Soca Warriors Online Discussion Forum
General => General Discussion => Topic started by: Flex on October 12, 2014, 04:42:48 AM
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T&T RUNNING OUT OF NATURAL GAS.
By Curtis Williams (Guardian).
T&T is running out of natural gas and its shortage is pointing to a bigger problem. At the same time, the downstream sector is facing real challenges from Shale gas in the United States, with companies already preparing to move some of their operations there.
Those were some of the arguments used by Proman Holdings, through its consortium Consolidated Energy Ltd (CEL), in seeking to have the Court of Arbitration rule that it should pay less that US $900 million for Clico’s 56.53 per cent of Methanol Holdings Company Ltd.
In submissions which have never before been made public, since the proceedings were held in secrecy, and which the Sunday Guardian has copies of, it was revealed that the natural gas shortages, which have cost the country hundreds of millions of dollars, may have also hurt the Government’s valuation of MHTL.
CEL told the court that T&T’s gas shortages were likely to continue for years and it had already cost the company significant revenue while hurting the sales of the National Gas Company.
In a scathing review of the country’s natural gas challenges and allegations that the NGC has consistently underestimated the problem, CEL argued that both the Clico directors on the MHTL and the NGC made incorrect assumptions of gas supply issues. Proman representative on the MHTL board Joseph Cassidy told the Court of Arbitration, “Past and present experience shows that management, like the NGC, has underestimated the probable impact of curtailments in 2014 and beyond.
Yet Clico has claimed that management’s assumptions concerning curtailments are too liberal. In particular, Clico-appointed directors, including Mr (Rampersad) Motilal, have continuously questioned management’s curtailment allowances of five per cent from 2016 to 2018 and five per cent thereafter.”
Cassidy pointed to last September as an example of the strain that gas shortages had put on MHTL, saying that while the NGC had estimated curtailments of 12 per cent under the DCQ (Daily Contract Quantity) levels for September 2013, the average curtailment rate was actually 25.96 per cent and on September 3, a 34 per cent curtailment rate made it impossible to maintain concurrent operations of all five methanol plants, so it was necessary to take plants offline.
He said, “As a result, management decided to perform maintenance work on M2, followed by M5000. Curtailments have also impeded management’s ability to improve and achieve greater reliability in the melamine operations. Also, to appreciate the significance of current conditions, one must understand that prior to 2011, MHTL operated at name plate levels—the maximum quantities it could obtain, not DCQ levels. MHTL essentially took as much gas as it needed.”
Cassidy added, “Just by limiting MHTL to DCQ levels, MHTL’s production is significantly lower regardless of gas curtailments. The gas curtailments, which result in MHTL receiving even less than DCQ levels, just make the situation that much worse. And as I have repeatedly stated to the board, this would not be an issue today if the NGC had contracted for sufficient gas, but it will continue to be the case until they do so.”
The Court of Arbitration heard despite the NGC’s previous assurances that curtailments would not be an issue going into 2014, the gas supply in early January was five to ten per cent below DCQ levels, and the NGC issued a force majeure notice on January 5, 2014.
Cassidy said, “The average supply reduction in January was even greater—8.7 per cent below DCQ levels. Yet, based on a presentation, the NGC gave to the Point Lisas Energy Association (“PLEA”) in December 2013, management assumed that supply rates in 2014 would average just two per cent below DCQ levels.”
Clico's argument
Clico tried to counter this argument and sent in an expert witness in the former director of Resource Management at the Ministry of Energy Helena Innis King. She argued that there was no issue of T&T running out of gas nor a structural problem, but rather it was due to significant maintenance work that was being done by the country’s two largest gas producers, bpTT and BG.
Innis King opined, “There are no grounds for concern that the gas is running out.” Innis King’s suggestion that it was due to maintenance issues is in keeping with what Energy Minister Kevin Ramnarine consistently told the country prior to 2014, but which bpTT itself is now denying is the root cause of the problem.
The company argued that the 2008 global economic crisis, unfavourable fiscal environment and the expectation by the National Gas Company and the National Energy Company that an oversupply of gas was likely due to the cancellation of downstream projects created uncertainty which invariably affected investment decisions.
BPTT said its heightened maintenance activity that took place following the Macondo disaster was necessary to ensure continued safe and reliable operations and while it did contributed to the current gas curtailments, it is not the primary factor. The issue of gas shortages at Point Lisas has also set off a firestorm with Ramnarine accusing the Point Lisas Energy Association of politicising the issue. Cassidy also told the International Court of Arbitration that last year alone, MHTL lost 410,000 metric tonnes of production.
“These are not only metric tonnes MHTL cannot sell, but also about US $70 million worth of gas it does not pay to the NGC. Thus, everyone in the value chain suffers as a result.” He also said MHTL was not as profitable as is suspected because of the escalation agreement with the NGC where the higher the methanol price, the higher the price of gas the NGC sells to MHTL.
Cassidy showed that in 2005 to 2008 methanol prices were projected by MHTL’s management to average US $186, which was consistent with recent history. But the average actual price for that period turned out to be US $383 per tonne. “The difference between projected and actual profits after tax for these periods is explained by (1) the structure of the gas contracts and (2) the economic downturn. For the period of 2004 to 2008, forecast profits were US $171 million while actual profits were US$208 million—a difference of only 22 per cent, despite a 106 per cent increase in prices. This is due to the structure of MHTL’s gas contracts with the NGC.” Cassidy said.
Cassidy acknowledged that the present low gas prices in the US was likely to increase, but he said it would do so minimally and would continue to be a threat to T&T downstream sector.
Innis King rubbished that argument saying, “Notwithstanding developments in Shale gas in the US, Trinidad’s gas industry has a strong future: given the difficulties of developing Shale gas resources, the US Shale gas industry is unlikely to have a real competitive advantage over Trinidad, whose gas reserves are, by contrast, far easier to develop.”
CEL has been the minority shareholder in MHTL and the German group has been Clico’s partner including marketing and selling its methanol since its inception. The NGC gave to the Point Lisas Energy Association (“PLEA”) in December 2013, management assumed that supply rates in 2014 would average just two per cent below DCQ levels.”
Clico's argument
Clico tried to counter this argument and sent in an expert witness in the former director of Resource Management at the Ministry of Energy Helena Innis King. She argued that there was no issue of T&T running out of gas nor a structural problem, but rather it was due to significant maintenance work that was being done by the country’s two largest gas producers, bpTT and BG.
Innis King opined, “There are no grounds for concern that the gas is running out.” Innis King’s suggestion that it was due to maintenance issues is in keeping with what Energy Minister Kevin Ramnarine consistently told the country prior to 2014, but which bpTT itself is now denying is the root cause of the problem.
The company argued that the 2008 global economic crisis, unfavourable fiscal environment and the expectation by the National Gas Company and the National Energy Company that an oversupply of gas was likely due to the cancellation of downstream projects created uncertainty which invariably affected investment decisions.
BPTT said its heightened maintenance activity that took place following the Macondo disaster was necessary to ensure continued safe and reliable operations and while it did contributed to the current gas curtailments, it is not the primary factor. The issue of gas shortages at Point Lisas has also set off a firestorm with Ramnarine accusing the Point Lisas Energy Association of politicising the issue.
Cassidy also told the International Court of Arbitration that last year alone, MHTL lost 410,000 metric tonnes of production. “These are not only metric tonnes MHTL cannot sell, but also about US $70 million worth of gas it does not pay to the NGC. Thus, everyone in the value chain suffers as a result.”
He also said MHTL was not as profitable as is suspected because of the escalation agreement with the NGC where the higher the methanol price, the higher the price of gas the NGC sells to MHTL. Cassidy showed that in 2005 to 2008 methanol prices were projected by MHTL’s management to average US $186, which was consistent with recent history. But the average actual price for that period turned out to be US $383 per tone.
“
The difference between projected and actual profits after tax for these periods is explained by (1) the structure of the gas contracts and (2) the economic downturn. For the period of 2004 to 2008, forecast profits were US $171 million while actual profits were US$208 million—a difference of only 22 per cent, despite a 106 per cent increase in prices. This is due to the structure of MHTL’s gas contracts with the NGC.” Cassidy said.
Cassidy acknowledged that the present low gas prices in the US was likely to increase, but he said it would do so minimally and would continue to be a threat to T&T downstream sector.
Innis King rubbished that argument saying, “Notwithstanding developments in Shale gas in the US, Trinidad’s gas industry has a strong future: given the difficulties of developing Shale gas resources, the US Shale gas industry is unlikely to have a real competitive advantage over Trinidad, whose gas reserves are, by contrast, far easier to develop.”
CEL has been the minority shareholder in MHTL and the German group has been Clico’s partner including marketing and selling its methanol since its inception.
Energy Minister: Reserve hike coming
Energy Minister Kevin Ramnarine yesterday said he could not comment on what Proman or their legal representatives have said at the arbitration hearing. In an e-mail exchange with the Sunday Guardian, Ramnarine said the valuation of any asset is based on a range of assumptions of probabilistic variables.
“On the issue of curtailments, this matter has been well ventilated in the public domain. I have spoken on it several times, and I will do so again. The facts are that firstly there was a period of underinvestment by major upstream companies in the period 2008 to 2010 that has led us to where we are today,” Ramnarine said.
He cited the Central Bank study for that period to support his claim. “It is also reflected in public statements by major multi-national companies and is the principal reason that we have experienced the disruptions in supply,” he said. Ramnarine also said that there was a period of “major asset maintenance conducted by BP and BG that has caused disruptions in supply.”
“This is a consequence of companies placing a higher emphasis on safety in a post Macondo world,” he said. Ramnarine said in response to those consequences, the Government has re-engineered the fiscal regime which managed upstream objectives. “This has resulted in record levels of investment in the period 2011 to 2014. As I have indicated previously, the projected investments by energy companies, based on their submissions to the MEEA, is expected to be US$3bn per year over the next three years.”
He said added to that, the recent approval by BP of the Juniper project and the approval by BG of the Starfish development in 2012 (due to be online in November 2014) are “positive signs that the country’s two major natural gas suppliers are responding to improve natural gas supply.” “Consequently, we expect to see improvements in reserves and output in the near to medium term.
Ramnarine said in the last three years the Ministry of Energy has co-ordinated the supply-demand balance to mitigate the impact of curtailments on Point Lisas and Atlantic. “In this effort we have worked and will continue to work with all stakeholders,” he said.
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nope!!!!!!
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no plan B from what i see..not seeing where the money spinner will come from...cant stop the drilling though
option can very well be working out something with venezuela for the production and processing of their nat gas reserves seeing that they dont have the infrastructure (physical, commercial) to do so...
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We used to have one under the previous government but Kamla and her Cabal knows best.
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We used to have one under the previous government but Kamla and her Cabal knows best.
I am no PP but this is dead wrong, Manning's plan called for monetizing the remaining gas resources through down stream energy and raw material production investments, most of which have fallen through due to the smelter and OPV fiascoes, investor confidence and such......but to say that there was a concrete plan for life after gas would be stretching the truth
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We used to have one under the previous government but Kamla and her Cabal knows best.
I am no PP but this is dead wrong, Manning's plan called for monetizing the remaining gas resources through down stream energy and raw material production investments, most of which have fallen through due to the smelter and OPV fiascoes, investor confidence and such......but to say that there was a concrete plan for life after gas would be stretching the truth
I appreciate your view.
Btw have you read this document?: https://sta.uwi.edu/conferences/10/cote/documents/day1/bforum/Kelvin%20Sergeant%20-%20COTE%202010.pdf
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I appreciate your view.
Btw have you read this document?: https://sta.uwi.edu/conferences/10/cote/documents/day1/bforum/Kelvin%20Sergeant%20-%20COTE%202010.pdf
those are bullet points.....we are speaking of a complete policy document on the way forward, projection for growth and sustainability, contingencies in the case of possible failure.......in other words what posted there is summary when what is needed is policy based on said points, there wasn't much ah dat on manning tenure either.....difference they had an idea of direction they wanted to go, but d map was incomplete at best........but I suppose an incomplete map is better than no map :-\
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I appreciate your view.
Btw have you read this document?: https://sta.uwi.edu/conferences/10/cote/documents/day1/bforum/Kelvin%20Sergeant%20-%20COTE%202010.pdf
those are bullet points.....we are speaking of a complete policy document on the way forward, projection for growth and sustainability, contingencies in the case of possible failure.......in other words what posted there is summary when what is needed is policy based on said points, there wasn't much ah dat on manning tenure either.....difference they had an idea of direction they wanted to go, but d map was incomplete at best........but I suppose an incomplete map is better than no map :-\
There is a comprehensive document produced by the PNM some of which I've read but unfortunately the link to it is now broken: http://www.caribbeanelections.com/eDocs/manifestos/tt/PNM_manifesto_%202010.pdf
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I think one of PNM plans was the smelter that this government along with Wayne did not want ,only to realize now how useful it would have work for us .
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Petrotrin boss fears $ crisis, fuel shortage.
By Yvonne Baboolal (Guardian).
Some $.5 billion in crude oil and the survival of T&T’s economy are behind Petrotrin’s determination to berth a tanker coming from Ebola-stricken west Africa, even though it is now in a standoff with employees who are refusing to do it.
Petrotrin president Khalid Hassanali confirmed the situation yesterday, telling the T&T Guardian: “I know there are some people, including Petrotrin employees, who are refusing to work. “But we will have to find a way to berth the vessel. If it doesn’t berth, the refinery will have to shut down. “Petrotrin depends on imported crude oil to operate. If Petrotrin doesn’t operate there will be no fuel for the country.”
Petrotrin workers have refused to berth the tanker, Overseas Yellowstone, which arrived at Pointe-a-Pierre last Friday with $.5 billion worth of crude oil from Gabon, west Africa. Gabon is not on the list of countries whose citizens have been banned from entering T&T but it borders Guinea, Cameroon and Congo. Health Minister Dr Fuad Khan announced last week that anyone coming from Sierra Leone, Guinea, the Democratic Republic of the Congo, Liberia and Nigeria would be denied entry to the country.
The highly contagious Ebola virus continues its spread in west Africa and the rising death toll is now over 4,500. Cases have also been reported in the US and Spain. Hassanali said yesterday that the Health Ministry gave a certificate of clearance to Overseas Yellowstone last Friday but workers were still refusing to berth it.
Workers have to go out in tug boats and pull the vessel into the Pointe-a-Pierre port. He said the tanker took the crude oil cargo ten miles off the coast of Gabon and the crew members did not go onshore. Further, Hassanali noted, the crew had been aboard the vessel for 62 days. The Ebola virus has a 21-day incubation period.
Contacted yesterday, Khan confirmed that medical personnel from his ministry had gone aboard the Yellowstone and cleared it of Ebola last week. “It’s Ebola free,” Khan told the T&T Guardian yesterday. “The vessel was also given a clean bill of health based on its history, where it came from. “It came from west Africa but never reached shore.
Its crew members are people from different parts of the world,” he noted. Khan said Petrotrin workers were refusing to go on board the ship to offload it but they have no reason to act in that manner. “The ministry and its doctors take their jobs seriously. If they are using Ebola for their union problems, it’s the country that will suffer,” he said.
Crew already taken off ship
The presence of the tanker has also thrown workers at the Point Lisas Industrial Estate into a state of panic. A source claimed after the Health Ministry cleared the tanker last Friday, six crew members were taken off and transported to Piarco Airport. “We don’t know if these crew members were changing shift, or what,” the source said.
The source claimed that after Petrotrin workers refused to berth the vessel, Petrotrin got Point Lisas tug boat workers to bring six crew members ashore. “The Government is banning people coming from West Africa into the island on airlines but they are being allowed to come in at the sea ports,” the source added. A Plipdeco official yesterday denied the tanker was berthed at this port, saying the vessel is out at sea on its way to Pointe-a-Pierre and Point Lisas does not service oil tankers.
Another United Kingdom-registered cargo vessel, Ocean Discovery, was initially prevented last week from docking at the Chaguaramas port. The vessel stopped at two ports in Africa before arriving in Trinidad but after Health Ministry officials checked the crew they were allowed to dock.
Roget: No protocol in Place
Oilfields Workers’ Trade Union (OWTU) president general Ancel Roget said yesterday Petrotrin workers were within their rights under the Occupational Safety and Health Act to refuse to berth the Overseas Yellowstone, since the company had no health protocol in place to protect the workers and the country from Ebola. “Petrotrin has not secured this port where a lot of international ships berth. Also, we don’t know which personnel crew members had contact with along their journey. Petrotrin is putting workers and the country at risk,” he said.
Roget also confirmed that crew members from Overseas Yellowstone were taken off the ship and expressed concern about that. “We don’t know who these people are and where they were taken,” he said. He added that the union got information that Petrotrin was trying to get Plipdeco workers to berth and offload the tanker. He said the union did not trust Petrotrin and was calling on the Health Ministry to intervene in the matter. “We want a committee set up to develop protocols to protect workers,” Roger said.
Also contacted on the matter yesterday, National Security Minister Gary Griffith told the T&T Guardian to pass on all Ebola reports to a recently set up committee being overseen by the National Operations Centre. Griffith said every five minutes someone called him to report some Ebola threat. “Someone even called to report something about a pair of sneakers coming from west Africa.”
President Anthony Carmona has signed an official order declaring the Ebola virus a dangerous threat to public health. The order gives state officials the authority to take required action to stem the disease.
About the Ship: Overseas Yellowstone, registered in the Marshall Islands in the northern Pacific, stopped at several ports on the way to its Pointe-a-Pierre destination, the last being Cartagena, Colombia. An online site showed the tanker anchored yesterday in the Gulf of Paria in T&T and gave its destination as Pointe-a-Pierre
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Set of lazy ignorant workers.
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Oil outlook uncertain for T&T
By Natalie Briggs (Guardian).
Experts advise wait and see, watch gov’t spending
Oil has become the world’s routine. It is there, running in the background of everything and, like an app or a piece of equipment, nobody notices when everything is right, but the results are potentially catastrophic when things go wrong. Last week, the Organisation of Petroleum Exporting Countries (OPEC) made a significant departure from the routine, announcing that it would maintain oil production at 30 million barrels, a move ostensibly against US shale oil producers.
The high level of production has created an oversupply, depressing prices. As of writing this, the price of oil was US$57.81 a barrel (West Texas Intermediate) down from US$115 in June.
Financial services company, Morgan Stanley has predicted that the price could go as low as $43 and OPEC member, Kuwait has said that prices are likely to stay low for the next six to seven months.
In this clash of titans, OPEC lead member, Saudi Arabia, realising the threat posed by the US shale oil producers is, apparently, trying to force them out of production, and in some cases may succeed as several fracking companies are in debt and will not be able to survive sustained low price.
Shale oil costs more per barrel to extract from the ground, while Saudi Arabia can still extract oil for comparatively less and make an albeit smaller profit on lower oil prices.
Consumers in countries that are oil importers have been benefitting from lower gasoline prices, but Saudi Arabia's OPEC partners Iran, Nigeria and Venezuela, may all run into serious trouble over the coming months as oil prices are lower than what they need to balance their budgets.
Like the proverbial cockroach in fowl business, T&T as a small exporter, has found itself in the middle of a situation not of its making and outside of its control.
On November 28, Finance Minister, Larry Howai stood before the Lower House presenting three scenarios open to T&T as a price taker. All of them involve adjustments to earnings and the deficit. Howai said:
“...the reduction in total revenue will be $1,879 million on an annualised basis. This will be offset by savings on the fuel subsidy of $507 million. The overall fiscal deficit will increase by $1,372 million or 0.7 per cent of GDP.”
The finance minister also said that government was continuing to monitor the situation and that adjustments may mean that each ministry may have to cut $45 million from their expenses.
He also recognised that there was “no room for complacency” as the ministry continues “to monitor what is happening in the global environment and to refine our remedial fiscal measures to ensure that the country can respond appropriately to changes in the market for oil and gas”.
Responses to the minister's assessment of the situation have ranged from “waffling” (Terrence Deyalsingh to reporters after the minister's presentation) to charges that he is deliberately trying to mislead the public into a false sense of security.
The editorial of the Sunday Guardian of November 30 upbraided Howai for only outlining what was the mid-range scenario and not worst case scenario for a protracted price war between OPEC and the US, namely, “a sustained period of further price collapses to US$45 a barrel and the natural gas netback to US$1.75 a unit.”
An informal poll on the streets of Port of Spain, shows that many people are aware of the situation with oil prices, even if they are not clear on the circumstances surrounding the impact of a decline on the country’s revenue. Most of them are also cognizant that it affects them, even if they are not sure how it will, particularly if there is a further decline in the oil price over a prolonged period.
Time a factor
Economist, Dr. Ronald Ramkissoon said even with the fall in government revenues, time was still a major factor in determining what the potential fallout could be for the public.
“It is important to distinguish between a short-term fall in the price of oil and let's say a long-term or a sustained change. If the fall in the price of oil is for a month, two months or less, as you would imagine, that is less of an issue, compared to if there is a sustained decline for six months, 12 months.”
If the decline in oil prices is for the medium to long term, Ramkissoon said he sees the resulting reduction in government spending, which he said made up between 30 to 35 per cent of GDP, having several spin-off effects.
“If government then spends less on goods and services and employment or wage increases for example, then there is less flow of income and business, to those who depend on the government for business. If government is buying less construction materials, then the private sector may have to consider reducing the number of its employees.”
He also foresaw problems with foreign exchange as he said lower energy prices would mean less revenues coming from energy sector companies, who make the largest contributions of foreign exchange to the country.
“If the inflow of foreign exchange slows and the demand remains strong at the existing exchange rate or price, then you either have to allow your reserves to be depleted or you are going to have to adjust the price of foreign exchange.”
Ramkissoon emphasised that both scenarios were dependent on how long oil prices remained depressed. He also said that there were steps government could take, including borrowing to sustain spending to prevent a slowdown in the economy, draw down on foreign reserves, as well as allowing an exchange depreciation in the foreign exchange market to curb demand for US currency.
“We are not there yet.” cautioned Dr. Ramkissoon.
Economist and UWI lecturer, Dr. Roger Hosein said he also did not expect much to change within the short term.
“The decline in oil prices would not lead to dramatic changes as it is an election year and the government would strive to preserve the transfers and subsidy spending which is one of the main conduits through which the economic rents are passed onto to the man in the street.”
In this election atmosphere, Hosein said, that items like GATE and CDAP would be left untouched, the fuel subsidy marginally affected and current unemployment rates maintained by “fiscal expenses”.
Hosein said the real challenge with low oil Oil outlook uncertain for T&T
Experts advise wait and see, watch gov’t spending oil stabilises at US$75 and that anyone assuming government after the 2015 elections would have to seriously commit to “downsizing the size of the state” in the economy. The UWI lecturer again made a call for diversification of the economy as this was the only way to protect the “man in the street” from the “ vagaries of the petroleum market”.
Watch government borrowing
Acknowledging that the man in the street could face among other things, a cutback in his ability to spend, save and invest, that businesses could see reductions in production, eventually leading to job losses and that the foreign exchange situation could worsen if oil prices remain low, economist and Opposition senator, Dr. Lester Henry characterised all of these as pointing to a further deterioration of T&T's investment climate.
“People would become less optimistic about future prospects. The investment climate hasn't been good anyway.”
He was more concerned though, that the government would borrow, a solution outlined earlier by Dr. Ramkissoon, to finance the additional deficit created by falling oil prices, even though the finance minister has said that this would not be done (Trinidad Express November 29).
In Henry's view the government would not have a choice, since it had no buffers in terms of savings, after four years of running budget deficits. He said that all that remained were the country's foreign reserves. Henry said the public should be worried about the potential cost that could be passed on to the country from this borrowing.
“What we need to do is to pose the question to the finance minister and ask him: What is the quantum of borrowing that has been taking place. Because they can borrow very quietly without the public knowing and it shows up six months later. We need to get some kind of transparency to the extent of government borrowing during this period in the run up to an election.”
He contrasted this with the previous administration's position of being able to draw down on deposits at the Central Bank.
“If you go back to 2002 to 2007, there was surplus of revenue that had been accumulated at the Central Bank, so when the crisis hit in 2009, it mainly affected us in 2009, the then government drew down on those balances at the Central Bank, to help cover the shortfall in revenue. I don't think any such thing exists right now.”
Bad news for energy investors
Brent Salvary of KSBM Asset Management Ltd said: “Equity investors in the US energy sector have felt the pain with the exchange traded fund, (ETF), XLE, that tracks publicly traded companies in the Energy Select Sector Index, down 12.5 per cent for the year thus far and down 24 per cent from its June 23rd peak.
While recognising that Trinidad and Tobago's situation was not as bad as Venezuela which he said is now “facing mounting pressures mounting pressure to maintain spending on subsidised programmes that are more populist in nature than they are economically viable...The savings aspect of our economy as transfers to the Heritage and Stabilization Fund would most likely be the same as last year: zero. On the flip side investments in exploration by the major oil and gas companies may be put on hold or considerably scaled back.
“We have seen companies like Conoco reducing their capital spend by 20 per cent worldwide while Schlumberger is reducing its global workforce as it takes a related US$200 million charge due to the dramatic fall in oil prices. This would have a similar effect on both oil producers and service companies in the energy sector and we can look forward to lower investments in the local economy at least for the short-term.”
This echoes warnings to energy sector stakeholders during an Energy Chamber discussion on the implications of falling oil prices last Tuesday. In a Guardian report on the meeting, Roger Packer of Tucker Energy Services told those in attendence to learn from the mistakes of history as all indicators pointed to T&T heading for a “serious economic downturn”.
But at this point, all views remain speculative. At this point, no one can tell how low prices will descend, what steps the government will take and how these will eventually end up affecting the stakeholders, including John Public.
Ultimately, it is time that will tell how these low oil prices will affect T&T. And, it is only through time that the commentators for this article will be proven right, or wrong.
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PM on falling oil prices: Govt may have to revise budget, withdraw from HSF
Reshma Ragoonath (Guardian)
Prime Minister Kamla Persad-Bissessar says if oil prices continue to slide on the global market the Government may have to revise, for a second time, the national budget. And if the situation does not improve soon, withdrawals from the national Heritage Stabilization Fund (HSF) might be necessary, she added.
Yesterday, the price for Crude WTI (West Texas Intermediate), on which the budget is pegged, fell bellow US$60, according to Bloomberg.com. At present, crude oil is selling at US$57.81, down from a high of US$100 earlier this year. Persad-Bissessar, speaking with reporters at her annual toy distribution drive at the Ato Boldon Stadium, Couva, said Finance Minister Larry Howai sent out circulars last week to ministries ordering all non-essential services be cut.
However, she said, essential services like health and the social services programmes would not be cut since those would be required to support the most vulnerable. Persad-Bissessar said the trimming of excess in ministries would take place in the coming weeks and into the new year. The Prime Minister hastened to add, “Should the oil prices continue to fall it will be required to have a further look at the budgeted figures and do some revisions as may be necessary.”
She assured that the HSF, which was set-up for “rainy days,” would be available to the Government if needed. “The fund is configured [to be triggered] should the oil prices fall below a certain amount. Minister Howai has told me that there is no (need) to trigger off withdrawals from the HSF,” she said.
Persad-Bissessar assured that the fund was “a padding and a support, budgetary support, fiscal support.” The HSF currently stands at US$5,563.3 million.
She said there was no need to cut her annual Christmas toy drive since those functions were not paid for by the Government, but through donations. “So these will continue, all the toy drives will continue,” she said. At the toy drive, which was attended by thousands of eager children from central Trinidad, Persad-Bissessar got a special surprise when 13-year-old heart surgery patient Anuradha Balgobin presented her with a thank-you letter.
The form two student at Sarawati Girls Hindu College hugged the Prime Minister and thanked her for the Life Fund that enabled her to have life-saving open heart surgery this year. “I feel very happy. I knew she would help me. I came to give her a letter. I came this specially to give her the letter to thank her for the Life Fund and getting me the surgery,” the little girl from Mc Bean, Couva said.
Balgobin’s sister Shweta said she brought her sister because it was important for her to say thank you. She said her family would never have been able to raise the US$.5 million needed for the surgery. Persad-Bissessar said she was touched by the girl’s gesture and promised that the Children’s Life Fund would not be cut.
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For the past previous 3 or 4 budgets.....we running at a deficit of BILLIONS.
The HSF is 5.5 billion USD....so lets say 30 billion.
That is currently half of this year's budget.
Does this allay any of your fears?
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‘8 energy firms lost $10b in last 4 years’
http://www.trinidadexpress.com/news/8-energy-firms-lost-10b-in-last-4-years-285731461.html (http://www.trinidadexpress.com/news/8-energy-firms-lost-10b-in-last-4-years-285731461.html)
By By Asha Javeed
From 2010 to 2014, eight energy companies based in the Point Lisas Industrial Estate suffered combined losses of US$1,639,694,699.20 (or roughly TT$10 billion) because of irregular natural gas supply.
In turn, the National Gas Company (NGC) lost US$653.3 million (about $4.1 billion) in revenues, the Government lost US$217.4 million (about TT$1.3 billion) in corporation tax and US$1.4 million (TT$8.82 million) for the Green Fund.
On August 25, the Point Lisas Energy Association (PLEA) of CEOs which comprises Ian Welch, managing director of PCS Nitrogen and chairman of PLEA, Jerome Dookie— the chief executive of Caribbean Nitrogen Company, Dennis Patrick—the chief executive of Methanol Holdings Ltd, Roberto Mantellini- president of Point Lisas Nitrogen Ltd, Robert Bellisle- managing director and chief executive of Arcelor Mittal Point Lisas Ltd, Charles Percy-the chief executive and managing director of Methanex Trinidad Ltd, Jay Henderson— managing director of Nu-Iron Trinidad and Tobago and Richard de La Bastide— president of Yara Ltd, penned a three-page letter about the gas supply curtailments to Energy Minister Kevin Ramnarine.
The chief executives said despite their plea in 2011 that the matter be addressed, they were “severely affected by frequent curtailment in the supply of natural gas to our various plants”.
PLEA noted that they had tried to collaborate with other stakeholders in an effort to come up with solutions to the problem.
“PLEA even facilitated and paid for consultants to work with the Group you agreed to form to look at the shortfall issue. Sadly, to date, little progress has been made. Indeed, despite these efforts, and notwithstanding numerous assurances to the contrary, the gas curtailments continue unabated and have been worse than forecast and appear to have no end in sight.
“As a result of this situation, our respective companies, and by extension, the Government and the people of Trinidad and Tobago, continue to lose significant revenue daily,” the letter stated.
“This does not include the other indirect losses and expenses such as the damage caused to our equipment by constantly having to cycle the plants to respond to broad fluctuations in supply, and the impact that this has had on the equipment’s ability to continue to produce safely at design capacity. Nor does it capture the full trickle-down effect on and the opportunity cost to the nation. Additional indirect effects include the increased risk of accidents and environmental mishaps and the development of a reputation as an unreliable supplier of petrochemical products.
“Honourable Minister, the image that is being painted of Trinidad and Tobago is a place where the gas is either running out or the supply has been overcommitted. The longer this image is allowed to persist, the less attractive the country will be as a venue for foreign direct investment. Numerous investors have passed up the opportunity of investing in Trinidad and chosen to invest in other countries where the supply of gas is more readily available and consistent. We fear that unless the situation is soon brought under control and the confidence in the availability of gas to be supplied to our plants is restored, we may soon witness the permanent closure and migration of plants from Trinidad and the collapse of the Point Lisas model,” the letter observed.
They said the situation required “immediate and definitive handling” and called for critical measures, which they identified as:
1. Concrete action items within a timeline to restore a reliable, stable contract gas supply to PLEA in the shortest time
2. Appropriate planning and communication of items in 1 above
3. Short, medium and long-term outlook of gas supply so the proper planning can be affected. (It is understood that this can only be made possible with accurate forecasts of well-depletion rates superimposed by new production capacity)
4. An understanding of the new gas-consuming projects that have been announced and progressing. What is the plan for the supply of gas to these projects given that the gas shortages being experienced by existing consumers have not been addressed?
5. Reinstate the Reserve Gas/Gas Behind-Pipe to mitigate unplanned upstream outages that will significantly reduce curtailments in Point Lisas.”
PLEA said while they appreciated Ramnarine’s efforts, “given the severity of the problem and the very dire consequences with which we-and the country as a whole-are faced, we consider it our duty to escalate the matter and strongly recommend that immediate action be taken to reverse this worsening and prolonged situation”.
“Please be assured of the ongoing cooperation of our companies towards sustainable solutions and improvement in the economy of Trinidad and Tobago,” the letter ended with the signatures of all eight chief executives.
That letter had followed a letter penned by PLEA on October 3, 2011 which had also called on Ramnarine to address the gas situation because of mounting losses by the plants.
That letter observed: “In implementing these curtailments, the NGC also continues to claim the protection of force majeure clauses in our contracts. There is dissimilarity between the contracts in this regard. While the clauses provide the NGC with a shield in genuine cases of events beyond its control (subject to the limitations set out in the contracts), the expectations are that the NGC must take every reasonable step to limit the force majeure event and its consequences. Furthermore, contractually, the NGC is obligated to meet with us to discuss the consequences of the force majeure event, and the intended remedial actions to be implemented. This simply has not occurred. Indeed, the NGC routinely gets notification of shut-downs from its suppliers, and then passes these over to us forcing us to reduce production rates.”
PLEA had made some recommendations then to Ramnarine. They were:
1. Gas users contracting directly with gas producers- If as gas users, we are, as a matter of policy, free to contract directly with producers, the local gas supply market will become a more transparent and competitive one which will be conducive to the settlement of more attractive terms and, address all the issues of supply that impact or have the potential to impact our productivity.
2. Re-ordering of priority for gas supply— the current status of gas supply priority, gives the LNG producers the highest priority of supply after electricity generation in instances of gas curtailment. We believe that it is time to re-order the gas supply priority so that except for electricity generation, all gas users share curtailments pro rata. In current markets, not only are we losing out but government revenue suffer as well, when it should be benefitting from high commodity prices.
3. Provision of a buffer gas supply- the NGC’s gas suppliers have the available capacity and infrastructure to provide the NGC with an adequate quantity of stand-by or buffer gas which can be used in circumstances where the regular supply is curtailed for unforeseen disruptions. This would of course necessitate a negotiation of terms between the NGC and its able suppliers.
4. Trading among gas users- Given the volatility of the petrochemical markets in which we operate, we propose, in the instances of gas supply restrictions, that we be allowed to enter into commercial arrangements among ourselves, which would allow us the flexibility to determine the rate at which we should each operate, while at the same time complying with the NGC’s request to reduce overall production rates. This would ensure that if market conditions are good for one of us, then the opportunity arises for negotiation, which would allow a user to benefit as much as possible in the prevailing market.
5. Re-pressing of old Petrotrin wells- As a means of providing additional gas storage, we suggest that the old Petrotrin wells can be reconditioned and re-pressured to be used for underground storage which we can tap into as needed.
6. More equitable sharing of the burden. Given the premier position enjoyed by the NGC in our gas sector, we believe it is important for us to have a more equitable sharing of the burden, as well as the benefit. Specifically, in each of our gas contracts, we agree to a take or pay clause. We believe that consideration must be given to the development of a deliver or pay formula whereby if the NGC fails to deliver to its customers, it will accept a reasonable portion of the financial fall-out. This type of policy will create an incentive- based culture, which promotes efficiency and accountability from which our country will ultimately benefit.
Contacted yesterday to comment on the letter, Ramnarine maintained the stance he’d taken in an interview with the Sunday Express two weeks ago, that the problem won’t be set right until 2017.
“There is a gap between what could be supplied and what is the total demand. And that gap is probably five to ten per cent,” he had said.
“I am going to be honest with you, that situation will not go away for the next two and a half years. Where we will get relief is in the year 2017 when the Juniper (a bpTT gas field) comes on.”
Last week BG’s Starfish field came into production.
“That’s good news. It helps. It’s a bit late. It had a slippage in schedule because of rough seas but it is going to come on in stages. They will bring in the first well next week, by January they will bring in the second well and by March they will bring on the third well. It will add 220 million standard cubic feet of gas (mmcf/d). That is not going to alleviate the problem, it’s going to help but it won’t make it go away. We are in this supply-demand situation for the next two and a half years,” he had said.
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Just realized the price at the pump reflects a decrease ...
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Just realized the price at the pump reflects a decrease ...
Umm....in T&T?
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Don’t panic
By Clint Chan Tack
December 31 2014
PRIME Minister Kamla Persad-Bissessar yesterday declared nothing will distract her from ensuring that the country is protected against the dangers of falling global oil prices.
Persad-Bissessar urged citizens “don’t panic” adding she will address the nation on the state of the economy and how Government will deal with falling oil prices next Thursday. She made this declaration at the final post-Cabinet news conference for 2014 at the San Fernando Teaching Hospital, Chancery Lane, San Fernando.
Persad-Bissessar also announced the House of Representatives will sit 24 hours later to debate the Finance Bill. When the House completes its debate on that legislation, Persad-Bissessar said she will hold consultations with stakeholders on the state of economy and the way forward.
Persad-Bissessar, who left immediately after making her statement and took no questions from reporters at the briefing, declared in her speech, “I remain doubly focused on the task at hand. Attempts to distract my attention and energies from my responsibility to lead and manage the affairs of this nation will not deter me from my goal of a prosperous and secure nation.”
Reiterating that she remains concerned about falling oil prices as the new year looms, the Prime Minister said, “I will speak to the nation on the state of the economy on January 8, 2015. I will address the issue of falling oil and gas prices and their implications for Trinidad and Tobago and outline the way forward in the year ahead.”
She then announced that on January 9, “the Finance Bill will be debated in the House of Representatives.” Persad-Bissessar explained this bill will “give life and traction” to the measures announced in the $68 billion 2014/2015 Budget which Finance Minister Larry Howai presented in the House in September.
The Prime Minister said she looked forward “with keen interest in the ideas and suggestions which the stakeholders and citizens will share as we deepen our partnership in the interest of a prosperous and secure” country. “In the mean time, feel secure in the fact that your Government is monitoring the situation on a daily basis and working with you in mind every single day,” she said.
Reiterating there will be “no cut to affect the vulnerable and the underprivileged as well as health sector reform and crime fighting” and job creation remains high on Government’s agenda, Persad-Bissessar said in 1995 she was part of the United National Congress (UNC) administration under then Prime Minister Basdeo Panday which had to manage the country’s affairs against a background of low oil prices.
“I am therefore not daunted by the current situation but instead feel very confident of our ability to mitigate the impacts of lower energy prices whilst preserving jobs and promoting economic growth,” she said.
While telling reporters her Christmas season was “enriched by the thousands of happy faces of children” who interacted with her during her toy distribution drive, Persad-Bissessar did not speak about the controversial billboards bearing her face, that were erected during the season.
“Those happy faces gave me inspiration and the strength to continue to do the best that I can for our country and our people and to work harder with the next generation in mind,” she said.
With general elections due next year, Persad-Bissessar said as she reaches the end of her first term as Prime Minister, the country “is in a better place than when I inherited the responsibility for its administration.”
Reiterating that the People’s Partnership (PP) coalition has been “the most scrutinised administration” in the country’s political history, Persad-Bissessar boasted, “We enjoy today political stability, economic growth, financial stability, lower levels of poverty, and increased financial support for pensioners and the vulnerable in our society.”
She said under the PP, 75 labour agreements were settled; the subsidy on gas prices has been maintained; social welfare benefits have increased; universal childhood education has been advanced and the public can look forward to improvements in health care with the opening of the Children’s Hospital in Preysal by mid-2015.
“All of this has been achieved without any new taxes (personal and corporate) in the last five years,” Persad-Bissessar boasted.
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Land of d limbo right.........start stretching dem backs out
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anybody followin d propag.... ah mean address to d nation going on now
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Kamla slashes budget: continues expenditure in social programmes
By Ria Taitt Political Editor
PM HOLDS BACK
A $7.4 billion shortfall is what Prime Minister Kamla Persad-Bissessar last night identified as a result of falling oil prices.
The PM reaffirmed that the support grants, senior citizens’ pension, new minimum wage and baby grants will be untouched. But she provided no precise cost-cutting details or any sacrifices that the population might be called upon to make.
What the Prime Minister did announce was the Government’s 2015 budget would now be pegged on a revised oil price of US$45 a barrel, a 44 per cent reduction from the original benchmark of US$80 a barrel.
The gas price on which the budget is premised was also revised, from US$2.75 per mmbtu to $2.25 per mmbtu, she stated. This points to a major realignment in Government revenue and therefore adjustments in spending.
However, delivering her address to the nation on the economic situation, in light of the new budgetary and fiscal situation, Persad-Bissessar identified savings in Government expenditure from one source—$1.4 billion from a lower fuel subsidy outlay.
“What (areas) are we adjusting? In moving forward there’ll be areas where we must moderate or redirect our spending in order to manage the present situation, always making sure that we keep people and country first—Reviews of our PSIP and current expenditure are ongoing, with the aim of identifying savings of approximately $4.5 billion,” the Prime Minister stated.
“Amongst the areas identified for redirectional spending and indeed in helping us to make up the shortfall of the $7.5 billion...these are the areas that we would consider—infrastructural projects for which funding has not yet been confirmed; lower expenditure on non-critical goods and services; and cuts in allocation in selective ministries by about 15 per cent.
“Any additional shortfall will be met from revenues generated as a result of our continued public offering programme,” she added, referring to the IPO to be held for the public sale of shares in Phoenix Park, Gas.
“This would be the first-ever listing of an energy stock on the local stock market, thereby giving the citizens a direct stake in our very important energy sector.”
The Prime Minister said the international credit rating agencies, Standard and Poors and Moody, have all projected that oil will rebound to between US$62.7 and US$70 a barrel in the near to medium term.
However, she said, Government decided to use the “more conservative assumptions” (of US$45 a barrel) for oil and gas.
“What this means is that the shortfall we may experience in Trinidad and Tobago would be in the region of TT$7.4 billion,” she said.
The price of oil has moved from a high of US$107 per barrel in June 2014 to US$48.65 at the close of business yesterday, representing a 55 per cent decline, Persad-Bissessar pointed out.
But in noting that the country had to adjust its spending, she committed her Government to continue expenditure on “the things that matter most to you (the population)”.
Persad-Bissessar singled out the energy corridor—San Fernando to Mayaro highway, describing it as a “key investment”.
She also cited her Government’s committment to the “provision of protection to the vulnerable and disadvantaged; to ensuring the pace of business activity continues; to preserving jobs and personal incomes; to intensifying its efforts in making our nation safer; to maintaining successful investments in education; to making improvements in the quality of health care so urgently required; and to keeping our committment to critical infrastructure projects, including schools, hospitals and the housing programme”.
The Prime Minister gave the assurance that her Government will navigate safety through these turbulent times.
She trumpeted the achievements of her Government, stating that the economic fundamentals were stronger today than ever and that her Government’s economic policies had halted the decline that it inherited.
Persad-Bissessar recalled that when she was a member of the government in the 1990s the oil price fell to as low as US$9 a barrel, yet the economy was kept strong and investor confidence high and stability was maintained.
“I make this reference to reinforce the reference that Trinidad and Tobago has been here before and was able to overcome the challenges faced. The population can feel confident that once again the nation is fortunate to have a Government in place that has demonstrated responsible fiscal policies, that has balanced investment in social programmes and people-centred development whilst simultaneously turning the fragile economy we inherited in 2010 into the stable and strong one that it is today,” she said.
“The same prudence with which we managed the economy since 2010, to bring us to a position of resilence and stability, will be used in shifting our priorities and maintaining stability,” the Prime Minister stated.
“History will record this period as one of our finest when we stood strong, made the right choices, exercised the right amount of restraint, held the right course and indeed saw the right results,” Persad-Bissessar said.
The address was made live from the Diplomatic Centre, St Ann’s.
Before delivering it, the Prime Minister met with senior executives of the energy companies in the state sector and the Ministry of Energy and held another meeting of a sub-committee of the Cabinet.
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she said a whole lot of nothing for people dat actually know anyting 'bout economics
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Economist: Prime Minister failed to level with public
http://www.trinidadexpress.com/news/Economist-PM-failed-to-level-with-public-287998731.html (http://www.trinidadexpress.com/news/Economist-PM-failed-to-level-with-public-287998731.html)
By Kim Boodram
ECONOMIST Gregory McGuire said last night it was his belief Prime Minister Kamla Persad-Bissessar failed to level with the public in her address to the nation on falling energy prices and its possible impact on Trinidad and Tobago’s heavily energy-dependent economy.
McGuire said his initial reaction to Persad-Bissessar’s address was there had been an overarching lack of detail, a bid to make the population more comfortable in a time of crisis and an opportunity to deliver a “platform statement”.
“I don’t think the Government has a handle yet on the extent of the crisis. I don’t think the Prime Minister has levelled with the public,” McGuire said.
He said he was yet to study Persad-Bissessar’s address, but his first impression was the PM failed to provide much-needed detail that would truly convince the population of this country’s ability to navigate on a lessened income.
“We still don’t know where the cuts will come from,” McGuire said when contacted last night, minutes after the conclusion of Persad-Bissessar’s live speech to the nation.
“Really, we are left, at the end of the day, still not clear about what the Government is going to do.
“She also seized the opportunity to make what I think was a platform statement.”
McGuire said Persad-Bissessar should have gone into detail when she announced Government’s plan to place Phoenix Park Gas on the public market and should have projected the expected revenue and when it could be expected.
“I think that the Prime Minister’s statement really lacked detail,” he said.
He also noted a lack of mention of the current price being paid by citizens who use premium gas at the pumps and said given prices at this time, customers were now paying a tax of over a dollar per litre.
“The price is way above what it really ought to be, given what the price of oil is now,” McGuire said.
Persad-Bissessar should also clarify which and how many State projects yet to receive funding were mentioned in the September delivery of the 2014-2015 budget, given her remark funding for those projects would be deferred.
Persad-Bissessar also mentioned in her address last night her Government had turned around the economy it inherited in 2010 when the People’s Partnership swept the polls.
McGuire said the fact remained the economy had shown nominal growth in one year and has, for the rest of the time, survived but not expanded and remained “highly vulnerable”.
Boasting should come when an economy has seen growth upwards of three per cent, he said.
He said while Persad-Bissessar spoke a lot about diversification, the numbers she provided said little.
“What are the sectors your are talking about that you have actually led and created diversification?” he queried of the PM’s statements.
On Government’s announcement on Tuesday that money may have to be borrowed for the completion of its San Fernando to Point Fortin highway megaproject, McGuire said the “mistakes” associated with that project took place before an economic crisis had developed.
He said a project of that magnitude should not have been carried out out-of-pocket but would typically have taken place on borrowed funds.
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she said a whole lot of nothing for people dat actually know anyting 'bout economics
This is an understatement because even the most uneducated people understand that if their salary get cut in half and their bills and spending stay the same, they going to be in plenty trouble.
Kamla stalling because elections coming up and if she have to cut any freebies, people going to be upset. So her calculation right now is how long can she delay a decision before the election, because yuh never know, oil prices might rebound. She better off passing a hat round the table at the next cabinet meeting and asking her colleagues to donate back some of what they thief from the Treasury.
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she said a whole lot of nothing for people dat actually know anyting 'bout economics
This is an understatement because even the most uneducated people understand that if their salary get cut in half and their bills and spending stay the same, they going to be in plenty trouble.
Kamla stalling because elections coming up and if she have to cut any freebies, people going to be upset. So her calculation right now is how long can she delay a decision before the election, because yuh never know, oil prices might rebound. She better off passing a hat round the table at the next cabinet meeting and asking her colleagues to donate back some of what they thief from the Treasury.
lol so true on all counts
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Rowley knocks PM’s poor economy plan
Richard Lord (Guardian).
Opposition Leader Dr Keith Rowley yesterday joined in with people from various sectors of society in ridiculing Prime Minister Kamla Persad-Bissessar’s economic plan in light of the continuing falling oil prices, saying Government had not taken the critical decisions to deal with the worrying global issue.
Rowley made the comment in the House of Representatives during debate on a Government motion to adopt the First Report of the Standing Finance Committee on proposals for the Supplementation and Variation of Appropriation for fiscal 2014.
Six business organisations—the TT Manufacturers’ Association (TTMA), American Chamber of Commerce (Amcham), San Fernando Business Association, T&T Chamber of Industry and Commerce, Penal/Debe Chamber and the Chaguanas Chamber—also expressed concerns about the lack of details by Persad-Bissessar about solid measures to deal with the falling oil prices during her address to the nation on Thursday night.
Yesterday was the first sitting of the House following the Christmas break. The motion was presented by Finance and the Economy Minister Larry Howai. Rowley began his response by saying the country was “smouldering while Government praises itself. There is smoke and there could be fire behind.”
He said the Government had failed to take the appropriate action to deal with the reduced oil price, adding Persad-Bissessar had not even admitted that the price of the commodity had collapsed during her address. Oil again traded at under US$50 yesterday. The priced dropped from over US$100 last year. The 2015 budget was based on an oil price of US$80, but the PM revised that price to US$45 in her address.
But Rowley insisted yesterday that Persad-Bissessar should have done more. He said the Government should roll back operations. The increased expenditure announced by Howai in the budget presentation last September, he added, should have been cut back as the required revenue was not there to support it. Rowley said subsidies should also be cut and warned that if the Government were to maintain its position the country may have to go to the International Monetary Fund (IMF).
“If this Government continues pussyfooting and pretending that we are the only oil and gas economy which has no problem with a collapse of the oil price, then we are going to end up before the IMF,” he said, adding Persad-Bissessar “did not address any of the fundamentals.” While the price of oil at which the budget was based had been reduced, Rowley said Government was maintaining the budgeted $250,000 for printing publicity and promotions.
He said Persad-Bissessar, in her address, which he labelled a campaign speech, also “did not say a word to deal with waste and corruption, which are its hallmarks in office.”
More Info
Leader of Government Business, Housing Minister Dr Roodal Moonilal, defended the Prime Minister during his contribution to the debate yesterday. He said Persad-Bissessar gave an assessment of the existing economic conditions in the country and “came flat out and said we are revising our budget assumptions.”
Moonilal said the Government will look to reduce the cost of goods and services by 15 per cent, try to clear $4.5 billion on infrastructure projects where financing was not confirmed as yet and seek to save on subsidy by $1.4 billion. “The Prime Minister was very clear on those issues,” he said. Moonilal said the economic fundamentals for this country have never been stronger. The problem was one of cash flow and the country was treating with it he said.
3 contracts in one day
As an example of the wastage, Rowley said the National Gas Company was now engaged in the repair of minor recreation grounds. He said he had documents to show that three contracts were received in one day by a company called Phoenix Project Management and Designs Ltd, which was formed in 2011. He said those recreation grounds were located in Cumuto, Gasparillo and Ste Madeleine were awarded for $3.5 million, $5.5 million and about $9 million, respectively.
The company’s address, Rowley said, was changed from Brechin Castle to Chaguanas and one month later there was another change of address. “They believe that they are hiding from the population what is going on with the raiding of monies out of NGC to these individuals,” he said. Rowley claimed the directors of that company were employees of SIS Ltd. “That is how the monies are being shoveled out of the state enterprises,” he said.
In response to Persad-Bissessar’s statement, Rowley said if an attempt was made to sell Phoenix Park Gas Processors, its value would have to be reduced because of the current outlook in the energy sector. He said the Government was effectively talking about a potential fire sale of state assets to acquire money to maintain the status quo.
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she said a whole lot of nothing for people dat actually know anyting 'bout economics
:thumbsup:
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Khalid orders Petrotrin cutbacks and says: We can manage for short time.
By Kevon Felmine (Guardian).
Petrotrin president Khalid Hassanali is forecasting a dim 2015, saying the state-owned oil company could lose 40-50 per cent in revenue due to the continuing sip in global oil and gas prices.
As such, he says the company has readjusted its budget and will also have to slash drilling and development programmes. The revised budget will take into consideration its revenue forecast over a five-year period, he said.
Hassanali made the comment following the opening of a workshop on incident command systems at Petrotrin’s staff club at Pointe-a-Pierre. He said the company suffered a loss last year and expected to do the same again this year.
“As you know, we are in a down cycle and in these down cycles we still have to prepare for when prices will ‘re rise.’
“We are experiencing about a 40 to 50 per cent loss in gross revenue but, like I said, we manage our cash flows very carefully in these times,” he said.
Hassanali’s statement comes mere days after Prime Minister Kamla Persad-Bissessar announced that Government would peg its national budget figure on US$45 a barrel for oil and $2.25 for gas, as well as various cutbacks in Government spending, due to the falling global prices.
Yesterday, Hassanali said Petrotrin would use the down cycle not only to optimise and restructure the company but also be prepared for when the prices began to rise.
Hassanali said the company would reduce spending on its drilling and developmental programmes as many of its aged assets needed to be replaced. The focus too, he said, would be on cash management rather than accounting profits.
He added: “We will continue to cut, maybe to a reduced extent, our drilling programmes, our developmental programmes, because we have an asset that has to be replaced.
“We have just come out of acquisition of seismic at the marine acreages in Trinmar. We have certain responsibilities there and we also have already started development drilling in terms of our land seismic so there is a lot of potential.”
Although the oil price ended yesterday at US$46.30 a barrel with gas at $2.81 per trump, Hassanali said that would be sufficient to withstand the current crisis, although he said that would only be for a short time.
He said there were several initiatives with the Ministry of Energy and Energy Affairs to manage cost carefully.
“If you think of that in terms of our lifting cost, in other words, the money that is required to take a barrel of oil out of the ground, we can manage at the current pricing scenario. We can manage on a cash basis, not forever, but we can manage for a period of time.”
Financial hole
Last month, Energy Minister Kevin Ramnarine announced in the Senate that Petrotrin had suffered a loss of $346 million in fiscal 2014 and had a total debt of $14.38 billion.
He made the comment as he appealed to Petrotrin workers not to carry through on a proposed strike action over the company’s claim that it could not increase salaries.
“This is not a time for acrimony at Petrotrin. This is not a time to break down Petrotrin but to build up Petrotrin,” he said.
Ramnarine said the company’s poor financial performance was partly due to losses by the refining arm of the company.
The way forward for the company was to increase its crude oil and gas production through its own efforts as well as from ventures, such as its lease operatorship, farmout, incremental production service contract (IPSC) and joint venture programmes.
He said improved production was expected from the Trinmar operations in the Jubilee field and the ongoing South West Soldado project.
Contacted yesterday, Petrotrin’s communications department said at the end of 2013-2014 fiscal period, the company revenue was TT$29.285 billion and there was a loss of $347 million. The main contributor to the loss was a low refinery margin.
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Rowley: Govt needs to prepare for worst-case scenario (http://www.trinidadexpress.com/news/Rowley-Govt-needs-to-prepare-for-worst-case-scenario-288761861.html)
By Sue-Ann Wayow sue-ann.wayow@trinidadexpress.com
Story Created: Jan 15, 2015 at 8:42 PM ECT (T&T Express)
OPPOSITION LEADER Dr Keith Rowley says he expects more information from the Government concerning the falling oil and gas prices, and it needs to prepare for “a worst-case scenario”.
Rowley reminded the public that on three occasions in 2009, former prime minister Patrick Manning revised the nation’s budget because of a decrease in government’s revenue.
Rowley was speaking to reporters on Tuesday during the launch of the People’s National Movement’s (PNM) election campaign in Mayaro.
Referring to Prime Minister Kamla Persad-Bissessar’s address to the nation on the state of the economy last week Thursday, Rowley said,“What happened last Thursday was the first response. What is clear from the Government is that the Government is hoping that this is a very temporary occurrence and it will turn around soon. If that happens we will all be very happy, but if it does not happen, we have to prepare for a worst-case scenario.
“The causative factors of this collapse are factors which indicate that the price could go a bit lower for a fair period of time. So we have to be prepared for that and this is where the Government is failing us,” he added.
“The Government has to show honest leadership and provide the country with proper guidance in the situation. Playing politics because of an election is a dangerous game because time is being lost, opportunities are being wasted and it will become more difficult if the Government continues on its spendthrift pattern. Oil revenues will collapse,” said Rowley.
Last week, just after Persad-Bissessar’s announcement of a decrease in State expenditure in an attempt to deal with the drop in oil and gas prices, Rowley said the Prime Minister “failed massively” in her response to the growing turbulence in the global energy sector and instead delivered a campaign speech.
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TT will buffer oil price fall
T&T Newsday
ENERGY Minister Kevin Ramnarine says the country will be able to buffer the fall in global oil prices and the outlook from local energy companies is positive.
He was speaking with Sunday Newsday yesterday after the Petroleum Dealers’ Co-operative Society Limited symposium entitled “The Retail Petroleum Industry in Trinidad and Tobago: Forging Ahead” held yesterday at Hyatt Regency, Port-of-Spain.
He noted the falling oil prices is a situation they monitor on a daily basis.
“As the Prime Minister said so eloquently in her speech (on the state of the economy) there is no need to panic. Of course there is need for concern and there is a need for adjustment and we are concerned and we are adjusting,” he said.
He continued’: “But the country has sufficient fiscal space in which we can buffer the impact of falling oil prices.”
He explained the foreign exchange reserves are US $11 billion to US$12 billion and the Heritage and Stabilisation Fund is over US$5 billion. He also said all the oil companies have indicated that there would be no cuts in jobs and he personally has not received any report thus far.
“And based on the feedback I have gotten from them and the feedback Newsday has gotten from them (in a recent article) thus far the companies have not indicated that they will cut any jobs,” he said.
He noted it is a situation that evolves daily but for now “they have indicated that all is well” and have also indicated that they will continue their capital investment programmes for this year plans which would have been made a year or two years ago.
“So the sector continues to be strong and we continue to monitor the situation on a daily basis,” he said.
He noted that they saw “some slight improvement in oil prices last Friday with Brent crude per barrel going back up to US$50 and we continue to monitor the situation over time”.
He reported that for the first quarter of fiscal 2015, October to December 2014, they have realised gas prices slightly above the budgeted price however they do not expect that trend to hold.
“Gas prices follow oil prices globally so we expect gas prices will come down which is why we have adjusted the budget to (US) $2.25 (per mmbtu gas price) instead of the $2.75 which was the September budget price,” he explained.
“So I mean we are planning for it,” he said.
He also responded to Opposition Senator and economist Dr Lester Henry’s contribution in Parliament last week in which Henry said this country was headed for a “perfect storm” of lower oil prices and lower gas prices and revenue as well as lower production levels.
Ramnarine responded: “I listened to what he said. And I don’t know what he was talking about. He normally is very confusing to listen to. I don’t know what he was referring to.”
He continued, “Oil prices are falling - the whole world knows that. Gas prices are falling too - the whole world knows that.”
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Ramnarine tells Energy Conference: Oil under US$50 not sustainable
By Rapheal John-Lall (Guardian).
Energy Minister Kevin Ramnarine says he does not foresee oil prices remaining under US$50 a barrel in the short or medium term because that price is not sustainable and is “below the break-even point for some companies here in T&T.” “It will certainly render the North Sea and US Gulf of Mexico oil production un-economic,” he said in a pre-recorded video message on the second day of the T&T Energy Conference at the Hyatt Regency Hotel, Port-of-Spain.
Ramnarine, who was out of the country along with Prime Minister Kamla Persad-Bissessar attending Monday’s Caribbean Energy Security Summit in Washington DC, said while T&T is not immune from the negative impact of the international oil and gas environment, eventually the local energy sector will rebound.
“We have been here before in the mid to late 1980s, in 1998 and again in 2008/2009. Each time the price of oil has recovered and the industry has survived and moved forward. In fact the service companies that survived the downturn of the 1980’s are today the largest service companies in the country.,” he said. Ramnarine said the Ministry of Energy engaged petroleum consultants Netherland, Sewell and Associates of Dallas to conduct an audit of T&T’s crude oil reserves.
“The results of the crude oil audit as at December 31st 2011 showed proved reserves were 199.5 million barrels of oil, probable reserves 85.5 million barrels of oil and possible reserves 124.8 million barrels. The total crude oil figure of the proved plus the probable plus the possible reserves for crude oil was 409.8 million barrels,” he said.
“The country’s condensate reserves, which are associated with natural gas production, were evaluated in the annual natural gas reserves audits conducted by Ryder Scott Company and at year-ending December 31, 2011, showed proved reserves at 43.5 million barrels of condensate, probable reserves of 24.4 million barrels of condensate and possible reserves of 30.8 million barrels of condensate. The total condensate figure therefore estimated by Ryder Scott Company at 98.7 million barrels of condensate.”
The minister said this showed that the country “has tremendous potential to produce more oil” and on that basis the ministry launched its 2013 onshore bid round. As a result, he said, licences have been signed with Range Resources, Lease Operators Ltd and Primera Oil and Gas out of which there will be 12 land-based exploration wells greatly adding to activity on land in coming years.
Ramnarine said the ministry is considering two bid rounds in this year for land and nearshore acreage and for deepwater acreage. “We will however gauge the appetite of the companies in this low-price environment before we proceed with more bid rounds,” he said. He said several critical contractual obligations would soon be up for renewal, including the BG/Chevron contract with the NGC which expires in December and bpTT’s contract with the NGC which expires in 2018.
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Kamla calls for US$1b energy fund.
T&T Guardian Reports.
Prime Minister Kamla Persad-Bissessar yesterday suggested that a US$1 billion Caribbean Energy Thematic Fund be established to deal with regional energy security.
Speaking at the First Caribbean Energy Security Summit in Washington, D.C., said the T&T Government’s is committed to working with the United States and other Caribbean countries to achieve a “cleaner, more sustainable energy future” in the region.
“Energy is at the heart of efforts to build resilience through improved competitiveness and stronger energy security,” she said.
Persad-Bissessar said resilience can be built by transforming the energy matrix in the Caribbean, which requires a three-pronged approach:
• Improving conservation and energy efficiency,
• Maximizing the use of renewable energy sources
• Converting to Liquefied Natural Gas fuelled electricity generation for the base load capacity.
She said the cost of this solution is not supportable for countries with high debt and minimal fiscal space, and it is therefore necessary to engender co-operation for building resilience through energy security.
Persad-Bissessar proposed a methodology to work with the Inter-American Development Bank (IADB), the Caribbean Development Bank (CDB), the World Bank, the IMF and other international donors, friends of the Caribbean and the private sector to provide the method and means of achieving energy security in a manner that is efficient and sustainable.
She said the T&T Government has been working in close collaboration with the IDB over the last 18 months to design a new initiative that is home-grown in the Caribbean.
“After rigorous economic analysis and technical feasibility studies and a thorough assessment of these, we have agreed as a government on the creation of a Caribbean Energy Thematic Fund for Caricom member states,” she said.
Persad-Bissessar proposed working with traditional donors and countries with a strategic interest in the region and the private sector to provide the necessary financial and technical support for transformation of the energy sector, maximizing public private partnerships.
“We must look past short term fluctuations in oil prices to focus on the long term strategic interests of the region,”she said.
In a joint statement issued at the end of yesterday’s summit, participating countries said their agreed to “comprehensive, planning-based and research-driven approaches to energy transition, including implementation of pilot and demonstration projects, based on successful models so that individual clean energy projects are part of a fully integrated, climate-resilient energy transition plan toward clean sustainable energy for all.”
They also agreed to specific reforms, including adoption of recommendations from the 2013 Caricom Energy Policy afore introduction of new technologies favouring sustainable and clean energy.
In addition, where “technically and commercially feasible” the objective will be lower carbon electricity generation through wind, solar, geothermal power, hydropower, bioenergy, ocean energy, energy recovery from waste, and other clean energies.
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Audit finds company exposed to criminal probes, litigations, penalties
By Asha Javeed (Express).
Spending Spree
Failure by the corporate communications department of the National Gas Company (NGC)to adequately account for how its budget ballooned from $67 million in 2012 to almost $200 million in 2014 has potentially left the management and board “exposed to criminal and integrity probes, litigations, penalties, fines and reputational damage”.
That was the conclusion of an audit conducted into just one department of the country’s most profitable State company in November 2014.
In 2013, NGC recorded a profit after tax of $6.5 billion for its financial year.
The company’s internal audit team for this report, which was obtained by the Sunday Express, included internal audit manager Rabindranath Lakhan, its head, Financial & Compliance Audit Marina Dukhedin-Lalla, senior auditor Wendy Murray-Thomas and auditor Rebecca Procope.
The corporate communications department (CorpCom) is responsible for sponsorships, donations and any community-related activity in which NGC invests.
The audit revealed weak internal controls “resulting in the concealment (deliberate or otherwise) of the true extent of the company’s expenditure, obligations and commitments”, and there was evidence of CorpCom management’s “non-compliance with standard and requisite requirements”.
“No information was provided on the approval for the increase from eight recreational facilities to 23 although budgetary and costs reporting protocols require full disclosure. Such arbitrary and inconsistent management reporting practices distort the outcomes of the company’s analyses of CorpCom’s expenditures; value for money received; and cost behaviours relevant to its planning, budgetary, forecasting activities. Such practices are also indicators of fraud and/or gross negligence,” the audit noted.
Among NGC’s communications expenses were:
1. In 2012, the budget for Economic & Communities was $21.7 million. The budget increased by 114 per cent to $83.6 million in 2014.
2. Donations moved from $2.3 million in 2012 to $9.13 million in 2014, an overall increase of 515 per cent.
3. In 2012 and 2013, the company spent no money on reputation and branding. But by 2014, $20.4 million was spent under the category Reputation and Branding.
4. In 2012, NGC spent $8.4 million in advertisements. By 2014, there was an 80 per cent increase to $20 million.
5. The NGC went from spending $2.4 million in a category External Communication-Gas Facts to $4.5 million in 2014.
6. In 2012 and 2013, there was no category of spending for Corporate Social Responsibility. In 2014, $9.5 million was spent.
7. In 2012 and 2013, there was no category of spending for Environmental & Greening. In 2014, $3.2 million was spent.
“The audit team reviewed similar expenditures from 2012 to 2014”, and it “showed that costs of these projects have escalated by 50-114 per cent,” the report stated.
“Manager CorpCom (Charmaine Mohammed), in response to audit queries, stated that the increases were due to inflation. However, statistical data provided on the Central Bank of Trinidad and Tobago’s website relating to inflation showed an average rate of seven per cent under review. Additionally, some increases were made when other business activities within NGC were required to reduce budgets and actual expenditure in 2013, that is, by memo dated January 11, 2013, staff training and conferences, seminars and workshops reduce by 30 per cent and 25 per cent respectively,” it noted.
“CorpCom’s management has not provided any evidence to substantiate the reasonableness of the costs of community-related projects, monies expended on said projects, nor any evidence that value for money was received,” it noted.
Audit Conclusions
“Audit has concluded that CorpCom’s management of risk may be incomplete (based on lack of detailed information provided to Audit on risk management activities) and may expose the organisation to risks such as corrupt procurement practices, invalid transactions, poor quality works, lack of transparency, false advertisements and disclosures, potential conflict of interests which can result in a breach of public trust,” the audit said.
“CorpCom’s lack of records to support its risk management of community-related projects that are impacted by the Environmental Management Agency (EMA) and the Occupational Safety and Health (OSH) Act, can be viewed as breaches of the legislations, especially as NGC’s published Freedom of Information Act (FOIA) statement indicates that the company maintains these records.”
It added: “If the underlying records to support this declaration are proven to be non-existent then the declaration will be assessed as a false declaration which can result in charges of criminal negligence against management and directors,” the audit warned.
“There is also evidence and/or red flags or materialising risks within CorpCom’s procurement and contracting activities for community related costs. CorpCom’s approved budget 2014 included a list of ten recreational facilities under its Corporate Social Responsibility programme. On review of 2014 June, CorpCom’s Management report showed that works were committed for fifteen (15) and another eight (8.) are under consideration for 2014. Assurance cannot be provided that CorpCom’s activities are compliant or that they create value for monies expended,” the audit said.
The audit also noted that insufficient information was provided by CorpCom to ensure compliance with legal and regulatory requirements as well as NGC’s procurement rules.
“Hence, assurance cannot be provided that the sums allocated within CorpCom’s budget for community-related projects, donations, sponsorships and advertisements were utilised in a manner that resulted in the company receiving value for money (best combination of price and quality, and acceptable time frame),” it said.
“The lack of reliable records and major variations observed between Legal Services and CorpCom’s information on MOUs, contracts and valuations for community projects, are clear indicators that neither the company nor CorpCom’s management has established a formalised process for the execution, assignment of responsibility, monitoring, performance evaluation and reporting of all agreements/MOUs and contracts executed, most of which are valued (more than) TT$2 million. Hence at no time is the company aware of or able to assess the entire population of MOUs and other agreements, their related commitments and obligations (financial and legal/regulatory), be it by a deliberate lack of transparency and disclosure or by management’s negligence,” it said.
Following the submission of the audit for sign-off, the Sunday Express understands that one auditor has since been reassigned to another NGC subsidiary.
Last week, the NGC advertised for two auditors.
All-Inclusive Fetes
Last week, the Sunday Express reported that over $1 million was spent on tickets to all-inclusive fetes by the NGC for Carnival 2015.
The NGC bought 1069 tickets at a cost of $1,073,497.80.
The company spent $352,000 on 220 $1,600 tickets for the South Cancer Support Group, which took place on January 31.
But while 130 tickets were assigned to the Corporate Communications staff, 245 were assigned to the manager of corporate com-munications. (See table above).
The Sunday Express was unable to get a response from Mohammed on why she was assigned that quantum of tickets and who were the recipients of those tickets.
No response from NGC
On February 20, the Sunday Express sent a list of questions to NGC’s vice-president of human and corporate relations, Cassandra Patrovani-Sylvester with regard to the audit.
At that time, Patrovani-Sylvester replied and copied the e-mail to NGC’s president, Indar Maharaj, and committed to providing a response on February 23 because Maharaj was due to travel.
The e-mail said: “I confirm receipt of your email and the questions contained within which have been referred to the president, NGC.
A response will be forthcoming no later than Monday, February 23, 2014, as the president is due to travel.”
However, the Sunday Express did not receive any response to the questions it submitted on the date.
Last Friday, the Sunday Express sent another e-mail and copied manager of corporate communications Charmaine Mohammed, seeking answers to the questions, which were overdue by a week.
Patrovani-Sylvester responded by sending the e-mail again to Mohammed, with the note:
“Charmaine, good morning.
Ms Javeed’s e-mail is self-explanatory.
I gave a commitment following conversation with the president for a response by Monday, 23 February, 2015.
Your attention to this matter would be appreciated.”
However, the Sunday Express received up to yesterday.
Telephone calls and text messages were also sent to Mohammed seeking a response.
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Rowley outlines plans for T&T to energy execs
http://www.guardian.co.tt/news/2015-04-16/rowley-outlines-plans-tt-energy-execs (http://www.guardian.co.tt/news/2015-04-16/rowley-outlines-plans-tt-energy-execs)
In outlining his plans should he become the next Prime Minister of T&T, Opposition Leader Dr Keith Rowley says he will strengthen diplomatic relations with Caricom and the international community so as to expand T&T's energy industry. Speaking on his intentions for the challenged energy sector at the Energy Chamber’s conference at Cara Suites Hotel and Conference Centre yesterday, Rowley promised to open new doors for both state and private sector companies with the signing of several Memorandums of Understanding (MOU).
Special focus will be placed on the United States, United Kingdom, Venezuela, Ghana, Germany, China, Saudi Arabia, India and Caricom members. He hinted at seeking a possible MOU with the Barbados government for offshore hydrocarbon exploration with T&T being a processing market. “We expect from a PNM standpoint to be the next government of Trinidad and Tobago and I commit very early to lead the requisite delegations to Ghana, in particular, where we lost some significant opportunities; Suriname, Guyana and Barbados to ensure we get those opportunities.
Especially in Suriname, Guyana and Barbados, I am going to make sure that we offer them a platform where we can work together so when they do put out the energy that we have now, Trinidad and Tobago can play a significant role in it, from use of our technical expertise,” Rowley said.
He added, “With the advent of shale gas and the impact it will have on the global energy sector, the discovery of substantial natural gas reserves in Africa—Tanzania, over 60 tcf, Mozambique over 150 tcf—the development of new technologies that will allow natural gas to become the feedstock for products traditionally associated with oil such as transportation fuels, including diesel and gasoline [and] the plastic industry, Trinidad and Tobago may be presented an opportunity to increase its role in the global energy industry.
One of his challenges will be the remodelling of major state companies such as the National Gas Company and Petrotrin, which he said had spent substantial funds outside their core business that should have been used on investment programmes. He said key roles would be assigned to those companies in expanding the sector.
He also hinted at a human resource shake-up, saying that his government would put the best people to head state companies, while the Ministry of Energy and Energy Affairs would be staffed with experienced and qualified professionals.
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Trinidad faces downturn as energy prices collapse.
By DAVID McFADDEN
The Associated Press
PORT-OF-SPAIN, Trinidad (AP) — During the good times, earnings from natural gas and oil exports made the tiny Caribbean nation of Trinidad and Tobago one of the richest countries in the Western Hemisphere. The collapse in world oil prices now has it facing the threat of a punishing and prolonged downturn.
After two decades of nearly uninterrupted prosperity, the government is being forced to scale back spending by 7 percent, siphon some $1.5 billion from a stabilization fund over the next couple of years and warn its 1.3 million people that they will have to make do with less.
“We must all appreciate that the circumstances we now face as a nation require sacrifice and managed adjustment in our living standards,” Prime Minister Keith Rowley warned in a recent speech.
Those standards include American-style shopping malls, cheap electricity, subsidized gasoline and so many families with multiple cars that highways weaving past abandoned cane fields are often clogged with traffic jams in both directions.
Things have been going so well for so many years that locals repeat the mantra “God is a Trini,” meaning the twin-island republic, known for high spirits and rollicking Carnival celebrations, is so blessed that things will always turn out well. But the specter of tough economic times is starting to prompt a glum self-examination.
“You can see it coming: Times will be getting hard. Previous governments have spent too lavishly and now it’s time we have to pay the piper,” said Adrian Lashley, a father of five who runs a small clothing shop in downtown Port-of-Spain, the capital.
Trinidad gets roughly 45 percent of its gross domestic product and 80 percent of export revenue from the energy industry. In June 2014, the price of Trinidad’s benchmark crude was $106 per barrel and the government had drawn its 2015 budget anticipating $80 a barrel, but the price has plummeted to near $30. Prices for liquid natural gas, Trinidad’s main export, have declined by some 45 percent.
The global price collapse has already inflicted serious economic damage in oil-producing nations such as Venezuela and Nigeria. With forecasts suggesting that world prices won’t recover anytime soon, economists say this downturn will have a serious bite here. Last month, the Central Bank of Trinidad and Tobago announced the country was officially in recession, with no economic growth in 2015.
“The situation is very, very dire because of the extent to which we depend on the oil and gas sector. The government’s no longer going to have access to the kind of resources it’s been used to in order to maintain the country,” said economist Indera Sagewan-Alli, executive director of the University of the West Indies’ Caribbean Center for Competiveness.
Trinidad and Tobago, just 7 miles (11 kilometers) off the coast of oil giant Venezuela, became a significant global energy player about 25 years ago when it tapped big reserves of natural gas. That helped rescue the country following an oil bust in the 1980s that touched off labor unrest, contracted the economy by 35 percent, and forced the government to seek help from the International Monetary Fund.
Rowley, who took office in September, has warned that the country will have to go to the IMF again if it doesn’t make the right adjustments now. Trinidad and Tobago has few local industries so the economy is almost entirely dependent on foreign exchange.
“We need it for food, medicines, clothing, books and education, cars, trucks and tractors, and computers. We are very dependent on foreign exchange to sustain our economy and our standard of living,” Rowley said.
The government is calling on businesses to find cheaper sources of imports and for consumers to buy whatever locally produced goods they can find. Rowley said government spending must be slashed as its expenditures are roughly 35 percent of gross domestic product.
For many years, officials have repeatedly said that Trinidad’s economic base had to be broadened to provide protection from global energy downturns. Yet, little has been achieved.
Terrence Farrell, a former Central Bank deputy governor, told The Associated Press that Trinidad and Tobago is in a stronger position now than during the oil bust of the early 1980s. It’s built up roughly $10 billion in official reserves and $5.6 billion in a “heritage and stabilization fund” created in 2007 can help cushion swings in energy prices.
Still, he said mismanagement and corruption over the decades has meant far too much money vanished or was frittered away.
“There’s no question we ought to be in a better position than we are right now,” Farrell said. “We clearly could have done a lot more with our oil and gas resources.”
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Of a total of 138 gas stations operating, only one has a retail licence.
By VERNE BURNETT (NEWSDAY).
Minister of Energy and Energy Affairs, Nicole Olivierre has said that the ministry will not approve the operation of any new service station in the country without that station having a retail marketing licence. She made the comment in interviews following the official opening of the St. Christopher Service Station on Wrightson Road, Port of Spain on Thursday evening.
During her address she mentioned that the new service station was the only one of the 137 gas stations in the country which had a valid retail marketing licence.
She said all the others are operating without such licences, and gave them a six month deadline to meet the requirements to get the licences.
She said the existing situation is untenable and urged the gas station dealers to work more quickly to meet the requirements for the issuance of the licences.
She said the last retail marketing licences were issued back in 2010.
In an address at the function, NP Chairman Sahid Hosein said that in light of the Prime Minister’s call for all State enterprises to reduce expenditure where possible, NP had already taken austere measures to reduce operating expenses, and had cut total operating expenditure by five percent year on year , and achieved a 27 percent reduction in overtime- related spending through improvements in work scheduling, and operational efficiencies.
He added that “these are not ordinary times and threfore greater emphasis will be placed on our network rationalisation plan to ensure that our limited resources are being best utilised in a way that works for the benefit of the majority of people.”
He added, “Where we choose to operate service stations has to make sense, especially for the service station dealers who are challenged by fixed margins in the face of the Green Fund and Business Levy tax standing as it does at 7 percent. It also has to make good business sense in terms of operating expenditure for NP.” Asked in an interview afterward if this meant NP would have to close and relocate some stations, Hosein responded, “NP is going to do a rationalisation.
There might be some areas where its no longer economic to operate a service station, and with the developments in the country there are areas that might not have a station that we will want to put in a station. Unfortunately we are not as fleet as we would want to be, having made a decision that we want to open somewhere we have to go through all the bureaucracy.” He said he intended to work with the ministry and those people who want to put up service stations to see how the bureaucracy could be cut.
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She said all the others are operating without such licences, and gave them a six month deadline to meet the requirements to get the licences.
She said the existing situation is untenable and urged the gas station dealers to work more quickly to meet the requirements for the issuance of the licences.
Enough time for them to get the required licenses. No excuses when time come and you do not have now
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Shell gets approval for Colibri gas development, first gas expected 2022
CARLA BRIDGLAL (NEWSDAY).
Shell TT has made a final investment decision approving its Colibri project off the northeast coast of Trinidad, including the development of Block 22 and NCMA-4 (north coast marine area).
The two blocks are held in partnership with the Heritage Petroleum Co Ltd.
In a release, the energy giant said Colibri is expected to add a total of 43,100 barrels of oil equivalent per day or 250 million standard cubic feet of gas production per day, through a series of four subsea natural gas wells. Colibri will also include the installation of flowlines from the wells to the existing Poinsettia Platform located in the NCMA acreage. Drilling is expected to commence in the second half of 2020, with first gas anticipated in 2022.
In the statement, Shell TT's vice president and country chair Eugene Okpere said the development, along with Barracuda which was commissioned in 2019, were critical to the company's near to medium growth strategy in TT and part of its commitment to secure the country's energy future.
“We’re really excited to have achieved this milestone coming on the heels of the approval of the Barracuda project in November 2019.”
In November 2016, Shell TT purchased 100 per cent of Centrica’s gas interests off the north coast, including NCMA 1, NCMA-4 and Block 22.
The Shell-operated Colibri development is co-owned with Heritage, which has a working interest of 10 per cent and 20 per cent respectively in Block 22 and NCMA-4. Colibri, when combined with Barracuda and existing developments, will deliver more gas to the T&T domestic market and the LNG export markets.
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Imbert now forecasts $15B budget deficit.
By Gail Alexander (Guardian).
COVID-19 plus crashing oil prices have caused the 2020 Budget deficit to balloon from $5.3 billion to $15.5 billion - and the 2020 Budget is now being recalibrated.
And while Government’s been successful in slowing COVID spread, Finance Minister Colm Imbert says there’s no question that fiscal 2020 will be exceptionally difficult even if the pandemic fades in the second half of the year.
Imbert spoke about the situation in a statement to Parliament yesterday on the economic effect and Government’s financial response to the COVID-19 crisis.
He shared principal elements in Government’s package of policies to address public health and economic challenges posed by the pandemic. Imbert said a targeted financial support programme for an initial three months, costing approximately $4.5 billion, is providing a safety net for the most vulnerable households and businesses. (See page 15)
He said while the breadth, depth and duration of the effects of the virus are still uncertain, “our strategic initiatives have been swift as we seek to slow spread of the disease and minimise its economic consequences. We have been successful. We acted decisively, even before the World Health Organisation declared the virus a pandemic on March 11.”
As a result, he said the number of known/confirmed T&T cases as of yesterday was limited at 116 with eight deaths, plus 59 people have been discharged
“We recognised very early the characteristics of this crisis. It was fast moving and required quick, effective action which we initiated almost immediately. Our proactive approach saved us much of the pain and distress that other countries now face.”
But he said the comprehensive social, financial and economic support package of measures required to be taken has expanded Government’s expenditure “in the context of a serious erosion of our tax base caused by the oil prices’ collapse.”
Imbert added, “Accordingly, our fiscal deficit for fiscal 2020, which was originally estimated at $5.3 billion, is now expected to expand to $15.5 billion - $10.2 billion higher than was envisaged in our 2020 Budget.”
In calculating the revised deficit, he said Government noted that the collapse of the recent price of WTI oil to 1 US cent per barrel is having an adverse effect on other oil prices. He said Brent oil has dropped to $20.
“Such low prices were previously undreamt of,” he said.
“Notwithstanding the forecasts of the US Energy Information Administration and WEO of oil in the $30 range and gas in the $2.10 range for the rest of 2020, therefore, our latest revenue projections are based on conservative prices of $25 per barrel for oil for the rest of the year and $1.80 per MMBTU for natural gas.
“This results in a projected loss of revenue in fiscal 2020 of $9.2 billion, to which must be added another net $1 billion in extraordinary expenditure.”
Imbert added, “Within that $9.2 billion revenue loss, we estimate a loss of $3.8 billion in taxes on incomes and profits, and losses of $750 million in Business Levy and Green Fund Levy, $600 million in taxes on goods and services and international trade, $2.5 billion in royalties and production sharing and $1.2 billion in profits from state enterprises, among other areas.”
“There’s no question that fiscal 2020 will be exceptionally difficult even if the pandemic fades in the second half of the year, allowing for a gradual lifting of containment measures and a re-opening of the economy.”
He said the April 2020 World Economic Outlook envisages a partial recovery in 2021 but “there’s tremendous uncertainty around the outlook, given that it can get worse”.
Therefore, he said Government’s objective is to keep the economy moving, stimulate economic activity, provide financial assistance to individuals and businesses and keep as many people employed as is possible, including all workers in the public sector.
“We cannot allow this pandemic to destroy our economy and, therefore, while a reallocation of priority areas for spending is inevitable, it’s our intention to maintain our original expenditure target of $53 billion for fiscal 2020,” Imbert said.
For that reason, he said Government’s been in discussions with certain multilateral institutions and development banks to ensure that in addition to domestic financial resources, appropriate external financing is available to meet the requirements of the expanded fiscal deficit in 2020 and 2021.
Steps were also taken to allow for emergency drawdowns from the Heritage and Stabilisation Fund (HSF) not exceeding US$1.5 billion.
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US probes T&T fuel shipment linked to Venezuela
by Renuka Singh (Guardian).
Any nation that assists Venezuela in avoiding embargoes will face sweeping sanctions imposed by the United States.
The warning comes from the US government after it became aware of reports that a shipment of Paria Fuel Trading Company fuel that left Trinidad and Tobago’s shores for Aruba may have eventually been sent to Venezuela in defiance of US sanctions against that country.
The Aruban refinery is linked to Citgo, a subsidiary of the Venezuelan state-owned oil company PDVSA and reports surfaced last week that the fuel cargo was shipped to Venezuala after it arrived in Aruba.
As these reports continue to swirl, a US State Department representative has told Guardian Media that the United States has warned other nations against assisting embattled Venezuela President Nicolas Maduro and his regime.
“The United States has put foreign institutions on notice that they will face sanctions for being involved in facilitating illegitimate transactions that benefit Nicolas Maduro and his corrupt network,” the representative said.
“The United States condemns all attempts by Maduro and his supporters to steal resources from the Venezuelan people.”
The local arm of the US Embassy’s Public Affairs Section was much more vocal about the possible transfer of fuel from T&T to Venezuela.
In response to questions on Wednesday, the US Embassy said that the “US government was aware of reports indicating that a shipment of gasoline from Trinidad and Tobago may have gone to Venezuela”.
It noted that if T&T is found to have assisted Venezuela in getting fuel, it could open the country up to US sanctions.
“In general, entities and individuals risk exposure to US sanctions by operating in the Venezuelan oil sector,” the US Embassy’s Public Affairs Section said.
“This remains true regardless of how the transactions with Venezuela are conducted, whether using currency or in-kind exchanges and without respect to whether such conduct is otherwise legal under another country’s laws.”
The US had imposed sanctions on the Russian owned Rosneft Trading S.A and its subsidiary, the Swiss-based TNK Trading International, back in March for supporting Maduro. The US has also imposed sanctions on Cuban company Cubametales and its parent company Corporacion Panamericana and the Italian-owned PB Tankers for operating in the Venezuelan energy sector.
On April 21, a shipment of excess fuel left Pointe-a Pierre and was sold and shipped to Aruba.
The Aruban refinery has been mothballed since 2012 and was only recently transferred from PDVSA to the Aruban government after US sanctions dried up credit lines for the Venezuelan company. There have been unsubstantiated reports coming out of Venezuelan media that the fuel was bound for Venezuela.
Addressing this, the US Embassy said, “Some of the companies engaged in the Venezuelan oil trade business attempt to disguise the true nature of their business. These activities help them evade US and other countries’ efforts to prevent corrupt activities and to preserve assets for the benefit of the Venezuelan people.”
The Embassy confirmed that it will “actively investigate all efforts by (Venezuelan President Nicolas) Maduro and his supporters to circumvent US sanctions.
The Embassy added that the US government will also take “appropriate action” against those determined to be engaged in sanctionable activity as well as those found violating US sanctions.
Guardian Media reached out to US representatives after Paria Fuel Trading Company chairman Newman George confirmed a shipment of excess fuel left Trinidad on April 21 and was shipped to Aruba.
George confirmed a Swiss-based company, ES Euro Shipping S.A, contacted the Paria executive on March 28 to negotiate for the sale of the fuel.
The principal of ES Euro Shipping S.A is Wilmer Ruperti, a Venezuelan shipping tycoon who is also linked to Maroil Trading. Maroil Trading had close ties with former Venezuelan president Hugo Chavez and even reportedly ensured the country received fuel supplies in 2002.
Ruperti, according to George, was only able to get 150,000 barrels of fuel on April 21.
“We did our due diligence. Everything was above board,” George said in a telephone interview last Thursday.
“You have to understand that we buy in January for February and we buy in February for March. When the restrictions were imposed, it meant we had excess fuel because less people were travelling.”
There has also been speculation that Ruperti bought fuel from the US, stored it in tanks near the defunct Petrotrin and then transferred it to his vessel. But George said that was not true.
“We just don’t have the space to store fuel for anyone. We need all the storage space we have,” he said.
Since it began pursuing the story, Guardian Media has tried several times to contact several Government officials for comment on the matter, including Prime Minister Dr Keith Rowley, Energy Minister Franklin Khan and National Security Minister Stuart Young. However, there has been no response forthcoming from either of them.
Guardian Media sent the following questions to Minister Young:
1. Has T&T facilitated a shipment of fuel to Aruba?
2. Was this discussed during the visit with Venezuelan VP Delcy Rodriguez last month?
3. Was the head of PDVSA Juan Santana also at this meeting? Is this country facilitating fuel shipments to Venezuela?
Young read the messages but did not respond. He also declined calls to his mobile phone.
Guardian Media sent the same questions to Communication Minister Donna Cox and there was no response.
Guardian Media also sent these questions to Prime Minister Rowley:
1. Is this something that was arranged during the Delcy Rodrigues visit with you last month?
2. Was PDVSA president Juan Santana also at that meeting?
3. Is T&T facilitating shipments to Venezuela?
He also did not respond to those questions and calls to his mobile went unanswered.
Oilfields Workers’ Trade Union (OWTU) president general Ancel Roget read messages sent to him on the same issue but did not respond either.
In January 2019, United States Ambassador to T&T Joseph Modello said Rowley’s continued recognition of Maduro’s regime was “deeply concerning”. The US recognises opposition leader Juan Guaido.
Rowley responded to Modello then, saying that he took “umbrage” to Modello’s statements. He even criticised United National Congress (UNC) leader Kamla Persad-Bissessar for also publicly supporting Guaido over Maduro. He said then that if the Opposition believed it had to take instructions from the US Embassy, they should all leave the People’s National Movement out of that.
The Rowley administration has walked a fine line of neutrality since the massive socio-political collapse in Venezuela.
Who is Wilmer Ruperti?
2002
Wilmer Ruperti allegedly played a pivotal role in the Venezuelan energy industry breakdown in 2002/2003. According to reports at that time, he made oil tankers available to the Government. The provision made it possible for then-president Hugh Chavez to survive the then opposition’s attempt to cut off Chavez revenue source.
2016
The shipping tycoon confirmed that he paid the legal fees for two of Venezuela President Nicolas Maduro’s nephews, who were charged in a Manhattan court for conspiring to import 800 kgs of cocaine into the US.
2019
Ruperti in court over a sex-tape row after he sued a debt collector for allegedly swapping confidential documents for a sex tape related to another billionaire.
According to international reports, Ruperti’s company hired the debt collector and gave him access to internal documents. Ruperti then accused the debt collector of trading sensitive files.
2020
Ruperti’s company Maroil Trading billed PDVSA for the provision of 250,000 barrels of gasoline.
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‘More oil to come’
T&T Guardian Reports.
Energy expert Dr Krishna Persad says while the recent audit of this country’s oil reserves has estimated that our unrisked prospective resources is three billion barrels, he is a bit more optimistic. He has predicted five billion barrels.
“They said 3.2 billion barrels of oil and my figure is perhaps about five billion in terms of oil. I am not far off but I’m just a little bit more optimistic than them,” Persad said.
On Wednesday Energy Minister Franklin Khan revealed that an audit of T&T’s crude oil reserves and resources for the year ended 2018 prepared by Netherland, Sewell and Associates Incorporated (NSAI) revealed significant increases in this country’s oil prospects.
“Proven Reserves jumped by 10.3 per cent from 199.5 million barrels to 220.1 million barrels. Probable Reserves rose by 16.6 per cent from 85.5 million barrels to 99.7 million barrels and Possible Reserves climbed by 8.5 per cent from 124.8 million barrels to 135.5 million barrels,” according to the audit Khan said.
“The NSAI’s best estimate of our Unrisked Prospective Resources is now a mammoth 3.2 billion barrels. This is an increase of 773.4 per cent over the Unrisked Prospective Resources at January 1, 2012 of only 368.2 million barrels,” he said.
Persad said new discoveries are extremely good.
“There is more gas and oil to be found and I can say that with a great deal of certainty of the probability of this being true because we have seen that the source rock is present, that the discoveries are being made, and that the discoveries include gas. In the east coast there is indications of liquid hydrocarbon down below,” Persad said.
Persad gave a breakdown of the prospectives around the country.
“I have always considered Herrera’s onshore in the Southern Basin to be highly prospective for oil. Touchstone is proving us all wrong because they thought they were going to get oil too. They made two substantial discoveries recently of gas and gas condensate,” Persad said.
“In my opinion the prospects onshore in that area and the southwestern peninsula are substantial for both oil and gas. The prospect for oil and more gas in the deep waters offshore the east coast are even more substantial,” he said.
“In terms of onshore I am thinking we are looking at maybe two tcf (trillion cubic feet) and maybe 500 million barrels of oil,” Persad said.
“I have said publicly that we are looking at probably another 50 tcf of gas to be discovered in the east coast. I also believe that there is at least another three to four billion barrels of oil to be discovered in that east coast province area and in addition to that in the Gulf of Paria probably another 500 million to be discovered,” he said.
Former energy minister Kevin Ramnarine said the audit findings are very exciting but more needs to be done.
“What that 3.2 billion number is saying is that it has identified the significant potential in the deepwater and again all that would not be possible if the ministry of energy did not have three deepwater bid rounds between 2010 and 2014,” Ramnarine said.
“So, as far as the deepwater goes, there is very exciting stuff. The challenge for deepwater is the cost of development because of the depth of water and the distance from shore it becomes very expensive to develop those natural gas fields and to develop any oil which is found.
“The challenge for T&T’s government going forward is to work with BHP to make sure they are able to successfully commercialise all this natural gas that they have been finding. If they do find oil in deepwater which I expect then that just helps and enhances the economics of the entire development.
“But the deepwater is the future of the hydrocarbon industry in Trinidad and, so far, the news has been very good so I am very optimistic.
“I have always been very optimistic about our deepwater and I think that Broad Side is going to be a well which we will all have to be closely monitoring because the outcome there could change a lot for T&T,” he said.
Ramnarine said T&T is doing itself more harm than good by not having more deepwater bid rounds.
“T&T is shooting itself in the foot by not putting out more deepwater acreage in a bid round. Our deepwater acreage has therefore become very attractive because BHP has been successful so if we put out the unlicensed deepwater acreage we will obviously attract a lot of attention from major international players and what we want is as much interest and activity in our deepwater,” he said.
“I would say that we would need to have a new deepwater bid round as soon as possible and the reason for that is that since the year 2014 BHP has been working on developing the deepwater. They have done the largest 3D seismic survey ever in this country’s history in deepwater and they have drilled ten exploration wells in the last four years,” Ramnarine said.
“Seven of those exploration wells have encountered hydrocarbon so my point is this BHP has clearly derisked the deepwater. By derisking the deepwater what they have done is they have made the existing unlicensed deepwater acreage more valuable,” he said.
Last month when announcing the possibility of a new deep water bid round early next year Khan explained why one was not done during his five-year tenure.
“And seeing that this is the season I just want to say something that has been in the press for some time with regards by a former energy minister that this administration has not proposed any bid round over its five-year period,” Khan said.
“I would like the gentleman to know and the country to know you don’t just ups and have a bid round,” he said.
Khan said there are two criteria for a bid round.
“One, it must be licensed acreage so as minister of energy I cannot have a bid round onshore in the southern basin because all the acreage, by and large, is under license,” he said.
“Nor can I have a bid round in the Gulf of Paria because the Gulf of Paria, by and large, in the prospective acreage is under licence,” Khan said.
“It is very difficult to have a shallow water bid round because most of the acreage is under licence and would have made absolutely no sense to come out with a parallel deep water bid round while BHP was involved in some serious exploration,” Khan said.
Ramnarine said Khan was being contradictory since the energy ministry advertised back in 2016 a number of onshore blocks for which they invited nominations.
“And then strangely that onshore bid round we just never heard anything about it again,’ he said.
“What I want to say to Minister Khan is that it is not correct to say there is no unlicensed acreage left onshore. There is unlicensed acreage left onshore and I am also told that some of the acreage which is currently with Heritage. Heritage does not have the deeper rights that is the right to drill into the basement or deeper,” Ramnarine said.
“Mr Khan will be remembered by history as the only minister of energy to have never signed a production sharing contract. I think I signed 17 production sharing contracts in my time and ministers before me all signed production sharing contracts,” Ramnarine said.
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Another huge slide in TTNGL’s quarterly profits.
By Kyron Regis (Guardian).
After being hit with an 85 per cent slide in profit for the first quarter (Q1) of 2020, Trinidad and Tobago NGL Ltd (TTNGL) has revealed a profit for the second quarter ended June 30th 2020 (Q2) of $7.6 million. This successive quarterly reduction in profits amounted to $20 million or 72.5 per cent.
Moreover, TTNGL’s profit of $14.5 million for its half-year ended June 30th 2020 also represented a large decline of 80.2 per cent or $58.9 million.
In TTNGL’s unaudited financial statements, the Chairman Conrad Enill said: “The 2019 novel coronavirus disease (COVID-19) pandemic has ravaged the worldwide economy and the reduced economic activity has resulted in changes in the energy supply and demand patterns in 2020.”
Enill acknowledged that economies across the world have suffered declines in gross domestic product (GDP) during the first half of 2020, as compared to the previous corresponding period last year.
He continued to note that uncertainties persist across all energy markets, including liquid fuels, natural gas, electricity, coal, and renewables.
Enill added that crude oil prices averaged 35 per cent lower than in 2019 and Natural Gas Liquids (NGL) prices, which correlate strongly with crude and refined product prices, were also materially lower during the first half of the year.
For the six months to 30 June 2020, Enill said the volatility in the energy commodity markets driven by the impact of COVID-19 resulted in the precipitous decline of Mont Belvieu (MB) product prices, and significantly impacted the performance of the Company’s underlying asset, Phoenix Park Gas Processors Ltd (PPGPL).
The NGL Chairman indicated that recorded MB product prices were 44 per cent lower than the corresponding period in 2019.
He asserted that the impact of the lower prices was mitigated by higher price differentials recognized during the year, noting “differentials were 34 per cent than in 2019 and reflected PPGPL’s strong competitive position in the markets it serves, despite the impact of COVID-19.”
Enill said that PPGPL’s strong position is further strengthened by the continued strong demand for its products, which have remained relatively steady since the onset of the pandemic.
Additionally Enill noted “the company has benefited from a slight recovery in product prices, which has positively impacted its profitability in Q2 2020.”
The TTNGL Chairman also remarked that the effects of COVID-19 also disrupted the planned performance and markets of the petrochemical producers at Point Lisas, which translated into lower natural gas demand and lower gas volumes through the PPGPL facility for processing.
However, Enill added: “Positively, NGL content in the gas stream was 6 per cent higher than in 2019, and was a result of continued efforts by NGC to deliver higher NGL content gas streams to Point Lisas Industrial Estate.”
According to Enill, NGL production to June 2020 was 10 per cent lower than in 2019 and PPGPL continued to maintain high operating availability (over 99 per cent), and has sustained its focus on prudent cost and cash management.
Following the acquisition of the NGL liquids marketing assets of Twin Eagle Liquids Marketing LLC in February 2020, PPGPL created a subsidiary—Phoenix Park Energy Holdings (PPEH) to own and operate the assets acquired from Twin Eagle.
Enill expressed: “Since start-up, the performance of PPEH has been positive, and earnings from this acquisition are expected to impact PPGPL results positively in the short term.”
Notwithstanding a challenging market and operating environment, Enill posited that the TTNGL Board of Directors remains cautiously optimistic about the future and its investment in PPGPL.
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Significant fall in natural gas production
By Curtis Williams (Guardian).
T&T’s natural gas production plummeted in June to its lowest level since 2016 averaging a mere 3.110 billion standard cubic feet per day (Bscf/D).
The information is contained in the latest report on the energy sector which was released by the Ministry of Energy and Energy Industries on August 11th, one day after the general elections.
According to the figures from the Ministry, natural gas production declined from 3.5 Bscf/D to 3.1 Bscf/D or a fall of 400 million standard cubic feet per day (mmscf/d).
To put it into perspective the 400 mmscf/d is equivalent to all the gas used to power the entire country. It is enough gas to power Atlantic LNG’s Train 1 prior to its debottlenecking. It is also enough gas to run four methanol plants and an ammonia plant.
This represents a significant fall from production in 2018 which averaged in June 2018 3.81 Bscf/D and a year ago which was 3.45 Bscf/D.
Recently the Business Guardian reported that the upstream companies (BPTT,Shell,EOG, BHP) had been asked by the National Gas Company (NGC) to reduce their daily contracted quantities because there were a number of petrochemical plants that had shut down because the collapse of global prices for methanol and ammonia along while the relatively high prices for gas being demanded by the NGC had made them uncompetitive.
The NGC is the aggregator so it buys natural gas from the upstream companies and then sells it onto the downstream operators at a profit.
According to numbers from the Ministry of Energy BPTT was the major contributor to the decline in the natural gas production.
The Ministry report showed that BPTT’s production in June was 1.738 Bscf/D as opposed to 1.994 in January. That is a fall of more than 250 mmscf/d. EOG’s production also fell by more than a quarter or just under 100 mmscf/d.
In terms of usage LNG and methanol production were the worst affected.
Methanol utilisation of natural gas fell from 577 mmscf/d to 375mmscf/d or a fall of more than 200mmscf/d. This is a 35 percent fall in utilisation and probably reflective of the closure of plants.
The news is also not good for LNG usage which also fell dramatically from a high of 2.06 Bscf/D in April to 1.71 Bsc.f/D in June.
These numbers are all going to hurt government revenues since it means lower production of LNG and petrochemicals and in the petrochemical context, no taxes on profits from plants that are under significant pressure. It will hurt revenue from gas production since the royalty is on volume and the lower the volume the less money government gets.
There is however some better news as Heritage Petroleum led a 5000 barrels of oil per day (bo/d) increase in crude production in June when compared to May this year. In June, crude production averaged 56,316 bo/d compared to 51,218 bo/d in May.
The figure however represents the continued decline in production from the high in the 1970s of over 250,000 bo/d down to the relatively minuscule production today.
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Major oil and gas announcement expected.
By Curtis Williams (Guardian).
Prime Minister Dr Keith Rowley is expected to make a major announcement on oil and gas exploration success when he holds a news conference at the Diplomatic Centre this morning.
Sources have confirmed that the Prime Minister will reveal the good news at a joint news conference with the President BHP Billiton Trinidad, Vince Pereira and Minister of Energy Franklin Khan.
According to a media invite a live virtual press conference will be held to discuss the Return of the Invictus Deep Water drillship and the Drilling of the BHP deepwater Well Broadside- 1.
Earlier this year BHP’s Vice President, Exploration Sonia Scarselli in an exclusive interview with the Business Guardian spoke extensively about the Broadside well.
Scarselli said Broadside 1 would target a much deeper horizon.
She said: “So we will penetrate the shallowness of that interval where we encountered oil seeps in the Le Clerc and Victoria wells but we will now go drilling deeper than we have done in the past. Since we have a much larger understanding, a better understanding of the full hydrocarbon systems and potential for the area. In the Le Clerc well we encountered the oil seeps. So part of the well we will drill the next couple of months it is to test this oil potential.”
Scarselli said in the original Le Clerc well, the plan was to drill to relatively shallow depth but when there was gas and then oil seeps were found so the company decided to continue drilling given that it was a frontier basin and wild-cat exploration it wanted to take as much information as it could from the well and only stopped when the pressure came too much to continue. So now they have a better understanding of the geology BHP will take another look at the acreage.
BHP’s vice president, Exploration, said in the case of the North the company does not expect to find oil because she believes that the source rock is over mature.
“We tested that so we don’t expect to find any lead with that. In the South is a different story, so in the South, because we encountered the shallow section was biogenic so it was locally sourced. So expect to go deeper to find oil because we don’t think the oil has migrated shallow enough. It takes a certain amount of time for the oil to migrate through the rocks and because of the level of maturity in the south we don’t think it has migrated that shallow yet,” Scarselli said.
She said there are similarities and differences in the Guyana and T&T deep water and the company incorporated the information from Guyana to a mega-regional view of the basin. She said the source rock we have in T&T deepwater is a Cretaceous source rock in the Cenonian age which is similar to what there is in Guyana and most of the Central Atlantic.
She noted, however, in terms of the fold of play, there are differences. “There are differences in water systems and age compared with where we are looking, the main difference is the age of maturity of the source rock in Guyana vs T&T. So certainly we’ll learn a lot from the experience there but we’re also looking at different petroleum system overall,” Scarselli said.
Scarselli said BHP’s strategy is to target tier-one opportunities. She explained: “We want to find the traps so we can deliver multiple hundred million barrels of discovery. So that is like really the minimum threshold that we are looking and it could be a set of multiple traps that can deliver this amount. Normally when you open a new play you can find maybe some larger traps and smaller traps but necessarily you need to have quite a large amount to move forward with the development, because we are targeting large trap we are looking for the deepwater it is sort of numbers we are talking about,” Scarselli ended.
Today we will find out the extend of their success.
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BPTT starts up Galeota expansion project
T&T Guardian Reports.
BP Trinidad and Tobago LLC (bpTT) has announced the safe start-up of the Galeota expansion project (GEP).
President, bpTT Claire Fitzpatrick said this was a proud moment for the company as it culminated years of work and effective partnerships between teams, contractors and the many people who worked together to safely deliver the project. “Although this project does not directly increase production, it is an important investment in safe, reliable and environmentally compliant facilities that will support our continued operations over the coming decades,” Fitzpatrick explained.
In a statement the company noted the project has been under construction since late 2016 began September 28, 2020, reiterating that the completion represented a major milestone for bpTT.
“The Galeota Terminal is core to bpTT’s operations and is essential to T&T, as it processes all hydrocarbon liquids produced from bpTT’s 15 offshore facilities as well as from other upstream producers,” the company said.
It noted Galeota terminal began operations in 1972 and the GEP was necessary to maintain the safe, reliable and compliant terminal operations for the next 20 plus years.
The new facility will restore the terminal’s capacity to process 20,000 barrels per day (bpd) of condensate.
“It will also make our operations safer, by separating the entrained gas and produced water more efficiently, thereby reducing condensate volatility,” bpTT said, adding that it also provides increased safety for personnel as a newly constructed control room will now move operators further away from the plant.
In addition, the facility has the capacity to efficiently process 50,000bpd of produced water and enables compliance with T&T’s water pollution rules.
At its peak during construction, GEP employed approximately 900 people, 96 per cent of whom were nationals, bpTT said.
It added over the past four years, the project also brought significant benefit to the community of Mayaro and its environs through partnerships with local suppliers for the provision of various services and contract labour.
The GEP also invested TT$3.5 million into the community, mainly supporting education programmes.
These provided grants to students wishing to pursue Caribbean Advanced Proficiency Examination (CAPE) and scholarships to those wishing to pursue tertiary level education, the company said.
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Sale of NP stations and port privatisation long overdue, says PwC
By Joel Julien (Guardian).
The sale of gas stations owned by National Petroleum and the privatisation of the port of Port-of-Spain are two measures which are long overdue, Brian Hackett the Territory Leader of PwCTrinidad and Tobago has said.
Hackett made the statement in the PwC’s budget memorandum titled Recover and Reset - 2020 and beyond.
“We applaud the firm decisions taken by the Government to take some initial concrete steps to restructure the state sector, reset the economy and curtail expenditure both at the public and private sector levels. In particular, we applaud the removal of the imposition of fixed retail margins for all liquid petroleum products for petroleum retailers and dealers,” Hackett stated.
“Additionally, gas stations owned by the Trinidad and Tobago National Petroleum Marketing Co (NP) will now be offered for sale to the private sector with first preference to be given to existing dealers and concessionaires,” he stated.
“While it is not the only, or indeed, the most important criterion that should guide the divestment of public assets, we do await further details on how this divestment will be configured to ensure that value to the people to Trinidad and Tobago is appropriately maximised whilst ensuring the widest practical coverage of retail stations remains within our twin island state,” Hackett said.
He then mentioned the government’s plans to “privatise the managerial, operational and financial responsibility for commercial activities of the Port Authority of Trinidad and Tobago.
“We are hopeful that this privatisation will be undertaken in the context of a coherent and implementable national port policy. Both measures have been long overdue, and we look forward to further initiatives in the coming years to reduce the regrettable extent to which the state still participates in our local economy,” Hackett said.
Hackett said it is PwC’s hope that the COVID-19 pandemic will continue to provide real and sustainable impetus to implement much needed measures such as the digitalisation of the public sector and the narrowing of the digital divide across the nation.
“Given the systemic inequality which the pandemic has further revealed with respect to the ability of all of our students to gain access to effective tuition, we are hopeful that the initiative to provide 45,000 internet WiFi hotspots for students in need, the expansion of existing Wi-Fi hotspots and the establishment of internet cafes across all areas of the country will have the intended effect of balancing the scales within our education system and indeed our wider society,” he stated.
Hackett said the pandemic has shown us exactly how interconnected and interdependent we are.
“However, it also resulted in one positive for our small nation as digitalisation could provide regional and wider global opportunities. The digitalisation of the country could be the catalyst to move many businesses from a market of potential buyers of 1.4 million to over 7 billion,” Hackett stated.
“From our PwC experience, I can attest that had we not made the move a few years ago to digitalisation of almost every aspect of our operations, the adaptation to the so called ‘new normal’ would not have been as seamless for our team and to the contrary, it would have required a sudden and deep learning curve for our business,” he stated.
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PM: Govt won’t allow gas monopoly
By Peter Christopher (Guardian).
Government will not allow the gas situation to become worse.
This was the word from Prime Minister Dr Keith Rowley yesterday as gave assurances that the decision to privatise National Petroleum gas stations will not lead to a monopoly.
“It will be very transparent and it will be very open. And if course we will not, nothing is reserved for anybody. Conglomerate or solitaire. The situation is that we will ensure that there is transparency in what we do. Nothing is reserved for anybody,” Rowley said following the opening of the new Diego Martin Health Centre in Diamond Vale.
During Monday’s Budget presentation, Minister of Finance Colm Imbert announced the liberalisation of the fuel sector as well as the intended sale of all NP gas stations, with operators to be given first preference.
However, this has brought fear of a monopoly among private entities and increased costs at the pumps as a result for the public. But Rowley tried to allay those fears.
“Of course, the Government will have to ensure that whatever we create does not worsen our situation or give any undue advantage or create any disadvantage,” he said in response to questions of a potential monopoly emerging.
He also downplayed the possibility of runaway prices adversely affecting the wider public, as he said it placed a level of responsibility on the consumer to manage the market as he reminded that National Petroleum never controlled the fuel prices.
“That was never NP’s role, fuel prices were a cabinet decision. It will be more of a market situation because of competition in the market, the consumer will now play a bigger role,” he said.
“If the people who are now going to get involved in owning gas stations and they are competing, you wouldn’t go to a gas station where the price is higher would you?
“And by the same token, if the price of oil goes up and takes the price of fuel up with it, you wouldn’t run up and down with your car because you feel to drive? You would make a decision as to when you travel, how many people you carry if you have family, how often you travel, how much fuel you burn, so you now have the lever in your hand to determine how you influence your fuel expense.”
Rowley also responded to complaints from used car dealers, who expect their market to collapse amid the removal of tax concessions for the imported vehicles and the reduction of the importation of the age of used cars to three years. He explained that the importation of cars was not a national priority at this time.
“I would simply say to the people in the car business, used car, unused car and whatever, if I have a choice to make between ensuring we have foreign exchange to buy medicine for the hospital, I would restrict the expenditure on motorcars. Because one thing this country is not short of is motorcars, but we cannot be short of medicine for the hospital. And that is my answer,” Rowley said.
In fact, he revealed that consideration was made to completely ban the importation of cars.
“You know there are some countries in situations like this where all they did was ban the importation of cars. Case closed,” he said.
“We didn’t do that. But yet that was an option that we had you know. And I must tell you we considered it you know. It was considered. But we said we will take the next option, which is to restrict the importation.”
Rowley also explained the reasoning behind the decision to privatise the Port of Port-of-Spain, which he said would raise the level of the port. (See editorial on Page A12)
“At this point in time, the option that is best for us is to get it into a situation where the Port of Trinidad and Tobago could be a recognised port by those who use the world’s transportation service,” he said.
“We are receiving the outcome of our decades of management. Getting weaker and weaker and weaker and weaker in port business. What foreign investment would do, or even local investment for that matter, if we get it out of the public service into the hands of private sector.
“They automatically will put the port into an international perspective. The investment that they will make to upgrade the port and so on, they will focus not just being the Port in Port-of-Spain for colloquial business and reasons but see it in the context of international transportation.”
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Petroleum dealers feel liberated as State sells gas stations
PAULA LINDO (NEWSDAY).
Petroleum Dealers Association (PDA) president Robin Narayansingh is describing government’s decision to sell the gas stations operated by National Petroleum (NP) as liberation from the total dominance of the state-owned enterprise.
In a phone interview Wednesday, he noted that Government has offered assistance to existing occupiers to purchase the stations. "The dealers needed security of tenure." When NP operated the stations, he said, the title was vested in its name and its executive decided how the operation was run. The dealers, on the other hand, were the ones who made personal and financial sacrifices. "Petroleum dealers now have a vested interest... You have a vested interest when you own something and you can make a proper offering to your community.”
Narayansingh did note, though, that without a supply agreement binding them to NP, dealers would now be in a position to deal with any fuel supplier they want when they purchase the property. "So, we’re not sure how this is going to work out and we want to know if NP wants to engage the PDA in ironing out a supply agreement with the dealers. You want stability in the country so people could get fuel to do their business, you want proper agreements, you want clarity in the way business is done.”
The fuel subsidy ends in January, as announced in the budget on Monday, and dealers will be able to set their own margins. Current margins on fuel are six per cent, which can be challenging to dealers when financing and labour costs are added, Narayansingh said.
“We would have to figure out a proper margin but it wouldn’t be more than ten to 25 cents per litre extra, so there’s nothing to say it would be exorbitant, because people have been talking about price gouging, and this might go down depending on what the wholesale price of fuel is...There are good people and bad people. Even with an agreement to the price, each dealer would set their own price point; competition will benefit the consumer."
Narayansingh said the cost of a gas station would vary depending upon whether it was being built from scratch or was an already existing facility.
“If you’re building one from scratch, you have to look at the value of the land, the age and type of equipment being installed, and labour costs for operationalisation. If it’s an existing facility, there are a lot of tanks that need changing, so those would be cheaper; if tanks were changed it would cost more, depends on where are in value chain, and also the location of the gas station.”
Addressing concerns about cartels being formed to fix gas prices, Narayansingh said under the Petroleum Act, the energy minister is the only person who can grant a license for the operation of a gas station. He said he was sure the ministry would conduct background checks on applicants to decide who was suitable to run a station. The current license fee for the operator of a gas station is $4,000 for a large-volume station, $2,000 for a medium-volume station and $1,000 for a small-volume station.
Narayansingh said liberalising the fuel market will change the landscape of T&T and make dealers more interested in their business.
“They will get more products to offer to the community, it’s a big move for the gas station industry. I want to allay any fears that people may have. Petroleum dealers are responsible people...As long as there is a proper supply of fuel, the gas station dealers will always be there to provide that service to the nation.”
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Union slams gas-station sale
YVONNE WEBB (NEWSDAY).
THE National Workers Union (NWU) is concerned about government’s decision to sell NP gas stations and remove fixed pricing on petroleum fuels on the domestic market.
In a joint statement, Cecil Paul and Gerry Kangalee said this issue was not raised in the election campaign and the country is owed an explanation.
“This decision is made by a newly elected government facing a pandemic and, like other countries, besieged by economic difficulties.
“Is our government selling the family jewels cheaply to deal with money shortages? These economic difficulties do not justify these decisions.”
Kangalee is the NWU’s education and research officer. Paul is a former first vice president and chief labour relations officer at the Oilfield Workers Trade Union (OWTU).
They said the decision to sell and remove subsidies should be of major concern for the population, particularly with petroleum dealers fixing their own prices at retail outlets.
“Once the fuel subsidy goes, the cost of living will climb ever upward, as will the closure of many small and medium businesses.
“Fuel prices are a major input into the final cost of most products we consume in this country ,as road transport is our only mode of moving goods and all materials purchased both at the wholesale and retail sectors on a daily basis.
“Hence the need to control this major factor of pricing, especially for essential goods and services.”
The trade unionists said the big question is why government is removing this major protective mechanism for a majority working-people population.
They said government’s announcement that NP gas stations will be sold to private dealers is in fact transferring major economic assets of the people, held in trust in a state enterprise, to private businesspeople without the people’s consent.
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bpTT begins work on new natural gas development
By Curtis Williams (Guardian).
In a press release the company said Matapal is a subsea development comprising three wells that tie-back into the existing Juniper platform.
Matapal will deliver gas into the Trinidad gas market from resources discovered by the Savannah exploration well drilled in 2017. The development will have a production capacity of 400 million standard cubic feet per day (mmscfd).
“The drilling operations for Matapal commenced on 8 October and are being undertaken by the Maersk Discoverer, a semi-submersible rig which arrived in Trinidad on 3 September 2020,” the release read.
The Matapal project is located approximately 80km off the south-east coast of Trinidad. The Matapal field is located approximately 8km east of Juniper, in 163 metres of water depth.
According to bpTT the project consists of both greenfield and brownfield activities with the majority of brownfield fabrication being completed locally.
Claire Fitzpatrick, bpTT president said “Matapal is an important part of bpTT’s portfolio to continue to underpin our existing gas contracts. This is bpTT’s second subsea development in Trinidad and the spudding of this well is a key milestone as we work toward first gas in 2022.”
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Touchstone records significant find at Cascadura
By GEISHA KOWLESSAR-ALONZO (T&T GUARDIAN).
Touchstone Exploration Inc has completed drilling the Cascadura Deep-1 exploration well on the Ortoire exploration block, onshore in T&T, noting that it encountered significant hydrocarbon accumulations based on drilling and wireline log data.
The company said wireline logs indicated natural gas pay totalling approximately 1,315 net feet in four unique thrust sheets in the Herrera sands from a depth of 5,455 feet to total depth.
Drilling was suspended prior to the planned total depth of 10,600 feet due to high pressure gas zones encountered while drilling, the company said.
The Cascadura Deep-1 exploration well was spud on October 27.
Paul R Baay, president and CEO, noted that he was pleased the Ortoire block continues to outperform expectations.
“The Cascadura Deep-1 well is the best well we have drilled on the Ortoire property to date and it has provided three key pieces of information, primarily that the Cascadura field has numerous targets with each one of the thrust sheets providing its own unique opportunity,” Baay said.
He added it has also shown that the system is hydrocarbon charged and that in time the company will require more drilling horsepower to evaluate the deeper zones.
The company’s CEO James Shipk said the Cascadura Deep-1 exploration well confirms that this is a unique structure with tremendous potential.
“Although we were unable to drill to our planned total depth, the information gathered while drilling and the hydrocarbon accumulations encountered are truly exceptional.
“Not only did we encounter a massive section of turbidite deposits nearly 3,000 feet thick, we established the intermediate thrust sheet as a viable reservoir and expanded the known boundaries of the sands tested in the Cascadura-1ST1 well,” Shipk said.
The Cascadura Deep-1 well is the fourth of the amended five well exploration commitment under Touchstone’s Ortoire Exploration and Production Licence.
The company has an 80 per cent working interest in the licence but is responsible for 100 per cent of the drilling, completion and testing costs associated with the initial five exploration wells. Heritage Petroleum Company Ltd holds the remaining 20 per cent working interest.
(https://www.guardian.co.tt/image-3.2672396.128871.20201204124900.e945e2e256?size=1024)
Touchstone’s Cascadura well in the Ortoire Block which may be one of T&T’s largest onshore gas reservoirs. ...Courtesy Xavier Moonan
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Heritage signs $100 million deal with Government
RYAN HAMILTON-DAVIS (T&T NEWSDAY).
Heritage Petroleum Company has announced the completion of negotiations with the Government for a new exploration and production licence, which will combine the acreage of two major blocks on the west coast of the Trinidad.
The deal was sealed on Wednesday at the Ministry of Energy and Energy Industries (MEEI), Port of Spain and would see Government benefit from a $100 million payment from Heritage over a six-year period.
In a release sent to the media, Heritage said the new deal would combine the total acreage of the two areas into a 96,000-acre block for exploration – the single largest block on the west coast.
The two blocks belonged to Trinmar and North Marine until their licences expired in 2019.
Heritage Petroleum chairman Michael Quamina said in the release that the licence would further unlock the value of the company’s offshore resources.
“The new licence provides the security we need to continue to execute our commercial strategy in the offshore area,” Quamina said.
Energy Minister Franklin Khan congratulated Heritage for their performance over the last two years and lauded them as a flagship state enterprise.
“They have made, in their first year of operation, a profit of $1.4 billion, paying the State in excess of $800 million in taxes and from all indications they will repeat that performance in 2020 when the audited financials are completed,” Khan said.
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But what is the deal with Patriotic and the govt on the refinery?
http://www.looptt.com/content/govt-gives-patriotic-15-more-days-commit-us500m-petrotrin
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Exxon moving almost all supply work from T&T to Guyana by 2022
By Joel Julien (T&T Guardian).
As local capacity in Guyana continues to increase, ExxonMobil says more services are being moved from Trinidad and Tobago to the South American country, where it is the operator of the Stabroek, Kaieteur and Canje Blocks, a report from OilNOW has stated.
According to a recent interview with OilNOW at the Saipem Offshore Construction Facility in Georgetown, President of ExxonMobil Guyana, Alistair Routledge, said much has changed in Guyana from the early days when the company started exploration activities and made the world-class Liza discovery.
“In the early days, when we started exploration, there was no infrastructure, no expertise, no history to leverage so we had to utilise the existing capability, the existing facilities in Trinidad,” Routledge said. “Over time, now that we have that line of sight to more development, we can continue this investment journey and move more of that work, the facilities, the capability to Guyana.”
The supply chain capacity in the new oil producing country has been growing exponentially over the years.
A growing number of Guyanese companies have been entering partnerships and starting operations to service the expanding offshore activities where multiple exploration appraisal and development drilling campaigns are underway.
Local fabrication company Guyana Oil and Gas Support Services Inc. (GOGSSI) recently provided the workforce to Saipem for the assembly, testing, coating, and loading of massive subsea jumpers for the second phase of ExxonMobil’s Liza development. This work was previously done in Trinidad.
“I’m really excited to say that by sometime in 2022, virtually all of that supply chain, all of that work will have been moved to Guyana from Trinidad,” Routledge stated, pointing out that this will be a major milestone for the country and a significant step forward for local content development.
Already, GOGSSI and another local company—Industrial Fabrications Inc (InFab), are fabricating equipment for the Prosperity FPSO which is being constructed in Singapore for ExxonMobil’s third development in Guyana.
Additionally, as the largest local shore base facility – Guyana Shore Base Inc., continues to expand its operations and capabilities, other such facilities are also being planned in anticipation of around 10 FPSOs expected to be producing oil off the country’s coast in the coming years.
To date, ExxonMobil has found more than 9 billion barrels of oil equivalent offshore Guyana and is pursuing an aggressive exploration campaign that will see it drilling over 50 wells through 2025.
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T&T gets access to Venezuela’s Dragon Field
... as US agrees to waive energy sanctions
By Kejan Haynes (T&T Guardian).
Prime Minister Dr Keith Rowley says the United States decision to waive sanctions against Venezuela, clearing the way for Trinidad and Tobago to import natural gas from our neighbours, is “a significant and happy day” for him, his team, the people of Trinidad and Tobago and Caricom.
Rowley made the comment yesterday in response to a question about what the opportunity to develop the Dragon Gas Field would mean for the country financially. Working the math, the Prime Minister said T&T could benefit to the tune of around US$450 million with a “decent profit on the margin.”
“The United States Government has today approved Trinidad and Tobago’s development of the Dragon Field via an OFAC Waiver from sanctions with specific terms to be finalised,” Dr Rowley had read just moments before from a written statement during a press conference at the Diplomatic Centre.
“What this means is that the restrictions on the Dragon Gas Field development are now relieved and all relevant parties can progress the plans to result in natural gas from Venezuela.”
The United States, during the Trump administration, had placed strict economic sanctions on the Nicolas Maduro-led Venezuelan government in 2019 because it claimed the government was suppressing human rights in the country.
However, the terms of the waiver are still to be worked out, as the Prime Minister said there is still significant work to be done, but he noted it was “a giant step forward.”
The license has been granted for two years with the option to extend, although the T&T Government originally asked for a ten-year license, Rowley said. The exact start date of the license is also yet to be worked out.
He acknowledged the US could easily update its sanctions against Venezuela, which could impact the deal. However, the Prime Minister is choosing to remain optimistic, adding there is nothing in the terms so far that the Government could not meet.
Rowley declined to say what the US was getting out of the deal.
The US, however, imports $231 million worth of urea ammonium nitrate fertilisers from T&T and stands to benefit from clean fuel and fertilisers if the deal goes through.
Explaining some of the particulars of the deal, Energy Minister Stuart Young said the license was granted to T&T.
“NGC will be the body that will be used to transact the deal working along with Shell, and this is for the Dragon Field.”
Rowley said there are a lot of terms to be finalised between T&T, Venezuela and Shell but said the highest hurdle has been crossed and the development can be accelerated.
The fields will still be owned and run by Venezuela’s stated-owned Petróleos de Venezuela (PDVSA), but Shell will be the operator in the field, Rowley clarified.
“The field is a PDVSA field,” Rowley said.
“Whatever license we get from Venezuela to operate the field, Venezuela would be involved in that.”
Development will not be immediate though, as Rowley could not give a time frame for first gas, saying he would have to be advised by Shell and the Venezuela government. He said it needs to be soon, however, because the market needs the products.
“We’ll be going full speed ahead to get it to market at the earliest opportunity,” Rowley said.
“It’s not going to be tomorrow. It’s not going to be 2023 because there’s a lot of work to be done, a lot of lead time, and a lot of engineering work to be done.”
One of the major caveats of the deal is the requirement T&T shares the spoils with Caricom nations.
“One of the main conditions is that we give priority to supplying our Caribbean neighbours who need it,” Rowley said.
He thanked the Dominican Republic President Luis Rodolfo Abinader, saying he was instrumental in the discussion of energy security in the region, and adding that country looks to T&T for energy supplies. Jamaica will also be a major beneficiary under the agreement.
Rowley specifically thanked Guyana President Irfaan Ali, Suriname President Chan Santokhi, Barbados Prime Minister Mia Mottley and Antigua and Barbuda Prime Minister Gaston Browne and Prime Minister of The Bahamas Phillip Davis.
“All of whom have been in Trinidad and Tobago’s corner pushing us to this point of encouraging the United States to do this,” Rowley said.
He said the cost to the country would be minimal, namely legal fees “very small” in comparison to what can come out of it.
When asked if Venezuela could not receive cash payments, he said that wasn’t a problem because it’s been dealt with before, saying it could be paid for in many ways.
Told that he had warned on Sunday of “difficult days” ahead in the energy sector and asked if the deal changes his mood, the PM said, “A little bit.”
“The infrastructure to handle these kinds of resources to bring to the world market usually needs a horizon of 20-25 years if you’re going to make new investment. So, if your reserves are only dribbling along with a five or ten-year horizon, you can’t look to any new investment. So, having access to gas fields outside of our border, this is a seminal development because it’s the first time we have had this opportunity,” Rowley said.
Following the announcement, US Ambassador to T&T Candace Bond said it reinforced the relationship between T&T and the US.
“Today, we reinforce the closeness, strength, and depth of our over 200 years of friendship and cooperation. Upon my arrival, I promised to work to further strengthen our countries’ unique bond, to deepen and grow our already close relationship, and to ensure that our cooperation continues to yield positive results for both of our countries,” Bond said.
“We share Trinidad and Tobago’s urgency in contributing to global energy and food security. We have listened to the Government of the Republic of Trinidad and Tobago’s message that it has the capacity and willingness to ameliorate economic and humanitarian crises around the region and the world.”