The future development of Trinidad’s energy sector

Mar 13, 2008 01:00 AM

by Ofelia Paredes

In August 2007, Trinidad and Tobago hosted a Symposium on “The Future Development of the Energy Sector in Trinidad and Tobago,” at which the views of the industry were solicited.
The Symposium which was chaired by the Honourable Minister and which was attended by senior executives of all energy companies operating in Trinidad and Tobago sought to identify the main elements for the future state of Trinidad and Tobago’s energy sector.

Four key issues arose from those consultations:
-- Human resources capacity to deal with changing demands in the energy sector.
-- The relevance of our current arrangements for commercial activities by the state and the potential for an integrated state energy company.
-- The relevance of the current fiscal regime in the face of the Ryder Scott report and the governments own economic objectives; and
-- Continued promotion of Trinidad and Tobago as an attractive place to invest.

The Honourable Conrad Enill, the Minister of Energy and Energy Industries for Trinidad and Tobago, provided an update on where the country is regarding these issues.
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.
The needs of the energy sector will be high on the agenda, given the pivotal role this sector plays in the development of the economy. The team is due to complete and submit their first report by the first quarter in calendar 2008.

State energy company
The discussion on the relevance or otherwise of an integrated state energy company, has been actioned. A committee chaired by the Ministry of Energy and Energy Industries with representation from state energy companies has been established with a mandate to examine this matter and to make recommendations on the corporate structure or institutional arrangement needed in the energy sector that is the most appropriate for the future, in the context of our new circumstances.
We will await the completion of this exercise but there are models globally that appear attractive.

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.
Consultants with the industry have already begun and soon, the team would have meet with many of those whose views we will consider.

Investment location
Trinidad and Tobago continues to be an attractive investment location due to a number of positive attributes. These include a stable political climate, close proximity to major markets, a well-developed infrastructure and timely decision making. As part of the strategy to maintain our attractiveness for investment, we are reviewing our institutional framework to ensure a return to more timely and efficient decision-making.
We aim to ensure that the sector continues to contribute positively to the economy and therefore will intervene as is considered appropriate.

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 program 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 of 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 Deep Atlantic Area. The southerly part of this acreage was offeredin 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 Deep Atlantic Area, east of blocks 23b and 24.

It must be noted that exploration activities to date have only covered one third of our potential resources.
These new initiatives will target resources that are located primarily in the Deep Atlantic, our new frontier.

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