There will have to be a major turnaround in crude and downstream production if predictions of growth in the economy for 2012 are to be achieved.
Both the Governor of the Central Bank Jwala Rambarran and the Finance Minister Larry Howai have said the country could experience a 1 per cent rate of growth in the calendar year 2012.
On Monday, the Central Bank governor said the short-term forecast of growth in the second half of 2012 and into 2013 were based on three fundamental assumptions: That the energy companies would fully complete their maintenance programmes; that the industrial relations climate would return to some semblance of stability and that the Government must implement its public sector investment programme in a timely and efficient manner.
He said the economy declined by 3.6 percent in the second quarter with the energy sector experiencing a "substantial contraction" of 7.3 per cent.
The Bank's Monetary Police Report noted that the decline in activity in the exploration and production sub-sector by 7.0 per cent (year-on-year) on account of reduced output of natural gas (6.5 per cent) and crude oil (11.1 per cent).
The report read: "There was also a significant contraction in the refining sub-sector (12 per cent). Reduced production of natural gas contributed to the sharp declines in the output of liquefied natural gas (LNG) (9 per cent) and natural gas liquids (24.3 per cent). Production of LNG was also affected by a two-week unplanned shutdown of Train 4, the country's largest LNG train, while the fall in petroleum refining (15.2 per cent) was largely associated with a 35.6 per cent drop in diesel production. Liquefied petroleum gas (LPG) and gasoline production also plummeted by 63.1 per cent and 33.1 per cent, respectively, due to upgrade works being undertaken on the Fluidised Catalytic Unit (FCCU) as part of the Gasoline Optimization Program (GOP) at Petrotrin. This state of affairs contributed to a fall in imports of crude oil (15.3 per cent)."
The report also noted that the output in the petrochemicals sub-sector was also restricted by lower availability of natural gas. Ammonia output fell slightly (0.2 per cent) while a shortfall in methanol production (10.9 per cent) was largely due to a three-week scheduled outage at a plant during the second quarter.
However Rambarran said in order for the economy to grow by one per cent for all of 2012, there would need to be growth of just under two per cent in the non-energy sector in the second half of the year and a contraction of one per cent in the energy sector.
His predictions may be difficult to achieve because the latest figures from the Ministry of Energy show that in the third quarter of 2012, the sector continued to decline in significant ways. In terms of crude production, there was a 10.78 percent decline in oil production in the third quarter of this year when compared to 2011. Daily oil production fell from 90,799 barrels of oil per day to 81,003 barrels of oil per day, recording an average production in September of a mere 77,288 barrels of oil per day.
Natural gas liquids production was also significanty down with the monthly average for the third quarter in 2011 being 1,369,105 BBLs while it averaged 1,053,064 BBLs in 2012. This represents a 7.6 percent decline in natural gas liquids production.
Ammonia production for the third quarter in 2012 averaged 400,782 metric tonnes per month while in 2011 it averaged 437,850, which represents an 8.4 per cent decrease in ammonia production. The decline is worrying because ammonia prices have been experiencing recently some of their highest levels in years.
Urea production plummeted in the third quarter falling a whopping 34.5 per cent. In 2011, Urea production averaged 62,141 metric tonnes per month while in 2012 the production had fallen to 40,669metric tonnes, representing a fall in urea production of 34.5 percent.
The story in methanol was a little better with the decline of less than one per cent decline in production for the third quarter in 2012 with production falling from 481,018.3 metric tonnes in 2011 to 476,705.3 metric tonnes in 2012.
There was a 7.9 per cent increase in the production of natural gas in the third quarter of 2012. Natural Gas production increased by 7.9 per cent when compared with the same period in 2011. In the months July, August and September 2012 natural gas production increased from an average of 3.76 bcf/d to 4.16 bcf/d.
But while the news is not bad for both methanol and natural gas production, the reality is that both natural gas production and methanol production are well down from their highs and continue to negatively impact the economy.
In addition BPTT has consistently said that it will not return to maximum production before the end of 2013 and into 2014 which means that the production of commodities including methanol, ammonia and LNG will be negatively impacted.
In a statement issued on October 29, the Ministry of Energy stated that bpTT's Kapok and BGTT's Dolphin platforms were fully operational and delivering natural gas as of the last weekend in October.
"Both platforms account for approximately 800 million cubic feet of natural gas per day," according to the Ministry of Energy.
The statement said that all gas restrictions had been lifted, with the exception of two industrial consumers who were having process plant problems.