Shifting
energy
By Rory Rostant
The Trinidad & Tobago Newsday
Port Spain
Petroleumworldtt.com
06 24 07
BPTT CEO Robert Riley believes revenues earned
by the energy sector in Trinidad and Tobago can
be invested in other countries in the region, saying
that stronger regional partners are needed if this
country was going to reach its competitive potential
The
reality, he said, is that TT was one energy exporting
country amongst 14 energy-consuming countries
and “will not on its own be able to realise
national economic objectives, including competitiveness.”
Referring to the Single Market and Economy (CSME)
as an attempt to achieve economic competitiveness,
Riley said revenues earned by the energy sector
in TT can be invested in other countries in the
region, by using its human and physical resources
to develop business, agriculture, tourism and financial
services.
He said to enhance its competitiveness and efficiency,
stronger regional trading partners for energy exporters
like TT were needed. This, he added was vital now
that the old industries, sugar and banana are all
but comatose; traditional preferences in Europe
having been withdrawn.
There
is need, he added, for greater effort to cushion
the blow of the high cost of energy to
the energy-dependent countries, noting “mechanisms
are needed to allow energy importers to utilise
more of their earnings to productive and competitive
investment.
“If
achieved, the cooperation between energy sufficient
and energy deficient countries can liberate
the potential for non-energy economic activities
and propel the emergence of a community of strong
trading partners.”
He
was delivering an address titled “Energy
and Competitiveness in the Americas” at the
Fourth OAS Private Sector Forum in Panama. The
theme of his presentation was: “Energy for
Development in the Americas: the Role of Public/Private
partnerships.”
Riley’s audience included, Martín
Torrijos, president of the Republic of Panama,
Ernesto Gutiérrez, President, Private Sector
of the Americas, José Miguel Insulza, Secretary
General, Organisation of American States, (OAS),
and Luis Manuel Kolster, Director of Public Policy,
General Motors Latin America, Africa and Middle
East.
Referring to the theme, Riley said there was a
relationship between energy and competitiveness
for those countries which export hydrocarbon products,
and those which were energy-dependent.
He said in the first instance, countries with
energy resources, like ours, are using the revenue
derived from energy to develop competitive downstream
industrial sectors in their economies.
But
the energy-deficient countries in the Caribbean
were not so fortunate. “The need to purchase
energy products at the prevailing high international
prices is making production in those economies
highly uncompetitive,” he said.
“These small and energy-dependent countries
of the eastern Caribbean and the relatively larger
Jamaica in the north are in desperate straits to
meet their energy bills, make payments on ever-increasing
mounds of public debt and at the same time attempt
to stimulate economic activity which could provide
the growth required,” he added.
The future looks no brighter as the International
Energy Agency (IEA) is projecting that oil prices
will decline only marginally to US$47 per barrel
over the next decade but will then rise steadily
to 2030. The indication, he said, from the IEA
is for gas prices to follow the lead set by international
oil prices
“The problems of our region are the problems
of energy and development worldwide: energy production
is concentrated in a few countries,” he noted.
As a result, investment in energy exploration
therefore is a challenge private corporations operating
in the Caribbean will have to confront with the
governments providing the correct framework, he
said.
He said the fallout effects from high energy costs
and mounting public debt in the Caribbean have
the potential to negatively impact on the region,
noting the Caribbean is the most heavily indebted
region of the world: public debt amounts to more
than the 100 percent of the GDP and debt servicing
payments require large annual leakage of foreign
exchange needed for investment.
He
said the challenge for the Caribbean is to find
mechanisms that could soften the blow of high
energy costs and in the process stimulate economic
growth and competitiveness in the energy-importing
countries of the region. He said even energy-exporting
countries like TT were facing challenges to avoid
inflationary expenditure as well as maintaining
competitiveness in the energy and non–energy
sectors for their exports. “The big point
is that social and political stability depends
heavily on getting the mix right as without it,
energy and competitiveness as a facilitator of
development will not have a chance,” he said.
He
said there now exists a highly successful partnership
between the State and private sector in Trinidad
and Tobago. After giving guests a history lesson
on energy development in TT, Riley said, “The
know-how of gas transnationals has been leveraged
as well as our strong balance sheets,” noting
LNG is now exported to the US and Atlantic LNG
now exports 15 million tonnes of LNG per year with
the start up from Train 4 of the plant.
Government, he said, had identified natural gas
as a product to be developed for commercial use
and has since laid down the policies for the utilisation
and down-stream development of raw materials.
Governments,
he said, must not commit the past error of leaving
the general population out of
the discussion. “People must be made to fully
understand why energy giants such as Venezuela
and Mexico would want to join an association with
small energy-dependent countries in the Caribbean,
Central and South America.”
He said things have changed a lot in the relationship
between the public and private sector.
“Time
was when undesirable gaps were allowed to exist
between the public and private sectors;
when multinational corporations could be perceived
to be the enemies of a State, when multinational
corporations seeking competitiveness were considered
exploitative.”
In the Caribbean, this no longer holds true.
Riley said he believed the opportunity now exists
for cooperation between the governments of Trinidad
and Tobago and Venezuela, and between private and
public sector energy corporations to exploit the
resources in the seabed between the two neighbours.
He
said when TT, in cooperation with the private
sector in energy, re-fashioned the taxation regime
to encourage exploration and production and to
increase its energy revenues, “companies
like bpTT went out and explored for hydrocarbons,
mined those resources and produced the resources
in commercial value allowing the Government to
draw down large revenues to stimulate economic
development and competitiveness in the rest of
the economy.
“But given that required investment in exploration
and production has to rise dramatically over the
next 20 years, there must be even greater levels
of cooperation between private investors and governments,” he
said.
“The
governments of the energy-rich countries must
inform and convince their populations about
the economic wisdom of assisting small countries
to become competitive trading partners.”
The
Trinidad & Tobago Newsday
Thursday, June 21 2007
Copyright
©2007 The Trinidad & Tobago Newsday All
Rights Reserved.
