In the next 12 months, Trinidad and Tobago will have three bid rounds—deepwater, onshore and a shallow water—and the country will continue to negotiate gas supply contracts and push the decarbonisation agenda.
Those plans would aid in the Government’s longer-term objective of successfully transitioning the energy sector away from crude oil by 2028.
In making his maiden contribution titled: “Leading The Energy Transition” at the virtual, annual Energy Conference yesterday, Minister of Energy, Stuart Young, gave a horizon of 2028 for oil production.
“In this transition there will be triumphs and casualties. As an oil and gas economy, Trinidad and Tobago is vulnerable but we are not flat-footed,” he said.
Young said, as a country, T&T must identify what are its advantages and leverage them. He said this is happening, and the Government has demonstrated, from top down, that it is willing to work with stakeholders to find the balance that is required to continue mutually beneficial relationships.
“We must all recognise that times are changing and we must work together to find solutions. We are prepared to be creative and flexible to ensure longevity. This has been demonstrated by the Cabinet and the Ministry of Energy and Energy Industries as we have negotiated and re-negotiated many deals in the sector in the last five years. This will continue. We will stay engaged and will think outside of the traditional boxes as we appreciate the competition for global growth and capital investment,” he said.
He asked that “our partners in the industry” recognise that T&T’s shareholders are the citizens of Trinidad and Tobago.
“Those of you who have interacted with the Honourable Prime Minister and me over the past six years appreciate that we take our responsibility to ensure that the people of Trinidad and Tobago get fair returns for their resources, very seriously. They are our shareholders. You would also bear testimony that we recognise and appreciate that stakeholders also need to ensure returns for their shareholders and it is our commitment to continue working day and night to find the balance ensuring that there are fair and sufficient mutual returns,” he said.
Here are his priority areas:
Engaging the upstream
Young said the engagement with upstream companies is not limited to unsanctioned projects, but will include their plans for prospective resources.
To this end, all companies will be requested to provide a work programme and definitive schedule for the maximum exploration and development of licensed and contracted acreage.
He said that acreage not required for exploration and/or development must be returned to state.
“Such cooperation is critical as the ministry over the next 12 months will be embarking on a deepwater bid round, an onshore bid round and a shallow-water bid round. In addition to open acreage, shallow acreage would be considered for inclusion in the bid rounds. The bid rounds are essential for identification and sustained replacement of oil and gas reserves. Over the period 2016 to 2019 Government has been successful in achieving a 100 per cent replacement of proven gas reserves. Further, as part of the bid process I have been reviewing the fiscal terms which would be applicable to future contractual arrangements and your comments will be appreciated,” he said.
Young said he intends to address an inequity in the gas supply arrangements between the upstream, Atlantic and the downstream.
“Whereas the LNG producers have long-term contracts, the downstream companies are afforded short-term contracts of five-year duration. This limits the ability of downstream companies to plan long term and subjects them to a price revision every five years. This has led to an inordinate amount of resources being focused on negotiations instead of business operations. There has been meaningful progress in the negotiations by NGC on outstanding contracts with downstream companies and it is my intention to make the cycle of protracted negotiations a thing of the past,” he said.
He said there must be an alignment with the upstream plans for exploration and production with the downstream demands outside of LNG.
“As regards LNG, the Government is currently in discussions with the LNG stakeholders for restructuring of the LNG business in Trinidad and Tobago. It has been determined that current model is not the most efficient. It is proposed to consolidate the existing ALNG joint ventures into a unitised facility with a common ownership and commercial framework. The Government is amenable to this proposal and a Government-appointed team is in negotiation on a new commercial structure and long-term licence for the proposed facility,” he said.