Remarks delivered by Dwight Mahabir the Chairman of the Energy Chamber at the Trinidad and Tobago Energy Conference 2021, hosted by the Energy Chamber.
Good morning and welcome to the Trinidad & Tobago Energy Conference 2021. This conference is taking place in a very challenging time for all of us, in the midst of the world’s worst health crisis in over a century. I would like to start by acknowledging the pain and suffering that this pandemic has caused for many people, all around the world. I would also like to recognise first and foremost, the hard-working frontline health care workers whose experiences I think most of us would find impossible to truly understand. And to all other essential workers, including those in the Energy Sector for their commitment in keeping the lights on and the economy going, albeit at a reduced pace. We thank each and every one of you.
I would also like to acknowledge the fact that we have a fantastic line-up of speakers over the next three days, starting this morning with four regional heads of government; President Ali, President Santokhi, Prime Minister Holness and Prime Minister Rowley thank-you so much for your support and for joining us this morning. It is deeply appreciated by the Energy Chamber and the entire energy industry.
The past year and a half, since our last conference, has been characterised by massive disruptions caused by the Corona virus. Back then in February 2020 we were all vaguely aware of the virus and the threat to human health, but I do not think that many of us had any idea of just how disruptive a pandemic would be for all of us.
In fact, the mood back then was generally optimistic, and it seemed that we had turned a corner in the Trinidad & Tobago gas industry, after years of decline. And, of course, that was taking place against a regional picture of huge exploration success, in both Suriname and Guyana, with first oil achieved in Guyana just two months earlier and additional world class oil fields moving through the investment and development cycle.
In Trinidad, 2020 turned out of be a year of significant disruptions, including temporary and longer-term plant closures and falling gas production, a pattern that has continued into 2021.
But there were also positives. Despite the challenges of coping with a highly infectious and sometimes deadly virus, upstream projects to enhance future production continued to be safely executed. There is hope that in 2022 gas production may increase from current levels, though it will be extremely challenging to get back to the over 4 bcf/d required to meet total installed demand. Global oil, gas and petrochemical prices have recovered well. Despite the disruptions, new supply contracts have been agreed with some of the petrochemical plants and negotiations have continued over the future of Atlantic. An overall policy reform and planning process has been initiated by the Government to ensure the sustainability of the gas industry and detailed consultations with the industry are ongoing.
We have also seen even further exploration success in Guyana and Suriname and the continued development of their hydrocarbon industries, notwithstanding some of the political uncertainty last year, pandemic disruptions and some technical challenges.
While the pandemic of course looms large, the fifteen months since our last conference have seen a revolution in the global energy industry, which will take decades rather than months to play itself out. I am of course referring to the energy transition and the urgent need for the industry to decarbonise energy production rapidly and fundamentally, whilst simultaneously providing sustainable and reliable sources of energy.
While the transition is going to take decades to work through - it is essential that we act with a fierce urgency now, if we are to have a sustainable future in the energy industry.
We have been talking about decarbonisation and the energy transition for many, many years at this conference. We have not shied away from having speakers such as Jeffrey Sachs and Stephen Chu who have made many of us feel uncomfortable when they challenged the energy industry to do far more to transform and to make radical change.
Despite all of the past talk, it is only essentially in the past year that we have seen a significant move from talk to action. This is being driven quite notably by the changing strategies of bp and Shell, two of our major gas producers, and the increasing demands for companies to commit to zero emissions targets from the global capital markets. The global capital markets are going to dictate where capital flows and much of that will be increasingly directed away from hydrocarbons toward renewables. The fight for scarce capital to invest in upstream exploration and production is only going to become more intense and that has serious implications for how we structure our industry and we must therefore take careful account of this.
The Caribbean region remains highly dependent on fossil fuels, notwithstanding our abundant sunshine, trade winds and geothermal resources.
We have seen significant investment in renewable and cleaner energy sources in the region, with Jamaica leading the way in wind and solar, in addition to the shift to lower carbon intensity fossil fuels with the importation of LNG for electricity generation. There have been significant investments in much of the Eastern Caribbean in solar and plans are underway for investments in geothermal energy, while Trinidad & Tobago has a major solar investment project which is currently moving through the investment pipeline, though perhaps not as quickly as we would like.
However, these investments in renewables are still dwarfed by the investment into hydrocarbon exploration and production, led by Trinidad & Tobago, Suriname and Guyana. With significant reserves already discovered and proven and more still to be found, it is not reasonable to expect small Caribbean nations not to develop their hydrocarbon resources while a global market for the products still exists. The “leave it in the ground” concept promoted by some environmentalists is all well and good, but it is not going to have any impact on global climate issues through unilateral decisions of small economies that export the vast majority of what they produce.
The energy transition has to be driven by global ambitions and global commitments. The Paris Accord already led to significant changes in government policies around the world and to changes in company strategies. Starting with COP 26 in Glasgow later this year, we expect future rounds of climate commitments to further shape government policy and hence company strategy and, as small Caribbean economies, we need to think carefully about how we fit into that framework.
But we also need to not just respond. As the theme of this conference suggests, we also need to lead.
There are many opportunities that we have here in the region to take a leadership role in the energy transition.
Focusing on Trinidad & Tobago, one of the worlds oldest hydrocarbon producers, we already have many of the ingredients in place to play a leading role.
We are already a major global cluster for hydrogen production and leaders in the ammonia and methanol business, two potential fuels receiving increased interest to solve issues in “hard to decarbonise” sectors such as marine transport. With our mature oilfields being very near to major sources of C02 production, we are an ideal location for carbon capture and sequestration. Carbon capture from the power generation plant at Atlantic could help decarbonise our LNG production and reduce the carbon intensity of our exports which can have a marked impact on global GHG emissions if it displaces current coal-fired power generation in importing countries.
Perhaps most importantly, however, is the fact we have well trained and experienced industry professionals in areas such as engineering, geotechnical, project management and IT, a highly skilled labour force and a long history of successful cooperation between government and international energy companies.
We know that there are many changes that we need to make to take advantage of these opportunities.
· We know that we need new policies and new tax regimes to attract investment to sustain our oil and gas industries, and that these are currently being actively developed by the Government.
· That we need to become more efficient and to remove distorting fossil fuel subsidies and that this is under active review by the regulators.
· That we need policies that will ensure more value is retained in the local economy from the spend of operator companies and that both companies and the government are aligned on this objective.
· We need to reform our institutions and labour markets to become more productive and to remove some of the current barriers to the ease of doing business.
· We know that greater Caribbean economic integration, especially in energy services, will result in sustained benefits for all economies and all Caribbean people.
These are all things that are well known and that we must make happen.
This will require clear visioning, strong leadership and collaboration from the private-sector, business associations, labour, civil society, academia and the government. Events like this conference are vital to the process of sharing information and views and helping people to forge relationships for action. But we must turn talk into action and we must do so with the utmost urgency.
I look forward to the conversations, knowledge exchange and learnings that will take place over the next two and a half days and to the future actions that will follow for the benefit of the people, businesses and countries of our region. I will be back with you in the final session at the end of the conference to reflect on these conversations and exchanges.
On behalf of the Board of Directors, Staff and Membership of the Energy Chamber, I thank you for participating in this year’s conference and I wish you an enjoyable and learning experience.
Thank you.