Worst
bid round in T&T’s history Energy experts
blame Govt strategy and timing
By Curtis Williams
Trinidad Guardian
Port
Spain
Petroleumworldtt.com
01 07 07
The
refusal of most of the world’s major oil and
gas to bid on the deep water is not a reflection
of the area’s prospects.
This
is according to two local industry experts Gregory
McGuire and Anthony Paul.
Both
men said they were disappointed by the results but
that the Ministry of Energy has to go back and do
its homework and find a way out of the situation.
Last
Friday, the ministry hosted the most unsuccessful
bid round in the history of T&T since the introduction
of production sharing contracts in the mid1990s.
Only
Statoil bid on Block 5 of the eight blocks on offer
in the Trinidad Atlantic Deep.
The
area has been described as the new frontier and
the area where huge oil fields were likely to be
found.
It
is, however, difficult drilling in deep water with
the average cost of one well being in the vicinity
of US$100 million.
Energy
consultant Anthony Paul said he was “very
disappointed and a bit surprised” by the lack
of bids but, at the same time, thought the Ministry
of Energy’s strategy and approach should have
been different.
He
said the ministry appeared to be existing in a time-warp
of using the 1990s approach.
“If
you look at it the results have been less and less
stellar over the last few years. Even the nearshore
and onshore bids were not spectacular,” Paul
said.
“This
is the culmination of that decline which mirrors
the strategy of disconnect from the changing world
of acreage management.”
Paul
said the results were even more disappointing since
Trinidad represented a proven oil province, it was
an opportunity to explore in the deep water where
huge finds have been made in other oil provinces
and the bid round was happening in a time of high
oil prices.
He
added that T&T’s history is also one of
political stability and it has an economic system
which is known to all and well understood.
Paul
pointed to the major changes in fiscal regime mere
weeks before the deadline for the bid round as a
fatal mistake made by the Energy Ministry.
“It
was not a good thing to do so close to the bid round.
I don’t think the Government got greedy but
it did not get the right signals out at the right
time,” Paul said.
“The
companies would have needed time to do their risk
assessment and to work their economics. Something
like this would likely have to be approved by a
company’s boards of directors or at least
at a very high management position and, in that
respect, the time may have been too short,”
Paul said.
“The
companies were given a work programme which was
aggressive for the fiscal terms with high upfront
expenditure and they may not have been able to do
a rebalance in time.”
Six
weeks ago, the Ministry of Energy designed a new
production sharing contract which is designed to
increase government’s take from any new discovery.
Paul
said the Ministry of Energy should have either shot
3D seismic for themselves or allowed companies time
to shoot 3D data.
The
energy consultant questioned whether there was sufficient
discussion between the Government and the companies
on issues such as the minimum work commitment and
the size of the blocks.
“It
was not one thing that the ministry did wrong but
a series of things. It was not about giving more
incentives but there needed to be a clear strategy
to promote the blocks taking into account whether
we were offering attractive geology or fiscal incentives
or both. We did not see the aggressive players in
the world like Gasprom and Petrobras being targeted.”
Paul
said he didn’t get a sense that the Ministry
of Energy did a vigorous mapping and felling job
of the geology and there needed to be move vigorous
geological interpretation to mitigate the effect
of the past deep water failure.
He
said the Government should go back to the companies
which bought the data and see what their concerns
were.
“The
ministry should go back to drawing board. If it
means changing fiscal terms then so be it. If it
means getting better data then so be it. We need
to capture this opportunity created by high crude
prices and should take stock of modern exploration
management. The ministry needs to go out and look
for help even if it is simply to get fresh ideas
or independent ideas and views.”
Petroleum
economist Gregory McGuire said he was unsure of
the position held by oil and gas companies, but
he suspected that the timing of the Ministry of
Energy was off.
“It’s
perhaps a question of timing and how much is on
offer. Plus they have had no success in the deep
marine so I am not surprised,” McGuire said.
He
agreed that the new fiscal measures may have negatively
impacted the bid round.
The
companies which paid for the 2D seismic were:
ENI
(formerly AGIP TT exploration BV)
BHP
Billiton Petroleum (Americas) Inc
BP
International Investments II BV
Total
(Elf Exploration Trinidad BV)
EOG
Resources Trinidad Ltd
Norsk
Hydro Trinidad Oil and Gas Ltd
Phillips
Petroleum T&T Ltd
Pdvsa
Petroleo SA
Repsol
Exploracion Trinidad SA
Statoil
ASA
Talisman
Energy Inc
Trinidad
Shell Exploration and Production BV
Keer
McGee/Anardakon
BGTT
Chevron
Texaco
Amerada
Hess
The
Trinidad Guardian
Thursday 21st December 2006
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©2006 The Trinidad Guardian . All Rights Reserved.
