Enill
unveils energy strategy
Energy
Minister, Conrad Enill
Port Spain
Petroleumworld.com, Feb 24, 2008
In a move aimed at ensuring that Trinidad and
Tobago continues to be an important player in the
international oil and gas business, the Government
has embarked on a series of initiatives to encourage
more vibrant offshore and onshore exploration.
In
his first major speech since becoming Energy
Minister, Conrad Enill told the BG T&T and
First Citizens Energy Luncheon Series last week
that the initiatives will range from an extensive
review of the fiscal regime to targeting a new
frontier of possible reserves in the deep Atlantic.
The following is an edited version of Enill's
speech:
Human Resources
On the issue of human resources a holistic approach
is being undertaken as other sectors are also affected.
We recently established a technical team to determine
the best strategies to ensure a continued supply
of quality human resources to Trinidad and Tobago.
Fiscal Regime
The fiscal regime governing the energy sector
is always a matter of some concern and was one
of the major items of discussion at the conference
and as is to be expected was the subject of mixed
reviews. In keeping with our objective of reviewing
our strategy on an ongoing basis, we have agreed
that it is appropriate that the regime be reviewed.
Cabinet approved the engagement of an independent
petroleum consultant supported by a high-powered
team of local technocrats from the government with
a scope of work that includes:
- Review of fiscal incentives for deep water
- Review of Supplemental Petroleum taxes to small
petroleum operators.
- Review of incentives for marginal or small fields,
drilling activities, enhanced oil recovery and
heavy oil
- Review of the structure of the Production Sharing
Contracts
- Review of the taxation regime for downstream
projects, and the
- Development of a special fiscal regime for downstream
projects.
The aim of this exercise is to ensure that the
taxation legislation continues to be relevant to
the changing energy sector needs and contributes
in a positive manner to its sustained growth and
development.
Consultations with the industry have already begun.
Upstream Activities
One such intervention upstream has been the offering
of acreage to stimulate exploration in Onshore/Near
shore and Marine blocks. The last competitive bid
programme offered in 2005/06 will give rise to
another wave of exploration activities to commence
early in 2008, some of which have begun already.
It is our intention to offer shallow marine acreage
for competitive bidding by the third quarter in
2008. Five blocks located on the East Coast and
the North Coast of Trinidad and Tobago are to be
offered for this bid round. Our evaluation indicates
that the blocks are likely to be gas prone and
offers great potential for enhancing our gas reserves.
This exploration thrust will be sustained in 2009
with the offer of blocks in the Trinidad and Tobago
beep Atlantic Area. The Southerly part of this
acreage was offered in 2006 and attracted one bid
from Statoil. We expect that these negotiations
will be completed by March 2008.
Since then we have re-evaluated the area and will
be acquiring new data, which will form the basis
for the determination of location of the blocks.
The mix will include the more Northerly blocks
in the Trinidad and Tobago beep Atlantic Area,
east of blocks 23b and 24.
Exploration activities to date have only covered
one third of our potential hydrocarbon resources.
These new initiatives will target resources that
are located primarily in the deep Atlantic, our
new frontier.
Reserves Audit
In parallel with these activities we propose to
quantify the existing petroleum resources. We have
programmed the annual audit exercise with respect
to our natural gas reserves. This audit of gas
reserves as at January 1st 2008, is due to begin
shortly and is scheduled to be completed by May
2008.
You will recall following the release of the results
of the last audit, concerns were raised in some
quarters about the adequacy of our gas reserves.
At that time we pointed out that the results was
an indication that Government should review its
policy on the fiscal regime. We have acted and
to date we are on target. The recent discoveries
in the North Coast Marine Area and the East Coast
Marine Area in the current exploration program
is testimony to the success of our policy.
Initial estimates of the resources in these new
discoveries are in the order of 2.0 trillion cubic
feet of natural gas. There are still eight more
wells to be drilled in the current program and
there is a high level of optimism for further success.
The prospects for the year ahead are therefore
encouraging.
In keeping with our strategy for the quantification
of our resources, in 2008 we will also be conducting
an audit of both our conventional and heavy oil
resources. The reserves audit will be conducted
by an Independent Consultant, in a two-phase approach,
commencing with an unconventional (heavy) oil audit
and then the conventional oil audit. The consultant's
mandate will also include forecast of heavy oil
production rates, research of the end market and
recommendations on operational strategies. The
consultancy is due to commence in April 2008 and
be completed by July 2008.
Heavy Oil
While the focus has been on developing our conventional
oil, it should be noted that there are large deposits
of heavy oil in Trinidad and Tobago.
Natural Gas Allocation:
Our priority for the utilisation of natural gas
resources is targeted at the domestic market in
the first instance and then export gas. Domestic
projects, which are approved for utilization of
natural gas, must provide substantial value add
to the national economy.
Subject
to this policy we will be amenable to the pursuit
of new LNG opportunities. In this context,
the state in partnership with BG have undertaken
the LNG Train X feasibility study. This partnership
has as its objective Government's involvement along
the LNG value chain and in areas such as shipping,
LNG marketing and liquefaction. The results of
the feasibility study are due in the second quarter
of 2008. The new "Train X" model for
expansion will involve the inclusion of new stakeholders
and increased participation by the State.
Downstream Industries:
In our effort to diversify the natural gas industry,
we have been targeting the establishment of downstream
industries that maximize the value added via the
creation of linkages with the rest of the economy.
As a result we are moving fully ahead to expand
the metal industry and establish a plastic industry
in Trinidad and Tobago.
This is to be achieved by the Alutrint Aluminum
Smelter and downstream industries, Essar Steel
Complex, Lyondell and Bassell (methanol to polypropylene)
project and a polyethylene project. These projects
are important for the deepening and diversification
of the energy sector.
New Refinery:
Government
has identified the need for new refining operations
in Trinidad and Tobago, due to the strategic
link in the energy value chain, which extends from
upstream crude oil production to the sales of fuels
in the retail market. As a producer of approximately
150,000 barrels of oil per day, the country would
benefit from being able to refine its own crude
and convert it into saleable products for the fuels
retail
market. Additionally, the low valued (bottom of
the barrel) products from the Petrotrin refinery
can be utilized as feedstock for the new refinery.
A new refinery is estimated to cost US$3-4 billion
and would be export oriented. This refinery is
to be located at a site at the Pointe-a-Pierre
refinery complex.
Cross Border Relations With Venezuela:
There has been one new development with respect
to proposals for a Memorandum of Understanding
for cooperation in economic activities and the
Unitization Agreement for the Loran/Manatee cross
border field. A Reservoir Technical Group has been
selected by the Government of Venezuela to work
with a similar team from Trinidad and Tobago with
a view to conclude specific unitization agreements
for the exploitation and development of Cross Border
Hydrocarbon Reservoirs within the Unit Area.
CONCLUSION:
Our major goal as a Government is to achieve developed
nation status by 2020.
Today our country is enjoying
a long-running economic expansion and is modernizing
at a rapid rate. The evidence so far is impressive.
We have had solid employment growth, healthy trade
surpluses and external reserves and our public
debt remains in a sustainable position. We can
achieve our vision by leveraging the energy sector
to create conditions for sustained growth and development
of Trinidad and Tobago. We would soon see in Trinidad
and Tobago modern government buildings blending
elegantly into the architectural landscape. We
would soon experience a modern transportation network
with major highways criss-crossing the country
and a light-rail transit system connecting the
major population centres. We would soon be able
to benefit from an increasingly knowledge-based
economy centered principally at the Tamana Intech
Park and University of Trinidad and Tobago Campus
at Wallerfield; and we would see major regions
of the country occupied with state of the art petro-chemical,
LNG, steel and alumina plants with substantial
down-stream activities.
Story
from Trindad Express
Trinidad Express
Wednesday, February 20th 2008
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