The
Sale of Pelican
PORT SPAIN
Petroleumworldtt.com
02 24 08
It
was reported last month that the Trinidad and
Tobago Government has sold its 80 per cent shareholding
in the state company Trinidad and Tobago Marine
Petroleum Company (Trintomar) to US independent
energy company EOG Resources for US$20 million.
According to the report, Energy Minister Conrad
Enill indicated that the decision to sell its majority
share was partly driven by a need to boost exploration
to find new hydrocarbon reserves.
This is all we have heard about this transaction.
In his address to the BG Energy Luncheon last week,
the minister made no mention about the sale. It
is another situation that reinforces calls for
greater transparency in the management of the people's
assets.
While admitting that the thrust to find new hydrocarbon
reserves through continuous exploration is indeed
essential, one finds it very difficult to understand
and equate the sale of an important state asset
to exploration efforts by a foreign energy company.
To briefly refresh the minds of our readers, Trintomar-
a consortium of Petrotrin (80 per cent) and NGC
(20 per cent) - was assigned in 1989 an Exploration
and Production licence for the Pelican acreage
which is within the larger South East Coast Consortium
block. Trintomar was viewed then as the flagship
enterprise to lead the national effort at exploration
and production in marine areas. Moreover, it was
a strategic investment meant to free NGC from the
stranglehold of a monopoly gas supplier- Amoco.
By June 1991, approximately six wells were drilled
on the Pelican platform and gas production averaged
some 120 MMscfd. However, an unfortunate and highly
improbable drilling mishap resulted in damaged
reservoirs and the loss of several producing wells.
Production abruptly nose-dived to less than 40
MMscfd. With contractual gas obligations, in jeopardy,
Government sought an international partner to resurrect
the once heralded flagship of the gas sector.
EOG Resources (then Enron) was invited into Trinidad
in 1992 and was granted an E and P licence for
the SECC block but excluding the Pelican field,
which Trintomar retained. EOG has since successfully
developed four gas fields in the SECC block: Kiskadee,
Ibis, Parula and Oilbird for an overall production
of 135 MMscfd that is sold to NGC. A vital and
critical link for the delivery of gas to NGC, however,
is the processing of EOG's gas and condensate production
at the Pelican platform.
Trintomar, which is operated by Petrotrin, produces
a marginal 350 bopd of condensate and no gas and
the bulk of its revenue comes from processing fees
of the SECC's gas and condensate of which EOG has
an 80 per cent participating interest. The company,
however retains substantial tangible assets, namely:
a well-maintained 24-slot drilling and production
platform installed in 1989, a 10 inch condensate
line from the Pelican platform to Galeota point,
a tank farm at Galeota and related facilities,
and moreover reserves associated with deeper horizons
in the Pelican field.
It is reported that 80 per cent of these assets
were sold for a mere US$20 million. This is really
unbelievable. One is left aghast and bewildered.
The reader may better grasp the magnitude of this
absurdity when he recognises that these assets
were sold at less than a quarter of the cost of
the Deep Ibis well drilled by bpTT in the very
same SECC block a year and a half ago.
Several obvious questions cry out for answers.
Were the assets valuated and a fair market value
determined? Did the Government invite competitive
bids in the same way that BP invited bids for its
TSP assets? Is the State so risk-averse that it
has again abandoned the opportunity of acquiring
its own reserves in the Deeper horizons? After
nearly 30 years in the business, have we not come
to the realization that having access to its own
reserves is a necessary condition for the long-term
viability of NGC?
When the Minister says that the decision to sell
was partly driven by a need to boost exploration
to find new hydrocarbon reserves, is he admitting
that we will continue to endorse the failed and
hackneyed approaches that have allowed the foreign
companies to be the practical owners of the country's
resources?
No wonder why Petrotrin must purchase its crude
oil at exorbitant market prices to maintain an
adequate refinery throughput since the company's
equity crude is woefully deficient.
No wonder why plans for the manufacture of ethylene,
an indispensable building block for the development
of the petrochemical sector, remains in abeyance
because obtaining ethane at the critical mass and
a competitive price has found little favour with
Atlantic LNG.
Isn't it highly contradictory that the same Government
that talks about wanting to get a greater share
of the value added from industry also is selling
one of its few upstream assets? EOG Resources came
and conquered because we were afraid to dig deeper
when the obstacles confronted us; we ran from the
bone and also gave up the beef.
The Pelican platform and its processing facilities
is undoubtedly of immense strategic value to EOG's
operations. The company, as in 1992, can feel proud
once again of upstaging its local counterparts.
For a mere US$20 million it has been granted the
opportunity to utilize new-found assets to transform
marginal field operations, process its oil and
gas without future processing fees, and boost exploration
in the Deeper horizons to find additional reserves
which would be sold to its previous owners. When
shall we ever learn?
Story
by energy
Correspondent from
Trinidad Express
-energyczartt@yahoo.com
Trinidad
Express
Wednesday, February 20th 2008
Copyright
©2007 Petroleumworld. All Rights Reserved.
