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The Trinidad & Tobago Business Guide (TTBG, 2009-10)

ENERGY Good news and bad

ENERGY Good news and bad news Oil and gas production may be down, but the hunt for new resources is being stepped up, along with new downstream industries, port facilities and industrial estates BY DAVID RENWICK One of the unwelcome characteristics of the Trinidad and Tobago energy sector in 2009 is likely to be a continued erosion of the level of oil production, which slumped to 107,000 b/d at one point in 2008, compared with average output of 144,266 b/d as recently as 2005. This had nothing to do with the collapse of world benchmark oil prices in the latter half of 2008, which forced producers in other countries to cut back on output. It had more to do with geological and infrastructural factors peculiar to Trinidad and Tobago. Production decline Geological constraints affected output from the BHP Billitonoperated Angostura field in Block 2c off Trinidad’s northeast coast. Crude production there fell by more than 50 per cent over the threeyear period 2005-2008, because the reservoirs in the Oligocene horizon from which the oil is produced proved complex. At the same time, offshore Trinmar fields in the Gulf of Paria, operated by the state company Petrotrin, faced infrastructural difficulties. The poor condition of wells and pipelines, not to mention safety at production stations, combined to slash almost a third off production, which stood at 33,597 b/d in 2005. Since Trinmar is today the single biggest oil producer in the country, any downturn there is likely to have a severe effect on crude output as a whole. Rampersad Motilal, the outgoing president of Trinidad and Tobago’s “energy chamber”, the South Trinidad Chamber of Industry and Commerce (STCIC), has made a point of lamenting how little attention was paid in 2008 to the “very serious decline” in domestic oil production. He stressed the fact that oil production was still “a major contributor to revenue and a consumer of services, especially services from local companies, many of which are located in the south [of Trinidad].” It may well be argued that while this is unfortunate, Trinidad and Tobago is now a gas economy, not so? True; but to underscore Mr Motilal’s point, TT$40 out of every TT$100 in central government revenue from petroleum activity Table 15 Non-associated natural gas reserves Trillions of cubic feet (tcf), January 2008 Proven 16.99 Probable 7.88 Possible 5.88 Total 30.76 Identified exploratory resources 31.25 Unidentified exploratory resources 21.91 Total of potential resources 83.92 Source: ENERGY Caribbean/Ryder Scott/Ministry of Energy and Energy Industries emanates from oil production, and therefore is a major component of income flow into the treasury. In any event, gas too suffered from a production decline in 2008, which is not likely to be reversed until well into 2009. In this case, however, the decrease can be directly attributed to the slump in world economies, especially that of the US. Ask Frank Look Kin, outgoing president of the state-owned National Gas Company (NGC), which trades and transports all the natural gas used domestically in Trinidad and Tobago. He will tell you that the company had lost “about 15%” of its market in the petrochemical and steel industries by the end of 2008, a situation that is expected to persist for most of 2009. This loss is due to the fact that demand for methanol, ammonia and steel has fallen in the primary US market, and the companies have less need for the gas which is used as an input into processing or as a source of heat. 40 TTBG 09/10

09/10 TTBG 41

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