As cross-border gas remains significant to future of gas and petrochemical industries

The recent spat between Venezuela and Guyana over the Liza well, drilled by Exxon and its partners, creates an interesting diplomatic conundrum for Trinidad and Tobago.

On the one hand, Trinidad and Tobago is deep in negotiations with Venezuela about cross-border gas, and on the other, Trinidad and Tobago has identified the developing hydrocarbon sector in both Guyana and Suriname as a key market for diversification of our service exports.

Like all the other offshore wells drilled in Guyana, Suriname and French Guiana, the Liza well was serviced out of Trinidad, with Trinidadian service companies and international service companies based in Trinidad providing the key logistical support to the exploration activity.

The Trinidad and Tobago government, through National Energy, has invested in the upgrade of service port facilities in Galeota, with one specific strategic objective being to secure the developing oil and gas service markets in the regional offshore sector.

With Guyana, Suriname and French Guiana lacking both the experienced service-sector companies and the port facilities needed to service the offshore oil and gas sector, Trinidad is well-positioned to act as a services hub for the region and to take advantage of the significant business development opportunities that could unfold if a commercial hydrocarbon find is made and an investment decision taken.

The news about the Liza find has therefore been closely followed in Trinidad, and local and locally-based international service companies have been assessing the implications of the find for their business strategies.

The Venezuelans are no doubt aware of this Trinidadian interest in the Guyana exploration campaign. Earlier this year, when Exxon was about to spud the Liza well, the Venezuelan government took the unusual action of publishing a paid advertisement in the Trinidad and Tobago daily papers outlining their competing territorial claims to the Guyana maritime economic zone.

The target audience of the advertisement was not specifically identified, but presumably the advertisement was at least in part aimed at those Trinidad-based companies servicing the drilling campaign.

The advertisement in the Trinidad and Tobago press came shortly after the historic visit of Venezuelan President Nicolás Maduro to Port-of-Spain, the signing of a technical cooperation agreement between the two countries and the further advance of discussions about cross-border gas fields.

Cross-border gas is of huge significance to the future of the Trinidad gas and petrochemical industries.

There are other players involved beyond Venezuela and Guyana. The Venezuelans have specifically targeted Exxon and introduced the emotive topic of U.S. imperialism. But Exxon is only one of the partners in the development.

Another U.S. company, Hess, is also a major investor, and perhaps most significantly, the Chinese state-owned operator, CNOOC, holds 25 percent of the investment.

While the Venezuelans typically react very negatively to any U.S. involvement, they have developed a very strong relationship with the Chinese over the past few years.

Given all of this, Trinidad and Tobago has an interesting foreign policy balancing act to play. Clearly, we need to have a neutral overall stance and not be drawn into the dispute. Interviewed in this edition of EnergyNow, Energy Minister Kevin Ramnarine has revealed that Trinidad and Tobago has already hosted diplomatic meetings between Guyana and Venezuela, providing the physical space for a bilateral discussion.

But perhaps there is an opportunity to go further and for Trinidad and Tobago to play a more proactive role and to use our neutral position to try to calm tensions and try to broker an agreement.

The Chinese government could be an important player in this scenario, and given the strong and growing diplomatic relationship between Trinidad and Tobago and China, we could seek their assistance in this task.

The fact that this is all taking place in the context of a general election campaign makes it more challenging, but perhaps it is time for Trinidad and Tobago’s diplomats to step up and play a diplomatic role to match our ambitions as a regional economic hub in the energy services sector.