PRIME MINISTER Dr Keith Rowley delivered what he said was possibly his final address at the Energy Conference yesterday, providing a progress report on the energy sector and expressing confidence that he is leaving it in good hands.
In his feature address, the outgoing Prime Minister also stated that the Trinidad and Tobago Government will seek to engage with the Donald Trump administration in the United States to emphasise the importance of cross-border energy projects with Venezuela, not just for Trinidad and Tobago, but for the region’s overall energy security.
“The Government in collaboration with the Government of Venezuela and our energy stakeholders have made great strides in advancing the development of both the Dragon project and the Manakin-Cocuina project. We will be seeking to engage and apprise the new US administration of the importance of these projects not only to Trinidad and Tobago but to the energy security for the region,” Rowley said.
“Energy security is a major issue for the majority of countries in the Caribbean with oil and gas accounting for 60% of the energy needs of the region. There is an opportunity for the petroleum producing countries in the region to pool their resources and optimise their monetisation using existing infrastructure to the benefit of the resource owner and wider community. As a region susceptible to the effects of climate change, pooling of resources will contribute to reducing the carbon footprint of the region,” he said.
Cross-border arrangements
Rowley said at the start of his tenure, with low energy prices and delayed upstream investment, it became clear early that the known natural gas reserves would be unable to fully meet the requirements of the downstream companies and Atlantic LNG.
Rowley said the practical solution to this was to look beyond T&T’s borders to where large, untapped proven reserves exist in Venezuela, leading to the joint venture project of the Loran-Manatee and the Venezuelan Dragon gas field. Both were sanctioned for development and monetisation in T&T.
“In 2018, a term sheet was finalised for gas to be supplied from the Dragon field and a development plan for the Loran-Manatee field was being prepared by the exploration and production companies. However, both initiatives were curtailed due to sanctions imposed by the US government, which blocked US companies from doing business with the Venezuelan energy company PDVSA (Venezuelan state-owned oil and natural gas company),” he said.
Rowley said given T&T’s critical gas situation, the Government sought and received in 2019 the agreement of the Venezuelan government to delink the Venezuelan Loran field from the Manatee field. Following the delinking of the gas fields and the agreement between the Government and Shell on contractual arrangements for the Manatee field, a final investment decision was taken.
“For 15 years this exercise was pursued but brought us no nearer to getting gas to shore. As declining T&T reserves became more critical, the Government had to act on very many fronts. One of the main decisions taken by this Government was to approach the government of Venezuela with a firm proposal to have both countries abandon the unitisation approach to exploiting cross-border fields. By obtaining early agreement on this idea, it opened the door for swift access to the Loran-Manatee field, followed by other similarly placed deposits,” he said.
He shared that the Government, with the support of Caricom and the Dominican Republic, also simultaneously requested a review by the US Government on the sanctions on the Dragon gas project.
“Following discussions and negotiations with US government officials, the US Office of Foreign Assets Control (OFAC) approved a request by T&T to waive ongoing sanctions against Venezuela to allow for the development of the neighbouring Dragon gas field. This was followed by a 30-year licence between Venezuela and T&T that grants selected operators, Shell and NGC, the right to produce and export gas to T&T,” said Rowley.
He added that last May, the Government received an OFAC licence to pursue, with Venezuela, the exploitation and development of hydrocarbon reservoirs of the Manakin-Cocuina Field. The exploration and production companies have been undertaking preparatory work to bring Manakin-Cocuina and Dragon projects, which cumulatively possess 5.2 trillion cubic feet (tcf) gas, on stream in the shortest interval, he said.
“Suffice it to say, as a responsible Government, we took immediate action to put the industry on a sound financial footing and on a sustainable path. This necessitated difficult yet essential decisions and strategic actions. I was very pleased to lead these discussions with all the decision-makers as we sought listening ears and built relationships. These contacts in London, Houston, Melbourne, Amsterdam and The Hague were very fruitful and soon the industry regained its confidence, leading companies to pledge ongoing investments in activities across the spectrum,” he said.
Petrotrin restructuring
Rowley, however, said there was still the issue of the Petrotrin refinery, as production levels in its mature fields were declining, and huge accumulated debts burdened it.
“Based on the advice of the then-board of directors and a Government-appointed technical committee, the company was restructured into separate business units and the refinery was put up for sale or lease as the Government continued to keep and service upwards of US$450 million of Petrotrin debt,” he said.
According to Rowley, the Government’s decision to restructure Petrotrin has been vindicated by the performance of the operating companies, Heritage Petroleum Company Ltd and Paria Fuel Trading Company.
“From its inception, Heritage has been profitable with annual net profits in excess of $1 billion for most of its short history. Its success has enabled the company to contribute $7.75 billion towards the debt service of the TPHL group over the period commencing 2019 to June 30, 2024. Additionally, from inception to date, Heritage has paid $13.33 billion in taxes and other payments to Government. Simply by changing the business model from importing and refining crude to one of producing and selling unrefined oil, we have moved our bottom line from dangerous chronic losses to solid profitability,” he said.
He said Paria had also returned a profit each year since inception as a result of “effective cost management measures, operational efficiencies, favourable market prices and expansion of the bunkering business have been responsible for the company’s financial success”.
“The Government has been the recipient of corporation tax and green fund levy of $1.2 billion, from Paria, since the startup of operations on December 1, 2018, up to September 30, 2024,” he said.
He added that there has been a renewed commitment by companies to deepen their investment in the domestic energy sector and it is projected at US$10.2 billion over the period 2024 to 2027 as compared to approximately US$6 billion for the preceding four years.
