The
past must inform the future
By Energy Correspondent
Trinidad Express
Port Spain
Petroleumworldtt.com
08 26 07
Last
week, we promised to look at the outcome of the
high level consultation
on the energy sector.
We would not be derailed by the Prime Minister's
thinly veiled attempt to deflect attention away
from the hard energy sector choices by his announcement
of the budget date in the middle of what the Prime
Minister himself described as, "very important
discussions." So what was the key outcome
of the Conference? Did the conference address the
potential areas of conflict identified in last
week's column?
One
would have to conclude that most of the issues
mentioned
did arise. The matter
of relatively low
reserves to production ratio took centre stage,
for a while. There was broad consensus among participants
about the need for fiscal reform to explore for
and prove up the substantial reserves of natural
gas still to be found. The Government did not seem
averse to a more competitive regime, with the Prime
Minister hinting that some of these issues were
to be addressed in the 2008 Budget. We learnt as
well that the Venezuela/T&T cross border discussions,
which should bring access to Venezuelan gas, were
still ongoing, despite an apparent lack of enthusiasm
on the part of Venezuelan President Hugo Chavez.
On
the utilization side, the conference heard strong
arguments for
and against value-added
downstream
expansion vs. further LNG expansion. Not surprisingly,
the current petrochemical producers put forward
a strong case for more domestic value added, while
the producers, with a clear bias for Henry Hub
pricing and LNG, warned that T&T may be forgoing
high netbacks to be derived from another LNG train.
There was little discussion, however on the matter
of the spatial challenges posed by the need to
develop more industrial infrastructure to accommodate
further expansion.
Despite some lively discussion, one got the impression
that the majority of participants were cowed by
the presence of the Prime Minister and his foreign
guests. We have all grown up with the principle
that we should not wash our dirty linens in public.
As a result, discussions on some issues never went
beyond the superficial. Say nice things, say complimentary
things, say politically correct things and let
us look forward to a brighter future. This mindset
stifled the contributions and therefore robbed
the meeting of its real value.
Let me hasten to say that the contributions of
the foreign guests were insightful and important
to an understanding of the dynamics of the global
natural gas environment. However, when it came
to the substantive matters on the table, the discussions
were less than candid, none more so, than discussions
about a new model for the state firms in the energy
sector.
One
popular view is that the Prime Minister called
this consultation
primarily to
obtain industry
endorsement for the proposed single integrated
state company in the energy sector. Presentations
of Statoil and Petronas were both meant to provide
possible models which "Petroleum T&T" could
follow. Andrew Jupiter, Vice President Business
Development NEC, presented five other models of
industry structure for deliberations. In his summation,
the Prime Minister recognised that each model had
its own cultural and economic evolution. Yet in
seeking to develop a model relevant to Trinidad
and Tobago, the Prime Minister advised that we
need to "forget the antecedents and move forward".
This is a sure recipe for disaster Mr Prime Minister.
The history and current state of these enterprises
must inform our strategy for the future. We must
discover why we made the choices of the past in
order to inform what should or should not be part
of our future strategy. We need to take full account
of our assets and competitive strengths. Failure
to make a thorough and clinical diagnosis will
invariably lead to wrong prescriptions. The patient
fitted with new clothes remains just as ill. For
example, we need to discern why is it that companies
such as Petronas, Statoil and Sabic, all of which
started around the same time as Trintoc, are now
major international players which we uphold as
models, while state owned Petrotrin (formed by
the merger of Trintoc and Trintopec) remains a
struggling domestic based organisation. Is it only
a matter of size of resources and markets? Is it
the overarching economic ideology and policy? Is
it the capability of the leadership? Or can it
be a case of too much state control over the Board
and Management of the enterprise? The answer may
well be a combination of all of the possible causes
listed above. In any event, the answers to these
questions contain important lessons that should
inform the new model state energy enterprise desired
by the Prime Minister. Mr. Manning's comments to "forget
the antecedents" confirmed the perception
in the minds of many that the Prime Minister came
to the Conference with a predetermined solution.
How unfortunate.
Feedback: energyczartt@yahoo.com
Trinidad
Express
Wednesday, August 22nd 2007
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