By Atiba Phillips
In the Caribbean, Trinidad and Tobago is most reliant on energy for national revenue – currently accounting for around 32% of the country’s gross domestic product (GDP) – as opposed to tourism, which is the mainstay of most other Caribbean island economies.
T&T’s Energy Challenges
The country has seen its fair share of challenges in recent times based on its significant reliance on energy sector revenues. Not only from the precipitous fall in commodity global prices – prices fell from almost US$120/barrel in January 2013 to below US$30/barrel by the end of 2015 – but also due to falling domestic production levels.Crude Oil Price
77.57 USD/bbl – 31 May 2018Changing Fortunes
According to the Finance Minister, for the first five months of 2017, production had levelled off at 73,500 barrels per day (bpd), as compared with the 100,851 bpd in the corresponding period for 2010. Energy sector revenue, which peaked at $28 billion in 2008, fell to $1 billion in 2017.
But energy fortunes for this little twin island state may be changing…
- From a low of approximately US$30/barrel in early 2016, Brent Crude stood at just over US$78/barrel on 31 May, 2018
- The Finance Minister indicated a new tax regime to be introduced to provide incentives for increased exploration and production
- The Energy Minister indicated that upstream companies had committed to invest over US$10 billion in exploration and development activities over the next five years
- The investments include the BP Angelin project, which is due to come on stream in 2019 and is expected to provide in excess of 550 mmscf/d
- The other projects include De Novo energy exploration of Block 1 (a) off Trinidad’s west coast; the East Coast and North East Coast development projects of Shell, such as Starfish, Dolphin, Dolphin Deep, Endeavour and Bounty fields, and the Cassra and Orchid on the North East Coast
- BHP announced a deepwater natural gas discovery indicating between five to 10 tcf of gas with a high probability of oil
Indeed, there has been renewed interest and investment in energy exploration across the Caribbean.Grenada
Prime Minister Dr. Mitchell, indicated that hydrocarbons were found in “huge commercial quantities” by Global Petroleum Group (GPG), a little-known Russian company near to Grenada’s maritime boundary with Venezuela.Barbados
Minister with responsibility for Energy, Senator Darcy Boyce stated that Barbados had successfully negotiated exploration licences for two blocks within BHP Billiton and had awarded another block to Repsol.
He revealed: “BHP Billiton is now in the final stages of the Energy Information Administration (EIA) process, and once complete, we expect exploration to begin within the next year.”Jamaica
British firm, Tullow Oil Limited, has signed an agreement to pursue 3D seismic surveys of Jamaica’s south coastal seafloor as part of the island’s efforts to discover oil and gas in conjunction with the Petroleum Corporation of Jamaica (PCJ).Guyana-Suriname Basin
Oil exploration has stepped up significantly following ExxonMobil’s major discovery of more than 3.2 billion oil-equivalent barrels of recoverable resource on the Stabroek block, not including other more recent significant discoveries. As stated by Exxon, first oil is to be expected by March 2020, with production forecasts in excess of 340,000 bbls/day by 2022.
New Kinds of Opportunity for T&T
All this notwithstanding, Trinidad and Tobago continues to be an important oil and gas producing hub in the Caribbean and Latin American Region with major multinational energy giants, such as bpTT, Shell, BHP, EOG Resources and Perenco which continue to maintain a presence in the country.
Speaking of the massive finds in the Guyana-Suriname basin, Julie Wilson, research director of global exploration for Wood Mackenzie, said, “In Guyana and Suriname, gas is problematic because there is no market for it. Initially, gas can be reinjected into the reservoir, but if there are large quantities, eventually a use will need to be found…the lack of a local demand for power or industrial uses is the biggest impediment to gas development.”
She goes further to say, “A pipeline to the nearest market, Trinidad and Tobago, would be prohibitively expensive. Developing local power-consuming industries, such as chemicals or fertilizer, can take a long time – but it can be done.”T&T – Stalwart of Energy Experience
In Trinidad and Tobago, 99.8% of power generation is fuelled by natural gas and 0.2% by diesel. Further, T&T has the largest Liquid Natural Gas Train in the Western Hemisphere, and a number of industries, including ammonia and methanol, which are founded upon natural gas.
Indeed, Trinidad and Tobago has been involved in the petroleum sector for over 100 years and is still the largest oil and natural gas producer in the Caribbean. Trinidad and Tobago’s evolving challenge, is not only to optimize its domestic production and commercial outcomes based on its own domestic production, but now also be cognizant of the booming interest in the regional energy space. Trinidad and Tobago must become more engaged and market its expertise and energy competence in proactive and synergistic ways which will assure the country’s long-term economic prowess long after its own domestic energy reserves are depleted.View Companies Related to Energy for National Revenue - Who's Who