Over the last 20 years, the revenue received by the central government from the energy sector has seen significant annual fluctuations. The general pattern has been that revenue received over the last 10 years (147 billion dollars) has been considerably less than the revenue received during the previous decade (236 billion dollars).
There are two critical factors that affect the revenue earned from the sector.
The first is the price of the commodities. It must always be remembered that the price of the energy products we produce in T&T is not set domestically; it is set by external factors, largely driven by demand and supply. T&T by itself cannot influence the price of oil, natural gas, or LNG. In previous articles, we shared how the prices for natural gas and LNG are derived—but these are largely driven by foreign traded markets.
This is important to note, since these external factors play a major role in the price received for the different commodities, which therefore impacts the revenue earned by the central government. When prices are high, logically the revenue earned will be higher than when prices are low. In 2022, when Russia invaded Ukraine, prices of LNG and natural gas increased significantly because Europe tried to stop buying Russian pipeline gas and bought gas from elsewhere (including LNG from Trinidad). This greatly shifted energy dynamics in the region, resulting in rising prices, which benefited countries like T&T, which supplied some of that demand.
Conversely, during a low-price period, such as in 2020, the world reduced demand for fuels because there were restrictions on the movement of people due to COVID-19. This resulted in low demand and, therefore, low prices. T&T was not immune to these effects and consequently saw a substantial drop in revenue that year.
While price is a major component, it works hand in hand with the volume of the products being produced. Domestic production is the second critical issue.
Over time, the production of oil and gas from T&T has fallen dramatically. In the early 2000s, energy revenues would have risen sharply due to the increasing production of natural gas. However, the production of natural gas in 2025 is now almost half of what was produced in 2014. This is a major hurdle in terms of revenue.
This means that even when prices are high, the production is much less, so the potential boost in revenue is not fully realized. It also means that when prices are low, the effects are felt more severely since less would be earned on lower production.
The fall in upstream production also means there is less production in the downstream sector for LNG, methanol, and ammonia. These three commodities play a large role in the country's ability to earn foreign exchange through their export.
It is important to note that while prices are not within the control of the government, there are ways for the government to impact production. This means creating the environment to encourage investment in the energy sector.
In today's energy industry, there are newer and more exciting jurisdictions for energy development. This means that T&T has to do more to encourage the flow of capital to the country, since the risk and returns may be better elsewhere.
As a mature energy producer, T&T cannot afford to believe that investors have no other options. Even within major oil and gas companies, they must justify their capital projects, so the fiscal environment needs to be attractive and encouraging.
As the country looks to the announcement of the national budget, there are a few things that urgently need to be addressed: the supplemental petroleum tax, accelerating capital allowances, and reducing the amount of VAT refunds owed to the energy sector.
These are critical pain points that companies continually raise in reviews of the fiscal environment, and they have not been fully addressed to date.