Caribbean
companies thrive on ethanol tariff loophole
The Trinidad Guardian
Port Spain
Petroleumworldtt.com 04 02 07
The fact that our hydrocarbon resources are a finite
resource has led to repeated calls for the diversification
of the economy away from its reliance upon the energy
sector. This over-arching policy of diversification
has contributed to a lack of support for the energy
services sector. This lack of support needs to be
reversed.
The
energy services sector is probably the most competitive
sub-sector within the overall services sector of
our economy and it has the ability to develop competitive
exports of services and add value to the economy,
even after our hydrocarbon resources are exhausted.
Definition
In
T&T, the energy services sector has traditionally
been seen to comprise those firms who provide direct
services to the oil and gas exploration and production
sub-sector.
This
includes services such as seismic data acquisition,
geological mapping and positioning services, engineering
design, project management, drilling services, fabrication
of oil and gas platforms, installation of pipelines,
operations support, provision of transport and logistical
support, and maintenance of facilities.
These
are the activities considered to comprise “petroleum
industry: service contractors” by the Central
Statistical Office (CSO) in the national gross domestic
product (GDP) calculations.
There
are, however, a number of other activities that
are also considered to be energy services: such
as the distribution of petroleum products or natural
gas by pipeline and the generation and distribution
of electricity.
The
Central Bank tends to include both the service contractors
and the distribution of petroleum products and natural
gas under an “energy services” heading
in their reviews of the economy, though not the
generation and distribution of electricity (which
is measured under a “utilities” heading
in the national GDP date).
There
are also a number of other services such as research
and development, advisory, consultancy and training
services that are often procured by the energy sector,
but are categorised in the “business and professional
services” or “education and cultural
services sectors” in GDP figures.
The
STCIC advocates for a broad definition of energy
services for T&T, given the importance of this
sub-sector to the economy.
Why
energy services?
The
energy services sector is one of the most competitive
sectors of the economy and represents one of the
best opportunities for sustainable development.
The domestic energy services sector has never been
protected behind trade barriers and has always had
to compete with international firms operating in
T&T.
This
has meant that local energy service companies have
had to be internationally competitive if they have
wanted to win business from the major multinational
customers in the exploration and production and
petrochemical sectors.
Services
The overall services sector contributes more to
overall GDP than either the manufacturing sector
or the petroleum sector, though its percentage contribution
has fallen over the last few years with the very
rapid growth in the petroleum sector.
In
terms of employment the overall services sector
is the major employer, accounting for more than
80 per cent of jobs. The services sector has contributed
many of the new jobs created in the recent past,
especially in the construction sector.
Within
the services sector, “energy services”
is one of the most important sub-sectors, accounting
for 12 per cent of service sector GDP (that is the
service contractors, plus the distribution sub-sector),
ranking fifth after “distribution and restaurants,”
finance, insurance and real estate,” construction
and quarrying and government.” (See pie chart).
The
energy services sector is the major employer within
the T&T energy sector, with “service contractors”
accounting for about 33 per cent of petroleum sector
employment.
Given
the important of the energy services sector to the
economy, the STCIC has lobbied the Government to
include energy services among the list of sectors
targeted for government support.
Export
markets
There
are significant opportunities for T&T companies
in the energy services sector to access export markets.
The
recent announcement from the Prime Minister about
potential co-operation between T&T and Venezuela
in the energy services sector provides a good opportunity
for T&T companies to access the lucrative Venezuelan
market, especially as the demand for technical services
may be growing with the anticipated withdrawal of
expertise from amongst the international operating
companies.
Other
export markets in the Americas include Brazil—which
now has the second largest reserves in Latin America—and
the mature oil and sectors in Mexico, Argentina
and Colombia, and the small but growing markets
for services in Cuba and Suriname.
In
addition, there are active exploration programmes
planned in Jamaica and in Guyana and potential markets
for energy services in the many large oil refineries
found through-out the Caribbean Sea.
The
T&T energy services sector already accesses
all of these markets, to some extent, and with a
supportive policy environment further penetration
of these markets could be made.
The
thrust for increased diversification of the economy
should not lead us to ignore the potential of the
energy services sector to sustainable development,
even when our hydrocarbon reserves are exhausted.
Feedback can be sent to Deven Basdeo at deven@southchamber.org.
Trinidad
Guardian
Thursday 29th March, 2007
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©2005-2006 Trinidad Publishing Company Limited
. All Rights Reserved.
