Energy Minister Pleased with S&P Assessment

Minister of Energy and Energy Affairs Kevin Ramnarine is very pleased with Standard and Poor’s (S&P) affirmation of Trinidad and Tobago’s foreign and local currency sovereign credit ratings as “A/A-1”. The S&P report was published on December 24, 2013.

The Ministry of Energy and Energy Affairs (MEEA) notes that S&P’s positive economic assessment of the country was based on a positive outlook for the national energy sector. The MEEA was pleased with the expectation by Standard and Poor’s of an average growth rate of 2.6%, which is underpinned by “recovering energy output” in 2014. According to S&P:

“We expect per capita GDP to rise by 2.6% in 2014 thanks to both recovering energy output and continued growth in the nonenergy sector.”

From late 2010 to 2013 the T&T energy sector experienced a series of planned maintenance events led by the country’s largest natural gas producer, BP. The Minister of Energy and Energy Affairs Kevin Ramnarine has communicated that these maintenance events are now largely behind us and 2014 is expected to be the best year for natural gas production since 2010.

The S&P report was also positive on the ability of Trinidad and Tobago to attract new investment in its energy sector. According to S&P:

“… changes in tax and other policies in recent years have encouraged more activity in the energy sector, as we’ve seen in growing private-sector participation in recent onshore and offshore bidding rounds. As a result, official reserves of gas and oil–which had declined in recent years–may stabilize in the coming years.”

The MEEA is very pleased with this observation by S&P as it speaks to investor confidence in the national energy sector in the last three years.  During this time progressive revision of the fiscal regime governing the energy sector has led to:

1.      The highest ever foreign direct investment (FDI) in the energy sector of US$ 2.3 billion in 2012.

2.      The signing of seven deepwater production sharing contracts worth US$1.9 billion in FDI.

3.      The signing of a project development agreement with Mitsubishi of Japan for the establishment of a $US 850 million Methanol to DME plant in La Brea.

Finally the report notes that:

“The increase in exploration activities in the oil and gas sector in recent years should sustain energy production over the coming decade, contributing to economic growth.”

This view is consistent with the view of the MEEA which has noted that there are currently eight drilling rigs operating in our waters. This compares to one rig operating in our waters in June 2010.

Looking forward, the year 2014 is scheduled to be one of the busiest for the energy sector in over 30 years. Altogether there are 14 exploration wells carded to be drilled by various companies in 2014. This will undoubtedly contribute to new discoveries of hydrocarbons which will sustain the prosperity of Trinidad and Tobago into the future.

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