Energy ties that bind
By Janelle De Souza Thursday, February 14 2013
THERE will be an unprecedented meeting of Caricom energy ministers in Trinidad and Tobago. This was disclosed by Minister of Energy and Energy Affairs, Kevin Ramnarine at the opening of the Trinidad and Tobago Energy Conference 2013 at the Hyatt Regency Hotel in Port-of-Spain on January 28. In making this disclosure, Ramnarine hinted that the possibility of this meeting being used to discuss common and collaborative strategies in the area of regional energy security.
He said this meeting will be held under the auspices of Caricom’s Council for Trade and Economic Development (COTED) and will be timely, since Prime Minister Kamla Persad- Bissessar is due to assume chairmanship of Caricom when Caricom Heads of Government meet in conference in TT later this year. One of the topics which Caricom energy ministers are certain to discuss when they meet in Port-of-Spain on March 1, is the Caribbean gas pipeline initiative which was the brainchild of Persad-Bissessar’s predecessor, Patrick Manning. Persad-Bissessar has signalled that TT remains committed to participating in this initiative.
Ramnarine said it was against this background that his Ministry had signed a Memorandum of Cooperation with Grenada for joint exploration in Block 21 and one of the offshore blocks that borders the two islands. He revealed that a similar agreement is also in the works with Guyana.
Regarding Tobago, Ramnarine noted that he would be willing to discuss Tobago’s future in the country’s energy sector with Chief Secretary, Orville London, He said Tobago was “surrounded by prospectivity” in oil and natural gas with the development of Block 22 to its north soon, as well as Block 14 and 23a to its east, and Angostura field to its south.
“Tobago is positioned to play a very significant role in the Energy sector in TT and I think there has to be a degree of cooperation between the Central Government and the Tobago House of Assembly (THA) with regard to how that is optimized to the benefit to the people of Tobago and Trinidad,” he said. Both Ramnarine and Persad-Bissessar spoke about increasing economic benefits which Tobago could receive from possible energy discoveries in its waters and under the Constitution (Amendment) (Tobago) Bill 2013 which the Prime Minister piloted in the House of Representatives on January 16, five days before the People’s National Movement (PNM) registered a resounding victory in the THA election on January 21, winning all 12 seats in the Assembly. Persad-Bissessar and London are scheduled to meet after Carnival on February 21, to discuss a series of matters pertinent to Tobago. Both the Prime Minister and the THA Chief Secretary signalled their commitment to work together after the THA election.
Ramnarine also said land based oil and gas exploration would resume in Trinidad and Tobago once again with the launch of a bid round in the middle of this month. According to Ramnarine, his Ministry and Petrotrin were working together on a Land Based bid round where three blocks would be offered locally and abroad.
“The land based bid round is the first since the late 1990s and is a key component in our strategy to arrest the decline in oil production,” he said. “It is our plan to market this bid round in Houston, Calgary and in Aberdeen.”
In addition to the land based bit, the Ministry intended to launch the 2013 deepwater bid round in April, and will begin marketing the bid round next month at the NAPE Winter Expo in Houston.
Ramnarine also announced that the National Gas Company (NGC) of Trinidad and Tobago was in talks with three multi-national companies in TT to acquire their assets. He said, “NGC is a cash rich company. It has current assets of approximately TT$17 billion and its total asset base US$5 billion. It has an excellent credit rating and therefore the ability to raise capital is there.”
He said the Ministry believed it was better to put capital into investments that give higher returns and has strategic benefit for the country. Therefore, NGC was also considering investments in Africa. He noted that NGC was a mid-stream company, and believed it would be strategic of the company to own some aspect of gas production and the downstream sector.
Ramnarine said discussions on the development of the Juniper field had already commenced with British Petroleum; British Gas and EOG Resources had plans to ensure the continued deliverability of natural gas; while Niko and Centrica were ready to explore the north coast for natural gas.
Delivering the opening remarks at the event, BpTT Regional President, Norman Christie, said, in 2013 alone, the company intended to invest US$ 1 billion to fund drilling, as well as and seismic acquisition and surveys.
He noted there was renewed optimism about the Energy Sector, however there were reservations. He recognised that the publication of the Ryder Scott report, shook the confidence of many because of the declining reserves to production ratio. However, Christie reminded the audience, “These reports speak to proven reserves and do not attempt to address other categories of resources that are out there. It is the job of companies like bpTT to prove new reserves, which is exactly what the Savonette 4 discovery has done. So when the Ryder Scott team does its report this year it will now reflect this new discovery,” he said.
Christie also pointed out that there had been cost increases, increased global competition, and changes in the risk reward distribution across the gas value chain in the upstream and downstream sectors of the gas business. He pointed out that the old business models, which worked well in the past, would probably not be conducive in the future.
He said upstream players will not be encouraged to continue investing if structural and fiscal issues are not addressed. Therefore, he said, the industry, as a whole, needed to become more efficient with regard to regulation, use of labour, use of infrastructure, and managing the supply chain.
Energy Chamber president Roger Packer endorsed Ramnarine’s comments about regional energy, noting that exploration activities are taking place in jurisdictions such as Guyana, French Guiana, Suriname, Grenada, Bahamas, Cuba, Belize, Jamaica and “possible new exploration in Barbados.” “Regional approaches are needed in both policy development and in specific programmes, such as oil spill response capabilities,” Packer said.
“Trinidad and Tobago has to take a leadership role in these regional approaches,” he added. Last Thursday, Ramnarine told reporters at the post-Cabinet news conference at the Office of the Prime Minister that Cabinet had approved a national oil spill contingency plan.
Packer also called for “ a clear national strategic direction” regarding the future of the energy sector. “The Medium Term Policy Framework does provide us with some guidance but we need a more granular and precise strategy document for the energy sector,” he said.
“Most importantly, we need strong decision-making. Because there are many decisions that have an impact on numerous ministers’ portfolios, this means decision-making at the level of the Cabinet and not just from the Minister of Energy alone.
Packer further observed that when one looks at the respective fortunes of state oil companies in Latin America, “it is very apparent that the companies who restructured, implemented strong independent governance structures and publicly listed, at least some of their ownership, have performed much better than those who have maintained more traditional state controlled structures.
“The Energy Chamber of Trinidad and Tobago is clear that the reform process in the Trinidad and Tobago energy sector has to continue and be vigorously pursued,” Packer stated. Noting that the sector is “in the midst of another period of change,” Packer warned delegate that “without fundamental structural change, the future of our energy sector is uncertain.”
Noting the Energy Chamber needs to play a leadership role in its relations with similar organisation in some of the countries in the region and in the new hydrocarbon-producing countries in Africa where it has “targeted as export markers for our services,” Packer said, “We recently signed a memorandum of understanding with the Chamber of Commerce in French Guiana to do exactly this.”
Packer added that during the conference, the Chamber would have signed a similar agreement with the Sekondi-Takoradi Chamber of Commerce from the Western Region of Ghana.