPL is ConocoPhillips's sole interest in Trinidad and Tobago. Crain said, "While Phoenix Park has performed attractively both financially and operationally and is located in a stable environment and has an excellent outlook, others may see it as more beneficial to their portfolios."
ConocoPhillips told OGJ that it remains interested in exploration and development opportunities in Trinidad and Tobago but wouldn't disclose details.
Meanwhile, Crain said ConocoPhillips also will be disposing of several other assets, notably its Southeast New Mexico operating unit, San Angelo operating unit, Louisiana operating unit (excluding the residue system), Gulf Coast Fractionators, Mont Belvieu Storage, Atlantic Energy Terminal, and Glenmora Pipeline. Sale of the US assets is anticipated to be complete by the first quarter of 2004.
OGJ has been told that while the Trinidad and Tobago operations are profitable, they are too small for ConocoPhillips to continue to operate. PPGPL is a Trinidad and Tobago-based joint venture of ConocoPhillips, National Gas Co. Ltd. of Trinidad & Tobago, and Pan West Engineers & Constructors.
NGC has a controlling interest of 51%, while ConocoPhillips owns 39%.
NGC's interest in PPGPL
PPGPL started operations in 1991 as a gas processor and export marketer of natural gas liquids, including propane, butane, and natural gasoline. It is the leading producer and marketer of NGLs in the Caribbean; it also exports NGLs outside the region.
PPGPL has embarked of a multimillion-dollar upgrade as it prepares to deal with additional amounts of gas feedstock entering the system from the major Trinidadian gas projects, including the Atlantic LNG expansion.
Only last year, PPGPL announced a plan to expand its operations and to develop a Caribbean liquids hub with the possibility of utilizing gas from both Trinidad and Tobago and from Venezuela's Plataforma Deltana offshore region. Projects currently under development will by 2005 double the company's 2001 plant production.
NGC Pres. Frank Look Kin acknowledged that ConocoPhillips wanted out of the plant and said this has already been indicated in writing to the other shareholders. He said NGC is interested in purchasing the assets "if the offer was right."
Look Kin said, "We know what the plant is worth, and we will make a decision on whether we buy the assets whenever ConocoPhillips sets a price. There is no doubt that we want to acquire the assets, but they must first set a price."
The NGC president said Trinidad and Tobago had already been informed of the development, and NGC had informed Energy Minister Eric Williams about its interest in buying the assets.
"There is a particular procedure set out in these kinds of matters that has to be followed," Look Kin said. "Under the shareholders' agreement, NGC has the first right of refusal, and so ConocoPhillips will have to find a buyer and when that buyer makes an offer [ConocoPhillips] will then approach us and tell us this is their price. We will look at it and determine if it is fair, and if it is then surely we will buy it."
Look Kin added, "They told us they wanted to deal with this issue before the end of the year, and we are prepared to deal with it as soon as it is brought to us so we are waiting on them."
Williams also spoke on the issue and said he is sorry to see the company leave. "It is a pity that they are leaving Trinidad and Tobago, but it is a decision they have to make and having made it the government can only wish the company well in its restructuring efforts," Williams said.
Business as usual
Look Kin assured that ConocoPhillips's decision will not adversely affect NGC's plans to use Phoenix Park gas processors to provide the ethane feedstock required to support a world-scale ethylene plant.
Both NGC and the Caribbean island government have been pursuing an ethylene complex. They contend that, on completion of Atlantic LNG's Train 4 in 2005, it will have sufficient ethane in the system to support a world-scale ethylene plant.
Look Kin said, "I don't think the sale of the plant will have any effect on our plans. The fact is that the company will have to follow the dictates of the directors, whoever the shareholders are."
Look Kin said NGC and the government's policy of attracting an ethylene complex to Trinidad and Tobago had not changed and will not regardless off the changes at PPGPL.
NGC Chairman Keith Awong also is chairman of PPGPL.