“Energy: Fuelling America’s Growth”
Mr. Chairman, delegates, I bring greetings to you on behalf of the people of Trinidad & Tobago.
I welcome the opportunity to put forward Trinidad & Tobago’s vision for the future of energy, not only as a sovereign nation, but also as a partner and leading energy producer in the Americas.
Trinidad & Tobago’s occupies a robust position in the global energy business, as it should be, with a history of 107 years of commercially producing oil.
Over the past two decades, what was largely an oil driven economy evolved into a natural-gas based economy.
And today, the evolution continues as we are now vigorously pursuing an economic diversification programme.
This programme is being driven on three fronts:
· By reforms and incentives for the business environment that will support new economic sectors;
· By new training programmes for our young people to build the skills-base to support these sectors, and
· By reforming the energy environment to promote new investments in exploration and production.
This is because even as we pursue a vigorous programme of diversification, our energy sector remains one of the most sophisticated in the region, one that is now experiencing what one might call a rebirth.
As an energy brand, Trinidad and Tobago is highly regarded globally.
We are the world’s largest exporter of ammonia and methanol, and world’s sixth largest exporter of Liquefied Natural Gas (LNG).
Almost half of that LNG goes to three South American countries: Argentina, Brazil and Chile.
We also supply LNG to the Dominican Republic, Puerto Rico, Canada and in decreasing volumes to the United States because of the shale revolution.
Our LNG trade is therefore well integrated into the Americas, which places us as partners in the economic development of the countries within our markets.
And this will be further enhanced in the near future when the Panama Canal expansion is completed.
This leadership position has been won over many years of political stability and peace; deep regard for the rule of law, and our reputation for always honouring the sanctity of contracts.
Today we are home to energy players such as BP, BG, BHP, Chevron, Repsol and Shell.
A NEW ENERGY DYNAMIC
The extent of our participation in global energy is made clearer when we note that Trinidad and Tobago accounts for 17% of BP’s global volumes and 13% of BG’s global volumes.
And our energy sector now finds itself holding strongly at the centre of a new dynamic with the Royal Dutch Shell acquisition of BG Group for £47Billion.
BG is our second largest gas producer, and is a shareholder in the Atlantic facility which includes four LNG trains.
Shell is also a shareholder in Atlantic through its buyout of Repsol’s interest in 2013.
And the BG assets in Trinidad & Tobago will of course be an important factor in how the acquisition is finalised.
On the day the mega merger was announced I received a letter from the CEO of Royal Dutch Shell Ben van Beurden. In that letter Shell confirmed their acquisition of BG Group and committed to continue investing in Trinidad and Tobago.
I thank Mr van Beurden for his kind letter and give him the assurance that his company has a friend in Trinidad & Tobago.
ENERGY IN THE MIDST OF DIVERSIFICATION
While energy remains our cornerstone, in the last five years my Government has worked to reconfigure our economy, to begin shifting away from an over-reliance on the energy sector.
Economic diversification has become a major component of our economic policies for sustainability.
This has seen a marked strengthening of the manufacturing sector, and of course the financial services sector which has been modernised through a number of regulatory and legislative changes.
We are home to regarded institutions such as Citibank, Scotia Bank, the Royal Bank of Canada and our locally owned First Citizens Bank which is now traded on the Trinidad & Tobago Stock Exchange.
Also core to the economic transformation that we started five years ago has been a vision to create a property owning, knowledge driven democracy.
We have looked at the model of Ecopetrol in Colombia, which has earned an impressive reputation by divesting shares of that valuable oil company to its citizens.
In the coming weeks we will embark on another initial public offering for one of our valuable natural gas companies Phoenix Park Gas Processors Limited.
In doing so, our intention is to increase citizen ownership and participation in resources that are managed by some of the largest corporate entities.
Having given that snapshot on the energy landscape, and part of the regulatory environment, I turn to investments and the points that validate our current position as an energy re-birth.
For the period 2011 to 2013, an estimated US$5.8 Billion was spent on developing energy assets in Trinidad& Tobago.
Foreign Direct Investment (FDI) in the energy sector is expected to register an additional $US2 billion in 2015.
BP and BG are the companies at the forefront of these investments.
BP’s capital expenditure for 2015 into 2016 will focus on the Juniper project, for which the fabrication of the platform has commenced at La Brea.
This is a $US2.1 billion project and will spread itself over approximately two and a half years. And is the largest capital outlay for upstream development in the history of Trinidad and Tobago.
BP is also working on its next major developments – Angelin and Savannah both of which will be drilled next year.
At BHP Billiton, a seismic programme is underway with its partners.
This will be the largest seismic survey ever conducted by an international oil company in the history of the oil and gas industry.
CURRENT OIL PRODUCTION
These investments have come at a time when we have turned the sector back to a positive trajectory.
From 2006, oil production started on a slide and by 2011, had fallen from approximately 145,000 barrels per day to just over 80,000 barrels per day.
In 2010, my Government took office and pursued comprehensive reforms in the fiscal regime governing the exploration sector as part of a strategy to bring about a recovery in oil production and the broader energy sector.
From 2012 to 2014, oil production held at approximately 81,000 barrels of oil per day.
By January 2015, oil production was averaging at about 84,600 barrels of oil per day. And we expect in 2015 a 4% increase in oil production over what was attained in 2014.
You will also be happy to know that a crude oil audit as at 31st December 2011 showed proved reserves at 199.5 million barrels of oil, probable reserves 85.5 million barrels of oil and possible reserves 124.8 million barrels.
The total crude oil figure of the proved plus the probable plus the possible reserves for crude oil was 409.8 million barrels.
Our condensate reserves were also evaluated in the annual natural gas reserves audits conducted by the Ryder Scott Company.
At year-ending 31st December 2011, this evaluation showed proved reserves at 43.5 million barrels of condensate, probable reserves of 24.4 million barrels of condensate and possible reserves of 30.8 million barrels of condensate.
The total condensate figure estimated by the Ryder Scott Company stands at 98.7 million barrels of condensate.
Our total crude oil and condensate reserves as at 31st December 2011 therefore amounted to an estimated 508.4 million barrels.
At a rate of extraction of 30 million barrels per year, this equates to a reserve to production ratio of approximately 17 years on what the industry refers to as a 3P basis.
These positive indicators have placed us in a position to tell you that since 31st December 2011 the Ministry of Energy and Energy Affairs has signed 21 new production sharing contracts or licenses.
Our deep-water blocks and the three land blocks licensed in 2014 all have potential for oil.
The Ministry is currently considering two bid rounds in 2015, one for land and nearshore acreage and another for deep-water acreage.
The current environment of low prices will mean that we must gauge the appetite of the companies, especially for deep-water, before we proceed with more bid rounds.
In November 2014, the Ministry engaged Poten and Partners to develop a natural gas master plan for Trinidad and Tobago that would consider the period 2014 to 2025.
This master plan will serve as a guide to inform policy formulation and decision-making in the future as it relates to gas based industrialization.
The engagement of consultants was motivated by changes in the local and international environment for natural gas.
One of these factors includes the increase in natural gas production in the United States as a consequence of the shale gas revolution, and the need to ensure the continuing competitiveness of our own natural gas sector.
In addition, in the coming years there are a number of critical contractual obligations that will be up for renewal, including the BG/Chevron contract with the National Gas Company of Trinidad & Tobago (NGC), which expires in December of this year.
BP’s contract with the NGC expires in 2018.
In addition, the Atlantic Train 1 contract comes to an end in 2019 and a decision would have to be taken whether to extend the operation of this facility.
These factors all combine to make it extremely important that we map the natural gas sector for the period 2014 – 2025.
The plan will evaluate how gas is utilized in our economy between competing industries and will determine the most efficient allocation of natural gas between these industries.
It is very important to note that Trinidad and Tobago has attained candidate country status with the Extractive Industry Transparency Initiative (EITI). The process of re-entering the EITI started in 2010 and we hope to ascend to full compliant country status in 2015.
What is also very important to note is the partnership role it adopts with energy stakeholders, and the mode of Government in holding stakeholders to high standards of integrity.
Energy policy that supports competitiveness and investment opportunity requires that we are agile enough to quickly adapt to market changes over time.
In January of this year, following a meeting with senior executives from 26 energy companies, a committee was appointed to examine at ways to maintain and improve the sustainability of the energy sector.
A second Cabinet-appointed committee will look at ways to improve the efficiency of the regulatory approval process, with the objective of clearing log jams.
These approaches of consultation and a modernized regulatory environment have been adopted to ensure that as the global energy sector evolves and advances, so too will the Trinidad& Tobago energy sector, with a strong integrity pillar.
What I also believe is important, to understand the structure of the Trinidad & Tobago energy sector and the abundant opportunities for investment that exists, is the advance of renewable energy.
We have taken an unconventional approach to establishing the foundations for a renewable energy sector.
Through the Renewable Energy in Schools Project photovoltaic (PV) systems and solar stills have been established in 21 secondary schools across eight (8) educational districts of Trinidad and Tobago.
With the installation of these fixtures schools no longer have to pay for electricity consumption.
Twenty-five (25) more schools are marked for the installation of solar PV panels and solar water stills for the year 2015.
Potential investors will also be comforted to note that Trinidad & Tobago adopts and maintains support for region wide collaboration.
At a meeting with US Vice President Joe Biden last January, Trinidad and Tobago proposed a thematic Caribbean Energy Fund in partnership with the IDB.
We have since signed an MOU with the IDB on February 27th 2015 for the development of this Caribbean Energy Fund.
This fund is expected to be a multi donor fund with contributions from the public and private sectors and will be dedicated to broader sustainable energy development.
The fund is estimated to require US$1 Billion and will finance projects to convert power generation from oil to natural gas, and the execution of renewable energy projects.
And yesterday in Jamaica with President Obama, we welcomed the announcement that the US will move to establish an energy task force to identify ways to advance energy sector reform, regional integration and clean energy development.
As I conclude therefore, I trust that you will now share my enthusiasm for the tremendous opportunity for investments in energy in Trinidad & Tobago.
Our considerable resources exist in a sophisticated business environment.
We are governed by an Administration that has made consultation and transparency its hallmarks.
We have a modern incentive structure that supports profitable ventures.
And we are continually fortified through regional partnerships.
And while we all acknowledge the challenges that exists because of low energy prices, I propose that we see opportunities differently.
Rather than focusing only on the constraints brought by challenges, let’s choose instead to talk about combining our strength, agility and abundant resources in a manner that we can invest our way back into a period of boom.
As we always have in the past, Trinidad & Tobago is prepared to stand on its word and meet investors half-way to ensure that benefits are struck for our citizens as well as our stakeholders.
We look forward to welcoming you in the months to come.
I thank you all.
The Honourable Kamla Persad-Bissessar, SC, MP,
Prime Minister of the Republic of Trinidad and Tobago
RIU PLAZA HOTEL
10 APRIL 2015