Though some experts have their own ideas on when the world oil price, currently hovering between US$37-US$40 a barrel, will rise again, one of the foremost among them, Dr. Lester Henry, has adopted a posture of caution.
He is reluctant to join the guessing game, though. As a senior lecturer in the Department of Economics, Faculty of Social Sciences of The University of the West Indies, St. Augustine, he has been studying the Trinidad and Tobago hydrocarbons sector for decades and includes it in his discourses with students.
“In 2009,” he recalls, “the price only stayed down for less than a year and by early 2010, had started to rebound and it turned out that we sailed on for another four years, until 2014, when it started to go down again. Between 2010 and 2014, the oil price averaged about US$99 to US$100 a barrel.”
But this time, the question of when oil will go to beyond US$40 is a subject Dr. Henry would rather not touch.
“I would be a very wealthy man if I could forecast where the price will settle going into late 2016, 2017 and 2018,” he chuckles. In the meantime, the lower cash flow they are receiving is obviously doing damage to the producers' bottom line and negatively affecting tax revenue inflows to the government.
In other parts of the world, offshore exploration projects, particularly in deepwater, are being cancelled in large numbers but fortunately for Trinidad and Tobago, Anglo/Australian multi-national, BHP Billiton, is still pressing ahead, as far as EnergyNow is aware, with its nine-block deepwater exploration effort; its first well, Le Clerc, is expected to be spud in May.
BHP Billiton Trinidad and Tobago president and country manager, Vincent Anthony Pereira, explains that his company prefers to think long-term in exploration and oil price matters.
“We have to hold a long-term view,” he points out, “while, at the same time, ensuring that we can manage through the short term.”
As far as the deepwater in particular is concerned, “this is something that will play out over years. If, and when, BHP Billiton is successful in finding hydrocarbons in the deepwater, production from that won’t occur until the early 2020s.”
Mr. Pereira’s clear implication is that by then, the oil price will be much higher than it is today, thus returning gains from the deepwater that may not seem apparent at today’s pricing levels.