The South Trinidad Chamber of Industry and Commerce hosted
the annual T&T Petroleum Conference 2008 on Monday and
Tuesday this week at the Hilton Trinidad and Conference
Centre, St Anns.
Highlights of the welcome address by STCIC president Dr
The relatively high prices of energy combined with an increased
focus on the environment have reopened the international
debate on the future of energy.
This conference is taking place in the year that we are
celebrating 100 years of commercial oil production here
in T&T. This is a significant milestone in our long
history and demonstrates that we have a long history in
this sector and reinforces our conviction that we possess
a huge amount of knowledge and expertise to draw on as we
chart our path forward.
As a small country we have been quite successful in developing
our energy-based industries. This can be attributed to several
favourable factors including our oil and gas resources,
supportive government policies, respect for contracts and
property rights, an emphasis on training and development
of our workforce within the sector, and established expertise
in energy services.
There is also very broad support for the policy of moving
further downstream and for trying to facilitate and encourage
the production of higher value-added goods within T&T.
Much emphasis has been placed in the past on the monetisation
of gas and the maximisation of direct government revenues.
Lately we can detect a shift to deepening economic activity
within T&T particularly through projects with linkages
to other sectors of the economy. If we are to fully benefit
from our energy sector it is important that we move further
downstream and secure further value from each molecule of
T&T has benefited immensely from the primary petrochemical
sector. The sector has created thousands of well-paying
permanent jobs and a wide range of opportunities for entrepreneurs
in all of the support services required by the industries.
This includes world-class services associated with plant
construction, on-going maintenance and plant operational
We recognise, however, that in the context of a balanced
portfolio we may wish to target for our relatively small
energy sector in T&T, the share of primary petrochemicals
may already be approaching its proportional limit.
The local petrochemical industries have contributed significantly
to government revenues especially since the year 2000 as
they have enjoyed high prices over that period. With their
commodity-linked gas pricing structure, these products have
yielded revenues per unit of gas consumed which are comparable
to those from the export gas industries.
The rapid development of LNG exports from T&T has brought
many benefits to the economy, not least the high levels
of government revenue that it has generated. The development
of LNG spurred on the extremely successful gas exploration
and development programmes of the past two decades and has
resulted in a world-class LNG industry here in T&T.
Given our limited proven natural gas resource pool, and
over 54 per cent of gas produced being utilised by this
sector, we must now examine whether LNG in our current portfolio
has also reached or exceeded its proportional limit.
As we move further downstream the investment dollars per
unit of gas utilised increases. The number of jobs created
by each unit of gas used also increases. This underscores
the value of going further downstream.
Our success in developing our gas-based industries has,
however, raised important questions about sustainability,
given our limited gas reserves. In addition, with industrialisation
comes other concerns such as environmental and social issues.
The challenge for all stakeholders will be to find the appropriate
In 2007, the gas-based industries consumed an average of
3.9 billion cubic feet (bcf) of gas a day, of which 1.6
bcfd were utilised by the domestic market with 2.3 bcfd
going to LNG. This year, demand is expected to rise marginally
to 4.1 bcfd. By the end of 2010 the demand will rise to
4.7 bcfd as the four new projects which are currently under
construction come on stream (MHTLs AUM Complex, Essar
Steel, Alutrint and Petrotrins GTL plant). The existing
stock of petrochemical plants is relatively new or well-maintained
and one can only assume that the owners will look forward
to stable operations over the next 20 years. When LNG is
included, we will require approximately 34 trillion cubic
feet (tcf) of gas for stable operations over the next 20
years. If a lesser horizon of 15 years is considered we
will still require approximately 25 tcf of gas to satisfy
Viewed from this perspective, one can well understand the
urgency to stimulate exploration activities with a view
to shoring-up our current gas reserves.
In this regard we are pleased to note that the Government
is currently re-examining the fiscal regime governing the
energy sector so as to ensure that the taxation legislation
remains relevant to the needs of the sector and promote
the necessary exploration activities. This cannot come too
soon given our limited proven reserves and the changing
characteristics of the sector which now includes maturing
assets, smaller gas fields and deep water interests.
Reserves to production ratio
Recently, the reserves to production ratio has been the
subject of considerable attention and discussion from the
wider public. Such discussion is a positive sign that issues
affecting this most critical sector are today capturing
the interest of the average citizen.
With all the discussion of the R/P ratio for gas, we must
not forget about our oil production. This has been declining
fairly rapidly over the past couple of years and urgent
action is needed to reverse this trend.
Some 31 per cent of local land-based oil production comes
from the various lease and farm-out operators, joint ventures
and independent oil companies. These companies are mainly
locally owned and are collectively referred to as the independent
sector. This sector has produced an impressive 21 million
barrels of oil from mature oilfields mainly in the South
since its inception some 16 years ago.
It is roughly ten times more labour intensive than the overall
national oil and gas exploration and production sector but
today faces rising costs, royalties and payment of bonuses
to the Ministry of Energy such that it is under threat of
This would be very unfortunate and we would like to encourage
the Government to take this small but nevertheless important
sector into account as they consider their revised fiscal
regime for oil and gas production.
n Continued next week