Investment levels in the Trinidad & Tobago upstream sector have remained at relatively high levels despite cuts, internationally, in capital expenditure due to low commodity prices. In December 2015, the Minister of Energy and Energy Industries, Nicole Olivierre, reported that investment was expected to be approximately US$3.0 billion in 2015 and in 2016. In these uncertain times, this is encouraging for our energy sector. Yet we cannot assume all is well. It is vitally important that final investment decisions for future projects are monitored. 

Final investment decisions on many of the projects currently in execution in Trinidad & Tobago were taken before the precipitous fall in oil and gas prices. Final investment decisions based on oil prices under US$40 are very different to those with prices of US$100. 

As the article on possible future field developments in this edition of Energy Now (page 3) makes clear, many gas fields are awaiting final investment decisions, as well as projects to increase production from existing fields through in-fill drilling or compression. The Trinidad & Tobago energy industry must closely monitor investment decisions for these new upstream projects to ensure a sustainable future for our gas industry. 

In the past, the local industry typically placed much greater emphasis on monitoring potential future downstream development projects. Downstream projects implemented onshore are far more visible to the average citizen than an offshore gas field development project and will typically employ far greater numbers of workers during construction. 

Trinidad & Tobago has had tremendous success in developing our downstream industry and our success in developing our LNG and petrochemicals has distinguished us from many other emerging economies with hydrocarbon resources. Over the years, we have hosted several delegations from countries such as Ghana, Tanzania and Timor Leste who have been trying to develop their downstream gas processing industry and who have considered Trinidad & Tobago a model for their development. However, our very success in downstream industrialisation is now being threatened by shortages in gas supply. Our focus now needs to be on regaining the plateau of gas production needed to sustain our industry. 

This means that we must concentrate on the potential upstream investment decisions that could take place over the next few years. Both local and international media commentators have placed much emphasis on the success/ failure of bid rounds as an indicator of the future health of our upstream industry. However, the reality is that most of the potential investment decisions that need to be taken are in acreage that was allocated many years, and even decades, ago. 

For all the fanfare around the closing of bid rounds, it is striking that of a total of 25 blocks allocated from bid rounds since 2004, actual gas production is only taking place on one of those blocks, namely EOG’s Toucan development on block 4 (a). There have been a number of exploration successes on other blocks, but only one has resulted in final investment decisions for an actual field development. 

The news from BG’s third quarter investor call that they have ‘‘pushed out in time’’ a final investment decision on block 5(c), where there were exploration successes as long ago as 2008, has passed without comment in the national media. A similar announcement of a delay on an investment decision for a downstream petrochemical plant would certainly have raised more commentary. As an industry we need to place far greater emphasis on the investment decisions being taken about potential upstream development projects if we are to find a sustainable future for our gas industry.