We cannot control global gas and commodity prices, but we can control how efficiently our industry operates
After a period of spectacular growth in production volumes between the mid-1990s and 2009, Trinidad and Tobago is now battling hard to maintain a plateau of gas production above 4.2 billion cubic feet of gas per day.
This is a big number and requires a big industry, investing big dollars just to maintain this big production level. Unless there are some major unexpected game-changers, the task for the industry over the next decade will be to ensure that enough continuous upstream investment takes place to simply maintain these production figures and maintain our existing midstream and downstream industry.
It is no secret that the country has struggled to produce sufficient gas to meet the total demand from the LNG, petrochemical and heavy industrial sectors over the past four years.
Shortfalls in gas production have hit companies across the value chain and have eroded profits and tax revenue.
Trinidad and Tobago’s deep waters do hold the promise of very significant new hydrocarbons, but the expectation is this will be an oil play, rather than gas.
And a major deepwater development may take a decade to come into production. There are other possible game changes, such as the agreement on importing gas from Venezuela, but we cannot bet on these changes coming to pass.
So if we want to see new growth, Trinidad and Tobago’s gas policy has to move from an emphasis on pumping up the volumes to pumping up the value.
The emphasis on pumping up the value from our existing level of gas production implies a clear focus on efficiency. We cannot control global gas and commodity prices, but we can control how efficiently our industry operates.
Of course we understand that “value” might have a different meaning for different players, including the Government. However, there must be agreement that it is to the benefit of all if we have to have an extremely efficient gas industry that is able to squeeze the maximum value out of every molecule of gas that we produce.
This in turn implies a high level of coordination and cooperation amongst companies themselves and between companies and regulators to avoid wastage and inefficiency.
We expect that the Government is going to have to be proactive in efforts to maximise value for the industry as a whole – and from its own perspective and for its investments.
However, it cannot be business as usual in the gas industry. Bureaucratic delays must be eliminated and decision-making must be speeded-up.
Further, there will be new roles for Government agencies and state-owned companies and new approaches to ensure fair returns to investors along the entire local gas value chain – including the local services sector – and to the country.
We have to ensure that the small volumes of gas being vented across the oilfields and throughout the industry are gathered and put into the network and that we increase the efficiency of electricity generation, distribution and utilisation.
Waste heat from power generation needs to be put to productive use, and carbon dioxide from our petrochemical industry should be used to enhance oil recovery. Harnessing alternative energy options to complement the oil and gas energy sources must be considered.
Finally, local content has to be central to efforts to pump up the value from the gas industry. We need local content strategies that are based on increasing the competitiveness of our local service companies and decreasing imports of more expensive goods and services for the industry.
This will ensure that we both increase the value of the industry in country and increase returns to the citizens of Trinidad and Tobago.
By focusing on maximising value, our gas industry can still grow and drive national development forward, even if the volume of production does not increase.