Production sharing contract concluded since April 2011

The impasse that has delayed the commencement of exploratory drilling in block NCMA 2, known to be rich in gas, could conceivably be resolved soon if discussions under way at the Ministry of Energy and Energy Affairs (MEEA) bear fruit.

The production sharing contract (PSC) for the block, located directly north of the long-productive NCMA 1, was concluded as far back as April 18, 2011.

It involved Niko Resources of Canada, as operator, with a 56 percent share, partnered by RWE Dea, the oil and gas unit of Germany's second-largest power utility, RWE AG (24 percent) and state-owned Petrotrin (20 percent).

The first-phase exploratory drilling programme required the sinking of three holes, but none of that has taken place, mainly because of financial problems faced by Niko.

MEEA has, naturally, not been happy about this situation, especially since the country needs as much gas as can be produced and has turned to RWE Dea for a solution.

This could mean the German company (well, now Russian, since most of RWE Dea's assets have been acquired by Russian oligarch Mikhail Fridman's investment company, Letter One) assuming the role of operator.

This will be challenging since, as pointed out by Peter Immerz, RWE Dea's country manager in Trinidad and Tobago, “The joint operating agreement (JOA) among the three parties is like a marriage contract: You can't do anything you like. Whatever the solution arrived at will need consensus from everybody.”

That may well be true, but MEEA's patience appears to be wearing thin, and if it wants the programme relating to NCMA 2 to get going, it may have to take some unorthodox actions.

MEEA seems very partial to an RWE Dea takeover, judging from what Energy Minister Kevin Ramnarine has recently stated.

“The Ministry has been talking with RWE Dea,” Ramnarine revealed in an interview. “And, if we want, we will talk to Niko, too. RWE Dea has shown great interest in the future of NCMA 2.”

This is hardly surprising. When the German/Russian firm first declared its interest in offshore Trinidad and Tobago, it was reported in the international press that “RWE plans to tap natural gas reserves in Trinidad and Tobago to help double production by 2015.”

Note the date; 2015 is already five months old and initial drilling, much less production, has yet to happen.

“The first well, which was to have been drilled by the Ocean Diamond Lexington in 2013,” Minister Ramnarine notes, “was a very important well. It was going to test a geological region off the north coast that would have opened up an entirely new play. I think it was the mid-Miocene.”

A government minister is not supposed to be “vexed” over the behaviour of companies contracted to the ministry, Mr. Ramnarine says with a slight smile, but he does confess to being “very disappointed” over the situation.

He says he is in no position to “push” RWE Dea to take over operatorship of NCMA 2, “but the company has met with me and my technical people to discuss the future of the block.”

At this stage, he says he prefers “not to say much of what was spoken about,” though he does stress that “RWE Dea assured us that their new Russian owner is not on the blacklist of Russian oligarchs by the US and the EU” (though it was recently reported that Britain had ordered Mr. Fridman to dispose of the North Sea gas fields, accounting for about 3 to 5 percent of UK suppliers, that he had acquired through the purchase of RWE Dea).