In an exclusive interview, Energy and Mineral Resources Minister
Finbar Ganga outlines the government's plans to expand the vital energy
What are the mainstays of the energy sector?
Crude oil and natural gas are the major natural resources from which the
energy sector of Trinidad and Tobago derives its importance. Proven reserves
of crude oil at the end of 1995 reached 530 MMBO. With an average production
rate in that year of 131,811 bopd the reserve life is estimated to be 11
years. On average about 50 per cent of the crude oil produced is exported
and the remainder is utilised as throughput in the local refining sector.
At present the refinery at Point-à-Pierre is being upgraded to yield
higher-quality products. In recent years crude oil production has been on
the decline, but steps are being taken to encourage further exploration
In contrast to the declining fortunes in crude oil, the natural gas subsector
has been gaining in prominence in the economy. This is a direct result of
the growth of the petrochemical sector based on the use of natural gas both
as fuel and feedstock. The output of the petrochemical sector is primarily
for export. Total proven and probable reserves of natural gas at the end
of 1995 were 10,600 bcf, while average production was 652 MMcfd, giving
a reserve life of 38 years.
Natural gas consumption in 1995 averaged 593 MMcfd which represents an increase
of 3 per cent from 1994. It is projected to increase by 21.9 per cent in
1996 to 723 MMcfd. The greatest increase in demand in 1996 is expected to
come from the country's third methanol plant which came on stream in November
1995. Current projections indicate natural gas demand will double by the
year 2000. This increase is premised on the development of additional petrochemical
plants and the establishment of a 425 MMcfd LNG facility.
How has the sector fared in the past 12 months?
In 1995 the energy sector of Trinidad and Tobago experienced a fairly stable
economic performance and continued to play a major role in the economy.
Crude oil and natural gas production averaged 131,811 bopd and 752 MMcfd
respectively, which represent increases of 0.2 per cent and 0.9 per cent
from the production rates of 1994.
With respect to the production and export performance of petrochemicals,
ammonia production increased 2.3 per cent to 2,056,193 tonnes in 1995, while
exports rose 5.6 per cent on 1994 and exports increased 15.4 per cent and
12.6 per cent to 573,629 tonnes and 513,381 tonnes respectively in 1995;
methanol production and exports registered a slight decrease from 1994 of
5.5 per cent and 7.9 per cent and 963,102 tonnes and 940,530 tonnes respectively.
Production from our natural gas liquids recovery plant, Phoenix Park Gas
Processors Limited, increased 7.8 per cent from 3,477,099 barrels in 1994
to 3,747,402 barrels in 1995. Exports from the plant increased from 2,775,843
barrels in 1994 to 3,588,226 barrels in 1995 or by 29.3 per cent.
How important is the energy sector to the economy as a whole?
The energy sector is the largest and most important contributor to the national
economy. In 1995 the sector (excluding petrochemicals) contributed 21.8
per cent to government revenue; 68 per cent to foreign exchange and 28 per
cent to GDP. It is expected that the sector will continue to be instrumental
in promoting and achieving sustainable growth and development in the medium
to long term.
How successful have you been in attracting foreign investment into the
The government has been utilising appropriate mechanisms to promote and
attract foreign private sector investment to the sector either independently
or in joint venture partnerships. In this regard the government's efforts
have been very successful to date.
In the area of exploration and production there has been involvement by
several international petroleum companies including Amoco, Enron, Exxon,
Total, Chevron and Unocal over the last few years. At present Shell BV and
Anderman Smith are international partners in a consortium with the state
oil company and a local company, Krishna Persad and Associates, to conduct
exploration in the under-explored northern half of the island of Trinidad.
In addition, several foreign companies have shown interest in acreage offered
under a competitive bidding exercise which commenced in early 1995. Contracts
are soon to be awarded to Enron and BHP/Elf with respect to Phase I of the
bid rounds while bids were received for Phase II from BHP Petroleum (T'dad)
Inc, Talisman Energy Inc, Elf Aquitaine, Amoco, Repsol Exploration SA, Conoco
and Exploration and Production BV.
A number of international companies are also involved in the production
of petrochemicals and other downstream activity. The major companies which
are already involved are: Arcadian (US) and Norsk Hydro (Norway) in the
production of ammonia; Ferrostaal/Helm (Germany) and Methanex (Canada) in
methanol, Arcadian in urea production; Ispat (India) in iron and steel production;
Nucor (US) in iron carbide; Southern Electrical International (US)
and Amoco in electricity generation and Conoco and Pan West in the liquids
recovery plant. In addition a Project Agreement has been signed with Farmland
Industries Inc and Mississippi Chemicals Corporation for the establishment
of a new ammonia plant and a sod turning ceremony took place in April this
year. Arcadian is also expected to start construction in 1996 of another
ammonia plant at Point Lisas. Furthermore, a number of foreign companies
are currently negotiating the final details of an omnibus agreement for
the start of an LNG facility. The companies involved in this venture are
Amoco, British Gas, Repsol Sa and Cabot and the National Gas Company of
Trinidad and Tobago.
What specific measures do you plan to increase foreign participation
in the energy sector?
In recognition of the important contribution foreign investments will continue
to play in the development of the energy sector the government of Trinidad
and Tobago plans to undertake a number of measures to maintain a healthy
investment climate in the country. In this regard there are plans to review
the natural gas pricing structure in order to make it more transparent and
therefore easier for the prospective investor to relate to.
In addition, to foster downstream activity in the petrochemical sector the
government proposed to devise a support policy for the development of downstream
industries in the sector. It is hoped to implement this policy through a
co-ordinating agency engaging in market intelligence, engineering and financial
analysis and the development of an appropriate fiscal incentive package
with the objective of fostering investment whether it be in MTBE, plastic
resins, polyester fibres, acrylic, PVC or any other products.
In the area of marketing of petroleum and petroleum products measures will
be taken to foster the growth of a healthy and competitive marketplace.
A proposal to demonopolise the local retail petroleum market is currently
What does Trinidad and Tobago offer as an investment destination that
other countries in the region, for example, Venezuela, do not?
As an investment destination Trinidad and Tobago offers several incentives
to the prospective investor. First and foremost there exists in this country
a stable political climate which is rooted in a commitment and tradition
of this people in the rule of law. In addition, there are provisions in
our Fiscal Incentives Act which present opportunities to negotiate reasonable
fiscal terms and conditions. The country also offers very competitive natural
gas prices and a highly skilled labour force. Finally, there are highly
developed infrastructural facilities, excellent telecommunication services
and a liberal financial sector which facilitates the repatriation of profits.
What exploration activities are currently under way?
The government of Trinidad and Tobago has embarked on an extensive exploration
programme in an effort to increase crude oil and natural gas reserves.
In early 1995 the government commenced a programme of Competitive Bidding,
the overall objective of which is the award of additional acreage offshore
under terms and conditions which will encourage new exploration activity
and hopefully result in new fields being brought into production.
The programme is being undertaken in three phases involving several blocks
in the south and east coast marine areas. Negotiations with respect to Phase
1 are nearing completion and production sharing contracts are expected to
be signed with Enron and BHP/Elf Aquitaine for Blocks Modified U(a) and
Bids were received for five blocks in Phase 2 of the bid round and have
already been evaluated. BHP/Talisman and Amoco/Repsol were successful bidders
for two of the offshore blocks. Phase 3 involving exploration in deeper
horizons offshore is expected to commence later this year.
Exploration activity is also continuing in the northern basin of Trinidad
through the Northern Basin Consortium, a joint venture comprising Andersen
Smith, Shell BV, a local private sector firm, Krishna Persad and Associates,
and Petrotrin. A seismic survey in the area is due to commence later this
Amoco is also continuing a comprehensive seven-well exploration/appraisal
programme which commenced in late 1995. In addition, Premier Oil BV has
recently signed a Deed of Assignment of a Licence with the government to
conduct petroleum exploration operations in the Gulf of Paria.
Are you confident that there are further oil and gas reserves to be found?
The ongoing programmes aimed at increasing crude oil and natural gas reserves
have been very successful to date and based on the findings further increases
in reserves can be expected in the future. The areas which hold greatest
promise and on which future exploration efforts will focus primarily are
the deeper waters off the east coast and in the North Coast Marine Area
of Trinidad. A recent noteworthy occurrence has been an oil find in deep
waters off the east coast of Trinidad in an essentially gas-producing region.
This discovery is expected to foster greater exploration activity in the
area. Another reason for optimism is the increasing level of interest displayed
by several international oil and gas companies to explore for hydrocarbons
while new techniques such as horizontal drilling are being employed to enhance
Are you optimistic for the future of the energy sector of Trinidad and
As already pointed out, the energy sector will continue to play a major
role in the development of Trinidad and Tobago. The government through its
plans and programme is therefore committed to the development of the sector.
Based on the level of commitment being expressed, the performance of the
sector to date and the favourable findings with respect to potential oil
and gas reserves, there is much room for optimism. The government is also
aware that crude oil and natural gas are non-renewable resources and has
been taking appropriate steps to develop alternative forms of energy.
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©Kensington Publications 1996