More
information, less confusion
By Energy Correspondent
Trinidad Express
Port Spain
Petroleumworldtt.com
09 04 07
Much of the anxiety and confusion surrounding
the release of the much anticipated Ryder Scott
gas reserves audit has been due to a widespread
lack of knowledge among the population about these
matters. The vast majority do not know that this
is a periodic exercise that has been going on since
1974. For most, this is the first time they have
ever heard of something called a gas reserves audit.
As a result, opposition spokesmen, political and
economic commentators have been calling for a release
of the report to the public. They just don't trust
the Government. They are also unaware that anyone
who maintains a record of the last audit and keeps
logs of annual production and discoveries could
easily calculate an approximate figure. The Ministry
of Energy keeps such records and at any point in
time is capable of calculating what the remaining
reserves may be. If such figures were provided
within the budget documents each year, the Ryder
Scott figure would have been no surprise.
The
Government must take full responsibility for
this state of affairs. The sector has become
a
virtual black box - notwithstanding the Freedom
of Information Act or the Prime Minister's frequent
call for "depoliticizing the energy sector".
The reality is that there is need for greater
transparency in the energy sector. However, anytime
one speaks about transparency red flags go up.
The Government is particularly sensitive about
the release of confidential contract information.
In fact it is adamant that such information is
not for public consumption. There is a view that
this is one of the factors that has halted progress
on the Extractive Industries Transparency Initiative.
The Government had signed this international protocol
back in 2005, but to date very little progress
has been made into making it a reality. However,
transparency spans a wide spectrum and there should
be at least a commitment on the part of Government
to make critical non-confidential data and information
available in a timely manner to the general public.
This lack of interest in public information is
manifest in several areas of Government action
and/or policy as it relates to the energy sector.
The 2007-8 Budget speech provides some good examples.
The critical factors that determine Government's
energy sector revenues are price, output and the
tax regime. Moreover, all now understand that since
2000 natural gas is as important as oil in its
contribution to Government revenue.
While aggregate data on the size of energy sector
revenue is always provided, the Budget and the
supporting documents are silent on prices. At the
very minimum, we would expect that Government would
provide some estimates on how these variables are
likely to behave over time. In last year's Budget,
the Prime Minister quoted an estimated netback
price of gas at a notional US$3.50 per mmbtu. Very
few people understand this concept. Yet, the Prime
Minister announces that a netback price of US$3.55/
mmbtu is applicable for this fiscal year. But,
both Budget speech and the accompanying Review
of the Economy are silent about natural gas prices.
We have no idea whether prices were above or below
the budgeted figure nor do we have any indication
of likely trends.
There also is no mention of petrochemical prices
which are critical in determining the revenues
of the National Gas Company and by extension a
significant share of Government revenue. With respect
to oil prices, the Minister of Finance states that
the Budget is based on an oil price of US$50.00
/bbl. The Heritage and Stabilization Fund Bill
requires oil price projections to be based on an
11-year moving average. Is this US$50.00/bbl that
11 year average? Last year, the Budget price was
US$45.00/bbl. Did the average move up by US$5.00
per barrel in the last year? Again, neither the
Budget speech nor the accompanying documents could
shed any light on these matters, leaving room for
wild rumours and speculation.
An exploratory tour of the Ministry of Energy
website suggests that the problem is not necessarily
a political one, but is systemic. As a source of
information on the sector, the Ministry's website
needs considerable improvement. There are no reports,
only one (1) conference paper posted since 2005;
only one piece of legislation (Model Production
Sharing Contract) and two policy documents.
While the statistics sections contain a few lengthy
series, the most recent update was in 2005. The
most recent issue of the Ministry's flagship publication,
the Monthly Bulletin, is January 2007- an eight
month lag. It is not clear whether the problem
is lack of resources or an abundance of incompetence.
However, we are sure that it is untenable.
If the Government wishes the people of Trinidad
and Tobago to participate meaningfully in decision
making about the future of the energy sector, if
it wishes to build trust and avoid the furore about
reserves, output and prices, the Minister of Energy,
who ironically is also the Minister of Public Information,
must be prepared to share vital non-confidential
information with the general public. For best practice
in this regard, readers may visit the website of
the Energy Information Administration (EIA) of
the US Department of Energy (www.eia.doe.gov).
Feedback: energyczartt@yahoo.com
Trinidad
Express
Wednesday, August 29th 2007
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©2007 Trinidad Express. All Rights Reserved.
