The future of Trinidad and Tobago’s gas industry relies on the ability to attract significant new investment into upstream gas production. Rystad Energy, a consultancy firm, has recently concluded a study of the competitiveness of the Trinidad and Tobago gas economy, commissioned by the Energy Chamber. The study, summarised here, clearly highlights the serious challenges faced by the Trinidad and Tobago gas economy.
The firm’s analysis highlights how Trinidad and Tobago’s gas production has fallen 20% since 2013 and will continue to fall over the next couple of years, though at a slower rate of around 3% per annum. After 2019, declines will accelerate again unless new upstream gas delivery projects are sanctioned.
The Rystad study shows that there are opportunities to secure additional gas supplies for Trinidad and Tobago, including developing marginal fields already discovered, importing gas from Venezuela, and exploration for new gas in both the shallow and deepwater acreage. However, the study also shows that there will need to be some significant changes to the current investment climate if these opportunities are going to be developed. The consultants emphasise that there is no time to lose in making decisions.
Trinidad and Tobago is facing a clear choice. We can continue along our present business as usual path, which might seem comfortable but will see our gas industry continue to decline and eventually die. The other option is to take some serious decisions now to make the changes needed to ensure that our gas industry becomes competitive and able to attract investment into the upstream exploration and development needed to sustain the sector.
The decisions that need to be taken are well known, but not easy. They involve changes to the taxation regime, the structure of the gas markets, and measures to remove regulatory delays and reduce costs. Making these decisions requires close dialogue and trust among all stakeholders, including the government and the industry. While different stakeholders might have interests that are not always fully aligned, it is in everybody’s interest that we create an overall investment climate that attracts the very large volumes of capital that are needed to sustain our upstream gas industry.
It is urgent that decisions are taken now. If we are to avert a further rapid and sustained decline in gas production post-2019, we need to have new projects sanctioned now, as it takes two or three years – in most cases – from a project being sanctioned to actual gas delivery. Given the noise of the here and now decisions that have to be taken with crisis issues, it is sometimes difficult to get governments to focus on slower burning crises, like the gas supply situation – but the longer decisions are delayed, the greater the threat that our industry faces.
We have a clear choice to make: either we can collectively decide we want to become more competitive or we can leave things as they are now, and slowly dismantle our gas industry.