Nadaleen Singh

Two se­nior en­er­gy ex­ec­u­tives say there are signs of pros­per­i­ty in the sec­tor even with the price of oil hov­er­ing around US $50 per bar­rel and de­clines in the T&T econ­o­my.

One of them, Vin­cent Pereira, chair­man of the T&T En­er­gy Cham­ber and pres­i­dent of BHP Bil­li­ton T&T, said there can be in­creased com­pet­i­tive­ness if im­prove­ments are made to the fis­cal frame­work, gas pol­i­cy and pric­ing, ef­fi­cien­cy and in­sti­tu­tion­al ef­fec­tive­ness.

He said the chal­lenge is to en­sure T&T can com­pete with oth­er oil and gas provinces and at­tract in­vest­ment cap­i­tal.

Pereira, speak­ing at the T&T En­er­gy Con­fer­ence at the Hy­att Re­gency in Port-of-Spain, wel­comed the an­nounce­ment by Fi­nance Min­is­ter Colm Im­bert of plans to change the Sup­ple­men­tal Pe­tro­le­um Tax (SPT) to a prof­it-based sys­tem.

"It is not SPT alone where flex­i­bil­i­ty is need­ed, change is al­so need­ed to oth­er as­pects of the fis­cal frame­work to the pro­duc­tion shar­ing con­tracts, changes that en­able and en­cour­age in­vest­ment and help make the in­dus­try more com­pet­i­tive and sus­tain­able," he said.

"These changes will re­quire con­tin­ued gov­ern­ment-in­dus­try di­a­logue and a com­mit­ment to ad­dress­ing un­com­pet­i­tive fis­cal terms. We must get this right."

Pereira called for a clear and trans­par­ent gas pol­i­cy that pro­vides flex­i­bil­i­ty of terms to en­sure con­tin­ued in­vest­ment. He said an ap­proach that recog­nis­es the val­ue of mar­ket-led pric­ing is de­sir­able.

"Trans­paren­cy en­ables com­pet­i­tive­ness, par­tic­u­lar­ly so in gas mar­kets where there is typ­i­cal­ly less di­rect mar­ket com­pe­ti­tion to set price, and most gas is sold on long term con­tracts.

"One of the dan­gers that coun­tries can face by reg­u­lat­ing prices is that they stim­u­late grow­ing de­mand for nat­ur­al gas and this can out­strip sup­ply as it is un­eco­nom­ic to in­vest in new up­stream gas de­vel­op­ments," he said.

Pereira said there should be fo­cus on ef­fi­cien­cy and pro­duc­tiv­i­ty in a mar­ket where there is un­cer­tain­ty to "storm-proof our in­dus­try and de­liv­er com­pet­i­tive re­turns re­gard­less of where the price goes."

He added: "Lo­cal­ly, the in­dus­try is not stand­ing still and col­lab­o­ra­tion to find in­no­v­a­tive so­lu­tions is oc­cur­ring at a rapid pace."

Pereira said now that Guyana is ready to boost its en­er­gy sec­tor, T&T should be hav­ing di­a­logue with its part­ners there about op­por­tu­ni­ties to col­lab­o­rate.

"Greater lev­els of col­lab­o­ra­tion, in­clud­ing around things like rig shar­ing and mo­bil­i­sa­tion and de­mo­bil­i­sa­tion of sup­port ves­sels, could help re­duce costs in both ju­ris­dic­tions to the ben­e­fit of the peo­ple of both coun­tries and the com­pa­nies in­volved," he said.

Nor­man Christie, re­gion­al pres­i­dent of bpTT, said his com­pa­ny has had to make painful de­ci­sions about staff cuts to cope with T&T's de­clin­ing econ­o­my.

"We have made painful de­ci­sions, in­clud­ing a 15 per cent re­duc­tion in our over­all head­count and a 50 per cent re­duc­tion in our ex­pa­tri­ate work­force. Our coura­geous de­ci­sions have not on­ly been about re­duc­ing and stop­ping, they have al­so been about con­tin­u­ing," he said.

"De­spite the eco­nom­ic down­turn we spent over US$3 bil­lion in cap­i­tal ex­pen­di­tures in 2015 and 2016 com­bined. Fur­ther, we will spend an­oth­er US$1.3 bil­lion in 2017 if the en­vi­ron­ment re­mains con­ducive to in­vest­ments. The US$2 bil­lion Ju­niper project which will de­liv­er first gas in the third quar­ter of this year, demon­strates our com­mit­ment to in­vest­ing through cy­cles."

Christie an­nounced that the com­pa­ny is drilling a Sa­van­nah ex­plo­ration well in the Colum­bus Basin and is ex­plor­ing in deep-wa­ter blocks.

"Lat­er this year, we will spud a sec­ond ex­plo­ration well called Macadamia in the Colum­bus Basin. If our ex­plo­ration ef­forts are suc­cess­ful it will guar­an­tee ben­e­fits to T&T for decades to come and pro­vide a nec­es­sary bridge to di­ver­si­fi­ca­tion," he said.