Oil and gas companies have been given six months to bid on any or all of the six blocks offered in the 2018 T&T shallow-water bid round. This was announced yesterday by Energy Minister Franklin Khan as the country’s first shallow-water bid round in eight years was launched.
The Blocks on offer are:
° Block 1B off the West Coast of Trinidad
° Block Ub off the East Coat
° Block Uc which is located next to Ub and is also off the East Coast
° Lower Reverse L Block off the East Coast
° North Coast Marine Area (NCMA) 2 off the North Coast
° NCMA 3 off the North Coast
Oil and gas companies are required to bid for acreage either on land or offshore T&T. If they are successful they are then made the operator of the licensed area. Only then can they acquire seismic data and drill for oil or gas. If they find either in economic amounts, they share the profits from the oil or gas with Government in a pre-agreed formula.
Companies were told they will be allowed to bid on the acquisition of just seismic data or the acquisition of the data and the drilling of wells. Government is also expecting the companies to provide a signature bonus once awarded a block.
The companies will have to carry one of the state companies for the first four years at a rate of 15 per cent. This essentially means that if a company is awarded a block and it explores and finds commercial amounts of hydrocarbons, a state company will own 15 per cent of the asset but will only invest money into the effort at the time of development of the resources.
Khan said a decision has not yet been made on which State-owned companies will be the carried partner but there are three options. One is the National Gas Company Limited but the minister admitted that there were challenges in making it the carried entity. The others are Heritage Petroleum, which was only recently formed and has replaced Petrotrin’s Exploration and Production Unit and the little known Upstream/Downstream Company.
Khan told a packed room of energy sector executives there has been significant interest in the bid round but companies had to know that incentives offered way back in 1974 can no longer be expected in 2018.
With the exception of the North Coast Marine Area, the Ministry acknowledges that the blocks are likely to contain small amounts of gas, often less than half a trillion cubic feet of gas in place. Asked if these amounts might be too small for the terms were being demanded, Permanent Secretary in the Ministry Penelope Bradshaw Niles said they are confident oil and gas companies can make money from the blocks. She added that with the new technology being used in acquiring seismic data, the Ministry is seeing more prospects in the shallow water.
The blocks are expected to be awarded in November 2019.