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‘SUSTAINABLE energy’ is a term not much used in Trinidad and Tobago – and its meaning is not precisely identified – but the Network of NGOs of Trinidad and Tobago, under the energetic leadership of coordinator Hazel Brown, is striving to change all that.
The price of Trinidad and Tobago’s liquefied natural gas (LNG) exports in international markets has been a major topic of conversation in the energy sector over the past few weeks, with members of the parliamentary Joint Select Committee on Energy Affairs (JSEC) quizzing the Ministry of Energy on LNG pricing structures and whether the country is getting the right returns for its LNG exports. The discussions around LNG exports are complicated by the fact that sales are made under long-term commercial marketing contracts, which include commercial confidentiality clauses. Furthermore, the marketing arrangements under the four Atlantic LNG trains are all different, as different structures were negotiated as the government and companies refined their approach over time to securing markets for Trinidad and Tobago LNG exports.
Spanish oil giant Repsol has been awarded the Black Belly offshore block for exploration. The block is located off of Barbados’ northwest coast and is a fairly sizable 2,479 square km especially when compared with the Barbados land mass of about 431 square km.
The development of the 300 million tonnes of the very heavy oil in south Trinidad known as tar sands may actually become a possibility in due course now that energy and energy industries minister, Nicole Olivierre, has spoken on the matter – the first time any minister has mentioned this for the last five years.
Guyana looks set to soon join the ranks of oil producing nations. ExxonMobil has announced that its highly anticipated Liza-2 appraisal well has confirmed the discovery of a world-class, highquality oil reservoir offshore Guyana.
As we progress on the journey of confirming the hydrocarbon resources that are currently being targeted in deepwater – Trinidad and Tobago, Guyana and Suriname amongst others – a key question comes to mind, how do we prepare for the deepwater arena?
Ministry of Energy data for the first quarter of 2016 has revealed a significant drop in crude oil production from the smaller onshore oil companies in Trinidad, mainly operating under lease-out, farm-out or incremental production sharing contracts (LO/FO/IPSC) with the state-owned oil company Petrotrin. Activity in this sector has significantly decreased, with serious knock-on negative implications for service companies, general economic activity and employment across south Trinidad.
In May 2016, I had the pleasure of being one of the business sector delegates who joined the Prime Minister on his official state visit to Ghana. It was my fifth visit to the country, though my first as part of an official Government delegation.
Urgent government action is required to halt the current significant decline in activity in the Trinidad and Tobago oil sector and the knock-on impact that this is having on both crude oil production and the energy service industry, the major generator of employment in the sector. Since September 2015, the government has been promising a consultation process to discuss energy sector taxation and other issues facing the industry, but to date, no such consultation has taken place and there is no clear signal being provided of when or how this will occur.
BHP Billiton has spudded its much anticipated first deepwater well offshore Trinidad and Tobago. The well has been named LeClerc, after the 16th century French privateer, François LeClerc, famous for his peg leg and his many daring escapades around the Caribbean Sea and across the Atlantic.
"We cannot spend more than we earn”
On April 8, 2016, the minister of finance delivered the mid-year fiscal review, ending months of speculation on several issues, while evidently igniting new anxieties and debates on others. The minister noted that in March 2016 alone, the government entertained annual review visits by the International Monetary Fund (IMF), Moody’s, and Standard and Poor’s – all of whose reports we now eagerly anticipate, although downgrades are likely.
In March 2016, ProCom completed its acquisition of the assets of FT Farfan’s rigging business unit. The acquisition of the assets serves to bolster ProCom’s position in the local market. ProCom’s CEO, Mark Laughlin, said that the acquisition was a strategic move to acquire market share by removing a major competitor and adding 30% market share to ProCom. The acquisition became effective on March 31st 2016.
The message that I took away from the feature presentation by Filipe Calderon, former President of Mexico, to the Arthur Lok Jack Graduate School of Business Distinguished Leadership and Innovation Conference was that leadership is about taking decisions, even when they are tough and unpopular. Calderon’s presentation, delivered in a humble and often self-effacing manner, was both fascinating and inspiring.
With Exxon in the midst of their highly anticipated appraisal drilling campaign offshore Guyana, the government has been taking its time to increase its understanding of the oil and gas industry and where it needs to be heading, according to Raphael Trotman, the Minister of Natural Resources.
Trinidad and Tobago, the only non-associated gas producer and exporter in the Caribbean, will be playing a major role in the Caribbean Energy Security Conference, which Prime Minister Dr. Keith Rowley is due to attend in Washington D.C. on May 3 and 4.
A good way to gauge the business climate of the energy services sector is to examine the level of confidence that energy service contractors have in the activity of the sector. The Energy Chamber’s Energy Services Sectors Survey (ESSS) is a quarterly survey of energy service contractor which allows for such an assessment.
No producer is making money at a US$37-US$40 oil price, insisted Scotiabank’s Mark A Ammerman in a recent presentation to the Trinidad Energy and Finance Forum.
Though some experts have their own ideas on when the world oil price, currently hovering between US$37-US$40 a barrel, will rise again, one of the foremost among them, Dr. Lester Henry, has adopted a posture of caution.
Trinidad and Tobago needs direct foreign investment for its economic and social development. The economy of Trinidad and Tobago is – and will remain for the foreseeable future – an oil, gas and petrochemical-based economy. This means that we need very high levels of capital investment into our economy, each and every year. Oil and gas reservoirs have a natural decline rate and in order to simply maintain a national plateau of production we require billions of US dollars of investment every year. Given the current shortfalls in gas production, there is a particular need to attract investment into upstream gas production.
The Government of Trinidad and Tobago has followed through on its commitment to begin to address the transport fuel subsidy when it increased the price of super gasoline and diesel by a further 15% in its mid-year budget review. This came on top of a previous increase of 15% in September 2015 and a decision not to reduce the prices when VAT was reduced from 15% to 12.5% (effectively increasing the price of fuel pre-VAT).
