Speech by Mr. Eugene Tiah - incoming Chairman of the
Energy Chamber of Trinidad and Tobago
Post AGM Panel discussion, 5th October 2017, Hyatt Regency, Trinidad
I would like to express my sincere thanks to my fellow Board members for selecting me to be Chairman of the Energy Chamber Board for the coming year. I trust that I will be able to live up to the confidence that you have placed in me. I would also like to specifically and sincerely thank Mr Vincent Pereira for his leadership of the Energy Chamber for the past three years. These have been difficult times for the energy sector, and for Vincent personally, and it is testimony to his strength of character and his firm resolve that he has so successfully led this important national organisation during this period.
I would also like to welcome the new and returning members to the Energy Chamber Board. I look forward to working closely with all of you over the coming months and years. While I am sure that everyone in this room is fully aware of the importance of the role that this Chamber plays in the industry, and therefore in the overall national economy, I do not think that knowledge is equally as well known to the rest of the country. Many of the things that we do are done quietly and out of the spotlight – but they are vital to the continued development of this country and indeed the wider Caribbean region.
Which is a long-winded way of me saying to my fellow Board members that this is important work, but do not expect to get great public accolades for all your efforts.
The recent budget statement by the Minister of Finance highlighted the fact that the gas industry is expecting some modest growth in production over the next few years. After an extended period of falling production this is very good news and is the direct result of the significant new investment flowing in to the country’s upstream gas sector. One of the two key strategic imperatives of the Energy Chamber is to ensure that Trinidad & Tobago is an attractive investment destination. With US$ 10 billion of investment committed over the next four to five years to upstream gas, we are clearly making significant progress with this objective. We should not underestimate the important role that the Energy Chamber has played in creating the conditions to stimulate this investment climate.
Nevertheless, there is still significant work to be done to ensure further growth in both the gas and oil industry. The government has outlined the desire for a new taxation regime for the upstream oil and gas industry in each of the last three annual budgets and there has been some engagement with the Ministry of Finance and the consultants hired through the IMF about these topics. But there is still a lack of final resolution and clarity about exactly what is intended. Detailed and comprehensive consultation with the industry is required to find the right taxation regime, which meets the principles outlined by the Minister of Finance in his presentation on Monday.
In the oil industry, the role of state-owned Petrotrin remains a crucial issue and there continues to be a lack of clear policy on the future of the company by the government, beyond statements on the challenges faced by the company and the need for restructuring and a new approach. Many of our member companies rely upon Petrotrin for much of their business and the Energy Chamber is an important stakeholder in discussions about the future of the company and the traditional oil industry.
In the LNG and petrochemical sectors there are still many unresolved policy issues that require urgent attention. As in the upstream sector, clarity and certainty are needed to encourage investment, including investment in upgrading existing facilities to improve efficiency. Without clarity on policy and the right contractual terms, shareholders in downstream facilities will be unwilling to commit the necessary capital to maintain our highly successful mid and downstream sector.
The government has stated that the Gas Master Plan will be used to guide national policy, but in many cases the Gas Master Plan report presents options for consideration. Clarity is again needed on which of the three or four options presented in each policy area is accepted by the government. Without this, it is impossible to know the policy being pursued by the government.
In addition to the efficiency issues within the petrochemical and LNG sectors, there are very clear benefits that can be gained in increasing energy efficiency in the power generation sector. The Energy Chamber has lobbied hard on this issue over the past year and it was heartening to hear this mentioned by the Minister of Finance in his budget presentation. We are committed to working closely with the government and other stakeholders to find mechanisms to ensure that the efficiency upgrades take place, thereby freeing up additional volumes of gas that can be made available to the petrochemical and LNG sectors.
In addition to these near-term issues, it is also important that we stimulate more thinking about the long-term transition of our industry, as reflected in the theme of this panel discussion. Renewable energy is growing rapidly and there is rapid technological development underway that could lead to significant shifts in demand for petroleum products. This transition is going to take many years, not least because of the sheer scale of the global infrastructure that has been built up around the fossil fuel sector over the past century, but it seems increasingly clear that the shift is taking place. It is not so much a question of if “peak oil demand” will occur, but when and how quickly.
Fortunately for Trinidad & Tobago we are primarily a gas economy and most respected projections of future demand, project that global demand for gas will continue to grow even after demand for oil begins to fall. But abundant global reserves also mean that prices are likely to remain low – the new buzzwords are no longer “lower for longer” but “lower forever”. This has very serious implications for Trinidad & Tobago’s economy and society.
Diversification remains an absolute priority and we need a policy framework that incentivises investment into diverse new sectors and especially into export markets. Energy services remain an extremely important export sector that we must find a way of promoting and the concept of Trinidad & Tobago as a hub for regional energy sector development is one that we must continue to pursue. Supporting local content in the local economy is a vital element of this diversification thrust, as we need to create strong local companies able to compete here and abroad.
Underlying the efforts to diversify, we must maintain a clear focus on the ease of doing business. At present, there are just too many disincentives to investment. Reforming our industrial relations environment and overcoming the constraints in our labour market are central to any diversification drive. We must continue to pursue a reform agenda in this regard, to create the sort of dynamic, modern and committed labour force we need to spur economic growth.
As your incoming Chairman, I would like to emphasise my continued commitment to the main advocacy areas that have been pursued by the Energy Chamber in past years. One of the key strengths of this Chamber has been our clear focus on a few important issues and the continuity with which we have pursued our strategic targets. I can ensure you that I will continue to build on the strong foundations created by my predecessors. I look forward to your support as we pursue our continued journey.