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Ramnarine lauds T&T’s success in attracting energy investment

Sunday, June 22, 2014

Energy Minister Kevin Ramnarine says US$9.5 billion is forecast to be spent by the energy sector in T&T between 2014 and 2016—and that is coming after an estimated US$5.8 billion was spent developing energy assets between 2010 and 2013.


Speaking at the Society of Petroleum Engineers conference at the Hyatt Regency hotel earlier this month, Ramnarine said the ministry’s preliminary analysis indicates that T&T should be able to hold the 4.2 billion cubic feet per day plateau rate until 2015 “subject to the realisation of related investment” from the incumbent producers.


He said T&T had received some US$6.5 billion in foreign direct investment between 2010 and 2013—US$549 million in 2010, US$1.83 billion in 2011, US$2.45 billion in 2012 and US$1.71 billion in 2013—and that the assumption that 90 per cent of foreign direct investment into T&T would be energy related has held in that period.


“The point is we have seen a surge in energy related foreign direct investment since 2010 and this is due to increased investor confidence (particularly from the incumbent players BP, BG, BHP and EOG) and this is also related to the fiscal incentives that have been provided in every budget for the last four years,” said Ramnarine. In the upcoming 2015 budget, Ramnarine said that he intends to “look closely” at providing incentives for the development of small stranded pools of natural gas. 


Ramnarine outlined the expected capital expenditure in the local energy sector until 2016, stating: “In 2014 the forecasted capital expenditure for the energy sector is US$3.3 billion. In 2015, that figure is US$3.2 billion and in 2016 it is US$3.0 billion. 


“The main actors in these numbers are BP, BG and Petrotrin. Most of that money is being spent to bring oil and gas to the surface and to market in a safe and efficient manner. The incumbents all have a growth story around T&T and the proof is that they are investing again in substantial sums.” Expanding on the reasons for the increased investment in the energy sector, Ramnarine said the current administration has brought fiscal certainty to the sector.


The minister said: “In the past four years there has been no increase in taxes on companies in the energy sector. This has allowed upstream companies, for the first time in many years; to operate in an environment of certainty. Companies like certainty and don’t like having the rug pulled from under them. This comes against the backdrop of almost a decade of indecision as it relates to the fiscal regime. At the Ministry of Energy, we make decisions about the fiscal regime in the national interest.” 


Ramnarine also said that in the last four years, the Ministry of Energy has simplified the competitive bidding process, which has resulted in the signing of seven deepwater production sharing contracts (PSCs), five shallow/average depth water PSCs and a licence to Petrotrin for the Trinmar acreage.


He said the ministry expects to sign two more deepwater PSCs and three onshore licences with Range Resources, Territorial and Lease Operators. He added that of the 28 currently active PSCs dating as far back as 1974, 12 were signed within the last four years.


“At the 2014 Energy Conference, I announced the award of three land blocks to Range Resources, Lease Operators Ltd and Touchstone. These three blocks, together with the Trinmar license and the seven existing deepwater PSC’s will lead to the drilling of at least 31 exploration wells (these are based on contractual obligations) in the next eight years and at most 53 exploration wells. The additional 22 will be based on the optional second and third exploration phases under signed PSC’s,” said Ramnarine.


Referring to the theme of the conference “Future Assets: Acquisition, Maintenance & Reliability,” the minister said 2018 will be a significant year for T&T “as we must treat with the renewal of the Train I contract as well as the renewal of the BP domestic contract.” Next year, he said, the BG/Chevron base gas sales contract with NGC expires. 


“These are big contracts that impact the future of the country. We don’t intend to make decisions around these contracts without the benefit of a new natural gas master plan and it is for that reason we have commissioned such a study,” Ramnarine said. 
An in-house committee has been named to evaluate the applications by the consultants. 


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