It is no se­cret that our en­er­gy in­dus­try is cur­rent­ly in the midst of some chal­leng­ing times. Falling oil pro­duc­tion, in­ter­rupt­ed nat­ur­al-gas sup­plies, low nat­ur­al-gas re­serves and low nat­ur­al-gas prices are just some of the fac­tors oc­cur­ring si­mul­ta­ne­ous­ly to make this an in­ter­est­ing time. En­er­gy and En­er­gy Af­fairs Min­is­ter Kevin Ram­nar­ine is cor­rect in his dri­ve to in­crease oil pro­duc­tion, for it would ap­pear the world would be ex­pe­ri­enc­ing the shale-gas sup­ply glut for some time in the near fu­ture, which would con­tin­ue to sup­press nat­ur­al gas prices. How­ev­er, giv­en that most of our acreage that will be up for bid­ding is in the deep and ul­tra-deep re­gions, it would re­quire some unique­ly craft­ed pro­duc­tion shar­ing con­tracts (PSCs) to en­cour­age in­ter­na­tion­al oil com­pa­nies (IOCs) and multi­na­tion­al oil com­pa­nies (MOCs) to take a gam­ble in these high-risk en­vi­ron­ments.

Where­as most PSCs in the re­cent past were craft­ed around re­la­tion­ships in­volv­ing price of the com­mod­i­ty and pro­duc­tion vol­umes, it maybe the case where we may have to think out­side the box to pro­vide "sweet­en­ers" to our in­duce­ments to en­cour­age the IOCs and MOCs to in­vest in our coun­try. As seen in the past, we can­not be too dras­tic in pro­mot­ing a more ag­gres­sive tax­a­tion regime as it dri­ves away po­ten­tial in­vestors, and con­verse­ly, we can­not be too am­i­ca­ble as that is not to the cit­i­zens' ben­e­fit. How­ev­er, what this coun­try could prob­a­bly start con­sid­er­ing is craft­ing PSCs with new in­no­v­a­tive in­duce­ments, such as en­vi­ron­men­tal ben­e­fits.

We all know that all IOCs and MOCs are un­der pres­sure to go green, so maybe we can of­fer ben­e­fits in the form of car­bon cred­its that they can trade in oth­er ju­ris­dic­tions for tak­ing the risk to ex­plore in our off­shore en­vi­ron­ments. The me­chan­ics of such a scheme would ob­vi­ous­ly have to be worked out, as an in-depth fea­si­bil­i­ty study has not been done with re­gard to this idea. The main point here is that we have to be in­no­v­a­tive and dar­ing in our way for­ward in our pre­cious en­er­gy in­dus­try. We are small, but we have re­peat­ed­ly proven we are world lead­ers in en­er­gy.

Steve See­ta­hal

Di­rec­tor, Cen­tral Bank