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Energy Chamber
The theme of the T&T Energy Conference in 2024 was Accelerating Action. The Energy Chamber picked this theme because there was a strong feeling that the actions needed to create a sustainable future for the sector were known and we were moving in the right direction of travel, but things were simply not happening fast enough.
The European Union has begun the process of introducing new taxes on imports of some petrochemicals and other products (such as cement) based on the carbon emissions associated with the particular product. Other major economies will follow suit, with the United Kingdom already beginning implementation of these taxes, called Carbon Border Adjustment Measures (or CBAMs). As the name suggests, the measures are aimed to address carbon leakage by adjusting the prices of commodities to ensue that producers do not avoid carbon taxes levied against domestic production in the importing market by offshoring production to jurisdictions without carbon pricing mechanisms.
In the year since the last T&T Energy Conference there have been many positive developments in the local energy sector: we have seen the Atlantic restructuring completed, a license signed for the Dragon gas field, deepwater exploration blocks PSCs signed, onshore licenses awarded, a shallow water bid round launched (with more attractive terms), the Manatee project moving towards construction, continued activity to progress the Calypso project, new downstream supply contracts signed and the first major solar project in the country under construction. We have had first gas from Cascadura, and the Mento and Cypre projects are under execution.
At the T&T Energy Conference in January 2023 one of the key sentiments coming out of all of the discussions was that while we were on the right pathways to secure the future of the sector we simply needed to be moving faster. This was a sentiment we heard not just from industry leaders but also from senior government leaders, especially the Minister of Energy, Stuart Young.
A detailed, European Union-funded, expert report was delivered to the Government of Trinidad and Tobago in May 2023, that outlined a pathway to enable wind-energy generation in the country. The report outlined in detail the steps that need to be taken to deliver 2 gigawatts (GW) of installed wind capacity by 2035, using both onshore and offshore wind locations. The report provides an excellent strategic plan to move forward with the development of wind energy, including all the policy, regulatory, and legislative changes that are required to move this initiative forward.
The recent news of of a renewed dialogue between government and opposition in Venezuela and the changing diplomatic stance of the United States towards sanctions opens up a renewed possibility for Trinidad & Tobago to import natural gas via pipeline from Venezuela. With a significant potential to process natural gas exported by pipeline into either LNG or petrochemicals for international markets, Trinidad & Tobago represents the best opportunity for Venezuela to monetise its massive offshore gas reserves and stop harmful and wasteful flaring of associated gas in its oilfields. This will ensure that Venezuela can both generate the income needed to overcome the country’s continuing humanitarian crisis as well as provide the world with additional LNG, fertilisers and lower carbon fuels.
In last year’s national budget statement, the Minister of Finance announced that the Government would undertake a comprehensive review of upstream fiscal terms. Speaking shortly after the budget announcement at the Energy Chamber’s annual policy review forum, the Minister of Energy announced that the review would be completed by the end of the first quarter of 2022. As of July 2022, this review has not been completed.
Local content is often an emotive issue. It can often get caught-up with ideas about identity and complicated by political positioning. The noise around local content can drown out any proper policy analysis.
Trinidad & Tobago urgently needs to bring significant volumes of renewable energy into its electricity grid to help secure the future of its natural gas-based industries. This might sound counter intuitive, but it reflects the reality of the nation’s gas sector, which dominates its economy, and the medium-term outlook for gas production in the country.
If the Caribbean Region is to address the challenge of climate change, we need to both “go faster and go bolder”, to borrow from a recent statement from Ben van Beurden, the Chief Executive of Shell. We simply do not have time to waste, and it is imperative that we act now and act quickly.
The Energy Chamber of Trinidad & Tobago welcomes the Minister of Finance’s commitment that the government will conduct a comprehensive review of our oil and gas taxation regime to ensure that we remain an internationally competitive hydrocarbon province. The Energy Chamber would welcome the opportunity to work closely with the government in this review process, that is vital to ensure the continued investment in upstream oil and gas production.
Integration of the Caribbean energy services markets could help to make businesses more competitive and reduce costs for project development and hence, eventual prices to consumers. This should be a focus for CARICOM in the implementation of the Single Market and Economy.
Over the past few months, there has been a lot of commentary in Trinidad and Tobago questioning whether or not the country’s energy industry has a future. The spectacular rise of the oil industry in Guyana and the exploration success in Suriname has shifted the centre of gravity for Caribbean hydrocarbons south-east, while the climate change and the urgent need to decarbonise the global economy has people worried if hydrocarbons have much of a future at all.
The Energy Chamber has noted the media statements on the inability of the National Gas Company and MHTL/Proman to successfully conclude negotiations on a new gas supply contract to come into effect on the expiry of the temporary extensions agreed through to the 31 March 2021.
It is time to bring an end to the subsidy provided by the natural gas industry to Trinidad & Tobago’s electricity sector. While it is the National Gas Company who must provide the gas to T&TEC at rates way below the market price, the cost of this subsidy is indirectly borne by all of the players in the gas value chain. And while households, businesses and Government departments have all enjoyed the benefits of this subsidy, cheap electricity has meant that people are very wasteful in using electricity and the economy is very energy inefficient.
The Energy Chamber fully supports the privatization of the Pointe-a-Pierre refinery to put the asset to productive use. Significant capital investment is needed to bring the assets of the refinery back into productive and profitable use. This investment will need to be very carefully deployed and managed and there is significant risk involved. For this reason, the Energy Chamber is clear that no further Trinidad & Tobago tax-payers funds should go into this investment and that the capital must come from the private-sector. Given the size of the needed investment, the capital will likely be from an international investor, though local private-sector involvement would also be welcome. Click to read more…
“Oil is still good business’ has been one of Minister of Energy and Energy Industries Franklin Khan’s signature catch phrases over the past few years. The newly reappointed Minister of Energy and Energy Industries has consistently pointed out that oil remains an important and very valuable commodity for Trinidad and Tobago, notwithstanding the fact that our hydrocarbon sector is dominated by natural gas.
