China Moves in on Trinidad & Tobago Gas

In a move that arguably underlines the shifting of economic and political power in the region away from the US, China will this year acquire a substantial ten percent stake in the crucial Atlantic LNG plant at Point Fortin in a $5.5 billion deal.

The China Investment Corporation (CIC), the special-purpose company which manages China’s sovereign wealth fund, is to acquire the ten percent stake from French firm GDF Suez under a new memorandum of understanding signed between both and announced last Wednesday.

In exchange for joint-investment opportunities in Asia Pacific, including China, GDF Suez will, possibly before the end of the year, transfer its ten percent stake in Train 1 of the Atlantic LNG natural gas plant, as well as production payments associated with trains 2, 3 and 4 for EURO 600 million (TT$5.5b). CIC will also acquire a 30 percent of GDF Suez’s Exploration and Production division.

The transactions are subject to condition precedents and to approval by GDF Suezs’ employee representative bodies. The memorandum of understanding is to be administered by a steering committee chaired by Gérard Mestrallet, the chairman and CEO of GDF Suez and Lou Jiwei, chairman and CEO of CIC.

GDF Suez is one of five companies with interests in Train 1. The other companies are BG Atlantic 1 Holdings Limited; BP (Barbados) Holding SRL; NGC Trinidad and Tobago LNG Limited; and Repsol LNG Port-of-Spain B.V. CIC’s stake will represent the first time China has held a substantial interest in the plant since it began operations in 1999.

The deal comes after GDF Suez last October signed a medium term agreement to sell about 2.6 million tonnes of LNG to CNOOC Gas and Power Group Limited, a wholly-owned subsidiary of China National Offshore Oil Corporation, the largest importer of LNG in China.

In a statement last week, CIC’s Lou Jiwei described the deal as one of CIC’s most important.

“Our investment of 30 percent in GDF SUEZ E&P would be our first sizeable transaction in Europe to date and, together with Atlantic LNG, one of our most important investments worldwide. We are committed to working with GDF SUEZ E&P to achieve its growth prospects,” he said.

Mestrallet noted that the deal would help GDF Suez access strong networks and financing in China.

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