?"Every morning in Africa, a gazelle wakes up. It knows it must run faster than the fastest lion or it will be killed. Every morning a lion wakes up. It knows it must outrun the slowest gazelle or it will starve to death. It doesn't matter whether you are a lion or a gazelle: when the sun comes up, you'd better be running."
This African proverb was reproduced in Thomas Friedman's book The World is Flat. The book's title is a metaphor for a changed world where globalisation has levelled the playing field of the world economy. Fundamental to survival in the world of the gazelle and the lion is the ability to attract investment. I would caveat that by saying attract investment from the right companies.
In the world we live in countries compete for investment. In the USA, different States aggressively compete against one another to attract investment, especially in IT and manufacturing. In January 2015, the Economist wrote about the Indian state of Gujarat. They glowingly noted that "Gujarat is richer, enjoys faster GDP growth and a greater intensity of jobs and industry than India as a whole." At the heart of this was an investor-friendly approach adopted by the Government of this Indian State. It was therefore no surprise when in 2014 Gujarat's long standing Chief Minister was elected Prime Minister of India.
Many counties in our hemisphere, just like the Gazelle and the Lion, have woken up and started running. Enrique Pena Nieto, the President of Mexico has de-monopolised his country's ailing State oil company Pemex and has opened up Mexico to foreign investment. Pemex was nationalised in 1938. The world has changed a lot since 1938. It was argued that Pemex lacked the capital and technology to develop new resources of oil and gas and needed help.
In Colombia there is a similar story. In 2005, Colombia produced 526,000 barrels of oil per day. By 2013, that country's oil production passed one million barrels of oil per day. At the heart of that success were two approaches. The first was the reformation of the State oil company Ecopetrol which included an Initial Public Offering. The second was the offering of mature and ageing fields to small independent companies that had lower operating cost. There are many more stories of countries attracting world class investment. There is for example the case of the Lee Kuan Yew-led Singapore that attracted Hewlett Packard, Texas Instruments and IBM.
For an economy to grow it must attract investment. For companies to decide to invest the business environment must be conducive to investment. Companies invest to make a return on their investment and capital goes to where it is treated the best. This is true of all industries. I always assumed that this was something that everyone knew and understood. I might be wrong in making that assumption.
In the oil and gas business, multi-nationals monitor what is being said by all policy makers. They do this to gauge political risk. Obviously before companies invest (in some cases billions) they assess all risk. Oil and gas does not flow to the surface at zero cost and zero investment nor does it depend on magic. When you go offshore you realise the huge risk and the money involved in drilling a well.
Companies therefore invest here not because they are obliged. They invest because they will get a return on their capital that surpasses what they will get in other countries. As far as the oil and gas business goes we are simply not the only game in town. This is a level thinking that has to be embraced sooner than later.
Switching gears a bit I want to comment on national economic planning. Most people don't plan their life for one year. They plan for many years. In like manner an economy should not be planned for one year but for many years. An economy should not be seen in a 12-month box. It must be seen in terms of five years, 10 years and beyond 10 years. It is more imperative that T&T take a medium to long view on economic planning. While politicians plan in (at best) five-year cycles. Our main revenue earners plan in much longer cycles. The misalignment therefore is between politics and petroleum.
An investment made in a natural gas production project in 2014 therefore cannot be expected yield government revenue in 2015. The cycle of "investment–drilling�production�revenue" sometimes takes as long as three years as is the case of the 0 Juniper project or over 10 years as is the case with deepwater projects.
We must take a longer view of the economy to navigate the current situation. There will be a T&T in 2017, in 2018 and beyond. We must also be wary not to send the wrong signals to investors especially those that have demonstrated a long term commitment to this country. As a nation we must do like the proverbial Gazelle and the Lion and start running when the sun comes up least we get eaten or we starve.