Opinion
- Editorial- Commentary
Mary
King:
No business as usual in energy
Gregory
McGuire in his article headlined, "Jamaica
LNG Delay: Politics or Economics?", in the
T&T Review of June 4, 2007 claims that Prime
Minister Manning's decision to renege on the
MOU was forced onto him by a tight natural gas
situation which could delay indefinitely the
establishment of another LNG plant. However,
he sees that the recent settlement of the technical
issues regarding unitisation of the cross border
fields with Venezuela gives some hope that the
tight reserve situation would improve in the
short to medium term.
The
dilemma that faces the T&T Government is
to determine the optimum split of the incremental
gas reserves between low value-added LNG and
the range of domestic market applications (mainly
FDI owned) i.e. petrochemicals and metals which
are perceived to yield higher added value. If
we were to rectify the immediate tight gas reserves
position it will be business as usual. i.e. drawdown
on the reserves as quickly as possible to feed
the insatiable appetite of the north with basic
resources of which it uses a disproportionate
amount. For example the US uses 25 per cent of
the world's production of petroleum (oil and
natural gas).
What
is unfortunate about McGuire's article is that
he does not take into consideration that Peak
Oil phenomenon in world petroleum production
is fast approaching. Shell, a large international
oil company, sees this happening by the year
2025; the US Department of Energy thinks that
this can be postponed to 2030 while other analysts
see the date as somewhere between 2015 and 2020.
What this means is that the predicted world demand
for oil for 2030 of 121mb/d, increasing from
current demand of 84mb/d, will be economically
and geologically infeasible, impossible to satisfy.
Hence, petroleum and its products will continue
to fetch escalating prices with new and deleterious
effects on the world's economies and politics.
Some
claim that the large deposits of heavy oil in
Venezuela and Canada will alleviate this situation.
However, the costs of exploiting these resources
will be extremely high both economically and
in the use of natural gas. The experts do not
see any real impact of these heavy oil deposits
on the date of peak oil production, the date
on which demand will begin to exceed supply of
a diminishing resource. Few expect that oil prices
will collapse as they did before.
Surely,
then, how and when we utilise our diminishing
and increasingly valuable reserves, at least
that part over which the T&T Government has
some control, is of critical importance to our
future economic well being. As a small nation,
especially one with a large petroleum-based income,
we import much of what we need to survive. However,
almost everything we import, in particular food,
has the use of oil and its increasing price as
inputs. Were we to run down our reserves too
quickly at current prices without the reconstruction
of the on-shore sector paying for future increasingly
expensive imports would become very difficult
in a natural gas economy with no gas. Other petroleum
economies are already preparing for Peak Oil;
yet, our Government is in a state of denial as
to this phenomenon.
Saudi
Arabia has no intention of putting more crude
oil into the market, if even it could, to meet
the expected large increases in demand. Why should
it do so now, since this will simply bring prices
down temporarily? The Saudi Minister of Energy
is reported as saying that that country intends
to develop clusters of petroleum product manufacture
in preparation for the very lucrative markets.
Saudi Arabia owns and controls its resources
as a result of its nationalisation policies of
the 60's and 70's.
Chavez
of Venezuela and his colleague Morales of Bolivia
are engaged in similar nationalisations. These
countries can control their petroleum assets
and develop the associated manufacturing clusters
so that their people can benefit from the coming
high-demand low-supply world market. The multinational
companies in general control the exploitation
rate of our proven resources. They are clearly
not driven by the same philosophies as the Saudis.
Recall Lord Browne, before his exit, saying that
BP is no longer interested in maintaining oil
reserves or property. BP is interested in profitability.
Hence,
in a recent article I called for our Government
and their advisors to look closely at any reserves
or potential reserves that are steadily increasing
in value and are still under our control and
see how we can optimise their use. Surely LNG
is not such a use. Please let us understand that
Point Lisas may have different producing plants
but they do not form a cluster in the Porter
or Saudi Arabia sense.
Mary
King is
an article writer in one of the leading newsdaily
in Trinidad & Tobago ( maryking@tstt.net.tt
). Petroleumworld not necessarily share these
views.
Editor's
Note: This article was first publish in Trinidad
Express, Monday, June 25th 2007. Petroleumworld
reprint this article in the interest of our readers.
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Petroleumworld
24/06/07
Copyright ©2006
Mary King . All Rights Reserved.
