Experts:
There's no energy crisis
By Driselle Ramjohn
Trinidad Express
Port Spain
Petroleumworldtt.com
09 04 07
Experts in the energy sector are not concerned
about the recent Ryder Scott Report on the depleting
gas reserves in Trinidad and Tobago.
Some do not even believe that much incentives
should be given for further exploration in the
country as coming up with new finds is a reward
enough for exploration efforts and coming up empty
handed is simply a risk and the nature of the industry.
The Prime Minister Patrick Manning indicated in
his presentation of the Government's 2007/2008
fiscal package that some incentives will be given
for exploration for oil and gas, however he did
not mention any change in the tax regime with regard
to energy companies.
Manning came under intense criticism for not changing
the tax regime for the energy sector as people
began to panic about the need for further exploration
for the fear that we will indeed run out of the
precious substance buried beneath the ocean floor.
Speaking
at the Trinidad and Tobago Chamber of Industry
and Commerce post budget panel discussion
last week University of the West Indies Economics
lecturer Gregory McGuire said, "I was hoping
that by today the nation would have realised the
true purpose of the reserves audit and the way
people respond to it. These things have been said
over and over again by a number of us actually
involved in the energy sector. Essentially, the
message is that this (the Ryder Scott audit) is
a picture of a point in time that proven reserves
to production ratio and says nothing about your
future prospects."
He added that there is tremendous opportunity,
space, land and acreage in this country that has
not been explored.
"Yet in spite of all of this, we continue
to hear about the urgency with which we must reduce
taxation terms so that energy sector companies
can now explore for oil and gas. The fact is people,
that the crisis that people are making out is not
a crisis and I say that quite firmly without any
reservations," the energy expert said.
PCS Nitrogen chief executive officer, Ian Welch
said that he agreed fully with McGuire.
"As a company with significant investments
in the energy sector, we are not concerned and
I want to make that very clear," Welch said.
Ronald Ramkissoon, senior economist, Republic
Bank said that while the issue is something for
some concern, there is no need to panic and that
there is a great possibility that new sources of
oil and gas would be found.
"The United States, one of the most drilled
up countries in the world has for the longest while
a gas reserves to production ratio of less than
10 years. I have not heard CNN or anybody raise
issues or concerns about this. Of course, they
raise concerns about the US dependence on oil but
the fact is people that that crisis that people
are making out is not a crisis," McGuire added.
With
regard to fiscal incentives in this year's budget
for exploration, McGuire said, "This
was one of the most anticipated aspects of the
budget. Not surprisingly the budget merely indicated
the direction in which the government was going
to go. We are sure that they will be no across
the board reduction in taxation for the energy
companies" he added.
"The Prime Minister indicated that amendments
would be coming to specifically targeted areas,
heavy oil, deep marine areas on the east coast,
marginal fields and farm in and farm out areas.
These amendments were promised in fiscal 2008.
Again I find myself on the side of the government
with regard to this measure. I am of the view that
there is no need for the wholesale revision of
the tax regime," he added.
At this time, McGuire explained, there is a record
number of exploration wells planned, around 15,
under the current fiscal regime.
There are companies out there that are exploring
and planning drilling programmes right now and
no incentives were needed, he said.
Should this intensive effort reveal natural gas
or oil, it may change the entire picture.
"Another point to consider is that if there
are any major gas finds, the operating companies
would want to produce it now. The first choice
project is likely another LNG Train which takes
800 million a day. One of the Canadian exploration
companies have clearly indicated that a strong
interest in another LNG Train to serve the Canadian
market," McGuire said.
Manning also proposed in the budget the expansion
of the energy industry.
He
said, "Mr. Speaker, the Ryder Scott audit
information does not affect in any way the priority
projects, which are set to come on stream in the
short term".
"These include the five large gas-based projects:
the Alutrint Smelter at Union Estate in La Brea,
the Essar Steel Complex, the Methanol Holdings
AUM Complex at Pt. Lisas, the Gas-to-Liquids plant
at the Pointe-a-Pierre Refinery; the Petrotrin's
Gasoline Optimization Programme which is the first
phase of the refinery upgrade, and the Methanol/Propylene/Polypropylene
Project manufacture of a basic building block of
a plastic industry", the Prime Minister added.
Also
in the budget speech, Manning said, "In
respect of the latter project, the Cabinet has
now taken a decision to proceed to development
of this new industry, and this complex, which will
be built at a cost of some US$1.5 billion is expected
to come on stream in 2011. Construction is expected
to begin in the fourth quarter of 2008".
"The upgrade of the Pointe-a-Pierre Refinery
in Petrotrin's Gasolene optimization programme
is proceeding at a cost of US$850 million and the
industrial estate at Pointe-a-Pierre is now being
cleared of old plants to make way for a brand new
state-of-the-art refinery which we are seeking
to attract" he added.
To
the announcement of these projects McGuire said, "We heard in the budget the usual litany
of projects which the Prime Minister assured would
not be affected by the reserve situation, which
I agree. Perhaps the only surprise here was the
announcement of a Polypropylene project as one
of the A group projects- those projects that are
sure to go".
However, the major problem McGuire sees with these
new projects in the possible shortage of skilled
labour to work in these new industries.
"The projects listed as priority by the Prime
Minister in Point Lisas requires an additional
2,500-3,000 skilled jobs, and these are figures
coming out of the National Energy Corporation (NEC)
presentation at the recently help energy consultation," McGuire
said.
He added that there seems to be some comfort in
the fact the University of Trinidad and Tobago
(UTT) trains individuals in the energy field.
However the question, Mc Guire explained, is would
the UTT system generate the required skills at
a rate of 1,000 per year over the next three years.
He added that there is a desperate need for the
boarder perspective on solving this problem like
the introduction of energy training and courses
at the secondary school level and possibly even
at the primary school level.
Young persons must be trained in the energy field
and they must be aware of careers available in
this field.
Jobs
in the energy sector, which is some of the nation's "best jobs",
McGuire said should not go to foreigners.
"Skills shortages in the energy sector, this
is a more important question than the question
of reserves," McGuire said.
In the area of diversification within the energy
sector the Government revealed last week that it
has already commenced discussions with respect
to the production of renewable sources of energy.
Ian
Welch, chief executive officer of PCS Nitrogen
said at the Chamber's budget discussion, "In
terms of looking at renewable resources in the
case of Algeria who has significant reserves clean
green power utilizing solar and gas. As a people
and as a country the responsible thing to do is
to start looking at renewable resources, not because
of the fear that we may be running out of reserves".
Minister
in the Ministry of Finance Enill said, "We
have started the discussions but we have also expanded
it to deal with issues about the environment. One
of the challenges that we face in an oil and gas
structure is that we have not spent sufficient
time looking at the issue of the environment and
in some instances now we are seeing the instance
of the effects of that".
"We have started some discussions on looking
at the alternative energy agenda and some of the
discussions we have had (were) with the producer
companies. The directions we wanted to go in we
have been advised not to go there because of their
personal experiences," the minister added.
In the context of what is happening internationally,
Enill explained, and how the Government is positioning
Trinidad and Tobago it is an issue that is at this
time being considered by the technical team that
is looking at these matters respective to energy
sector competitiveness and/or challenges within
the sector.
"Our energy committee is committed to the
tackling this issue and are already looking deeply
into the situation and recommendations could be
made in the foreseeable future," Chamber president
Ian Collier said.
Trinidad
Express
Wednesday, August 29th 2007
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©2007 Trinidad Express. All Rights Reserved.
