Optimism
reigns at TTPC 08 Petroleum Conference
David
Wears /Trinidad Guardian
Energy Minister Conrad Enill, left,
chats with T&T Central
Bank Governor Ewart Williams, Monday at
T&T Petroleum Conference at the Hilton Trinidad & Conference
Centre, St Ann’s.
Port Spain
Petroleumworld.com, Mar 02, 2008
After a year highlighted by an Ibis Deep failure,
a Ryder Scott Hydrocarbon audit which put reserves
to production ratio at 12 years and a general consensus
among energy executives that the Government needs
to review its tax and fiscal incentives, the energy
industry is once again regaining momentum.
Maybe it has to do with natural gas discoveries
offshore Tobago and the North Coast by Petro-Canada
and Canada Superior respectively.
Or
maybe it was Energy Minister Conrad Enill’s
detailed agenda which he presented to energy executives
at an energy luncheon hosted by BG T&T at the
Hyatt Regency Trinidad hotel, Wrightson Road, Port-of-Spain,
two weeks ago.
When
energy executives gathered at the Hilton on Monday
and Tuesday for the South Chamber’s
Petroleum Conference to discuss “the Future
of Energy,” the general mood was one of optimism.
Enill first outlined his agenda which included:
- A new bid round scheduled for shallow blocks
in the North Coast Marine Area and South East Coast
Area in late 2008 and for the Deep Atlantic in
2009.
- The establishment of an integrated oil company
-The establishment of a Natural Gas Governance
Framework
- The continued focus by the National Energy Corporations
to develop its industrial estates and port facilities
funded by the State
- Review of its fiscal regime
- An oil audit
- An updated gas audit
It was comprehensive enough.
Enill,
who has consistently maintained that the Ryder
Scott audit was just a guide to manage the
country’s energy future, was pleased with
Petro-Canada’s and Canada Superior’s
discovery.
T&T
also got a pat on the back from Richard Hurburt,
Minister of Energy of Nova Scotia, Canada,
for its incentives for local content and its subsidised
education to create a well-educated workforce.
“Of course, a well-educated local workforce
is the key to a strong local market. That is a
commitment T&T has clearly made, starting programmes
like Petroleum Geoscience at the University of
the West Indies and creating the University of
T&T in 2004 to build talent in the energy sector,” he
said.
But it was South Chamber president Rampersad Motilal
who added a touch of sobriety.
Local stock market needs energy listings
“
The development of LNG (liquefied natural gas)
spurred on by the extremely successful gas exploration
and development programmes of the past two decades
has resulted in a world-class LNG industry here
in T&T.
“Given our limited proven natural gas resource
pool and over 54 per cent of gas produced being
utilised by this sector, we must now examine whether
LNG in our current portfolio has also reached or
exceeded its proportional limit,” he said.
Delving
further into the job creation potential of metal
industries, Motilal noted that T&T’s
success has raised questions about sustainability
given limited gas reserve.
“In addition, with industrialisation comes
other concerns such as environmental and social
issues. The challenge for all stakeholders will
be to find the appropriate balance,” he said.
He noted that in 2008 demand for natural gas is
expected to rise marginally at 4.1 billion cubic
feet a day (bcfd).
By
the end of 2010 the demand will rise to 4.7 bcfd
as the four new projects which are currently
under construction come on stream: MTHL’s
AUM Complex, Essar Steel, Alutrint and Petrotrin’s
Gas to Liquids plant.
“The existing stock of petrochemical plants
is relatively new or well-maintained and one can
only assume that the owners will look forward to
stable operations over the next 20 years. When
LNG is included, we will require approximately
34 trillion cubic feet (tcf) of gas for stable
operations over the next 20 years. If a lesser
horizon of 15 years is considered we will still
require approximately 25 tcf of gas to satisfy
industry,” he said.
Viewed from this perspective, one can well understand
the urgency to stimulate exploration activities,
he said.
And
while the Government is re-examining the fiscal
regime this “cannot come too soon given our
limited proven reserves and the changing characteristics
of the sector which now includes maturing assets,
smaller gas fields and deep water interests.”
He called on the Government to consider the plight
of farmed-out wells which today face rising costs,
royalties and payment to bonuses to the Ministry
of Energy such that they are under threat of becoming
uneconomic.
Motilal pointed out that there was a noticeable
absence of energy companies on the local stock
exchange.
“We
wish to encourage the Government to establish
the appropriate framework of local energy
industries to be placed on the local stock exchange
so that citizens can participate directly in sharing
the risk and the rewards of the energy sector.
“This can be a useful mechanism for the
divesting of mature assets which may no longer
meet the returns criteria of larger players but
could still be profitable to a smaller, publicly-traded
company,” he said.
Then
there was Central Bank Governor Ewart Williams
admitting that the country’s inflation rate,
now at ten per cent, was a symptom of the “Dutch
Disease.”
Williams
said, “While the factors behind
the increase in inflation are many, at least two
of them could be traced back to the buoyancy of
the energy sector. These are:
“One,
the expansion in domestic demand in the context
of capacity constraints (reflected
in the public utilities, the transportation sector,
etc) and
“Two,
sluggish agricultural production, as farm incomes
stagnate relative to other non-farm
incomes.”
He said that, as a result, fiscal policy provides
special challenges for natural resource-based economies.
“Higher oil revenues provide these governments
with the opportunity to increase public spending
on priority economic and social goals. However,
the fortunate governments are faced with the trade-off
between pressing developmental needs and the limits
of the country’s institutional and absorptive
capacity,” he said.
—Asha
Javeed
Story
by Asha Javeed from The Trinidad Guardian
-ashajaveed@yahoo.com
The
Trinidad Guardian
Thursday 28th February, 2008
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