T&T’S 2017 Energy Sector's naughty and nice list
As December draws to an end and 2018 approaches we can take a close look at our domestic energy industry and see exactly who would be on Energy Santa’s naughty and nice list. Being Trinbagonians, we must prepare ourselves for the reality that there may be a longer naughty list than nice list but at the same time we should highlight, congratulate and celebrate those that made it onto our nice list and improved our energy sector in one way or the other.
1. Petroleum Company of Trinidad and Tobago (Petrotrin)
It’s a shame that the top of our naughty list is held by our very on state-owned oil company but considering the number of mishaps that occurred within the company, it was inevitable. Firstly, let’s start with the numerous oil spills that happened throughout the year, some of which reached as far as Venezuelan waters.
Another faux-pas incurred by Petrotrin was the increase in the cost of the Southwest Soldado Project from $400 million to $1.2 billion. In 2015, the company contracted the services of PricewaterhouseCoopers (PWC) to conduct an audit into the Soldado Project corruption scandal after allegations were made that Petrotrin paid an upfront commissioning fee of US$1.25 million to a Mexican shipping firm, Maritime de Ecologia de CV.
It wouldn’t be right if we did not mention the “Fake Oil Scandal”, which, when investigated, revealed that there was a discrepancy between the oil produced and the actual production receipts at Point-a-Pierre. An audit exposed that Petrotrin paid $100 million dollars to A&V Drilling, for oil which was not supplied. Apart from that, another report found that the reservoir was incapable of producing the volumes in question, causing the investigation to be widened to the year 2016.
In the 2018 fiscal budget, it was revealed as well that the company’s profits fell from $37 billion in 2012 to $16 billion in 2016, with their debt now standing at $12 billion. The Minister of Finance stated that Petrotrin requires fundamental restructuring, which cannot be put off any further.
2. The Citizens of Trinidad and Tobago
As a people, we tend to not understand the bigger picture and how things will benefit us in the long-run, but more along the lines of how we lose out in the short run. In the 2018 fiscal budget, the fuel subsidy was further adjusted, and it was proposed to discontinue the subsidy on electricity. While this may mean the average citizen would now have to pay more for fuel and electricity, it would benefit the country in the long-run. In 2014, the fuel subsidy was as high as $7 billion, which is quite an alarming figure since the country’s revenues have decreased and are not where they were once at. We, as citizens, need to see past political affiliations, panic and disarray and look towards measures that would be beneficial and sustainable.
3. Trinidad and Tobago Electricity Commission (T&TEC)
In the 2018 fiscal budget, it was revealed that T&TEC was once again owing money, over $4 billion, to the National Gas Company of Trinidad and Tobago. The NGC sells gas to the Commission as a subsidised cost, which is significantly lower than the market price, to increase productivity, therefore forgoing the amount of money that could have been earned by selling the natural gas at the market price.
4. A&V Oil and Gas Limited
As mentioned above, A&V Oil and Gas Ltd. was the central focal point of the fake oil scandal. Apart from not producing the volume of oil it was being paid for the company also threatened to take legal action against the Petroleum Company of Trinidad and Tobago. A&V demanded that Petrotrin withdraw any statement that suggested that they were guilty of any fraudulent conduct. Along with these threats of legal action, it was also alleged that journalists, when visiting A&V, were threatened physically if they did not leave the company’s compound.
This was a good year for bpTT in Trinidad and Tobago’s energy industry. There was a high level of activity from bpTT over the past three years. Firstly, we must discuss first gas from Juniper which occurred in August. Juniper was the fifth BP upstream major project, and the second in Trinidad, to start-up in 2017. Juniper began on schedule and under budget. The project is expected to boost bpTT’s gas production capacity by approximately 590 million mmscfd.
Secondly, in June 2017, bpTT announced that it sanctioned the development of the Angelin gas field, which is expected to start production in late 2019. This project will feature the construction of a new platform, bpTT’s 15th offshore production facility, which will be located 60km off the south-east coast of Trinidad, at a depth of approximately 65m. It will include four wells and will have a production capacity of roughly 600 mmscfd.
Thirdly, the company also announced in June 2017, that it made two significant gas discoveries with the Savannah and Macadamia exploration wells, offshore Trinidad and Tobago. The findings of these wells have a potential of around 2 trillion cubic feet of gas in place to underpin new developments in these areas. Based on the success of the Savannah well, BPTT expects to develop these reservoirs via future tieback to the Juniper platform that is due to come online mid-2017, whereas the Macadamia discovery is expected to support a new platform within the post-2020 timeframe.
Norman Christie, Regional President for bpTT, stated, “This is a testament to BPTT’s ongoing commitment to the development of our Trinidad and Tobago operations and the wider industry, and we look forward to the future portfolio drill-out.”
BP Chief Executive, Upstream Bernard Looney has expressed BP’s commitment to Trinidad and Tobago, stating that, “We remain committed to being the best stewards of our acreage and to ensuring that Trinidad and Tobago benefits from our investments here. We will continue to invest in our people, in our technology and in our operations to sustain production and to actively participate in the broader development of the country.”
2. The Government of the Republic of Trinidad and Tobago
While many may beg to disagree, for various reasons, the Government of Trinidad and Tobago belongs on ENERGY Santa’s nice list and justifiably so. The government made many moves in the right direction to mitigate and adapt to many obstacles which were occurring within the energy sector for 2017 such as a fluctuating oil price, natural gas curtailments, and contracts with multinational energy companies. Some of these moves include fortifying their relationships with oil giants such as BP, Shell and Exxon, as well as reducing fuel subsidies, and working on progressing the natural gas deal with Venezuela.
Even though the naughty list far outweighs the nice list, we must remain hopeful and optimistic for 2018 since our economy is heavily based on our energy industry. Hopefully, at the end of 2018, the results will be the total opposite, with a lot more positive things to report on.