Energy Chamber welcomes news on shallow water bid round but concerned about measures to stimulate investment in gas production in the short-term

Energy Chamber Press Release: Energy Chamber welcomes news on shallow water bid round but concerned about measures to stimulate investment in gas production in the short-term

Bid rounds

The Energy Chamber of Trinidad & Tobago warmly welcomes the announcement of the 2023 Shallow Water Bid Round. Coming on the back of the signing of three deepwater production sharing contracts last week and the successful onshore bid round earlier this year, this bodes well for future development of Trinidad & Tobago oil and gas resources.  It is important for the future of the country that we have a consistent and active exploration programme within Trinidad & Tobago’s economic zone to ensure that resources are identified, and reserves are brought into production as quickly as possible.

The Ministry of Energy and Energy Industries must be commended for making significant changes to the packages that were offered in the 2018 shallow water bid round, that resulted in a disappointing response from oil and gas exploration and production companies.  The Ministry has incorporated many of the changes suggested by industry after the 2018 bid round and the technical teams designing the packages must be commended for their work on the bid round.   Under the direction of the Honourable Minister, Stuart Young, the Ministry has been open to constructive dialogue with the industry on this issue. 

The Energy Chamber anticipates that there will be a much more positive response to the current thirteen shallow water blocks on offer compared to the previous bid round, notwithstanding the highly competitive international market for upstream exploration capital.  The challenge for the Ministry and the industry now will be to ensure that production sharing contracts are issued as quickly as possible after the close of the bid round on 2nd April 2024.   

The Energy Chamber hopes and anticipates that the licenses for the onshore blocks awarded in June this year will be issued shortly, so that activity on the blocks can be initiated. 

Stimulating investment in existing acreage

Exploration acreage offered through bid rounds is very unlikely to deliver additional gas or oil to market before the 2030s.  There is an urgent need to stimulate more investment in existing acreage in the short-term to be able to deliver gas to downstream plants and the LNG facility.

One of the mechanisms to stimulate more investment in existing acreage held under exploration and production licenses is through fiscal reform.  The Energy Chamber has argued for many years for amendments to supplemental petroleum tax (SPT) to encourage investment into oil production in mature acreage and for changes to the petroleum profit taxes and royalties to encourage investment in gas, especially from small fields. 

Changes to the SPT have been introduced over the past three years, with additional changes announced again this year.  These changes are welcomed as moves in the right direction.  The Energy Chamber is in dialogue with the Ministry of Energy to understand the details of the proposed changes to be introduced in January 2024.  Our aim is to ensure that the amendments meet the objective of increasing investment and production of oil. 

No changes were introduced to stimulate investment in natural gas production, except some potential changes in the structure of capital allowances which may help the economics of projects to an extent.   The Energy Chamber will continue to seek dialogue with the government on amendments that could help stimulate investment in gas production from existing acreage.

Long-term sustainability of government revenue from the energy sector rests on encouraging investment now.